These rules contemplate far-reaching changes to our regulatory regime, the breadth of which is hard to glean from merely reading their titles. William Lane The agenda identifies 4/23 as the target date for final action on the proposal. Digital Currency + Blockchain Perspectives Blog (See this PubCo post, this PubCo post and this PubCo post.) We once worked to help small and emerging companies raise the funds that are their lifeblood; we now work to increase their costs and shrink their investor base. Lee has previously raised concerns about the explosive growth of private markets. Currently, under the Exchange Act, a company that reaches either 2,000 holders of record or 500 holders of record that are not accredited investors, whichever first occurs, is required to register under the Exchange Act. Generally, new SLB 14L presented its approach as a return to the perspective that historically prevailed prior to the issuance of the three rescinded SLBs. Today, Lee points out, most shares in U.S. markets are held in street name, with the result that record ownership has plummeted and in most cases has no meaningful relationship to the number of actual investors. According to Lee, [e]ven some of the largest and most widely traded issuers do not have enough record owners (as that term is currently defined) to meet the requirements of Section 12(g). The changes were intended to increase efficiencies and provide more tools and more flexibility to the SEC, but not all the Commissioners saw it that way. These and other developments are discussed in more detail below. the role of these information providers in today's markets raises important questions under the securities laws as to if they are providing investment advice rather than merely information. is blessed with the largest, most sophisticated, and most innovative capital markets in the world.But we cannot take that for granted. In This Issue. The current rule is limited to fund names that suggest investments in a type of security, industry, geographic region or suggest they are backed by the U.S. government. Additionally, it does not apply to names that indicate a specific investment focus or strategy and allows funds to define terms used in their names in a reasonable way. Under Dodd-Frank, the policy would apply in the event the company had to prepare an accounting restatement due to the companys material noncompliance with any financial reporting requirement under the securities laws. Adoption of the Service, according to the Board, will allow for enhanced efficiency of both domestic and cross-border payments due to greater interoperability among global payment systems. Build a Morning News Brief: Easy, No Clutter, Free! D, cybersecurity, Rule 10b5-1 and insider trading, amendments to the SECs Whistleblower Program Rules, among others. Given the new majority on the Commission, Corp Fin is considering whether to recommend that the SEC review the rules to determine if additional amendments might be appropriate. The report provides an update on the short and long-term regulatory actions that the agency plans to take. Subsequent reporting has suggested that companies capitalized on the fact that the new rule does not call for specific metrics, as [r]elatively few issuers provided meaningful numbers about their human capital, even when they had those numbers at hand, such as workforce diversity data submitted to the EEOC. to learn how MCOs Know Your Risk solution provides firms with a holistic and aggregate view of their risk profile that helps compliance teams set regulatory priorities, link regulatory obligations to related policies and procedure, identify gaps in policies and procedures and streamline operations. Mr. Gensler believes focusing on these two objectives will help the SEC achieve its three-part mission of protecting investors; maintaining fair, orderly, and efficient markets; and facilitating capital information. (Ok, admittedly, thats an exaggeration, but not much of one.) With the change in the majority at the Commission, the SEC is now planning to re-propose those rules and, to that end, reopened the public comment period in October 2021. Revisions to the Definition of Securities Held of RecordCorp Fin is considering recommending that the SEC propose amendments to the definition of held of record for purposes of section 12(g) of the Exchange Act. Proxy Voting AdviceWhether and how to regulate proxy advisory firms, such as ISS and Glass Lewis, has long been a contentious issue, with some arguing that their vote recommendations are plagued by conflicts of interest and often erroneous, while others see no reason for regulation given that the clients of these firms are satisfied with their services. The proposed 2021 amendments would rescind that second central conditionwhich some might characterize as a core element, if not the core element, of the 2020 amendments. The new target date for the proposal is 4/23. to join Hope Newsome, Managing Partner at Virtus LLP on, On Demand Webinar: Insider Trading, Digital Assets and MNPI Regulatory Developments and Compliance