‘Thrilling’ SEC rule changes coming, says corp fin director

Pending regulatory changes from the SEC “will be the equivalent of a series of blockbuster movies,” according to James Moloney, director of the commission’s Division of Corporation Finance, which recommends new rules and rule changes to the SEC.

Moloney summarized the topics that he and other SEC officials discussed at the Securities Regulation Institute in late January, via a statement posted last week on the agency’s website. In short, CFOs should expect movement on Regulation S-K disclosure requirements, crypto assets, semi-annual reporting, and more.

He advised folks not to “expect a quiet summer ahead as we continue our work on an extensive overhaul of our rules to implement regulatory reform.” (We’ll spare you the myriad Steven Spielberg movie references he made, which become more tiring than all of the Jurassic Park sequels.)

Crypto regulation: SEC Chair Paul Atkins is leading efforts to develop a regulatory framework for cryptocurrency that, he said back in November, will “match the energy of American innovators.” As CFO Brew previously reported, Atkins no longer wants “regulation through enforcement” of crypto, and the SEC is working with the Commodity Futures Trading Commission (CFTC) to align crypto regulation.

The Corp Fin division is preparing to send the SEC two recommendations “in the form of interpretive guidance that provides a taxonomy for crypto assets and describes a framework for determining when crypto assets are subject to an investment contract.”

Regulation S-K: Moloney also posited that “today’s disclosure regime” is too burdensome and costly for organizations. Atkins last month called for reforms to Regulation S-K, which is the “central repository” of disclosure requirements beyond financial statements. The goal is to “avoid compelling the disclosure of immaterial information,” Atkins said in a statement.

Moloney said the SEC wants “targeted, concrete recommendations to reduce immaterial disclosure” and specific data such as “cost of compliance with specific SEC rules.”

Goodbye, quarterly reporting? President Donald Trump in September suggested that companies should have to report their earnings only twice a year instead of every quarter. Moloney said his team is preparing recommendations for any regulatory changes needed to make the switch happen. He also called for companies to submit their feedback, acknowledging that some may prefer to stick to quarterly reports, while “semi-annual reporting may make sense” for others.

“We want to hear a broad range of market participants’ thoughts on the best way to structure the final rule” before the Division of Corporation Finance sends in its recommendation, Moloney said.