No Result
View All Result
SUBSCRIBE | NO FEES, NO PAYWALLS
MANAGE MY SUBSCRIPTION
NEWSLETTER
Corporate Compliance Insights
  • Home
  • About
    • About CCI
    • CCI Magazine
    • Writing for CCI
    • Career Connection
    • NEW: CCI Press – Book Publishing
    • Advertise With Us
  • Explore Topics
    • See All Articles
    • Compliance
    • Ethics
    • Risk
    • FCPA
    • Governance
    • Fraud
    • Internal Audit
    • HR Compliance
    • Cybersecurity
    • Data Privacy
    • Financial Services
    • Well-Being at Work
    • Leadership and Career
    • Opinion
  • Vendor News
  • Library
    • Download Whitepapers & Reports
    • Download eBooks
    • New: Living Your Best Compliance Life by Mary Shirley
    • New: Ethics and Compliance for Humans by Adam Balfour
    • 2021: Raise Your Game, Not Your Voice by Lentini-Walker & Tschida
    • CCI Press & Compliance Bookshelf
  • Podcasts
    • Great Women in Compliance
    • Unless: The Podcast (Hemma Lomax)
  • Research
  • Webinars
  • Events
  • Subscribe
Jump to a Section
  • At the Office
    • Ethics
    • HR Compliance
    • Leadership & Career
    • Well-Being at Work
  • Compliance & Risk
    • Compliance
    • FCPA
    • Fraud
    • Risk
  • Finserv & Audit
    • Financial Services
    • Internal Audit
  • Governance
    • ESG
    • Getting Governance Right
  • Infosec
    • Cybersecurity
    • Data Privacy
  • Opinion
    • Adam Balfour
    • Jim DeLoach
    • Mary Shirley
    • Yan Tougas
No Result
View All Result
Corporate Compliance Insights
Home Compliance

SEC Seeks to Harmonize and Update Its Disclosure Regime

by Barbara Jones
March 19, 2015
in Compliance
SEC Seeks to Harmonize and Update Its Disclosure Regime

Under Section 108 of the JOBS Act of 2012, Congress tasked the SEC to undertake a comprehensive review of requirements under Regulation S-K, with the goal of developing a plan to modernize and simplify the registration process for the newly created category of issuer called an “emerging growth company,” or EGC. The objective was to reduce the associated costs and burden of ongoing compliance with reporting and disclosure requirements.  In December 2013, the SEC issued its “Report on Review of Disclosure Requirements in Regulation S-K,” proposing not only to evaluate the requirements under Regulation S-K, but to undertake a comprehensive review of all existing disclosure requirements, including financial statement requirements under Regulation S-X, related rules for presentation and delivery of information to investors, and disclosure requirements developed through SEC staff interpretations, no-action letters, waivers and CD&I guidance.  In addition, the SEC stated its intent to evaluate the appropriateness of the current scaled disclosure requirements for all categories of issuers, not just EGCs.

Given that the SEC is still over-burdened with the task of proposing rules to address various matters mandated by Dodd-Frank and the JOBS Act, the SEC is to be commended for adding this monumental undertaking to its workload voluntarily.  However, to have limited its review of disclosure requirements simply to Regulation S-K would be doing only half the job, as the staff no doubt determined.  A fresh look at the disclosure requirements is required to bring the regime into the 21st century, including an exploitation of available technology to make the disclosure accessible and navigable.  Keep in mind that many of the current requirements have their genesis in the original Securities Act of 1933 and Securities Exchange Act of 1934 and have been expanded significantly in the decades since, but yet have not been updated for continued relevance, harmonization and consolidation, and elimination of repetitiveness.

Take, for example, the “risk factor” disclosure common to prospectuses and annual reports.  The original requirement dates back to 1968, when companies were required to disclose risks relating to an offering of their securities in registration statements.  In 1982, when this requirement was moved in Regulation S-K, companies were asked to include risks relating to the absence of a trading market, if applicable.  Today, it is not uncommon to see 30-40 pages of largely boilerplate risk factors, which the market widely acknowledges are primarily read by the SEC staff and plaintiffs’ lawyers rather than the intended investor.  Items such as historical stock price disclosures and number of shareholders are now readily available through online resources and company websites, leaving the mandated disclosure requirement with little relevance.  Most readers will agree it is far easier to obtain, digest and analyze company information from Bloomberg, The Wall Street Journal, Yahoo! Finance or a myriad of other online sources.

The SEC’s “Industry Guides” for banks, oil and gas programs, REITs, insurance companies and mining companies have not been updated since 1982.  In addition, a number of disclosure requirements relating to financial information are now redundant due to having been supplanted by financial accounting rules.