Risks. So much for legislative mandates. On June 22, the Office of Information and Regulatory Affairs released the Spring 2022 Unified Agenda of Regulatory and Deregulatory Actions on June 22, 2022. OIRA is the governments central authority to review executive branch regulations. A rule proposed in March of 2022 would enhance and standardize climate related disclosures and require firms to provide, climate-related risks that are likely to have a material impact, certain climate-related financial metrics, disclosure of a registrants greenhouse gas emissions and the impact of climate-related events. According to SEC Chair Gary Gensler, the U.S. Rule 14a-8 AmendmentsIn October 2020, the SEC adopted amendments to Rule 14a-8 to modify the eligibility criteria for submission of shareholder proposals, as well as the resubmission thresholds; provide that a person may submit only one proposal per meeting, whether as a shareholder or acting as a representative; prohibit aggregation of holdings for purposes of satisfying the ownership thresholds; facilitate engagement with the proponent; and update other procedural requirements. The deadline for submitting comments is July 22, 2022. Some independent ATM owners and operators have reported difficulty in obtaining and maintaining access to banking services, which jeopardizes the important financial services they provide, including to persons in underserved markets. Learn more at troutman.com. Ahmed Abdelhamid Given the recent consternation over hacks and ransomware, it should come as no surprise that, in March, the SEC proposed rule amendments to enhance issuer disclosures regarding cybersecurity risk governance. See how MCO provides firms with a clearer picture of the ongoing risks faced from third parties and service providers. Download the brochure to learn how MCOs Know Your Risk solution provides firms with a holistic and aggregate view of their risk profile that helps compliance teams set regulatory priorities, link regulatory obligations to related policies and procedure, identify gaps in policies and procedures and streamline operations. The Service, which will be adopted on March 10, 2025, is a settlement system owned and operated by the Federal Reserve Banks and developed by the International Organization for Standardization, an independent, non-governmental organization that publishes standards for a range of industries. You might recall that the resource extraction rules, mandated under Dodd-Frank, have had a long and troubled history. Jay co-leads the firms Securities Investigations + Enforcement Practice Group. (See this PubCo post.) Thomas has. Under current guidance, in counting holders, companies look through record ownership only to banks and brokers, not to beneficial owners. The agenda identifies 10/22 as the target date for final action on the proposal. But not all of the commissioners were entirely satisfied that the guidance was adequate under the circumstances. A rule proposed in March of 2022 would enhance and standardize climate related disclosures and require firms to provide certain climate-related information in their registration statements and annual reports. The release notes that the proposed rules are intended to better inform investors about a registrant's risk management, strategy, and governance and to provide timely notification to investors of material cybersecurity incidents. The agenda does not identify any target date for further action. Samantha M. Kirby Learn how MCOs ESG Compliance Manager provides firms with a platform that streamlines and automates the management and evaluation of Environmental, Social and Governance data to highlight risks and identify the appropriate disclosures for stakeholders and investors. (See this PubCo post.) We once sought to protect retail investors; we now rush to the aid of professional investors. In March, the SEC proposed new rules and amendments regarding SPACs, shell companies, the use of projections in SEC filings and a rule addressing the status of SPACs under the Investment Company Act of 1940. The request also seeks comment on how existing rules should apply to certain categories of information providers that do not necessarily fit neatly into the SECs existing regulatory structure for investment advisers. Although the substance of the potential amendments is unclear, this article in Law 360 quotes Jones as advising a conference that Corp Fin is considering ways to add clarity and to reduce ambiguity surrounding the application of certain provisions in the rule.Thus, we are considering recommending amendments that would make the process more efficient and more predictable for all parties involved. The agenda identifies 10/22 as the target date for issuance of a proposal. Proxy Process AmendmentsCorp Fin may recommend that the SEC propose amendments to the proxy rules to facilitate improvements in the proxy system with respect to the distribution of proxy materials, pre-voting reconcilement, processing of shareholder votes (including proxy vote confirmation) and shareholder communications, otherwise referred