September 21, 2021

Volume XI, Number 264

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September 20, 2021

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SEC News from Katten's Corporate & Financial Weekly Digest - Week of March 26

SEC Responds to Investor Demand by Bringing Together Agency Information About Climate and ESG Issues

On March 22, the Securities and Exchange Commission launched a new page on its website to bring together agency actions and the latest information about climate and environmental, social and governance (ESG) investing. In response to increased investor demand for this information, the page will appear on the front page of SEC.gov and will be updated as the agency continues to respond to investors.

The ESG page currently includes statements, announcements and bulletins by the SEC regarding the SEC’s various ESG initiatives.

The SEC page on ESG investing.

SEC Issues Amendments, Seeks Public Comment on Holding Foreign Companies Accountable Act

On March 24, the Securities and Exchange Commission adopted interim final amendments to implement congressionally mandated submission and disclosure requirements of the Holding Foreign Companies Accountable Act (HFCA Act).

The HFCA Act became law on December 18, 2020. Among other things, Section 2 of the HFCA Act amended Section 104 of the Sarbanes-Oxley Act of 2002 to require that the SEC identity each “covered issuer” that has retained a registered public accounting firm to issue an audit report where that firm has a branch or office located in a foreign jurisdiction, and the Public Company Accounting Oversight Board (PCAOB) has determined that it is unable to inspect or investigate completely because of a position taken by an authority in the foreign jurisdiction. The interim final amendments adopting release seeks comment on this requirement.

The interim final amendments will apply to registrants that the SEC identifies as having filed an annual report on Forms 10-K, 20-F, 40-F or N-CSR with an audit report issued by a registered public accounting firm that is located in a foreign jurisdiction and that the PCAOB has determined it is unable to inspect or investigate completely because of a position taken by an authority in that jurisdiction. Before any registrant will have to comply with the interim final amendments, the SEC must implement a process for identifying such a registrant. Thus, the SEC is seeking public comment on this identification process.

Consistent with the HFCA Act, the amendments will require any such identified registrant to submit documentation to the SEC establishing that the registrant is not owned or controlled by a governmental entity in that foreign jurisdiction, and will also require disclosure in a foreign issuer’s annual report regarding the audit arrangements of, and governmental influence on, such a registrant. The SEC is seeking public comment on these submission and disclosure requirements. The HFCA Act requires the SEC to issue rules within 90 days of the date of enactment to establish the manner and form in which registrants must comply with the documentation submission requirement. The SEC is issuing the interim final amendments to comply with this 90-day deadline.

The SEC staff is actively assessing how best to implement other requirements of the HFCA Act not subject to the 90-day deadline, including the identification process and the trading prohibition requirements.

Press Release regarding the SEC’s interim final amendments to implement congressionally mandated submission and disclosure requirements of the HFCA Act

©2021 Katten Muchin Rosenman LLPNational Law Review, Volume XI, Number 85
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About this Author

Susan Light, Katten Law Firm, Finance Law Attorney, New York
Partner

Susan Light focuses her practice on financial services regulatory matters. She counsels broker-dealers, hedge funds, investment banks and financial services clients on enforcement issues involving the Securities and Exchange Commission (SEC), Financial Industry Regulatory Authority (FINRA), other self-regulatory organizations (SROs) and state and federal regulatory authorities. She has particular experience related to sales practice issues, financial and operational issues, anti-money laundering, crowdfunding, cybersecurity, and cryptocurrencies.

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212-940-8599
Elise Michael, Katten Law Firm, New York, Finance Law Attorney
Associate

Elise Michael represents clients in the financial services industry. Prior to joining Katten, Elise was at J.P. Morgan Chase, where she supported the Private Bank’s advisory and alternatives businesses.

While in law school, Elise was a corporate scholar in the Samuel & Ronnie Heyman Center on Corporate Governance and the managing editor of the Cardozo Arts & Entertainment Law Journal. She also served as an intern with the US Commodity Futures Trading Commission (CFTC).

212-940-6610
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