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2020 EXAMINATION PRIORITIES Office of Compliance Inspections and Examinations
In January 2020, the Office of Compliance Inspections and Examinations (OCIE) of the U.S. Securities and Exchange Commission (SEC) announced their examination priorities for the fiscal year 2020. The publication provides an assessment of how these new rules will affect companies; anticipated risks and policy matters arising from market and regulatory developments. OCIE examinations focus on comprehensive and high-quality reports from organizations, with the purpose of promoting and improving compliance. In 2020, the OCIE will prioritize the examination of certain practices, products, and services to protect investors.
SEC Proposes Improvements to Governance of Market Data Plans
On January 8th, 2020, the Securities and Exchange Commission has proposed a new order to address issues regarding the dissemination of market data that affect the efficiency and fairness of our markets. The SEC is seeking public commentary on the following proposals, (1) order to modernize the governance of National Market System plans; (2) amendments to the existing plans filed by the plan participants, addressing conflicts of interest and the protection of confidential information; (3) amendments to the existing equity data plans (introduction of the “New Consolidated Data Plan”). After considering any comments received on the proposed order, the Commission will consider what actions to take.
SEC Proposes to Codify Certain Consultations and Modernize Auditor Independence Rules
In December 2019, the Securities and Exchange Commission (SEC) has announced a proposal to update certain provisions within the Commission’s Auditor Independence rules. These proposed amendments generally focus on those relationships or services that are more likely to pose threats to an auditor’s objectivity and impartiality. The proposed rules aim to provide a framework that will enhance both investor protection and market integrity. Some of the amendments include: (1) defining an affiliate of the audit client; (2) adding certain student loans and de minimis consumer loans to the categorical exclusions from independence-impairing lending relationships; (3) shorten the look-back period for domestic first-time filers in assessing compliance with the independence requirements. Also, there will be a comprehensive discussion about the potential economic effects of the proposed amendments, such as the impact on capital formation, competition, and efficiency. The SEC invites commentary on these proposed amendments. This can be done via email rule-comments@sec.gov, including the File Number S7-26-19 on the subject line or send paper comments to Vanessa A. Countryman, Secretary, Securities and Exchange Commission, 100 F Street NE, Washington, DC 20549-1090. Please bear in mind that all submissions should refer to File Number S7-26-19.
ChatBots, Artificial Intelligence & Machine Learning
Chatbots, AI and ML will soon have a significant impact on our law practices and the conduct of business by our clients. The Business Law Section is in the process of putting together a Chatbot/AI/ML Resource Center to help you navigate this landscape
CorpFin issues guidance on confidential treatment applications
Securities and Exchange Commission’s Division of Corporation Finance (CorpFin) has issued practical guidance on what steps to take when filing an application objecting to the public release of confidential information. In March 2019, the commission made significant changes to filing requirements pursuant to rule 406 and Rule 24b-2. Generally, the filing guidelines include: what information is required; how to maintain protection of the confidential information and relevant time limitations. CorpFin staff will review all applications for confidential treatment.
Intellectual Property and Technology Risks Associated with International Business Operations
Today, global technology advancements with respect to intellectual property expose companies to a myriad of risks. The SEC’s Division of Corporation Finance has issued guidance on (1) situations where technology, data or intellectual property may be stolen when conducting business outside of the United States, and (2) how companies should assess these risks and disclosure obligations in connection to their international operations.