to as proxy plumbing issues. DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations. Bass, Berry & Sims PLC var today = new Date(); var yyyy = today.getFullYear();document.write(yyyy + " "); | Attorney Advertising. Proxy plumbing was discussed at length at a 2018 meeting of the Investor Advisory Committee and then at the proxy process roundtable. Cybersecurity Risk GovernanceIn 2018, the SEC adopted guidance on cybersecurity disclosure. The agency is currently seeking comments on certain. Streamlining reports under the Investment Company Act, with respect to shareholder reports, annual prospectus updates, fee and risk disclosures, and fee information in advertisements; and. Conflict Minerals AmendmentsWay too long a saga to go through here. As a result, todays rule, by the Commissions own determination, will severely restrict the transparency and anti-corruption benefits that the disclosures might provide, and thus fails to advance the statutes goals. (See this PubCo post.) New requirements would include disclosures regarding potential conflicts of interest, business combinations around the sponsor of the SPAC, dilution of shareholder interests and disclosure of outside reports or appraisals. The CFPB is seeking input from card issuers, consumer groups and the public about credit card late fees, how card issuers determine these fees, whether they are reasonable and proportional, the potential deterrent effect of late fees, card issuers revenue and expenses, and the role late fees play in credit card companies profitability. The disclosures would be required under a separate caption, Climate-Related Disclosure, in registration statements and Exchange Act annual reports (with material updates in Forms 10-Q) Compliance would be phased in, with reporting for large accelerated filers due in 2024 (assuming anoptimisticeffective date at the end of this year). The firms litigation, transactional, and regulatory practices advise a diverse client base, from startups to multinational enterprises. The agenda identifies 4/23 as the target date for issuance of a proposal. Aenean lacinia bibendum nulla sed consectetur. The SEC has posted its Spring 2022 Reg-Flex agenda and its crammed with pending and new rulemakingsand theyre all going to be proposed or adopted in October! The SECs rulemaking agenda is driven by two public policy goals: continuing to drive efficiency in our capital markets and modernizing our rules for todays economy and technologies, said SEC Chair Gary Gensler. After an extension, the comment period has just concluded. Shareholder voting is viewed as fundamental to keeping boards and managements accountable, and the current system of proxy plumbing has been criticized as inefficient, opaque and, all too often, inaccurate. Stay on top of news and legal issues in the consumer finance industry. The rules to implement these clawback provisions were proposed in 2015 and then relegated to the long-term agenda. When rules were adopted for the third time in December 2020, Lee dissented because the final rules permitted payment information to be aggregated to such a degree that the resulting disclosures will obscure information crucial to anti-corruption efforts and material to investment analysis. the proposed rules are intended to better inform investors about a registrant's risk management, strategy, and governance and to provide timely notification to investors of material cybersecurity incidents. And just this month, a new rulemaking petition was submitted by a group of academics requesting that the SEC require more qualitative and quantitative disclosure of financial information about human capital. The SEC continues to advocate for more disclosures around the environmental impact of the firms the agency regulates. Clickhere to read more about how we use cookies. Regulation D and Form D improvements, including updates of the accredited investor definition under the Securities Act; Amendments and additions to the Custody Rule under the Investment Advisers Act; and. Climate Change DisclosureAfter many months of hyperventilating in anticipation of the SECs new climate disclosure rule, we finally got a chance to see it in March. On June 22, the Office of Information and Regulatory Affairs (OIRA) released the Spring 2022 Unified Agenda of Regulatory and Deregulatory Actions. Jay co-leads the firms Securities Investigations + Enforcement Practice Group. The new message format is an industry standard that many global payment and messaging systems are adopting. The proposal seems to have never materializedat least not in public. (See this PubCo post.) Amendments to the Commissions Whistleblower Program RulesIn September 2020, the SEC adopted changes to the rules governing its whistleblower program, enabling the SEC to adjust, within certain limitations, the amounts payable as awards under the program. That obviously didnt happen. According to the release, the role of these information providers in today's markets raises important questions under the securities laws as to if they are providing investment advice rather than