More SEC Proposals on Disclosure Rule Coming, Official Says

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By Andrew Ramonas

The SEC is working on more changes to a corporate disclosure regulation after recently proposing updates to the rule, an agency official said Oct. 18.

The Securities and Exchange Commission Oct. 11 proposed amendments aimed at streamlining Regulation S-K, which governs non-financial statement disclosure requirements. Some aspects of the proposal stemmed from a 2016 concept release seeking public feedback on how the disclosure regime can be more useful for investors.

The commission issued the release under then-Chairman Mary Jo White after years of interest in overhauling the regulation. SEC Chairman Jay Clayton since has made updating the rule an early focus of his tenure.

The SEC has “more to come from our Reg S-K disclosure initiative,” Elizabeth Murphy, an associate director in the SEC Division of Corporation Finance, said at an Association of Corporate Counsel conference discussion sponsored by Bloomberg Law.

“We certainly have a lot of other ideas that we solicited comment on in the concept release that we evaluated and that we will continue to look at,” Murphy said.

At the Oct. 11 meeting, a unanimous three-member commission proposed Regulation S-K amendments that would allow more hyperlinks in filings, eliminate outdated requirements, and simplify reporting on companies’ properties. The proposal also would allow companies to omit personal information from filings and remove repetitive reporting in the Management’s Discussion and Analysis portion of corporate annual reports.

The vote on the proposal came during Clayton’s first open meeting on rulemaking and followed remarks he made during his first major policy speech in July lauding SEC staff’s work on Regulation S-K updates.

Next Steps

Updating the disclosure regime is on the agency’s rulemaking agenda, Murphy told Bloomberg Law after the ACC discussion. She declined to discuss the specifics of further Regulation S-K recommendations or when they might be presented to the commission.

Jay Knight, a former CorpFin lawyer, told Bloomberg Law the staff might continue to focus on MD&A disclosures and Regulation S-K’s Item 101, which provides a narrative description of a company. Many comments on the concept release urged the SEC to “move from prescriptive rules to a more principles-based approach” in these areas, he said.

“Given how fundamental these S-K sections are to SEC filings generally, it seems reasonable to believe the SEC staff would develop recommendations to these rules for commission consideration,” said Knight, a Nashville-based member of Bass, Berry & Sims PLC.

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