SEC Still Encouraging Companies to Seek Relief from Unduly Burdensome Financial Reporting Requirements
As The Ticker has previously reported, soon after he was sworn in last year, SEC Chairman Jay Clayton gave a speech in which he encouraged companies to use Rule 3-13 to request relief from unduly burdensome financial reporting requirements. A new Ernst & Young publication identifies more recent steps taken by the SEC to encourage requests under Rule 3-13 and argues that companies should consider making such requests when faced with the prospect of preparing burdensome financial disclosures that may be immaterial to investors.
In a February 1 speech, William Hinman, director of the SEC’s Division of Corporation Finance, reiterated the SEC’s willingness to consider requests under Rule 3-13:
“The Division staff has engaged in outreach efforts to make sure that companies know we are open for business and that we want to be as transparent and collaborative as possible. For example, we have reminded companies that we will consider requests made under Rule 3-13 for modified financial statements. We will consider the specific facts and circumstances in each case, and while we may not always agree that an accommodation is warranted, we are willing to consider requests. We encourage companies and their advisers to reach out to discuss the matter with us before developing extensive applications for relief. This should ultimately save companies time and money.”
As evidence of the SEC’s efforts to facilitate requests under Rule 3-13, Hinman pointed to updates to the SEC’s Financial Reporting Manual to provide the names and contact information for individual SEC staff members that can assist with such requests.