In its annual global benchmark policy survey, ISS also sought input on whether board diversity info is still important to investors. As I blogged earlier this year, ISS halted application of its voting policy on that topic – but at least for this year, its research reports still have data on board diversity factors.
– 29% of investors selected “We remain focused on the importance of board, executive and workforce diversity, including diversity targets where applicable, and expect that most U.S. companies will disclose their approach to the diversity demographics of their boards as well as other DEI matters.”
– 24% of investors selected “Corporate DEI-related practices have evolved in the U.S., and disclosure on how companies assess risks or opportunities associated with DEI, whether they are scaling back or maintaining corporate DEI programs, is generally helpful for shareholders.”
– 2% of investors said “Irrespective of complexity, shareholder proposals on DEI topics are an unnecessary distraction for companies.”
– 34% of non-investors said “We no longer (or never did) consider numerical board or executive diversity targets but expect that U.S. company boards will continue to have a mix of professional and personal characteristics that is comparable to market norms and to each company’s business needs.“
For companies, this is an area where the balance of risk continues to evolve – so it will be important to have ongoing conversations about practices and disclosures, especially as proxy season approaches. Don’t forget to include perspectives from other experts and affected stakeholders in these conversations. For the legal side, that may include colleagues who specialize in employment law, government contracting, and potentially M&A and white collar defense (depending on the company’s circumstances). People outside of legal will also have views…
In addition to AI oversight and board diversity, the results from ISS’s annual global benchmark policy survey included several bread & butter governance topics. For these topics, investor respondents tended to show that they have views about “best practices” – while many companies (non-investors) want flexibility. No surprise there!
Here’s more detail on a few of the governance-related survey topics:
– Multi-Class Capital Structures – ISS asked whether “non-common” shares with more than one vote per share (other than in cases where these shares vote on an “as-converted” basis) should generally be considered the same way as common shares that have more than one vote per share.
– 71% of investors said “Yes.”
– 62% of non-investors said “No.”
As a reminder, ISS’s current benchmark policy is to recommend against directors individually, committee members, or the entire board, if the company has a capital structure with “unequal voting rights” – in the absence of sunset provisions or de minimis super-voting power.
– Independent Board Chairs – ISS noted that “independent chair” proposals seldom receive majority support (the current voting policy generally recommends a vote “for” these proposals and lists factors that the proxy advisor considers). In the survey:
– 43% of investors said an independent chair is best and that shareholder proposals calling for an independent chair are understandable.
– 38% of investors said that having an independent chair is a good practice, and companies should explain why they’re an exception to the rule.
– 51% of non-investors said a board should generally have the flexibility to determine its leadership structure.
– Director Overboarding – ISS noted that it last asked about overboarding in 2019, and some investors have changed their policies since then. Where local market best practice codes and/or regulations provide upper limits for board mandates, ISS policies globally already reflect these limits, but ISS asked about preferences when regulations aren’t in play. Here’s what they found about maximum limits:
– 26% of investors and 19% of non-investors said that 5 total board seats is appropriate.
– 25% of investors and 22% of non-investors said that 4 total board seats is appropriate.
– 9% of investors and 38% of non-investors said there should be no general limit; the board should consider its own circumstances and act accordingly.
– For CEOs, 55% of investors and 34% of non-investors believe 1 external board seat is an appropriate limit, and 39% of non-investors believe no general limit should be applied. The survey also got into other details, like whether board chair positions and connected companies should be treated differently.
The survey also covered views on shareholder proposals, shareholder written consent, say-on-pay responsiveness, director pay, executive incentive awards, and other matters. Meredith will cover the compensation-related items tomorrow on The Advisors’ Blog on CompensationStandards.com!
Earlier this year, the SEC published a concept release to explore changing the eligibility criteria for Foreign Private Issuers. This Mayer Brown memo summarizes themes from comments submitted to-date:
• A very large number of letters argued that the SEC should narrowly tailor any changes to the specific problems it intends to solve, since broad based changes may have unintended and unwanted consequences. More specifically, some letters request narrowly tailored disclosure changes focusing only on issuers that have failed to provide robust disclosure necessary to ensure the protection of U.S. investors (i.e., making “targeted, incremental changes to existing disclosure requirements applicable to FPIs accessing the U.S. markets through registered offerings or as reporting issuers”).
• Other letters favored limited, specifically tailored changes to the FPI definition for other reasons, arguing that any changes should be made in a manner that considers the impact of the definition on other terms and rules under the federal securities laws, including Regulation S and Exchange Act Rule 12g3-2(b).
