The Bass, Berry & Sims Corporate & Securities Practice Group recently hosted another in a series of complimentary webinars exploring various public company-related securities law issues.

The most recent Securities Law Exchange webinar, Recent SEC Reporting Developments and Enforcement Insights, was held on November 19 and discussed recent developments from the Securities Exchange Commission (SEC), including best practices and lessons learned from recent changes under the Fixing America’s Surface Transportation (FAST) Act and the SEC’s new rule that extends “testing-the-waters” to all issuers. It also covered recent SEC guidance and enforcement actions impacting public companies.

Key Takeaways from SEC Reporting Developments and Enforcement Insights webinar:

1. Registrant should pay close attention to make sure their upcoming SEC filings comply with the recent FAST Act changes. Among the areas of potential impact are management’s discussion and analysis (MD&A), exhibit filings, hyperlinking, property descriptions, audit committee reports, and others.
2. As of today, all registrants are permitted to “test the waters” in connection with a contemplated registered securities offering under the new Rule 163B. Under the new rule, there are no filing or legending requirements, but existing registrants should consider Regulation FD compliance.
3. The SEC recently proposed amendments to the federal proxy rules that are designed to enhance the accuracy, transparency of process, and material completeness of the information provided to clients of proxy advisors when they cast their votes, as well as amendments to enhance disclosures of conflicts of interest that may materially affect the proxy advisor’s voting advice. Comments on the rule proposal are due February 3, 2020.
4. The SEC also recently proposed to amend certain procedural requirements and the provision relating to resubmitted proposals under rule 14a-8. Comments on this rule proposal are also due February 3, 2020.

5. The SEC has expressed concern about the cybersecurity risks facing public companies, including data breaches and scams designed to steal company funds. Counsel should review and implement policies and procedures consistent with specific guidance issued for public companies by the SEC relating to the following:

   • Timeliness and accuracy of disclosures of cyber hacks.
   • Adequacy of internal financial controls to prevent financial losses due to cyber frauds.
6. Individual accountability is an express priority of the SEC’s Enforcement Division. In the SEC Enforcement Division 2019 Annual Report released last month, the SEC Enforcement Co-Directors stated that a “central pillar of our program is holding accountable individual wrongdoers.” Given this environment, when a company is subject to an SEC investigation it is important to consider early in the investigation the potential exposure faced by employees, officers and directors; the potential conflicts between and among them and the company; and whether any such individuals should secure separate counsel.
7. When faced with negative publicity or allegations of improprieties, it is tempting for a company to want to rebut the information quickly. It is important, however, to ensure that public responses by the company are accurate and do not create a separate risk of the company being accused of issuing false or misleading statements. Companies should consider involving counsel in the process of drafting such responses and not rely solely on public relations or marketing firms/personnel to do so.