In February 2009, at the annual SEC Speaks conference in Washington, D.C., senior staff of the U.S. Securities and Exchange Commission reviewed significant actions of the previous year and identified top priorities for the year to come.  This update lists our top takeaways from the conference that may have an impact on your business.  We will continue to follow these hot topics and provide updates in the future as developments occur.

Regulation D Amended

On February 6, 2008, the SEC published a final rule release regarding the adoption of amendments that revise and mandate the electronic filing of Form D.  The new electronic Form D is required as of March 16, 2009.  The SEC recently published Compliance and Disclosure Interpretations providing, among other things, that the filing of a Form D is not a condition to the availability of an exemption under Regulation D and that an annual amendment is required for ongoing private offerings if no Form D or amendment has been filed within a year.  For more information on SEC changes to Form D, please review our September 15, 2008 Update,  "Amendments to Form D Are Effective; Electronic Filing Required Soon."

XBRL Roadmap Unveiled

XBRL data-tagging is a format for enhancing financial reporting data that can turn text-based information, such as filings available on EDGAR, into documents that can be more efficiently and effectively retrieved, searched and analyzed through automated means.  In an adopting release for the introduction of XBRL data-tagging, the SEC included a roadmap for the implementation of XBRL in future filings, which requires filers to submit their financial statements in an interactive data tag file using the list of tags for U.S. generally accepted accounting principles or internal financial reporting standards as issued by the International Accounting Standards Board.  The roadmap requires current large accelerated filers to include XBRL data-tagging with their filings beginning with their quarterly reports for the fiscal period ending on or after June 15, 2009.  The SEC staff cautioned at SEC Speaks that the late filing of XBRL data-tagging will affect an issuer’s
S-3 status.

Rules Affecting Foreign Private Issuers Amended

In September 2008, the SEC adopted amendments  to rules and forms affecting foreign private issuers.  Foreign private issuers should make an annual assessment of whether they qualify for foreign private issuer status.  Additionally, foreign private issuers should prepare for the phase-in of accelerated reporting of annual reports on Form 20-F and revise their reporting calendars accordingly.  As a result of the amendments, beginning with fiscal years ending on or after December 11, 2011, foreign private issuers must file annual reports on Form 20-F within four months of the end of the fiscal year.  For more information on these amendments, see our October 3, 2008 Update, "SEC Adopts Amendments to Rules and Forms for Foreign Private Issuers."

Transition to International Financial Reporting Standards Still in Process

The SEC has extended the comment period for the implementation of the transition to International Financial Reporting Standards.  In November 2008, the SEC published a proposing release that included a roadmap for the implementation of the transition to International Financial Reporting Standards.  The proposing release provided for the phase-in of International Financial Reporting Standards for certain issuers beginning in 2014.  The SEC recently extended the comment period for the proposing release which may result in delays to the implementation of International Financial Reporting Standards.

Smaller Reporting Company System Launched

Under final rules adopted last year, the transition to the Smaller Reporting Company System will be complete on March 15, 2009.  After that date, a “smaller reporting company” may no longer use special “small business” forms like 10-KSB and SB-2.  Smaller reporting companies should keep in mind that an auditor attestation report
will be required for smaller companies beginning with fiscal years ending after December 15, 2009.  For more information on this requirement, please review our August 22, 2008 Update, "SEC Extends Deadline for Non-Accelerated Filers to Provide Auditor Attestation Report on Internal Control Over Financial Reporting Under Sarbanes-Oxley Section 404."

Hedge Fund Regulation Expected to Increase

SEC Chairman Mary Schapiro and certain commissioners have called for greater oversight of hedge funds.  Legislation has been proposed in the Senate that would provide for both hedge funds and their managers to register with the SEC.  We will monitor legislative developments and future SEC rulemaking in this area.

SEC Gives Additional Guidance on Executive Compensation Disclosure

At SEC Speaks, the SEC staff indicated several areas for improved communications when describing executive compensation.  The SEC would like to see more analysis and discussion on how compensation fits within the goals of an organization, and how market conditions and stock price affect compensation decisions.  Additionally, among other things, the SEC staff noted that companies should include a discussion of what changes a company is making to executive compensation this year and the policies in
place to provide incentives to officers not to take excessive risks.  For a summary of the SEC's October 9, 2007 report on executive compensation disclosure, please review our October 29, 2007 Update, "Back to Writing Basics: SEC Says Executive Compensation Disclosure Needs Better Analysis, Clarity and Organization."

SEC Gives Best Practices for Management’s Discussion and Analysis

The SEC expects robust liquidity discussion in annual reports on Form 10-K.  In March and September of 2008, the SEC published "Dear CFO letters" that suggest best practices on disclosure surrounding fair value.  Additionally the SEC has urged issuers to review the SEC’s 1989 and 2003 interpretive releases regarding Management’s Discussion and Analysis.

Additional Information

This Update is only intended to provide a general summary of our top eight takeaways from the SEC Speaks conference. Read the full text of comments by SEC Chairman Mary Schapiro.  You can find discussions of other recent cases, laws, regulations and rule proposals of interest on our website.