August 24, 2020

SEC’s Reg S-T Proposal: The End of “Fake” Filings?

Late Friday afternoon, the SEC issued proposed amendments under Regulation S-T aimed at promoting reliability and integrity of EDGAR submissions. If adopted, the amendments could mark the end of an era for “fake SEC filings” that we enjoy blogging about so much. But there’s still cause for celebration. In addition to aiming to curtail fake filings, the proposal is also intended to improve administration of EDGAR – for example, filing delays arising in connection with EDGAR outages (which have been a problem lately).  The proposed rule specifies the Commission can take the following actions to facilitate resolution of issues that arise in connection with EDGAR submissions:

– redact, remove, or prevent dissemination of sensitive personally identifiable information that if released may result in financial or personal harm;

– prevent submissions that pose a cybersecurity threat;

– correct system or Commission staff errors;

– remove or prevent dissemination of submissions made under an incorrect EDGAR identifier;

– prevent the ability to make submissions when there are disputes over the authority to use EDGAR access codes;

– prevent acceptance or dissemination of an attempted submission that it has reason to believe may be misleading or manipulative while evaluating the circumstances surrounding the submission; and allow acceptance or dissemination if its concerns are satisfactorily addressed;

– prevent an unauthorized submission or otherwise remove related access; and

– remedy similar administrative issues relating to submissions.

The proposed rule provides that in certain circumstances, such as a threat to EDGAR, the Commission may take corrective action without first communicating with the filer.  In such instances, the proposed rule sets forth a process for the Commission to notify filers and other relevant persons of actions it takes as soon as reasonably practicable.

Filers still need to ensure the accuracy and completeness of information in their EDGAR submissions and in most cases, address any errors by submitting a filer corrective disclosure.  The proposed rule will be subject to a 30-day comment period after publication in the Federal Register.

SEC Comment Letters Continue Downward Trend

SEC comment letters are still around and haven’t completely disappeared but if it seems like you don’t hear as much about them, it’s because they’re declining in number.  As reported in a recent Audit Analytics blog, SEC comment letters on Forms 10-K, 10-Q and 8-K continued a downward trend in 2019, a trend spanning the last nine years.  The decline in 2019 seems like quite a drop-off, although much of the decline is attributed to the government shutdown in early 2019. Between 2018 and 2019, the blog says the number of comment letters fell by 30% and this was after a 32% decline between 2017 and 2018.  The blog also reports that the number of conversations declined and that most reviews were resolved after one round of comments.  For something to watch, the blog notes ASC 842 – the lease accounting standard – became effective in 2019 for companies with calendar year-ends so keep an eye out for any comment letter trends relating to that.

July-August Issue of “The Corporate Executive”

The July-August issue of The Corporate Executive was just posted – & also sent to the printer.  It’s available now electronically to members of who also subscribe to the print newsletter at each of their locations (try a no-risk trial). This issue includes articles on:

– SEC Adopts Rules to Regulate Proxy Advisory Firm Recommendations: Where Do We Go from Here?

  • The Unique Role of Proxy Advisory Firms
  • The SEC’s First Shot Across the Bow: The 2019 Interpretive Release
  • ISS Responds: See You in Court!
  • This Means War: The SEC’s Rule Proposal
  • The Final Rules: Proxy Advisory Firm Regulation is Born—After a Decade in Labor!
  • Dissent
  • Next Steps
  • Supplemental Guidance for Investment Advisers
  • Status of the ISS Lawsuit
  • What Now?

– Considerations for the Use of Private Air Travel During the COVID-19 Pandemic

  • The Allure of Private Air Travel
  • Governance Considerations
  • SEC Disclosure Considerations
  • Applicable Aircraft Regulations
  • Tax Considerations
  • Conclusion

– Lynn Jokela