• Similarly, a number of commenters stated that the SEC should be wary of potential changes that are duplicative of or contrary to existing home requirements to which FPIs adhere, and understand that the additional burden and cost of navigating the two regimes could be significant, such that some issuers may choose to exit the U.S. markets.
• Many letters argued in favor of continued reporting in IFRS, either for FPIs or for all issuers. In the alternative, if foreign issuers that lose FPI status must report in U.S. GAAP, the SEC should provide guidance and a suitable transition period (several commenters suggested a minimum of two or three years). Concern about switching from IFRS to U.S. GAAP was the most commonly repeated idea across all letters.
• Some letters advocated requiring meaningful non-U.S. trading (e.g., ≤90% of global trading in the U.S.), potentially with de-minimis exclusions for bona fide dual-listings, and providing a safe harbor for issuers listed on a designated “major foreign exchange” or in jurisdictions assessed as robust. Interestingly, a number of other letters took the opposite approach, arguing that significant non-U.S. trading is not required or helpful in demonstrating meaningful regulation of a foreign issuer.
• A few letters asked the SEC to consider carve-outs or refined eligibility criteria that preserve
FPI status for companies with genuine foreign governance and infrastructure, regardless of shareholder geography or incorporation jurisdiction.
• A number of letters advocated for a requirement that a FPI be (i) incorporated or headquartered in a jurisdiction that the SEC has determined to have a robust regulatory and disclosure oversight framework and (ii) be subject to such securities regulations and oversight without modification or exemption. Other letters suggested that the SEC should avoid any approach requiring jurisdiction-specific judgments because developing the relevant assessment criteria would be a large undertaking and require constant monitoring, straining SEC resources, and would lead to unpredictability for non-U.S. companies that are reliant upon a given jurisdiction or exchange continuing to meet the SEC’s criteria to maintain their FPI status.
• At least one letter argued that meeting a required jurisdictional threshold alone is not sufficient, and the SEC should consider not just where a company is incorporated and headquartered but should also look holistically at where the company is from, including where its directors, officers and employees reside, where its assets are held, where it earns revenue, and the citizenship and residency of any controlling beneficial owners.
• A handful of other letters argued that, in the alternative to requiring that FPIs be subject to
certain named robust regulatory jurisdictions, the SEC should identify jurisdictions of incorporation that do not have securities regulations and oversight sufficient to protect U.S. investors. Companies from these jurisdictions could be subject to the same reporting obligations and rules as domestic issuers.
• A number of letters argued that the SEC should keep the current multijurisdictional disclosure system with Canada, or MJDS, unchanged, and explore mutual recognition pilots (e.g., EU, UK, Australia) where regulatory objectives demonstrably align.
The memo says there have been about 70 responses submitted so far – mostly from law firms, FPIs and industry groups. The SEC’s Investor Advisory Committee also discussed this topic at a meeting last week. In his remarks at the meeting, SEC Chair Paul Atkins noted:
Now, to be clear, the SEC welcomes foreign companies that seek to access the U.S. capital markets. I must emphasize that the concept release is not a signal that the SEC intends to disincentivize such firms from listing on U.S. exchanges. Rather, our goal is to better understand the impact on U.S. investors and the U.S. market resulting from significant changes to the population of foreign companies listed in the United States over the last two decades.
The Center for Audit Quality recently shared these notes from a June meeting with Staff from the Division of Corporation Finance and Office of the Chief Accountant. Among other things, the Staff weighed in on transition reporting and segment reporting, as well as pro forma requirements following a reverse merger or de-SPAC transaction. Here’s an excerpt on that piece:
In de-SPAC transactions or where a public shell company acquires a private operating company, a registrant is required to provide pro forma financial information reflecting the accounting for the acquisition in a proxy or registration statement (e.g., a Form S-4). After effectiveness of the registration statement, certain subsequent filings (such as a Super 8-K reporting the transaction or subsequent registration statements) may require the registrant to update its and the target’s financial statements to remain compliant with the applicable age of financial statement requirements in Regulation S-X.
The Committee asked the staff whether the pro forma financial information reflecting the acquisition should be updated for the most recently reported periods in the Super 8-K or subsequent registration statements even if the registrant believes the update would not be material. The staff clarified that if the registrant’s financial statements were required to be updated, the pro forma financial information must also be updated. The update is required regardless of any materiality assessment.