merely information. Modernization of Beneficial Ownership ReportingIn February, the SEC proposed to amend the complex beneficial ownership reporting rules. The final rule includes guidance for survivors on reporting having experienced a form of trafficking and submitting required trafficking documentation to credit reporting companies. (See this PubCo post.) SEC Chair Gary Gensler. Nicole Griffin He focuses his practice on complex business litigation, with a special emphasis on defending against shareholder derivative and securities class action litigation. The agenda provides a target date for final action of 10/22. For Schedules 13G, the filing deadline would be accelerated to five business days after the end of the month for qualified institutional investors and exempt investors, and would allow five days for passive investors to file. Special Purpose Acquisition CompaniesIn remarks last year before the Healthy Markets Association, SEC Chair Gary Gensler emphasized the need to treat like cases alike, contending that a de-SPAC transaction is functionally akin to a traditional IPO. He pointed to the need to level out information asymmetries, guard against misleading information and fraud and mitigate conflicts among parties that may have different incentives. In 2017, Corp Fin issued an Updated Statement on the Effect of the Court of Appeals Decision on the Conflict Minerals Rule that provided that Corp Fin would not recommend that companies face enforcement if they filed only a Form SD and did not prepare and file a conflict minerals report. In June 2021, Gensler announced plans to address problems with the affirmative defense provisions of Rule 10b5-1. New rules were again adopted, but were subsequently tossed out under the Congressional Review Act. The Agenda plans to rush to completion proposals in which commenters have identified deep flaws. And what about one of her areas of expertisecrypto? We once hoped to increase the ranks of public companies by making it less costly and more beneficial to be public; we now look for ways to force companies to go public since we are making it costlier to go public and be public.. And if youd like to see firsthand how MCO helps firms manage and mitigate conflicts of interest and conduct risk, set up a demo today. Stay on top of enforcement actions, trends and issues. On June 22, FinCEN issued a statement to provide clarity to banks on how to apply a risk-based approach to conducting CDD on independent ATM owners or operators. On June 15, the SEC issued a request for comment on certain information providers whose activities, in whole or in part, may cause them to meet the definition of investment adviser under the Investment Advisers Act. Law Firms: Be Strategic In Your COVID-19 Guidance [GUIDANCE] On COVID-19 and Business Continuity Plans. FinReg + Policy Watch Blog In the press release, SEC Chair Gary Gensler noted When I think about the SEC's agenda, Im driven by two public policy goals: continuing to drive efficiency in our capital markets and modernizing our rules for todays economy and technologies. Nevertheless, for a variety of reasons, companies have continued to file CMRs at about the same rate as prior to the Updated Statement. Reg D and Form D ImprovementsCorp Fin is considering recommending that the SEC propose amendments to Reg D, including updates to the accredited investor definition, and to Form D. The target date for a proposal is 10/22. Thomas has conducted sophisticated internal corporate investigations and regularly advises clients on compliance strategies. The target date identified for final action is 10/22. Rule 10b5-1(c) offers an affirmative defense to insider trading for parties that frequently have access to material nonpublic information, including corporate officers, directors and issuers. To address the real issue that the SEC was targeting, the 2020 rules added to the exemptions from those solicitation rules two significant new conditions for proxy advisory firmsone requiring disclosure of conflicts of interest and the second calling for proxy advisory firms to engage with the companies that are the subjects of their advice. (See this PubCo post and this PubCo post.) As a member of the firms White Collar + Government Investigations Practice Group, Thomas counsels and defends corporations, and their employees and executives in government investigations and enforcement matters, with a particular focus on the False Claims Act and Anti-Kickback Statute. Read the client alert to learn more about the allegations and key takeaways. The rulemaking generated an energeticsome might say heateddiscussion among the commissioners in the course of the long meeting, as well as substantial pushback through the public comment process, discussed in more detail in this PubCo post and this PubCo post. Join MCO and thought leaders from the financial services industry for two webinars that will keep you up-to-date on the latest. (See this PubCo post.) The agency is currently seeking comments on certain information providers includingindex providers, model portfolio providers, and