Since the onset of the COVID-19 pandemic, the SEC has issued a number of interpretations of interest to corporate issuers and others. The most recent are discussed below.
- Enforcement Statement on Market Integrity: On March 23, 2020, the co-directors of the SEC’s Division of Enforcement issued a statement regarding “the importance of maintaining market integrity and following corporate controls and procedures” during the pandemic. The statement, perhaps the first of its kind, focuses on risks associated with “corporate insiders regularly learning new material nonpublic information” and resultant insider trading concerns, and the importance of disclosure controls and procedures, insider trading prohibitions, codes of ethics, and Regulation FD. The statement urges public companies “to ensure to the greatest extent possible that they protect against the improper dissemination and use of material nonpublic information.”
- Manual Signature Retention Requirements: Rule 302(b) under SEC Regulation S-T requires that anyone signing an SEC filing must manually sign a signature page or similar document at or before the time the filing is made, and that these manually signed pages must be retained for five years and provided to the SEC on request. On occasion, the SEC has brought enforcement proceedings against companies that have failed to comply with these requirements. On March 24, 2020, the SEC issued a statement acknowledging that these requirements may be difficult to comply with due to the pandemic and stating that the Division of Corporation Finance will not recommend enforcement action if specified alternate procedures are followed.
- Extension of Filing Periods for Exchange Act Reports: On March 25, 2020, the SEC announced that it is providing public companies with a 45-day extension to file certain disclosure reports otherwise due between March 1 and July 1, 2020. In a related order (which supersedes and extends a similar SEC order issued on March 4), the SEC spells out the conditions that a company must satisfy to be eligible for this extension, including notification to the Staff of the Division of Corporation Finance of the intent to rely on the relief, as well as the time periods for relief.
- Public Company Disclosure Guidance: Also on March 25, 2020, the Staff of the Division of Corporation Finance issued CF Disclosure Guidance: Topic No. 9. The Guidance highlights certain “disclosure and other securities law obligations that companies should consider” in light of the pandemic. Among other things, it focuses on the impact of COVID-19 on financial condition, results of operations, capital and financial resources, assets and other balance sheet impacts, material impairments, remote working arrangements, and supply chains. The Guidance also reminds companies of the “need to refrain from trading prior to disclosure of material non-public information” (similar to the Enforcement Statement referred to above), as well as financial reporting concerns, including reliance upon non-GAAP financial measures.
If you have any questions, please contact Gunster securities law and corporate governance practice leader Bob Lamm.
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This publication is for general information only. It is not legal advice, and legal counsel should be contacted before any action is taken that might be influenced by this publication.
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