Blog: Proposal to allow SEC to take certain administrative actions on EDGAR without advance notice

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The SEC is proposing a new rule in connection with the administration of EDGAR.  Apparently, with increased volume on EDGAR, the SEC has faced administrative issues that potentially impact EDGAR’s reliability and integrity. (Even phony filings!) Proposed Rule 15 would permit the SEC (and its staff) to take the following actions, including actions without advance, to promote the reliability and integrity of EDGAR submissions:

  • “redact, remove, or prevent dissemination of sensitive personally identifiable information that if released may result in financial or personal harm;
  • prevent submissions that pose a cybersecurity threat;
  • correct system or Commission staff errors;
  • remove or prevent dissemination of submissions made under an incorrect EDGAR identifier;
  • prevent the ability to make submissions when there are disputes over the authority to use EDGAR access codes;
  • prevent acceptance or dissemination of an attempted submission that it has reason to believe may be misleading or manipulative while evaluating the circumstances surrounding the submission;  and allow acceptance or dissemination if its concerns are satisfactorily addressed;
  • prevent an unauthorized submission or otherwise remove related access; and
  • remedy similar administrative issues relating to submissions”; i.e., issues that cannot be addressed solely by filer corrective disclosure or by the other identified actions.

The proposed rule also allows the SEC to act without advance notice to filers or any other person. Typically, the SEC communicates and works with filers to address submission issues, but sometimes must act more promptly to prevent harm. Proposed Rule 15(b) provides that, as soon as reasonably practicable after taking action without advance notice, the SEC would be required to provide written notice and a brief factual statement of the basis for the action to the filer and relevant persons to the email address on record in the filer’s EDGAR account and the email address of any other relevant persons. If necessary, the SEC may also send the materials by registered, certified or express mail. Other relevant persons may be notified where the action taken (e.g., code disputes) may involve other parties.

The SEC observed that the proposed rule would not change filers’ obligations to ensure the accuracy and completeness of information in their EDGAR submissions.  Notably, the SEC emphasized that “in the vast majority of administrative and substantive EDGAR submission issues, filers would continue to address an error by submitting a filer corrective disclosure. We intend to continue to rely upon filer corrective disclosure to remedy most submission errors.”

[View source.]

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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