Perhaps one of the more interesting proposals in the SEC Report is that of revamping the entire concept of company disclosure and, instead, creating a “core company profile.”  This idea seems to be gaining traction both within the staff as well as with market participants.  As outlined by Keith Higgins, the SEC’s Director of the Division of Corporation Finance, in two speeches during 2014, each reporting company would have a “company page” on the SEC’s EDGAR portal where “core” company information would be disclosed.  In lieu of the current system of chronological filings, the company page would have tabs such as “Business Information,” “Financial Information,”  “Governance Information,” “Executive Compensation,” and “Exhibits.”  Consequently, instead of disclosure in an Annual Report on Form 10-K responsive to Regulation S-K Item 101 (Description of Business), there would be a block of structured data and information under the Business Information tab.  Exhibits would be readily accessible under one tab, rather than having to search through the chronological files to find the relevant document.  Exactly how and when information under the tabs would be updated remains to be developed.  As always, the devil is in the detail, but this is an extremely innovative and, quite frankly, revolutionary approach which, if adopted, would completely reconstruct the disclosure regime as we know it today.

The SEC seems to have put everything on the table for review, and public comment letters submitted to date are in broad support of the project, many offering detailed comments on Regulation S-X, Regulation S-K and certain Industry Guides.   Moving towards the proposed greater use of a principles-based approach for many disclosures would undoubtedly enhance the disclosure process.  No one can argue reasonably with the elimination of redundant, repetitive, boilerplate and outdated disclosures, or the harmonization and consolidation of the current rules, regulations, forms, guidance and interpretations impacting today’s disclosure requirements.  Employing available technology to improve the delivery and navigability of disclosure and accessible and comprehensible disclosure could be just a double-click away – it almost seems too good to be true.

Several commentators have advised caution in relation to the statutory safe harbors under the Securities Act and the Exchange Act for forward-looking statements which was added by the Private Securities Litigation Reform Act of 1995.  As the SEC coordinates its review of financial disclosures with the Financial Accounting Standards Board, consideration should be given to the placement of certain disclosures containing forward-looking statements to ensure that they qualify for the safe-harbors and do not create an unnecessary increase in liability exposure for issuers.  For example, forward-looking information contained in financial statements (including the footnotes), among others, do not qualify for the safe harbors.

The disclosure review and updating project will undoubtedly take more than a year to complete.  Market participants, including issuers, investors and industry groups, are encouraged to submit comments to the SEC on particular rules and issues, or more generally on the “core disclosure” or other concepts outlined in the staff’s report.  Higgins has a long and solid relationship with industry groups from his work as Chair of the ABA’s Committee on Federal Regulation of Securities.  He will need all of these relationships to support and guide the staff’s work.  We should anticipate the staff will have interactive forums and roundtables on specific topics as the project progresses.  If the SEC and its staff can pull this off, they will have left an indelible mark in the history of federal securities regulation.  It is fervently hoped that the staff will remain committed to the challenge it is has set for itself and not become sidetracked by other initiatives.


Previous Post

4 Top Leadership Myths

Next Post

Active Enforcement and Aggressive Investigative Tactics Continue

Barbara Jones

Barbara Jones

Barbara A. Jones is a shareholder in global law firm, Greenberg Traurig LLP. She coordinates the firm’s Global Securities practice group and serves on the firm's Blockchain Task Force. She is also co-coordinator of the firm’s interdisciplinary Conflict Minerals Compliance Initiative. Barbara maintains a diverse corporate and securities law practice across industry groups, emphasizing complex international and domestic transactions, including blockchain/cryptocurrency transactions, private and public financings (including ICOs), dual listings, mergers and acquisitions, strategic collaborations and joint ventures and licensing transactions. Her practice includes serving as a trusted advisor to public and private company boards of directors on governance and complex regulatory reporting and compliance issues. Barbara's clients include financial institutions, private equity and venture capital groups and companies in blockchain, life sciences and biotechnology, information technology, energy (traditional and renewable), mining, defense and security, telecommunications, media, entertainment and sports. Barbara is also active in the representation of Olympic athletes and sports-related organizations. Barbara practiced U.S. law in London from 1990 through 2003 and headed the international capital markets practice of a major U.S. law firm from 1999 to 2003 before relocating to Boston. From 1997 to 1999, she served as Vice President, Assistant General Counsel and Regional Counsel for capital markets with J.P. Morgan Securities Ltd. in Europe, the Middle East and Africa. Since returning to the U.S., she has continued to actively represent public and private companies, private equity groups and investment banks in the European, Scandinavian, African and greater Asian markets, including China.  

