Regulatory Developments
SEC Adopts Amendments to Whistleblower Program Rules
On August 26, the SEC adopted two amendments to the rules governing its whistleblower program, which are covered under Section 922 of the Dodd-Frank Wall Street Reform and Consumer Protection Act and Section 21F of the Securities Exchange Act of 1934 (Exchange Act). Section 21F allows the SEC to pay a monetary award to eligible whistleblowers who voluntarily provide the SEC with information regarding a violation of the federal securities laws which then leads to a successful enforcement action or a non-SEC action. The first amendment expanded the scope of actions for which whistleblowers may receive SEC payment. Specifically, the amendment provides for additional circumstances for which a non-SEC action may qualify for whistleblower payment, eliminating some of the previous caveats that the SEC is to have a direct and relevant connection to the action. The final rule provides more detail on the types of related actions covered under the rule. The second amendment clarifies that it is within the SEC’s authority to consider the dollar amount of a potential award when determining an award amount for the purpose of increasing, not decreasing, the award amount. The fact sheet for these amendments can be found here.
SEC Issues First Fee Rate Advisory for Fiscal Year 2023
On August 26, the SEC announced that the fees that public companies and other issuers (including mutual funds) pay to register their securities with the SEC will increase nearly 19% from $92.70 per million dollars to $110.20 per million dollars. The change will be effective on October 1, 2022. The fee rate change will apply not only to registration fees payable under Section 6(b) of the Securities Act of 1933, but also to fees payable under Section 13(e) and Section 14(g) of the Exchange Act, in connection with securities repurchases and certain proxy solicitations and statements in corporate control transactions, respectively. The Section 6(b) rate is also used to calculate fees payable with an Annual Notice of Securities Sold Pursuant to Rule 24f-2 under the Investment Company Act of 1940. Because a mutual fund is required to pay its annual registration fee within 90 days after its fiscal year end, funds with fiscal years ending July 31st or August 31st have the flexibility to pay such fees before the higher fee rate takes effect. Any such fund that ordinarily would make its annual fee filing after October 1, 2022, may be able to achieve meaningful cost savings by choosing to do so before 5:30 p.m. ET on September 30, 2022 (i.e., the last business day before the rate increase). The SEC filing fee estimator is available here.
SEC Publishes Draft FY22-26 Strategic Plan for Public Comment
On August 24, the SEC drafted a strategic plan in accordance with the Government Performance and Results Modernization Act of 2010, which requires federal agencies to outline their missions, planned initiatives and strategic goals for a four-year period.
The draft strategic plan establishes three primary goals:
- Protecting working families against fraud, manipulation and misconduct;
- Developing and implement a robust regulatory framework that keeps pace with evolving markets, business models and technologies; and
- Supporting a skilled workforce that is diverse, equitable, inclusive and fully equipped to advance agency objectives.
The SEC intends to enhance the use of market and industry data to prevent, detect and prosecute improper behavior. The SEC also seeks to modernize design, delivery and content of disclosures to investors so they can access consistent, comparable and material information while making investment decisions.
“Through the goals we’ve laid out in this strategic plan, we will continue to bring a skilled and steady hand to the capital markets of a changing world. We look forward to reviewing public comments.”
- SEC Chair Gary Gensler
SEC Adopts Final Rules Requiring Pay Versus Performance Disclosure in 2023 Proxy Statements
The SEC has adopted final rules that will require significant new disclosures in proxy and information statements about the relationship between executive compensation actually paid by a company and the company’s financial performance. Companies with a December 31 fiscal year end will be required to include these new disclosures in their proxy statements for 2023 annual meetings unless the company is exempt from the requirements of the final rules. For most companies, the disclosure required by the final rules is likely to require significant efforts at various levels, including the company’s senior executive officers and its compensation committee and full board of directors. Many companies are likely to find that the new pay versus performance disclosure requirements are based on compensation amounts and performance metrics that are different from those currently used by the company and may find it useful to enhance their current disclosure to address these differences.
Read the client alert for additional background and considerations for companies.
Check Out Goodwin’s Latest Industry Insights
FinReg + Policy Watch Blog
Stay on top of developments affecting the financial services community.
LenderLaw Watch Blog
Stay on top of news and legal issues in the consumer finance industry.
Consumer Finance Enforcement Watch Blog
Stay on top of enforcement actions, trends and issues.
Digital Currency + Blockchain Perspectives Blog
Stay on top of digital currency industry news, regulatory developments and issues.
Editors
Samantha M. Kirby
William McCurdy
Contributors
Serena Qandil