SEC Corporate Finance Director Discusses Cross-Border Regulation of Issuers and Offerings

SEC Director of the Division of Corporate Finance Keith Higgins gave a wide-ranging speech on United States regulation and the treatment of foreign issuers and offerings over the last thirty years. He spoke at the PLI Fifteenth Annual Conference on Securities Regulation in London.

The Director’s remarks focused on the impact of the SEC staff study conducted in the 1980s on the internationalization of the securities markets and the regulatory changes that resulted from that report. Those changes include the adoption of Regulation S, Rule 144A and the SEC’s collaborative effort with Canada to build the Multi-Jurisdictional Disclosure System.

Mr. Higgins challenged conference participants to consider broad questions with respect to foreign issuers in the registered U.S. capital markets. In particular, he asked if the SEC should explore current recommendations to create a system to address public offerings that could be made in several jurisdictions “especially when it would seem that the long-term trend is moving away from these [cross-border] offerings.”

Director Higgins concluded by discussing three global topics that he said were currently the object of some regulatory focus: crowdfunding platforms, disclosure reform (i.e., simplification and improvement), and the possible reduction or elimination of interim financial reporting, at least for smaller companies.

Lofchie Comment: While the Director certainly covered a lot of historical and regulatory ground in his speech, he actually gave very little sense of the direction, if any, toward which he believed the Division should proceed. For example, although he noted that the discussion on re-thinking interim financial reporting has been going on for some time now, and he likewise remarked that commenters have noted that “a focus on short-term performance is not conducive” to long-term growth, he did not indicate that he would give any personal support to a lessening of interim financial reporting requirements. His closing words on this topic were that “the debates and research in this subject area are likely to continue in the future.”