The SEC’s Division of Enforcement issued its yearly report for fiscal year 2019 on November 6th. This report explores the division’s efforts and initiatives on the behalf of investors. It also highlights significant actions and presents both qualitative and quantitative perspectives on the actions of the division during the previous fiscal year.

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On November 4th, the SEC proposed new amendments that would modernize rules under the Investment Advisers Act that focus on investment advisor advertisements and payments to solicitors. The proposed amendments are intended to update these rules to reflect changes in technology, the expectations of investors seeking advisory services, and the evolution of industry practices. These amendments would replace the current rules’ broadly drawn limitations with principles-based provisions such that certain investment adviser advertisements and payments to solicitors would be prohibited in some cases. The proposed approach would also permit the use of testimonials, endorsements, and third-party ratings, subject to certain conditions, and would include tailored requirements for the presentation of performance results based on an advertisement’s intended audience. The Investment Act rules in question for advertisements and solicitations have not been updated since their adoption in 1961 and 1979.

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On November 5, 2019, the SEC proposed amendments to Exchange Act Rule 14a-8, the shareholder proposal rule. This rule requires companies that are subject to the federal proxy rules to include shareholder proposals in their proxy statements, subject to certain procedural and substantive requirements. The proposed amendments seek to modernize the shareholder proposal rule by updating the criteria that a shareholder must satisfy to be eligible to require a company to include a proposal in its proxy statement and by updating the levels of shareholder support a proposal must receive to be eligible for resubmission at the same company’s future shareholder meetings.

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Staff at the Division of Economic and Risk Analysis (DERA) at the SEC have released an announcement regarding the use of certain XBRL elements for revenue disclosures. Filers that have adopted Accounting Standards Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) should be using the new elements related to this ASU to tag related revenue disclosures in their financial statements and notes. However, the staff has observed that filers instead are using outdated tags under the Accounting Standards Codification Topic 605, Revenue Recognition.

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The SEC is proposing to modernize filing fee disclosure as well as filing fee payment methods. These amendments would change most fee-bearing forms, schedules, statements, and related rules to require each fee table and accompanying disclosure to include all required information for fee calculation in a structured format. In addition, these amendments would allow for fee payment via Automated Clearing House (“ACH”), which would eliminate the need for fee payments via paper checks and money orders. These amendments are intended to improve filing fee preparation and payment processing by facilitating enhanced validation via fee structuring and lower-cost, easily routable payments through ACH.

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The SEC's Investor Advisory Committee will hold a public meeting on November 7th beginning at 9:30 am EST. The meeting, which is open to the public and free to attend, will take place in the Multipurpose Room at SEC Headquarters at 100 F Street, NE, Washington, DC. The Investor Advisory Committee was established to advise the SEC on regulatory priorities of securities products, trading strategies, fee structures, and the effectiveness of disclosure. In addition, the committee explores initiatives to protect investor interests and to promote investor confidence in the marketplace. Continue reading "SEC Investor Advisory Committee to Meet on..." »

On October 18th, the SEC voted to propose amendments to establish an expedited review procedure for applications under the Investment Company Act of 1940. These particular applications must be substantially identical to recent precedent. This is in addition to proposing a new informal procedure for applications that would not qualify for this expedited process. The changes are intended to make the application process more efficient as well as to provide additional certainty and transparency to the process. The SEC also intends that the staff of the Division of Investment Management will also begin publicly disseminating comments on applications and responses to those comments.

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The SEC will be closed Monday, October 14 in observance of Columbus Day. The EDGAR System will not receive, process or accept filings on this day. Filings with a due date of October 14 will be due the following business day. Continue reading "SEC Closed Monday, October 14" »

On October 8th, five federal agencies, including the SEC, finalized revisions that simplify compliance requirements with the "Volcker Rule". This rule general prohibits banking entities from engaging in proprietary trading or investing in or sponsoring hedge funds or private equity funds. Under the revision, firms without significant trading activity will have simplified and streamlined compliance. Conversely, firms with significant trading activity will have to comply with more stringent rules. By statute, community banks generally are exempt from the Volcker Rule. Continue reading "Agencies Simplify Volcker Rule" »

The SEC proposed amendments to Exchange Act Rule 15c2-11 on September 26th. This rule sets certain requirements with which a broker-dealer must comply before it can publish quotations for securities in the “over-the-counter” (OTC) market. The new actions will increase availability of issuer information to enhance investor protection and modernize the governance of quotations for OTC securities by requiring that information about the issuer and the security be current and publicly available before a broker-dealer can begin quoting that security. Exchange Act Rule 15c2-11 was last substantively amended in 1991.

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On September 27th, the SEC updated its list of unregistered entities that use misleading information to solicit primarily non-U.S. investors. The Commission added 23 soliciting entities, two impersonators of genuine firms, and twelve bogus regulators.

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On September 26th, the SEC voted to adopt a new rule that extends a “test-the-waters” accommodation to all issuers. This is a popular tool that was previously only available to emerging growth companies (EGCs). With the new rule, all issuers will be allowed to measure market interest in a possible initial public offering or other registered securities offering through discussions with certain institutional investors prior to, or following, the filing of a registration statement. This new rule is one of numerous SEC initiatives that build on Jumpstart Our Business Startups Act (the “JOBS Act”) provisions, which are intended to encourage companies to access public markets.

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Version 5.1b of all applications in the GoFiler Suite has been released. This release corresponds to EDGAR Release 19.3 and wraps up the EDGAR changes that were released on Friday with version 5.1a. In this release are a few improvements as well as some corrections, namely to the XBRL Previewer and the XDX Setup Wizard to incorporate additional inline XBRL changes that were introduced with EDGAR 19.3.

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On September 30, 2019, EDGAR Release 19.3 was released by the Securities and Exchange Commission. This release included new EDGAR filing password tagging requirements and a new exhibit EX-96 (Mining Disclosure). Also new are some changes to Form N-CEN, Forms ATS-N/UA and ATS-N/CA, Form SBSE, and changes to EDGAR to accept various submission form types from deregistered investment companies.

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Version 5.1a of all applications in the GoFiler Suite has been released. This release corresponds to EDGAR Release 19.3 and contains support for 12 character EDGAR filing passwords. This release also contains a number improvements to the SGML parser to allow users to more easily open and edit HTML and XML files with extremely large tags. Also new are DQC validation rules for XBRL and other improvements and corrections for ATS-N, N-CEN and Section 16.

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