Courtesy of Professor Emmett Brown, I recently attended the 2114 Securities Law Conference and I must say that I was heartened by what I heard there and then. Here are some of my notes from the conference:
- Periodic Reporting No Longer Mandatory. In 2100, the Securities and Exchange Commission abolished the requirement that issuers file quarterly reports. According to the SEC, requiring all issuers to report on a quarterly basis had several negative effects. It encouraged management to focus on short-term financial results, discouraged investment in companies with long term performance prospects, and encouraged financial reporting abuses. Companies are now allowed to pick their own reporting periods, with some companies electing monthly disclosures while others choose annual disclosures.
- Supreme Court Holds Criminal Insider Trading Unconstitutional. In the 2025 landmark decision of Milton v. Freeman, a unanimous Supreme Court held that the crime of insider trading was unconstitutionally vague. According to the Court, “Because Section 10(b) and Rule 10b-5 don’t clearly define the crime of insider trading, courts have been sending people to jail even as they announce the legal theories supporting their convictions. This state of affairs has made it impossible for citizens to know how to keep their conduct within the pale.”
- Section 16 Repealed. Declaring Section 16 a monumental waste of everyone’s time, Congress repealed the statute in 2050. SEC Chairman Thomas Corcoran commented that the notion of limiting trades within a six-month period always had been a “crude rule of thumb”.
- Form 8-K Has Only Five Items. After ballooning to more than 100 items during the middle decades of the 21st Century, the SEC, citing regulatory fatigue, reduced the number of items to five. One securities law practitioner well into his dotage quipped “It’s just like the 1980s all over again!”
- SEC Completes Dodd-Frank Rulemaking. On the 100th anniversary of the enactment of the Dodd-Frank Act and after receiving billions of comment letters, the SEC announced that it had finally completed rulemaking on pay ratio disclosure. A week later, Congress repealed the requirement.
- Risk Factors Greatly Reduced. In a surprising move, the SEC adopted an idea first proposed by a legal blogger early last century. The SEC created a list of standard risk factors and issuers are required to incorporate by reference all applicable risk factors into their filings. They are only permitted to disclose risks that aren’t on the list.