The Committee further inquired whether pro forma financial information presented for transactions other than the one described by the Committee (i.e., transaction specified in Rule 11-01 of Regulation S-X) must be updated when the financial statements used to prepare the pro forma financial statements are required to be updated. The staff confirmed that if the financial statements used to prepare pro forma financial information are required to be updated, the pro forma financial information must also be updated. The update is required regardless of any materiality assessment.
Here’s something that Meredith blogged last week on DealLawyers.com:
Sidley recently analyzed all late-stage director contests at Russell 3000 companies in the last eight years — which includes five years pre-UPC and three years post — to understand the impact of the SEC’s universal proxy rule on contested elections. As these excerpts from their report show, the assumption that UPC would make it easier for activists to win seats didn’t exactly come to fruition as expected. The impact has been more nuanced.
The “floor” on activists’ electoral success has risen. At least one activist nominee was elected in 48% of UPC elections, up from 39%. Half of these successes have been limited to a single seat, an increase from 10% to 24% of total elections.
The “ceiling” on activist success has collapsed. Shareholders have supported at least half of the dissident slate in only 24% of UPC elections, down from 39%.
The average number of activist candidates elected under the UPC is down 22% (1.1 to 0.9 seats), and the average when a dissident wins at least one seat is down 37% (from 2.9 to 1.8 seats).
Management success has ticked down while remaining typical. “Clean sweeps” (full-slate elections) by management continue to be a majority of contested elections under the UPC (52%, down from 61%).
Activists are more often withdrawing their slates after ISS and Glass Lewis back management (13% of late-stage proxy contests under the UPC withdrew after proxy advisor recommendations, up from 9%)
Activists are more often withdrawing their slates after ISS and Glass Lewis back management (13% of late-stage proxy contests under the UPC withdrew after proxy advisor recommendations, up from 9%)
Activist clean sweeps have effectively vanished, falling from 29% of pre-UPC contested elections to none aside from the proxy contests at Masimo.
The memo says the “net effect” of these data points is that “activist victories have increased in frequency but compressed toward single-seat outcomes.” This memo and others analyzing UPC are posted in our “Proxy Fights” Practice Area on DealLawyers.com. If you aren’t already a member of that site, it is full of good info about Delaware case law, deal trends, and more. To get access, you can sign up online, email info@ccrcorp.com, or call 800.737.1271.
This week, I am at the American Bar Association Business Law Section’s Fall Meeting in Toronto, and there has been a lot of discussion at the meeting about President Trump’s Truth Social post earlier this week calling on the SEC to adopt rules that change the frequency of periodic reporting from quarterly to semiannual. As I noted in this blog, the possibility of making this type of change to the SEC reporting system was considered during the first Trump administration, but no changes were ultimately made to SEC requirements. It appears that the SEC is now prepared to reconsider the issue – this CFO Dive post notes that the following statement on the topic was received from the SEC:
“At President Trump’s request, Chairman [Paul] Atkins and the SEC are prioritizing this proposal to further eliminate unnecessary regulatory burdens on companies,” according to a statement sent to CFO Dive late Monday by an SEC spokesperson. The spokesperson in an interview Tuesday declined to comment further on what steps need to be taken by the SEC to change the quarterly reporting requirement.
The dialogue about this topic and the potential for the SEC’s renewed focus on a potential rule proposal prompted me to take a spin through the comment file from 2018-2019, and the input was decidedly mixed. Here are some highlights:
1. As might be expected, there were some reporting companies (such as this example) that were in favor of a shift to semiannual reporting, focusing on the cost savings and the ability to provide material information to investors through other communications such as earnings releases and Form 8-K filings.
2. One company suggested that the Commission consider a “triannual” reporting framework, where companies would report to the SEC every four months, instead of every three months.
3. Accounting industry commenters (such as this one) noted that companies may continue to seek auditor review of quarterly financial statements even if they do not have to file a Form 10-Q on a quarterly basis because of investor demands for that information and the need for such information when conducting securities offerings. It was also noted in comment letters that a shift toward earnings releases would complicate the ability of auditors to provide negative assurance to underwriters.
4. Investors (such as this one) expressed concern with the possibility of moving to a semiannual reporting framework, noting that a reduction in the frequency of financial information would make it difficult to manage their investment portfolios, and that earnings releases and quarterly reports provide different and valuable pieces of information.