pricing services, whose activities, in whole or in part, may cause them to meet the definition of investment adviser. To embed, copy and paste the code into your website or blog: Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra: [HOT] Read Latest COVID-19 Guidance, All Aspects [SCHEDULE] Upcoming COVID-19 Webinars & Online Programs, [GUIDANCE] COVID-19 and Force Majeure Considerations, [GUIDANCE] COVID-19 and Employer Liability Issues. The proposal would also expand the application of Reg 13D-G to certain derivative securities and clarify the definition of group. (See this PubCo post.) The new proposed rule seeks to impose seven primary additional requirements: (1) the expansion of the current Names Rule to fund names, suggesting certain investment characteristics; (2) changing various registration forms to include disclosures that define terms used in the funds name; (3) addressing temporary deviations from the 80% investment requirement; (4) providing guidance on derivative valuation; (5) restricting fundamental investment policy changes for unlisted closed-end funds and business development companies; (6) prohibitions for integration funds; and (7) new bookkeeping requirements. We used to focus on companies disclosure of economically material information; we now focus on disclosure of hot-button matters outside our remit. (See this PubCo post.) Here is the short-term agenda and here is the long-term agenda. Now, the agenda indicates, the SEC may propose new amendments regarding shareholder proposals under Rule 14a-8. Note that, as indicated in this release, the conflict minerals rules are among the list of rules identified for review by the SEC under the Regulatory Flexibility Act. clearer picture of the ongoing risks faced from third parties and service providers. (See this PubCo post.) Digital engagement practices for investment advisers, which are rules related to the use of predictive data analytics, differential marketing and behavioral prompts. The agenda identifies 10/22 as the target date for final action on the proposal. A few proposed rules to highlight include: In March of 2022 the SEC proposed anew rule to enhance disclosure and investor protection in initial public offerings by special purpose acquisition companies (SPACs) and in business combination transactions. While the schedules may likely shift during the internal rule drafting process, the agenda is helpful as it provides a sense of the SECs priorities and pipeline. Just as certain wave and wind conditions can create dangerous rip currents, the pace and character of the rulemakings on this agenda make for dangerous conditions in our capital markets. Theres no dispute that the agenda is laden with major proposalshuman capital, SPACs, board diversity. Peirces concerns are with both substance and process. By continuing to browse this website you accept the use of cookies. Tim focuses on helping clients navigate complex consumer protection laws along with a variety of other financial services issues. He also conducts internal investigations on behalf of clients. The amendments also modified the requirements for anti-retaliation protection to conform to SCOTUSs recent decision in Digital Realty v. Somers (discussed in this PubCo post). The proposals amendments include required reporting around material cybersecurity incidents, reporting to provide updates about previously reported incidents, reporting about policies and procedures around cybersecurity risks, disclosure of the registrants board of directors' oversight of cybersecurity risk and managements activities around assessing and managing cybersecurity risk and implementing relted policies and procedures. Copyright var today = new Date(); var yyyy = today.getFullYear();document.write(yyyy + " "); JD Supra, LLC. This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. (And persons are also excluded from the definition of held of record if they hold only securities issued to them pursuant to an employee compensation plan in transactions exempted from the registration requirements of the Securities Act.) Perhaps the most surprising takeaway is the climate rule is scheduled to be adopted as early as October 2022. Share Repurchase Disclosure ModernizationIn December 2021, the SEC proposed new amendments to modernize share repurchase disclosure. In that instance, notwithstanding a rulemaking petition and clamor from numerous institutional and other investors for transparency regarding workforce composition, health and safety, living wages and other specifics, the principles-based team carried the day; the SEC limited the requirement to a description of the registrants human capital resources, including the number of persons employed by the registrant, and any human capital measures or objectives that the registrant focuses on in managing the business (such as, depending on the nature of the registrants business and workforce, measures or objectives that address the development, attraction and retention of personnel). (See this PubCo post.)
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