SEC Rule-Making

Summary

This topic page tracks status of SEC rulemaking
on matters of interest to corporate practitioners

Recently Adopted covers final rules adopted by the SEC
in the past year
Pending Proposals covers outstanding rule proposals
Under Consideration covers rule changes
being worked on by the SEC staff

Reflects SEC's April 2007 semi-annual agenda
See 72 Fed Reg 23615 4.30.07

Reflects SEC's December 2006 semi-annual agenda
See 71 Fed Reg 74304 12.11.06

Archive covers final rules adopted by the SEC
in recent years

Scheduled SEC meetings

SEC webpage

Commentary

Commissioner Atkins: SEC priorities for 2006 1.19.06

SEC Meeting Schedule

Scheduled SEC meetings

SEC webpage

SEC proposes rule changes at December 4 meeting

Regulation M Rule 105

SEC Chairman statement

Changes to Rule 10a-1 short sale tick test

SEC Chairman statement

SEC's 12.13.06 Meeting

At its 12.13 meeting the SEC:

Proposed SOX Act 404 interpretive guidance

For evaluations of internal control over financial reporting

Also proposed amendments to Rules 13a-15 and 15d-15
Also proposed changes to Regulation S-X
to clarify the auditor's reporting requirement

Proposal is being coordinated with the PCAOB

PCAOB will propose a new auditing standard on 12.19.06

Adopted e-proxy rule amendments

Adopted final rules to enable internet delivery
of proxy materials

"Notice and access" model
Voluntary for companies
Investors can opt-out and continue to receive paper
Can't be used before 7.01.07

SEC also proposed to make "notice and access" mandatory

Re-proposed rules for FPI deregistration

To give foreign private issuers an effective way to end their periodic SEC reporting obligations
As re-proposed test for when an FPI can deregister will be based on minimal US trading volume

SEC is dropping requirement that test also be based on minimal US holders
Change was made in response to comment letters
Extent of change required re-proposal
Final rule expected by March 2007

Proposed rules for hedge funds

To adopt an anti-fraud rule to cover a potential gap
in the SEC's enforcement authority

Will prohibit making false or misleading statements or to otherwise defraud investors or prospective investors in a pooled investment vehicle

To make changes to the definition of an accredited investor

A person will have to have $2.5mm in investments to be eligible to invest in a hedge fund, in addition to meeting either the current minimum income or current net worth requirement
No change is being made to Reg D definition of an accredited investor

SEC press release 12.13.06

Proposed bank broker rules (Regulation R)

To define statutory terms for

third-party brokerage (networking)
trust and fiduciary activities
safekeeping and custody
sweep accounts

Proposal is being coordinated with the Federal Reserve

Fed will propose rules on 12.18.06

SEC press release 12.13.06
SEC commissioner statement 12.13.06

At its 12.13 meeting the SEC did not address:

Changes to Rule 14a-8(i)(8)

SEC had said it will consider rule changes to address
Second Circuit decision overturning SEC rule interpretation

As SEC postponed acting for a second time

Activist shareholders are expected to propose a slew of Rule 14a-8 proposals to amend company by-laws

To allow shareholder access to the company's proxy statement when specified conditions are met

See AFSCME v AIG

Recently Adopted

Amend the ''Best-price'' rules Dec 2005

Rule 14d-10 and Rule 13e-4(f)
Response to decisionslike Epstein v MCA (9th Cir. 1995) that discourage use of two-step tender offers
Clarifies that the best-price rule applies only to:

Consideration paid for tendered securities
Not to employment compensation, severance or other employee benefit arrangements entered into with target employees and directors

Best Price Rule

Executive compensation disclosures

SEC adopts sweeping changes to required disclosures
Executive Compensation Disclosure

Concept release: Guidance re internal controls

SEC press release 7.11.06
CFTC press release 7.10.06

Guidance on soft dollars safe harbor

SEC press release 7.12.06
Soft Dollars

CFTC-SEC issue rules for trading debt futures

Fund of Funds Investments

SEC release 33-8713 6.20.06
SEC press release 6.21.06

Corrections to Securities Offering Reform

Technical corrections
Securities Offering Reform

SEC delays accelerated periodic reporting

SEC press release 12.14.05 Item 3
Accelerated Filers

Amends definition of accelerated filer Dec 2005

Create a new category: Large accelerated filers

Would include reporting companies with
a public float of $700 million or more

Large accelerated filers would have to file:

Form 10-K within 60 days
Form 10-Q within 40 days

Would also ease exit of companies from
accelerated filer status

Accelerated Filers

Internal control extension for non-accelerated filers

SEC press release 9.21.05 Item 2

Changes to short-swing trading rules

Intended to reverse result in Levy v Sterling Holding
Where Third Circuit matched pre-IPO transactions by directors to post-IPO sales to find §16 trading liability
Rules 16b-3 and 16b-7 should have provided an exemption,
in SEC's view
Final release 33-8600 8.03.05

Exchange Act deregistration

Rule changes to streamline process for
deregistering a security
Delisting

Securities Offering Reform

Sweeping changes to how registered offerings of securities can be brought to market
Securities Offering Reform

Use of Form S-8 and Form 8-K by public shell companies

Amendments to Form S-8 and Form 8-K
that would affect their use by shell companies
Shell Companies

Changes to penny stock rules

Changes definition of penny stock
Changes to disclosure requirements
for penny stock customers
Final release 34-51983 7.08.05
Correcting release 34-51983A 8.03.05

Independent directors for mutual funds

Rules overturned by US Court of Appeals
Mutual Funds - Independent Directors

Regulation NMS

Four interrelated SEC initiatives to modernize
the regulatory structure of the U.S. equity markets
Regulation NMS

FASB 123R effective date

Amends S-X Rule 4-01(a)
Equity compensation accounting

International financial reporting standards

One-time accommodation for
prior period financial statements that use
International Financial Reporting Standards (IFRS)

Form 20-F

Extension for internal control compliance

For non-accelerated filers and foreign private issuers
Final release 33-8545 3.02.05

Voluntary XBRL financial reporting on EDGAR

Allow registrants to submit voluntarily
supplemental tagged financial information
using XBLR as exhibits to their EDGAR filings
XBRL

Asset-Backed Securities

SEC revises how its rules apply to ABS
Asset-Backed Securities

Hedge fund registration

New rules require hedge funds to register with the SEC
Adopted under the Investment Advisers Act of 1940
Rules overturned by US Court of Appeals
Hedge Fund Registration

Pending Proposals

Treating Nasdaq-listed securities as covered securities

SEC proposal release 33-8754 11.16.06

Changes to broker-dealer net capital rules

Relevant to broker-dealers that are also registered with
the CFTC as future commission merchants
Conforms SEC net capital rule to changes made by
the CFTC to its rules
SEC proposal release 34-54575 10.05.06

Electronic filing of transfer agent forms

Would apply to Forms TA-1, TA-2 and TA-W
Transfer Agents

"Katie Couric" proposal

SEC delayed acting on controversial proposal for
expanded executive compensation disclosures
Would require narrative disclosure about compensation for up to three employees (without specifically naming them) who were not executive officers during the prior fiscal year, if their total compensation exceeded any of the company's named executive officers
As originally drafted, would have required Katie Courics employer, for instance, to disclose information regarding her compensation even though she is not an executive officer
As re-proposed, rule would only cover employees with policy-making responsibility
Was scheduled for SEC action in Dec 2006,
after re-proposal was issued in Sep 2006
Targeted date for action: Uncertain

Section 404 compliance relief (Internal controls)

Smaller companies (Non-accelerated filers)
Foreign private issuers (But not large accelerated filers)
IPO companies

Changes to Regulation SHO

SEC press release (Item 2) 7.12.06
Short Sales (Reg SHO)

Independent directors for mutual funds June 2006

Re-proposed rule changes
Follows second adverse Court of Appeals decision
Mutual Funds - Independent Directors

Foreign Private Issuer reporting obligations Dec 2005

Proposed changes will make it easier for an FPI to terminate its Exchange Act registration and reporting requirements

Final action scheduled for Dec 2006

FPI Deregistration

Electronic delivery of proxy materials Dec 2005

Relax existing requirements to allow internet posting

Final action scheduled for Dec 2006
Proxy Materials: Internet Delivery

Changes to Regulation M

Would affect allocation practices
Prohibit the use of penalty bids
Enhance the transparency of syndicate covering bids
Proposed December 2004
Targeted date for action: Dec 2006

