On September 16, 2024, CorpFin updated its FAQs for companies that submit draft registration statements for nonpublic review. The JOBS Act provided this nonpublic review process for Emerging Growth Companies, and in 2017 CorpFin announced it would provide a nonpublic review option for many other companies.  The current update to the related FAQs makes a change for SPAC transactions.

The SECs Final Rules for SPACs created a requirement for companies acquired by a SPAC to be a co-registrant in a de-SPAC transaction registration statement.  The update addresses when a co-registrant’s CIK and related information should be included in the EDGAR process:

(19) Question:

If a registrant uses the confidential submission process to submit a draft registration statement in connection with a de-SPAC transaction, when should it include any co-registrant’s CIK and related submission information in the EDGAR Filing Interface?

Answer:

In EDGAR Release 24.3, EDGAR was enhanced to allow co-registrants on draft registration statement submissions. See Section 7.2.1 Accessing the EDGARLink Online Submission of the EDGAR Filer Manual. The primary registrant must include the co-registrant’s CIK and related submission information in EDGAR when it submits the draft registration statement. See Section 7.3.3.1 Entering Submission Information of the EDGAR Filer Manual. The draft registration statement must also contain the information required by the applicable registration statement form, including required information about the target company. Co-registrants do not need to separately submit the draft registration statements or related correspondence in EDGAR.

One interesting aspect of these FAQs is that finding them is a bit of a treasure hunt.  Beyond the “What’s New” notice on September 16, this Announcement, most recently updated on June 24, 2020, has a link to the FAQs.

As always, your thoughts and comments are welcome.

On June 24, 2024, CorpFin issued five new C&DIs addressing cybersecurity incident reporting on Form 8-K Item 1.05.  The C&DIs focus on situations where a company has experienced an attack such as a ransomware attack.  For example, C&DI 104B.05 states that if a company experiences an attack and makes a ransomware payment before a materiality determination is made, it must still make a materiality determination, and if the incident is material report it on Form 8-K Item 1.05.  New C&DI 104B.07 states that if insurance provides a recovery of all or a substantial portion of the payment, a materiality assessment based on both quantitative and qualitative considerations must still be made. And C&DI 104B.08 makes the point that the size of a ransomware payment is not the only factor in making a materiality determination.  Qualitative aspects such as potential reputational harm could make a cybersecurity incident material even in breaches where the financial impact is relatively small.

In another cybersecurity event disclosure development, on June 20, 2024, Erik Gerding, CorpFin Division Director, issued an Announcement titled “Selective Disclosure of Information Regarding Cybersecurity Incidents.”  In the Announcement Mr. Gerding states:

“Apparently, some companies are under the impression that if they experience a material cybersecurity incident, the Commission’s new rules prohibit them from discussing that incident beyond what was included in the Item 1.05 Form 8-K disclosing the incident.  That is not the case.”

Mr. Gerding notes that:

“Nothing in Item 1.05 prohibits a company from privately discussing a material cybersecurity incident with other parties or from providing information about the incident to such parties beyond what was included in an Item 1.05 Form 8-K.”

The Announcement then summarizes various concerns companies may have surrounding how Regulation FD may apply to disclosures to third parties such as vendors, customers or other companies that could be impacted by a similar incident.  After a brief review of applicable Regulation FD considerations, he then explores ways to avoid selective disclosure concerns, including a reminder that Regulation FD applies only to certain parties outside a company and that the use of confidentiality agreements can mitigate selective disclosure concerns.

As always, your thoughts and comments are welcome!

The SEC’s spring 2024 regulatory agenda is now available for review at the Office of Information and Regulatory Affairs.  SEC Chair Gary Gensler issued this Statement about the agenda.

As always, your thoughts and comments are welcome!

On June 24, 2024, Corporation Finance Director Eric Gerding gave an Announcement titled “The State of Disclosure Review,” and stated that “[t]his is part of an initiative to be more transparent and communicate with the marketplace about what is going on in the Disclosure Review Program.”

In his remarks Mr. Gerding describes the objectives of the review program and provides an overview of the review process.  He notes that approximately 3,300 companies were reviewed in 2023.  He enumerates frequent comment areas including China-related matters, non-GAAP measures, MD&A, revenue recognition, and financial statement presentation.  He also discusses disclosure priorities including artificial intelligence, disclosures by China-based companies, and commercial real estate as well as how CorpFin will address recently issued rules.

The announcement provides a very thorough and comprehensive discussion that will inform all professionals in the reporting process about the priorities and approach of the filing review process.

As always, your thoughts and comments are welcome.

On June 29, 2024, the SEC “made enhancements to sec.gov to improve compliance with federal statutes and standards as well as the site’s functionality.”

The appearance and organization of the new sec.gov are very different.  The “About” link in the top menu line provides paths to several reporting tools.

You can find the new CorpFin section here.  This part of the webpage still has links to the forms, regulations and statutes.

As always, your thoughts and comments are welcome.