5. Some commenters (such as this one) noted that less frequent reporting would be likely to increase the risk of insider trading, and as a result companies may be forced to reduce the length of their open trading windows.
6. One commenter suggested that the SEC conduct a pilot program that would allow a select group of companies to opt-out of Form 10-Q reporting so the agency could collect data about the approach before making any changes.
7. Some commenters (such as this one) suggested that the SEC consider revisiting the information required in quarterly reports, rather than changing the frequency of filing such reports.
8. Commenters (such as this one) suggested that the SEC consider pursuing a scaled approach to the issue, moving to semiannual reporting for smaller companies.
9. Many commenters (such as this one) resisted any suggestion that the SEC should adopt specific regulations concerning earnings releases and guidance practices, beyond the existing requirements in Item 2.02 of Form 8-K.
10. Not surprisingly, commenters expressed concerns about the problem of short-termism, but commenters were often skeptical as to whether a change in the frequency of periodic reporting would have any impact on a short-term focus by companies and investors.
Based on the comments and the SEC’s questions that prompted those comments, it is unlikely that any change in the frequency of periodic reports will mean a significant change in the frequency of financial and other information being provided to the market. We can envision a “private ordering” approach to periodic disclosure, where the earnings release will become the vehicle for updating investors and permitting companies to open their trading windows, repurchase their own shares and conduct securities offerings. This approach would likely put more pressure on current reporting, where companies may choose to file more Form 8-K filings or issue press releases to communicate material developments that they might have waited to report in the Form 10-Q under today’s reporting regime. Consistent with some of the items on the Commission’s regulatory agenda, the SEC might consider a scaled approach, where it reduces the quarterly reporting burdens for smaller companies, while retaining quarterly reports for larger companies. With all of that in mind, let’s sit back and see where this potential proposal goes from here!
As this Goodwin Public Company Advisory Blog notes, the SEC recently issued new Exchange Act Rules CDI Question 130.05, which provides guidance on when an issuer may become an accelerated or large accelerated filer after it loses its status as a smaller reporting company. The new CDI states:
Question: An issuer is a smaller reporting company under the revenue test in paragraph (2) or (3)(iii)(B) of the “smaller reporting company” definition in Rule 12b-2. On the last business day of its second fiscal quarter of 2025, the issuer conducts its annual determination of smaller reporting company status and determines that it no longer qualifies as a smaller reporting company. When the issuer assesses its accelerated filer or large accelerated filer status, as of the end of fiscal year 2025, will this issuer become an accelerated filer or large accelerated filer?
Answer: No. When determining its accelerated filer or large accelerated filer status as of the end of its fiscal year, the issuer must assess, among other things, whether it is “eligible to use the requirements for smaller reporting companies under the revenue test in paragraph (2) or (3)(iii)(B) of the ‘smaller reporting company’ definition” in Rule 12b-2. See paragraph (1)(iv) of the definition of “accelerated filer” and paragraph (2)(iv) of the definition of “large accelerated filer” in Rule 12b-2. In this case, the issuer would be eligible to continue to use the requirements for smaller reporting companies through the end of fiscal year 2025 and until its Form 10-Q for the first fiscal quarter of 2026. See paragraph (3)(i)(C) of the definition of “smaller reporting company” in Rule 12b-2. Accordingly, the issuer would not satisfy the condition in paragraph (1)(iv) of the definition of “accelerated filer” or paragraph (2)(iv) of the definition of “large accelerated filer” as of the end of fiscal year 2025. The issuer would be a non-accelerated filer for filings due in fiscal year 2026 and would be ineligible to use the requirements for smaller reporting companies beginning with its Form 10-Q for the first fiscal quarter of 2026. [August 27, 2025]
The Staff’s new guidance is helpful for companies analyzing changes in filer status, which can difficult to navigate at times given the complexity of the rules.
On Wednesday, the SEC announced that the Commission has approved generic listing standards for commodity-based trust shares as part of the agency’s continuing efforts to take regulatory action in the digital asset market. The announcement notes:
The Securities and Exchange Commission today voted to approve proposed rule changes by three national securities exchanges to adopt generic listing standards for exchange-traded products that hold spot commodities, including digital assets. As a result, the exchanges may list and trade Commodity-Based Trust Shares that meet the requirements of the approved generic listing standards without first submitting a proposed rule change to the Commission pursuant to Section 19(b) of the Exchange Act.
