SEC Disclosure Review May See Concept Release in 2016

Stay current on changes and developments in corporate law with a wide variety of resources and tools.

By Che Odom

Feb. 10 — Securities and Exchange Commission Chairman Mary Jo White's push to modernize corporate disclosure requirements may lead to the drafting of a concept release on an update to Regulation S-K this year, an SEC official said Feb. 10.

Elizabeth Murphy, associate director of the Division of Corporation Finance, told attendees of a Practising Law Institute event in New York that modernizing disclosures is a “big, central” project of the division. As part of that effort, Corporation Finance already published technical guides on financial statements that registrants must file concerning third parties, she said.

“We are also working on updating industry guides,” specifically those that apply to bank-holding and mining companies, Murphy said.

The disclosure effectiveness initiative was highlighted in a 2013 speech by White , and it has been discussed publicly by other SEC officials since.

Proposed Hedging Rule

Murphy also discussed comments the SEC received on a rule proposed a year ago that would require public companies to disclose whether they allow officers, directors and employees to hedge against declines in the company's stock.

Following up on the comment letters, the SEC staff is reviewing the definitions of certain terms in the proposed rule, she said.

Commenters have argued that “it is not always crystal clear what the term ‘hedging' covers,” she said. Several commenters asked the commission to modify the proposal to clarify the difference between hedging and portfolio diversification, she added.

They also want it clear that “transactions involving broad-based indices are not covered because these transactions are designed to mitigate exposure to declines in the market generally, rather than a decrease in the market value of a specific issuer's equities securities,” she said.

To contact the reporter on this story: Che Odom in Washington at

To contact the editor responsible for this story: Yin Wilczek at

Request Corporate on Bloomberg Law