Related Posts

new york and us flags

New York Tightens the Breach Clock: 30 Days to Notify

by Melissa Crespo and Reiley Porter
May 12, 2025

State joins growing national trend toward broader personal information definitions and stricter notification timelines for data compromises

stablecoins

Exploring CorpFin’s New Perspective on Covered Stablecoins

by King & Spalding
May 12, 2025

Guidance clarifies when digital assets function as payment tools rather than investment vehicles

news roundup data grungy

DEI, Immigration Regulations Lead List of Employers’ Concerns

by Staff and Wire Reports
May 9, 2025

Half of fraud driven by AI; finserv firms cite tech risks in ’25

GFT Canada Update

GFT Expands AI Compliance Suite for Canadian Credit Unions

by Corporate Compliance Insights
May 8, 2025

Digital transformation company GFT has expanded its compliance suite to help Canadian credit unions combat payment scams and identity theft...

Next Post
Active Enforcement and Aggressive Investigative Tactics Continue

Active Enforcement and Aggressive Investigative Tactics Continue

No Result
View All Result

Privacy Policy | AI Policy

Founded in 2010, CCI is the web’s premier global independent news source for compliance, ethics, risk and information security. 

Got a news tip? Get in touch. Want a weekly round-up in your inbox? Sign up for free. No subscription fees, no paywalls. 

Follow Us

Browse Topics:

  • CCI Press
  • Compliance
  • Compliance Podcasts
  • Cybersecurity
  • Data Privacy
  • eBooks Published by CCI
  • Ethics
  • FCPA
  • Featured
  • Financial Services
  • Fraud
  • Governance
  • GRC Vendor News
  • HR Compliance
  • Internal Audit
  • Leadership and Career
  • On Demand Webinars
  • Opinion
  • Research
  • Resource Library
  • Risk
  • Uncategorized
  • Videos
  • Webinars
  • Well-Being
  • Whitepapers

© 2025 Corporate Compliance Insights

Welcome to CCI. This site uses cookies. Please click OK to accept. Privacy Policy
Cookie settingsACCEPT
Manage consent

Privacy Overview

This website uses cookies to improve your experience while you navigate through the website. Out of these, the cookies that are categorized as necessary are stored on your browser as they are essential for the working of basic functionalities of the website. We also use third-party cookies that help us analyze and understand how you use this website. These cookies will be stored in your browser only with your consent. You also have the option to opt-out of these cookies. But opting out of some of these cookies may affect your browsing experience.
Necessary
Always Enabled
Necessary cookies are absolutely essential for the website to function properly. These cookies ensure basic functionalities and security features of the website, anonymously.
CookieDurationDescription
cookielawinfo-checbox-analytics11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Analytics".
cookielawinfo-checbox-functional11 monthsThe cookie is set by GDPR cookie consent to record the user consent for the cookies in the category "Functional".
cookielawinfo-checbox-others11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Other.
cookielawinfo-checkbox-necessary11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookies is used to store the user consent for the cookies in the category "Necessary".
cookielawinfo-checkbox-performance11 monthsThis cookie is set by GDPR Cookie Consent plugin. The cookie is used to store the user consent for the cookies in the category "Performance".
viewed_cookie_policy11 monthsThe cookie is set by the GDPR Cookie Consent plugin and is used to store whether or not user has consented to the use of cookies. It does not store any personal data.
Functional
Functional cookies help to perform certain functionalities like sharing the content of the website on social media platforms, collect feedbacks, and other third-party features.
Performance
Performance cookies are used to understand and analyze the key performance indexes of the website which helps in delivering a better user experience for the visitors.
Analytics
Analytical cookies are used to understand how visitors interact with the website. These cookies help provide information on metrics the number of visitors, bounce rate, traffic source, etc.
Advertisement
Advertisement cookies are used to provide visitors with relevant ads and marketing campaigns. These cookies track visitors across websites and collect information to provide customized ads.
Others
Other uncategorized cookies are those that are being analyzed and have not been classified into a category as yet.
SAVE & ACCEPT
No Result
View All Result
  • Home
  • About
    • About CCI
    • CCI Magazine
    • Writing for CCI
    • Career Connection
    • NEW: CCI Press – Book Publishing
    • Advertise With Us
  • Explore Topics
    • See All Articles
    • Compliance
    • Ethics
    • Risk
    • FCPA
    • Governance
    • Fraud
    • Internal Audit
    • HR Compliance
    • Cybersecurity
    • Data Privacy
    • Financial Services
    • Well-Being at Work
    • Leadership and Career
    • Opinion
  • Vendor News
  • Library
    • Download Whitepapers & Reports
    • Download eBooks
    • New: Living Your Best Compliance Life by Mary Shirley
    • New: Ethics and Compliance for Humans by Adam Balfour
    • 2021: Raise Your Game, Not Your Voice by Lentini-Walker & Tschida
    • CCI Press & Compliance Bookshelf
  • Podcasts
    • Great Women in Compliance
    • Unless: The Podcast (Hemma Lomax)
  • Research
  • Webinars
  • Events
  • Subscribe

© 2025 Corporate Compliance Insights