“By approving these generic listing standards, we are ensuring that our capital markets remain the best place in the world to engage in the cutting-edge innovation of digital assets. This approval helps to maximize investor choice and foster innovation by streamlining the listing process and reducing barriers to access digital asset products within America’s trusted capital markets,” said SEC Chairman Paul S. Atkins.
Division of Trading and Markets Director Jamie Selway said, “The Commission’s approval of the generic listing standards provides much needed regulatory clarity and certainty to the investment community through a rational, rules-based approach to bring products to market while ensuring investor protections.”
Yesterday, the Commission, by a three-to-one vote, approved a policy statement that revisits the decades-long approach of the Staff not accelerating the effective date of registration statements for companies with mandatory arbitration provisions in their organizational documents, citing Securities Act Section 8(a), which allows the Commission to refuse to accelerate the effective date of a company’s registration statement upon considering, among other things, the adequacy of the disclosure in the registration statement, the public interest, and the protection of investors.
Historically, mandatory arbitration provisions have been viewed by the SEC as being inconsistent with the “anti-waiver” provisions of the federal securities laws, notably Securities Act Section 14 and Exchange Act Section 29(a), which state that any condition that would bind a person to waive compliance with those laws is void. In two specific instances over the course of the past forty years, the Staff in Corp Fin has refused to declare Securities Act registration statements effective when the issuer had included mandatory arbitration provisions in its organizational documents. The possibility of revisiting the SEC’s policy regarding mandatory arbitration provisions has been discussed over time, including during the first Trump Administration, but the policy has remained in place until now.
In the new policy statement, the SEC states:
This statement concerns requests to accelerate the effective date of registration statements filed under the Securities Act of 1933 (“Securities Act”) by issuers with a mandatory arbitration provision for investor claims arising under the Federal securities laws (“issuer-investor mandatory arbitration provision”). As discussed in further detail in section II.C. there have been a number of developments involving the U.S. Supreme Court’s (“Supreme Court” or “Court”) interpretation and application of the Federal Arbitration Act of 1925 (“FAA” or “Arbitration Act”) that inform such acceleration requests. In addition, as discussed in further detail in Section II.B., potential uncertainty exists regarding the intersection of the FAA and state law. For example, Delaware recently amended its General Corporation Law in a way that may prohibit certificates of incorporation or bylaws from including an issuer-investor mandatory arbitration provision. Other states may adopt different approaches on this issue. Notwithstanding these developments and potential uncertainty, the Commission has not spoken publicly on this topic even though, during the registration process, issuers have on occasion sought to include such a provision in their Securities Act registration statements.
In order to provide issuers with greater certainty concerning the Commission’s approach to requests to accelerate the effective date of a registration statement disclosing an issuer-investor mandatory arbitration provision, we are issuing this policy statement. For the reasons explained in this statement, we have determined that the presence of an issuer-investor mandatory arbitration provision will not impact decisions whether to accelerate the effectiveness of a registration statement under the Securities Act. Accordingly, when considering acceleration requests pursuant to Securities Act section 8(a) and Rule 461 thereunder, the staff will focus on the adequacy of the registration statement’s disclosures, including disclosure regarding issuer-investor mandatory arbitration provisions.
The policy statement goes on to note: “[n]othing in this statement should be understood to express any views on the specific terms of an arbitration provision, or whether arbitration provisions are appropriate or optimal for issuers or investors.” In expressing his support for the policy statement, Chairman Atkins stated:
While many people will express views on whether a company should adopt a mandatory arbitration provision, the Commission’s role in this debate is to provide clarity that such provisions are not inconsistent with the federal securities laws. It will fulfill that role through the issuance of the Policy Statement.
Commissioner Crenshaw opposed the SEC’s action, noting in a lengthy statement:
Mandatory arbitration forces harmed shareholders to sue companies in a private, confidential forum, instead of a court and without the benefit of proceeding in the form of a class action. While, in theory, arbitration could cut costs for companies, there are real downsides for investors. Arbitrations are typically more expensive for individual shareholders; they are not public; they have no juries; they lack consistent procedures; arbitrators are not bound by legal precedent; arbitration precludes collective action among shareholders; there are limited rights of appeal; and, ultimately, there is no assurance that two identical investors would get the same outcome. If that collection of things transpired in a courtroom without a party’s consent, judges would not hesitate to call it what it is: a violation of due process.
