At the beginning of each new year, we find ourselves engaged in discussions of the evolving securities regulatory landscape and the changes that we anticipate may occur. We have done this for many years now. Each January we also begin by reminding ourselves of the E.T. Bell quote, “time makes fools of us all. Our only comfort is that greater shall come after us.” That said, we offer some thoughts concerning the securities reforms that the U.S. Congress and the Securities and Exchange Commission (the “Commission”) may consider in 2017.
In recent years, the Commission has focused on implementation of the rulemaking requirements of the Dodd-Frank Act, the JOBS Act, and the FAST Act. At least in the case of the Dodd-Frank Act, the Commission was required to promulgate rules relating to executive compensation, such as pay ratio disclosure, say-on-pay vote, pay-versus-performance disclosure and related requirements, which are regarded as burdensome to public companies. Various other specialized disclosure requirements, such as those relating to conflict minerals, extractive industries and mine safety, also were required by the Dodd-Frank Act. The Financial CHOICE Act (“CHOICE Act”) proposes to repeal a number of these Dodd-Frank Act requirements. The CHOICE Act also includes measures that would expand some of the capital formation-related initiatives contained in the JOBS Act and the FAST Act. Of course, the Commission on its own undertook amendments to various rules in order to reduce burdens on smaller issuers, such as proposed amendments to the definition of “smaller reporting company” that would have the effect of making available to a broader number of issuers scaled disclosure requirements and other accommodations. Presumably, the Commission, under the Trump administration, would seek to adopt these proposed rules. Finally, the Commission, spurred in part by the mandate in the JOBS Act that it review the disclosure requirements of Regulation S-K, undertook the disclosure effectiveness initiative. This initiative has as its objective removing repetitive and outdated requirements and streamlining public company disclosures in order to make these more user-friendly for investors. Furthering this effort would seem consistent with the pro-capital formation and anti-regulation themes advanced by the Trump administration.
Originally published in Looking Ahead: The Impact of the 2016 Election on Key Legal Issues Practicing Law Institute on January 10, 2017.
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