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

Pursuant to Executive Order 13772, the Treasury Department has issued a report that identifies laws, treaties, regulations, guidance, reporting and record keeping requirements, and other government policies that promote or inhibit Federal regulation of the U.S. financial system in a manner consistent with President Trump’s core principles.

Treasury’s recommendations set forth in the report include:

  • Treasury recommends that Section 1502 (conflict minerals), Section 1503 (mine safety), Section 1504 (resource extraction), and Section 953(b) (pay ratio) of Dodd-Frank be repealed and any rules issued pursuant to such provisions be withdrawn. In the absence of legislative action, Treasury recommends that the SEC consider exempting smaller reporting companies (SRCs) and emerging growth companies (EGCs) from these requirements.
  • Treasury recommends that the SEC move forward with finalizing its current proposal to remove SEC disclosure requirements that duplicate financial statement disclosures required under generally accepted accounting principles by the Financial Accounting Standards Board.
  • Treasury recommends that companies other than EGCs be allowed to “test the waters” with potential investors who are qualified institutional buyers (QIBs) or institutional accredited investors.
  • Treasury recommends that the $2,000 holding requirement for shareholder proposals be substantially revised.
  • Treasury recommends that the resubmission thresholds for repeat proposals be substantially revised from the current thresholds of 3%, 6%, and 10% to promote accountability, better manage costs, and reduce unnecessary burdens.
  • Treasury recommends that the SEC continue its efforts, when reviewing company offering documents, to comment on whether the documents provide adequate disclosure of dual class stock and its effects on shareholder voting.
  • Treasury supports modifying rules that would broaden eligibility for status as an SRC and as a non-accelerated filer to include entities with up to $250 million in public float as compared to the current $75 million.
  • Treasury recommends extending the length of time a company may be considered an EGC to up to 10 years, subject to a revenue and/or public float threshold.
  • Treasury recommends expanding Regulation A eligibility to include Exchange Act reporting companies.
  • Treasury recommends that the Tier 2 offering limit be increased to $75 million.
  • Treasury recommends that the SEC, FINRA, and the states propose a new regulatory structure for finders and other intermediaries in capital-forming transactions.
  • Treasury recommends that amendments to the accredited investor definition be undertaken with the objective of expanding the eligible pool of sophisticated investors.
  • Treasury recommends a review of provisions under the Securities Act and the Investment Company Act that restrict unaccredited investors from investing in a private fund containing Rule 506 offerings.