Today, the Commission takes two steps to advance this policy goal. First, the Commission issues a policy statement dictating that staff make public-interest findings without considering whether a corporation has forced its shareholders into mandatory arbitration. And, second, we amend the Rules of Practice to ensure that no Commissioner or third party can effectively intervene to challenge those public-interest findings.
The policy statement fails on many fronts. It fails to identify a problem. It fails to adequately address numerous and complex legal and economic issues. And it fails entirely to discuss the practical consequences of allowing public companies to mandate arbitration. If, however, we actually were to consider whether mandatory arbitration is in the public interest—an analysis required by the Securities Act—we would face overwhelming evidence that it is not. So, to start there, what are some of those consequences?
For public companies and companies that are contemplating going public, the change in SEC policy now raises the question of whether the adoption of mandatory arbitration provisions for securities law claims is a possibility. As the Commission noted in the policy statement, whether issuer-investor mandatory arbitration provisions can be included in a company’s organizational documents depends on state corporate laws, and some states, such as Delaware, have enacted laws that may prohibit the implementation of such provisions. The Commission’s action will likely also prompt a broader debate over whether mandatory arbitration provisions are advisable from the perspective of issuers and investors. Through the policy, the Commission is not necessarily weighing in on this debate, but is rather getting out of the way (for better or worse) by not using the acceleration of effectiveness process to discourage the use of such provisions.
In an action related to the adoption of the policy statement on mandatory arbitration provisions, yesterday the Commission, by a three-to-one vote, adopted an amendment to Rule 431(e) of the SEC’s Rules of Practice, which is the rule addressing the Commission consideration of actions made by the Staff pursuant to delegated authority.
Many routine SEC matters that require Commission action are handled by the Staff pursuant to delegated authority from the Commission. This includes the acceleration of the effectiveness of a registration statement under the Securities Act. The Commission maintains the power to affirm, reverse, modify, set aside or remand for further proceedings, in whole or in part, any action made pursuant to delegated authority, and Rule 431 specifies the process by which the Commission considers any such action, which can be prompted by the filing of a petition for review by a third party or upon the Commission’s own initiative. Rule 431(e) provides for an automatic stay of an action made pursuant to delegated authority upon filing with the Commission of a notice of intention to petition for review, or upon notice to the SEC’s Secretary of the vote of a Commissioner that a matter be reviewed, except in specific circumstances. In the rulemaking action yesterday, the Commission added the acceleration of the effectiveness of a registration statement to the list of circumstances excepted from this automatic stay provision.
In his statement in support of the change, Chairman Atkins notes:
Currently, declaring a registration statement effective is not among the exceptions to a stay. However, stays of an effective registration statement may be extremely disruptive. A company, its underwriters, and other market participants may commence sales of the securities once the registration statement is effective. A stay of effectiveness could fundamentally interrupt the sales process. Investors – selling securities holders as well as purchasers — might be extremely disadvantaged. Market participants could incur costs as a result. A stay could also create uncertainty for issuers and underwriters that have sold securities. Rather than automatically trigger such adverse consequences, the Commission should have the opportunity to carefully weigh the equities involved before taking such a significant step.
Adding declarations of effectiveness of registration statements to the limited list of exceptions to the automatic stay requirement will help to alleoviate some of the aforementioned concerns. In the execution of its mission, the Commission should provide as much regulatory certainty as possible to market participants raising capital. Today’s amendments to rule 431 further that mission.
As with the policy statement on mandatory arbitration provisions, Commissioner Crenshaw opposed this action, noting in her statement:
It would be bad enough if all the Commission did today was issue the mandatory arbitration policy statement. But we simultaneously propose amendments to our Rules of Practice in order to eviscerate the procedural rights of those who might choose to challenge an issuer’s inclusion of mandatory arbitration.
Currently, when either a Commissioner or a third-party requests Commission review of almost any staff action made pursuant to delegated authority, those actions are automatically stayed pending Commission consideration. This consideration is an important backstop to delegated staff action. That all goes away with today’s amendments. From now on, the automatic stay, which provides the mechanism for meaningful Commission review of registration statements before an offering hits the market, vanishes. Accordingly, I also cannot support today’s amendments to the Commission’s Rules of Practice.
I must admit that in three decades as a practicing securities lawyer, including a decade spent inside Corp Fin, I never encountered a situation where a Commissioner or another party sought review of the Staff’s action in declaring a registration statement effective, so I am comfortable in concluding that the Commission’s amendment to Rule 431 of the Rules of Practice will likely not make much difference in our day-to-day practice.
