Securities Regulation in 2012
by David Scileppi on January 26, 2012
This year isn’t just a big year in presidential politics, it’s a big year in the world of securities regulation. The Securities and Exchange Commission (S.E.C.) has a long to-do list from continuing to tackle proposed rules from the Dodd-Frank Act to moving forward on other initiatives such as financial reporting standards and proxy plumbing that will have a real impact on many companies.
According to Compliance Weekly, “The SEC has announced its intention to finish rules on executive compensation even though Dodd-Frank does not specify a mandatory deadline on that front. The forthcoming rules will include specified clawback policies, new disclosure requirements for executive pay ratios, rules on employee and director hedging, and the relationship between executive compensation and company performance.
“‘We will most likely see the proposed rules on this issue come February or March and I expect them to be finalized end of next year,’ says David Scileppi, leader of the securities & corporate governance practice at law firm Gunster.”
The Dodd-Frank Act has already had a significant impact on financial firms and the financial industry. You can follow the SEC’s progress by visiting its estimated timeline for implementing the securities provisions of the Dodd-Frank Act. In addition, the SEC is reviewing other agenda items that will impact public companies. According to CFO Magazine, the SEC may take action several other provisions that may impact various areas of your company, including:
Supply Chains: The SEC’s proposed regulations would require public companies to disclose whether their products contain conflict minerals, which are certain minerals or metals from mines in the Democratic Republic of Congo and neighboring countries. The measures should be implemented in the first half of 2012.
Proxies: The agency will be refocused on its proxy plumbing concept release, which is its effort to bring more transparency and accuracy to the proxy voting system. Whether or not the SEC is able to tackle this in 2012 will not affect this year’s proxy season.
Accounting: In response to the global marketplace, the SEC wants to adopt globally accepted accounting and financial reporting standards, commonly known as International Financial Reporting Standards (IFRS). As the debate continues within the SEC, the SEC may not produce a final report on which to base its decision to adopt IFRS until the second half of this year.
Crowdfunding: This measure may give startups more flexibility in raising capital. Smaller companies may be able to raise capital without the need for robust disclosure that larger public companies must provide. The SEC will also look at other rules that would promote private company growth, but these proposed rules may come with objections from state regulators.
Private and public companies will have to keep a close eye on the SEC this year as it continues to review and implement provisions that could ultimately change the way your organization operates its business, reports its financials, and raises funds.