Topic: 1934 Act Filings

SEC Proposes Further Relief for Low Revenue Smaller Reporting Companies

On May 9, 2019, the SEC proposed rule changes to the disclosure requirements for smaller reporting companies (SRCs).  Last year, the SEC expanded the number of companies that qualify for scaled disclosure accommodations under SEC rules by increasing the public float and revenue caps in the SRC definition (from $75 million up to $250 million of public float or up to $700 million of public float with $100 million or less in revenues).

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SEC Proposes Changes to Disclosures for Acquisitions and Dispositions

On May 3, 2019, the SEC proposed rule amendments to financial information that investors receive regarding the acquisition and disposition of businesses.  The SEC’s rules requiring target company and pro forma financial statements are complex.  Creating the financial statements often results in significant delay and expense in M&A situations.  The SEC’s proposed changes are intended to address these difficulties.

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Locke Lord QuickStudy: Token Taxonomy Act – Exempting Digital Tokens from U.S. Securities Laws

On April 10, 2019, U.S. Representatives Warren Davidson (R-OH) and Darren Soto (D-FL) ‎reintroduced the Token Taxonomy Act1‎ (“TTA”) in the effort to amend the Securities Act of ‎‎1933 and the Securities Exchange Act of 1934 to exclude “digital tokens” from the definition of ‎a security and provide tax certainty on such assets.

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Corp Fin Issues Guidance on How to Redact Your Material Contracts Without Filing a Confidential Treatment Request

Late last month we blogged about rule amendments adopted by the Securities and Exchange Commission that are intended to modernize and simplify disclosure requirements for public companies, including an amendment that allows registrants to redact confidential information from most exhibits without filing a confidential treatment request.

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The SEC Modernizes and Simplifies Disclosure

On March 20, 2019, the Securities and Exchange Commission (SEC) adopted amendments to modernize and simplify disclosure requirements for public companies, investment advisers, and investment companies.  The amendments, consistent with the SEC’s mandate under the Fixing America’s Surface Transportation (FAST) Act, are based on recommendations in the staff’s FAST Act Report as well as a broader review of the Commission’s disclosure rules.

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SEC Issues New C&DIs Regarding Disclosure of Board Qualifications and Diversity Characteristics

On February 6, 2019, the SEC staff issued two new identical C&DIs that apply to Item 401 of Regulation S-K, Question 116.11, and Item 407 of Regulation S-K, Question 133.13.  The new interpretation provides guidance on disclosure when a director or a director nominee voluntarily provide self-identified diversity characteristics, such as their race, gender, ethnicity, religion, nationality, disability, sexual orientation, or cultural background, and the director or nominee has consented to disclosure of these diversity characteristics.

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SEC Takes Seriously Both Internal Control Weakness Disclosure and Remediation

On January 29, 2019, the SEC announced settled enforcement actions against four companies for ‎failures to maintain internal control over financial reporting (“ICFR”) as required by Section ‎‎13(b)(2)(B) of the Securities Exchange Act and Rule 13a-15 over extended periods even though ‎in most cases material weaknesses in their ICFR were disclosed.‎

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Earnings Releases, Non-GAAP Financial Measures and SEC Enforcement: Pay Attention to Your Headings and Bullet Points

On December 26, 2018, the Securities and Exchange Commission (“SEC”) entered a Cease-and-Desist Order (see here) against ADT Inc. (“ADT”) pursuant to Section 21C of the Securities Exchange Act of 1934 (the “Exchange Act”) based on ADT’s failure to give equal or greater prominence to comparable GAAP financial measures in two of its earnings releases containing non-GAAP financial measures.

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SEC’s New Rules on Hedging Disclosure

On December 18, 2018, the Securities and Exchange Commission (the “SEC”) adopted final rules requiring companies to disclose in proxy or information statements for the election of directors any practices or policies regarding the ability of directors or employees to engage in certain hedging transactions with respect to company equity securities. New Rule 407(i) of Regulation S-K follows the SEC’s proposal with some modifications reflecting commenter suggestions.

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