Scarinci Hollenbeck, LLC
The Firm
201-896-4100 info@sh-law.comFirm Insights
Author: Scarinci Hollenbeck, LLC
Date: December 27, 2018
The Firm
201-896-4100 info@sh-law.comSecurities and Exchange Commission (SEC or Commission) Chairman Jay Clayton summarized the Commission’s 2018 achievements and outlined the SEC’s top priorities for 2019.
In summarizing 2018 accomplishments, Clayton highlighted that the SEC advanced 23 of the 26 rules on the Commission’s near-term agenda. He specifically discussed Regulation Best Interest, which would require broker-dealers to act in the best interest of their retail customers and clarify the fiduciary duty owed by investment advisers to their clients. With respect to the SEC’s efforts to facilitate capital formation, Clayton cited the Commission’s amendments to the smaller reporting company definition, as well as rules that eliminate disclosure requirements that are outdated, overlapping, or duplicative of other Commission rules or U.S. GAAP.
Chairman Clayton’s speech was also forward-looking since he outlined the initiatives the SEC plans to pursue in 2019. The SEC’s regulatory to-do-list includes: finalizing Regulation Best Interest and its mandatory plain language disclosures as well as addressing the regulation of proxy advisory firms.
Clayton explained:
There should be greater clarity regarding the division of labor, responsibility and authority between proxy advisors and the investment advisers they serve. We also need clarity regarding the analytical and decision-making processes advisers employ, including the extent to which those analytics are company or industry-specific. On this last point, it is clear to me that some matters put to a shareholder vote can only be analyzed effectively on a company-specific basis, as opposed to applying a more general market or industry-wide policy.
Also on the SEC’s rulemaking agenda is the so-called JOBS Act 3.0, which includes provisions to expand ‘testing-the-waters’ and study of the SEC’s quarterly reporting regime. Rulemakings relating to expanding Regulation A for public reporting companies is also coming in 2019.
Concerning capital formation and investment opportunities, Clayton indicated that the Division of Corporation Finance is looking at the private offering framework. According to Clayton, “Our ‘patchwork’ private offering system is complex and it is time to take a critical look to see how it can be improved, harmonized and streamlined.” Specifically, SEC staff is developing a concept release seeking industry input about key topics, including whether the accredited investor definition is “appropriately tailored to address both investment opportunity and investor protection concerns.”
Not surprisingly, distributed ledger technology, digital assets and initial coin offerings (ICOs) continue as a top focus in 2019. “I believe that ICOs can be effective ways for entrepreneurs and others to raise capital,” Clayton said. “However, the novel technological nature of an ICO does not change the fundamental point that, when a security is being offered, our securities laws must be followed.”
From an enforcement perspective, Clayton stated that the SEC will continue to prioritize cybersecurity in its examinations of broker-dealers, investment advisers and critical market infrastructure utilities. “In assessing how firms prepare for a cybersecurity threat, safeguard customer information, and detect red flags for potential identity theft, for example, we have focused on areas including risk governance, access controls, data loss prevention, vendor management and training, among others,” Clayton stated. “And given the interconnectedness of our markets, we will continue to work closely with our counterparts at other federal financial regulatory agencies and the international community.”
Finally, Clayton noted that the SEC is monitoring three risk areas: the impact to reporting companies of the United Kingdom’s exit from the European Union (Brexit); the transition away from LIBOR as a reference rate for financial contracts; and cybersecurity.
If you have any questions or would like to discuss the matter further, please contact me, Paul A. Lieberman, at 201-806-3364.
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
If you’re considering closing your business, it’s crucial to understand that simply shutting your doors does not end your legal obligations. Unless you formally dissolve your business, it continues to exist in the eyes of the law—leaving you exposed to ongoing liabilities such as taxes, compliance violations, and potential lawsuits. Dissolving a business can seem […]
Author: Christopher D. Warren
Contrary to what many people think, corporate restructuring isn’t all doom and gloom. Revamping a company’s organizational structure, corporate hierarchy, or operations procedures can help keep your business competitive. This is particularly true during challenging times. Corporate restructuring plays a critical role in modern business strategy. It helps companies adapt quickly to market changes. Following […]
Author: Dan Brecher
Cryptocurrency intimidates most people. The reason is straightforward. People fear what they do not understand. When confusion sets in, the common reaction is either to ignore the subject entirely or to mistrust it. For years, that is exactly how most of the public and even many in law enforcement treated cryptocurrency. However, such apprehension changed […]
Author: Bryce S. Robins
Using chattel paper to obtain a security interest in personal property is a powerful tool. It can ensure lenders have a legal claim on collateral ranging from inventory to intellectual property. To reduce risk and protect your legal rights, businesses and lenders should understand the legal framework. This framework governs the creation, sale, and enforcement […]
Author: Dan Brecher
For years, digital assets operated in a legal gray area, a frontier where innovation outpaced the reach of regulators and law enforcement. In this early “Wild West” phase of finance, crypto startups thrived under minimal oversight. That era, however, is coming to an end. The importance of crypto compliance has become paramount as cryptocurrency has […]
Author: Bryce S. Robins
Earlier this month, the U.S. Supreme Court issued a decision in Ames v. Ohio Department of Youth Services vitiating the so-called “background circumstances” test required by half of federal circuit courts.1 The background circumstances test required majority group plaintiffs pleading discrimination under Title VII of the Civil Rights Act to meet a heightened pleading standard […]
Author: Matthew F. Mimnaugh
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.
Let`s get in touch!
Sign up to get the latest from the Scarinci Hollenbeck, LLC attorneys!