SEC adopts beneficial ownership rule changes
The Securities and Exchange Commission (SEC) has adopted rule amendments governing beneficial ownership reporting under Sections 13(d) and 13(g) of the Securities Exchange Act of 1934.
The amendments are as follows:
- For a Schedule 13D filing (a document that must be filed with the Securities and Exchange Commission (SEC) following the purchase of more than 5% of the shares of a public company by an investor or entity), the amendments shorten the initial filing deadline from 10 days to five business days and require that amendments be filed within two business days.
- For certain Schedule 13 G filings from qualified institutional investors and exempt investors (used to report a party’s ownership of stock in excess of 5% of a company’s total stock issue) the amendments shorten the initial filing deadline from 45 days after the end of a calendar year to 45 days after the end of the calendar quarter in which the investor beneficially owns more than 5% of the company.
- For other Schedule G filings from passive investors, the amendments shorten the initial filing deadline from 10 days to five business days.
- For all Schedule G filers, for all Schedule 13G filers, the amendments require that an amendment be filed 45 days after the calendar quarter in which a material change occurred rather than 45 days after the calendar year in which any change occurred
The amendments also:
- Extend the filing “cut-off” times in Regulation S-T for Schedules 13D and 13G from 5:30 p.m. to 10:00 p.m. Eastern time.
- Clarify that a person is required to disclose interests in all derivative securities (including cash-settled derivative securities) that use the issuer’s equity security as a reference security on Schedule 13D.
- Require that Schedules 13D and 13G use a structured, machine-readable data language (other than exhibits).
Compliance with the revised Schedule 13G filing deadlines will be required beginning on Sept. 30, 2024. Compliance with the structured data requirement for Schedules 13D and 13G will be required on Dec. 18, 2024.
ASIC acts against auditors
The Australian Securities & Investments Commission has announced it has taken action against 11 self-managed superannuation fund (SMSF) auditors, where conduct has fallen short and they have breached their obligations, in the quarter ending 30 September 2023.
- Three auditors have been disqualified.
- Five have had additional conditions (eg undertaking additional professional development, passing the SMSF auditor competency exam) imposed on their SMSF auditor registration.
- Three had their SMSF auditor registration cancelled.
The breaches included breaches of auditing and assurance standards, independence requirements and registration conditions.
US Department of Justice speech on white collar crime
In a speech at the American Bar Association 10th Annual London White Collar Crime Institute, US Department of Justice Assistant Attorney General Nicole M Argentieri discussed four topics.
- Tackling white collar crime through international partnerships.
- Corporate enforcement policies.
- Task Force KleptoCapture.
- Future plans.
Some of the key points of the speech are as follows.
Commitment to combating white-collar crime: Argentieri emphasised the Department of Justice’s Criminal Division’s firm commitment to prosecuting individuals and corporations engaged in white-collar crime. Notably, the Fraud Section focuses on various types of financial misconduct, stressing the importance of market integrity and safeguarding the interests of investors.
International partnerships: Argentieri acknowledged the necessity of international collaboration to effectively combat white-collar crime. Given that financial crimes often transcend national borders, successful partnerships with foreign authorities and organisations were stressed. She proceeded to highlight the impact of this coordination on recent cases (in South Africa and Colombia), showcasing the importance of global collaboration in tackling financial crime.
Corporate enforcement policies: Argentieri discussed recent changes to the Department’s corporate enforcement policies, particularly focusing on the benefits for companies that voluntarily self-disclose misconduct, fully cooperate, and remediate appropriately.
Task Force KleptoCapture: Argentieri reminded the audience of Task Force KleptoCapture, introduced in March 2022, underscoring the Department’s mission to enforce economic sanctions against Russia related to Ukraine. The importance of strong international cooperation in achieving this mission was again emphasised.
Future initiatives: Argentieri provided insights into upcoming initiatives, including the introduction of a new Department-wide mergers and acquisitions “safe harbour” policy. Explained how this policy aligns with existing corporate enforcement policies and encourages early reporting of misconduct in the M&A context.
Concluding, Argentieri reiterated the Criminal Division’s dedication to combatting white-collar crime, enforcing policies, and collaborating with international partners and emphasised the importance of transparency, predictability, and international cooperation to amplify efforts against corporate misconduct.
Michael Barr discusses the capital requirement consultation
US Federal Reserve Vice Chair for Supervision Michael S Barr has been speaking at the American Bankers Association convention in Tennessee about the Federal Reserve’s recent proposal on bank capital which would modify large bank capital requirements to better reflect underlying risks and increase the consistency of how banks measure their risk.
Barr argued that the costs of a financial crisis are sizable and that better capitalised banks are better able to absorb losses and continue to lend to households and businesses through times of stress.
He discussed the proposal, which would make a number of changes to bank capital requirements, including removing the use of banks’ internal models to set credit risk capital requirements and replacing them with a standardised approach. The rule would also standardise operational risk capital requirements and make a number of changes to capital requirements for trading and market making activities.
Barr acknowledged that there is some cost to higher capital requirements, but he argued that the benefits outweigh the costs. He also noted that the proposed rule is designed to minimise the impact on small and medium-sized banks.
Noting the current capital rule was updated following the global financial crisis of 2008, Barr said the current framework could nevertheless still result in capital requirements increasing during stress.
Concluding, he noted that “The aim of the revised market risk framework is to comprehensively address the lessons of the global financial crisis. The revised framework would permit banks to use their own models to compute elements of the market risk capital requirements only when such risk can be modeled well. Models under the new framework would need to better account for the possibility of large outlier events—tail risk—and for the illiquid nature of some trading exposures. The framework would also recognise that diversification that is beneficial in quiet times may not materialise under stress. The framework would backstop internal modeling with a new standardised approach to market risk, to be applied to trading portfolios where banks are unable to demonstrate that their models adequately capture risk.”
Finally, he urged stakeholders to participate in the consultation, which closes on 30th November.
A selected summary of key developments for regulated financial institutions
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