SEC Calls for Current and Forward-Looking Disclosure on Effects of COVID-19
In an April 8, 2020, joint statement, the SEC’s Chairman and Director of Corporate Finance addressed the importance of providing the public with information to make market decisions in coming earnings releases and investor calls. The statement urges companies “to provide as much information as is practicable regarding their current financial and operating status, as well as their future operational and financial planning.”
The Chairman and Director made specific observations and requests that included the following:
- Efforts to mitigate COVID-19 have caused a deep contraction of the economy, and the return to economic normalcy will be a difficult process that requires coordination of businesses, consumers, workers and governments.
- Securities disclosures should address this state of affairs, including (1) where the company stands currently, (2) how the company is protecting its workforce and customers and (3) how its operations and financial condition will change as efforts to fight COVID-19 progress.
- High-quality, forward-looking information is important to investors, even if it is challenging to provide this information at this early stage of the COVID-19 response. However, companies are encouraged to provide their best possible estimates and to recognize that the Chairman and Director do not expect “good faith attempts to provide appropriately framed forward-looking information to be second guessed by the SEC.”