January 27, 2020

January 24, 2020

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SEC Questions Puts Cart Before The Horse

The idea of putting the cart before the horse is not new.  The Second Century C.E. writer Lucian of Samosata used the phrase in his Dialogues of the Dead ("ἡ ἅμαξα τὸν βοῦν").  Although the phrase is now a cliché, it was all that came to mind when reading the following  requests for comment by the SEC its proposal to amend Items 101, 103 and 105 of Regulation S-K:

"Should we make disclosure of business strategy mandatory in Commission filings?  If so, how should “business strategy” be defined and what can we do to address concerns about confidentiality?" 

"Should disclosure regarding human capital resources, including any material human capital measures or objectives that management focuses on in managing the business, be included under Item 101(c) as a listed disclosure topic, as proposed? Should we define human capital? If so, how?"

The problem with questions like these is that one cannot rationally decide whether disclosure of a topic should be required when there is no definition of the topic.  It is somewhat akin to shooting and then aiming.  While this may seem a bit churlish, it underscores an important point.  Analysis of whether disclosure should be required must begin with an understanding what the disclosure is.

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About this Author

Keith Paul Bishop, Corporate Transactions Lawyer, finance securities attorney, Allen Matkins Law Firm

Keith Paul Bishop is a partner in Allen Matkins' Corporate and Securities practice group, and works out of the Orange County office. He represents clients in a wide range of corporate transactions, including public and private securities offerings of debt and equity, mergers and acquisitions, proxy contests and tender offers, corporate governance matters and federal and state securities laws (including the Sarbanes-Oxley Act of 2002 and the Dodd-Frank Act), investment adviser, financial services regulation, and California administrative law. He regularly advises clients...