Updated EDGAR Filer Manual. The SEC adopted revisions to the EDGAR Filer Manual to reflect updates to the EDGAR system. Effective upon publication in the Federal Register, the updates mainly reflect amendments made to forms under the Securities Act of 1933 and the Securities Exchange Act of 1934 to effectuate inflation adjustments and other technical amendments required under Titles I and III of the JOBS Act; support recent updates to Form C and Form D; includes instructions for hyperlinking to exhibits included with certain Securities Act and Exchange Act forms; and makes certain corrective changes to previously revised sections. The EDGAR system is scheduled to be upgraded on July 17, 2017. (7/6/2017)
No-Action Relief and Exemptive Orders
Santander Spain may conduct activities in the "ordinary course" of business outside the US. The Division of Trading and Markets granted to Banco Santander S.A., a bank organized under the laws of the Kingdom of Spain, an exemption from Rules 101 and 102 of Regulation M under the Securities Act of 1934 so that Santander Spain and its affiliates may conduct activities in the ordinary course of business outside the US in Santander Spain shares and Santander Spain ADS in connection with a proposed rights offering. (6/29/2017)
Company may offer and sell fan club memberships without registering under the Securities Act or Exchange Act. LA Fan Club, Inc. proposed to offer “FanClub Memberships” for sale without registration under the Securities Act of 1933 and the Securities Exchange Act of 1934, contending that these memberships are not securities. The Division of Corporation Finance determined that, as long as these memberships are not securities, it will not recommend enforcement to the agency if the company offers and sells them without registration. (6/28/2017)
Following reorganization, company may cause its policyholders to become holding company members without registration. MAG Mutual Insurance Company is planning reorganization by forming MAG Mutual Holding Company as a mutual insurance holding company and continuing the corporate existence of reorganized MAG Mutual as a stock insurer subsidiary of the Intermediate Holding Company. The Division of Corporation Finance determined that it will not recommend enforcement action to the SEC if, following the reorganization, MAG causes its current and future policyholders to become members of MAG Mutual Holding Company without registration under the Securities Act or the Exchange Act. (6/21/2017)
Selected Enforcement Actions
SEC files fraud charges in Bitcoin and office space investment schemes. The SEC announced that it has filed fraud charges against a UK citizen living in New York, alleging that the founder of a purported Bitcoin platform and a chain of co-working spaces located in former bars and restaurants defrauded investors in both companies while hiding his connection given his past with regulators in the UK. The SEC contends that the founder, who created a broker-dealer without registering the firm with the agency, presented offering materials to investors in both companies touting the backgrounds of senior executives who do not seem to exist. (6/30/2017)
SEC charges IT company and two former executives with accounting fraud. The SEC announced that it has charged an Illinois information technology company and two of its former top executives in an accounting fraud scheme that allegedly misled investors and allowed the former executives to siphon millions from the firm for their personal benefit. (6/30/2017)
Broker-Dealer, president charged with failing to monitor employee trading and safeguard research information. The SEC announced charges against a Colorado-based brokerage firm for failing to adequately monitor trading by its employees and to properly safeguard nonpublic information generated by its research analysts. The SEC alleged that the broker-dealer failed to enforce several of its written policies and procedures designed to prevent the misuse of material nonpublic information by the firm and its associated persons and failed to establish policies to track and prevent trading on information related to unpublished research reports prior to the time that the firm initiated coverage on the companies at issue. The SEC also alleged that the firm’s president and majority owner aided and abetted and caused the firm’s violations. Without admitting or denying the allegations, the firm and the president settled the charges by consenting to cease-and-desist orders, censures, and civil penalties of US$50,000 and US$35,000, respectively. (6/26/2017) In the Matter of Wm Smith & Co. and William S. Smith, SEC Release No. 34-81025.
Guidance Updates to mid-sized adviser FAQs. The Division of Investment Management announced that it has updated the “Frequently Asked Questions Regarding Mid-Sized Advisers” to reflect the enactment of a Wyoming state law regulating investment advisers with a principal office and place of business in that state, including mid-sized advisers with regulatory assets under management of more than US$25 million but less than US$100 million. (6/30/2017)
Speeches and Statements
Clayton testifies in support of SEC’s fiscal year 2018 budget. SEC Chairman Jay Clayton testified before the Senate Appropriations Committee in support of the SEC’s fiscal year 2018 budget, explaining that the SEC’s budget will support an increase in the number of investment adviser examinations performed by the Office of Compliance and Investment Examinations, staff for the Office of the Advocate for Small Business Capital Formation, and the development of key technology initiatives, among other priorities. (6/27/2017) Clayton testimony.
Clayton promises to punish bad actors and revitalize the IPO market. SEC Chairman Jay Clayton confirmed his commitment to punishing bad actors who commit fraud against retail investors and to reviving the declining initial public offering market in his opening remarks at the SEC’s Investor Advisory Committee meeting. (6/22/2017) Clayton remarks.
DERA Director discusses artificial intelligence in the context of market regulation. Scott W. Bauguess, Acting Director and Acting Chief Economist of the SEC’s Division of Economic and Risk Analysis, considered the emergence of artificial intelligence, big data, and machine learning in market regulation at the OpRisk North America 2017 Conference. (6/21/2017) Bauguess remarks.
Report on objectives for fiscal year 2018. The SEC’s Office of the Investor Advocate published its report on objectives for fiscal year 2018. (6/29/2017)
DCR expands JOBS Act benefit to all companies. The SEC announced that the Division of Corporation Finance is now allowing all companies to submit draft registration statements relating to initial public offerings for non-public review. (6/29/2017) Voluntary Submission of Draft Registration Statements – FAQs.
DERA white paper examines mutual funds during extreme liquidity demand.DERA staff published a white paper that analyzes the contribution of individual mutual funds to the aggregate liquidity demand during episodes of extreme liquidity demand. (6/20/2017) DERA white paper.
Staff announcements. The SEC announced the appointment of Robert Evans III as a Deputy Director in the SEC’s Division of Corporation Finance. The SEC also announced that Kelly L. Gibson will serve as the Associate Regional Director for Enforcement in the SEC’s Philadelphia Office and Kathryn A. Pyszka will serve as the Associate Regional Director for Enforcement in the SEC’s Chicago Office. (6/20/2017)