Twice postponed 12.05 8.05

Regulation M

Security holder director nominations

Changes to proxy rules to requires inclusion of shareholder director nominations in company proxy materials in specified circumstances
Proposed October 2003
Targeted date for action: Sep 2007

Postponed yet again
Final Action 11.00.07

Security Holder Director Nominations

Require MD&A disclosure of critical accounting estimates

To require disclosures about the
critical accounting estimates that a company makes
To require disclosures about the adoption by a company of an accounting policy with a material impact on its financial presentation

To be included in the MD&A section of a company's annual reports, registration statements, and proxy and information statements
To be updated quarterly

Proposed May 2002

Targeted date for action: Undetermined

Was scheduled for March 2007
Many issuers already voluntarily comply

Critical Accounting Estimates

Define qualified purchasers

Amend Rule 146 to to expand the definition of
covered securities in Securities Act § 18
Proposed 12.27.01 66 FR 66839
Targeted date for action: June 2007

Postponed yet again

Credit rating agency definition

SEC had proposed to define NRSRO:
Nationally Recognized Statistical Rating Organization
Superseded by the
Credit Rating Agency Reform Act of 2006

Rating Agencies

Securities processing for tenders, exchanges, reorgs

Changes to Rule 17Ad-14
Would require book-entry accounts for tender offers, exchange offers and reorganizations
Would require depositories to deliver physical securities within 3 business days
Proposed 9.04.98 63 FR 47209
Targeted date for reproposal: Dec 2006

Postponed from Nov 2005

Attorney noisy withdrawal

Proposed as part of SEC's attorney conduct rules
Timing of any final action hasn't been determined

SEC Attorney Conduct Rules

Additional Form F-6 Eligibility Requirement

Make Form F-6 unavailable to register depositary shares evidenced by ADRs if the foreign issuer has separately listed the deposited securities on an exchange or Nasdaq
Proposed September 2004
Targeted date for action: March 2005

Under Consideration

Mandatory use of XBRL for SEC filings

Apparently, SEC has begun working on proposal
to require use of XBRL for public company filings
Targeted date for proposal: December 2007
XBRL

Smaller public companies

To consider recommendations made by the SEC's
Advisory Committee on Smaller Public Companies Advisory Committee
Targeted date for proposal: June 2007

Internal Controls Transition

Would delay compliance with internal controls rules

For foreign private issuers issuing or listing for the first time in the US, until after the company had filed one annual report on Form 20-F
For IPO issuers until after the company had filed one annual report with the SEC on Form 10-K

Source: SEC staff comments at ABA Meeting

Define qualified purchasers

Amend Rule 146 to to expand the definition of
covered securities in Securities Act § 18
Proposed 12.27.01 66 FR 66839
Targeted date for action: March 2008

Postponed yet again

Cross Border Tender Offer Exemptions

SEC is considering revisions to improve application of these rules
Including to codify interpretations
Cross-Border Exemptions

Electronic filing of Form D

Provide for electronic filing
Targeted date for proposal: June 2007

Regulation D

Streamlining Rule 144

Reproposal of amendments first proposed in 1997
(62 FR 9246)
To make Rule 144, Rule 145, and Form 144 easier to understand and apply
Add a bright line test to the Rule 144 definition of affiliate
Increase the Form 144 filing thresholds
Codify certain interpretive positions
Targeted date for proposal: June 2007

Rule 144

Disclosures by financial companies

To update application of Guide 3 to bank holding companies
To extend Guide 3 to non-bank financial companies
Targeted date for proposal: Sep 2007

Postponed yet again
Withdrawn 04.01.07

Lock-up agreements

Clarify how to register securities that acquiring companies issue to target security holders who enter into lock-up agreements in connection with acquisition transactions
Adopt exemptions to applicable rules to allow execution of lock-up agreements
Targeted date for proposal: Sep 2007

Postponed yet again
Withdrawn 04.01.07

Revise definition of securities "held of record"

To include the beneficial owners of securities registered in the name of a broker, dealer, bank or similar nominee
Targeted date for proposal: March 2007

International accounting standards

Concept release on recognizing IASB standards
in cross-border deals
Issued 2.23.00 65 FR 8896
SEC continues to monitor; No scheduled date for action

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