Developments in Securities Regulation, Corporate Governance, Capital Markets, M&A and Other Topics of Interest. MORE

The Office of the Inspector General has issued an evaluation of the Division of Corporation Finance’s disclosure review and comment process. The report begins with a description of the Division’s comment process. Perhaps the most interesting part is the report notes that the Division is developing a new system to improve and streamline certain aspects of the disclosure review process. The new system is called the System for Workflow Activity Tracking, which is referred to as SWAT. SWAT will automate certain aspects of the review process such as providing notifications of filing review status to other review team members. In addition, according to Division officials, SWAT will generate a draft comment letter based on comments input into and approved within the system. The reviewer or another designated member of the relevant Assistant Director’s staff will review and revise the draft letter to ensure that it meets the Division’s policies for format, tone, and content. Once the draft letter is approved, a final comment letter will be generated within SWAT.

According to the report, the IG found that:

  • examiners and reviewers did not always properly document comments before issuing comment letters to companies;
  • some case files were incomplete as of the date the Division issued a comment letter to a company; and
  • examiners and reviewers inconsistently documented oral comments to companies.

As a result, the IG issued three recommendations with which the Director of the Division of Corporation Finance concurred. The IG therefore noted that the recommendations were resolved and the recommendations will be closed upon verification of the action to be taken.