Chair White spoke at the Annual Securities Regulation Institute in San Diego last week and participated in a Q&A session. We have highlighted below commentary on topics of interest to our readers.
- Disclosure effectiveness: Chair White noted that this initiative is one of the Commission’s important priorities. She noted the requests for comment that had been issued in late 2015 regarding certain Regulation S-X requirements, and indicated that the next milestone is likely to be a concept release on S-K. Chair White also mentioned technical amendments that are intended to eliminate repetition or overlap in disclosures related to financial statements. Chair White also noted that the Staff intends to review Industry Guide 3 for banks and other financial institutions, and Guide 7 on mining.
- Rule 506(c): Chair White commented on Rule 506 offerings. She noted that there are some open investigations related to these types of offerings, including one relating to the reasonable efforts that issuers have to make to determine that sales are made only to accredited investors. She noted that use of the new exemption remains limited—“[f]rom 2013, when 506(c) became effective, through 2015, you had about $2.8 trillion sized market for 506(b) and about a $71 billion market for 506(c).”
- Accredited investor definition: Chair White reiterated that the Commission seeks comment on the recently published report regarding the definition and noted that, in her opinion, the rule needs to be revised.
- Late stage private placements, and private secondary markets: Chair White noted that the Commission and various of the advisory committees are paying close attention to market developments, and are focused on secondary liquidity for investors in private placements. Commenting on late-stage private placements, Chair White noted, “the kind of the late stage private investments, pre-IPO that have gotten so much attention in the press, that’s something we look at closely there. One take away just at a high level is you’ve got pretty sophisticated institutional investors who ought to know the right questions to ask and have the leverage to be able to get the information that they need. They ought to have the resources to be able to do the due diligence they need to do, the leverage to basically negotiate favorable terms.”
The full transcript is available here: https://www.sec.gov/news/speech/securities-regulation-institute-keynote-white.html.