Industries Guides from 205 to 215, Sustainability from 216-223 and exhibits from 224 to 263
Securities Regulation, SEC reporting, Concept release- Disclosure Effectiveness Initiative
1. CONCEPTRELEASE: BUSINESSAND FINANCIALDISCLOSUREREQUIREDBY REGULATION
Request
comment
number
Personal comments
205 No,all registrationsshoulddiscloseunderRegS-K,S-X,S-Ttoenforce uniformityincompliancetherefore
comparability
206 It dependsonindustry,some registrantsfindthe industryGuidesuseful bypreparingdisclosureforperiodic
reports
207 The challengesof providingindustryGuidesdisclosureare the lackof uniformityincompliance and
comparabilityacrossanindustry
208 I do notthinkcodificationwillsolvethe problem. If codificationcanbringconsistencytoindustryguides.
That meansaddingquality andmakingthemcompete againstRegS-K,S-X…,Itwill have alotof challenges
overcomingobsolete
209 All industryguidesshouldbe updated. Otherindustryguidesshouldbe developedlike healthcare services,
entertainment-casinos-hospitality,entertainment-films,entertainment-music(media,broadcasting),defense
contractors,Airline,Research&Development,Financial institutions,regulatedindustries( electricity,
water,…). All of themwill benefitfromsuchguidance. Thatmeansindustryspecificdisclosure underRegS-X
will be betterforall of themif SEC can developthem
210 It shouldbe expensivetodisclose underindustryguidesbecauseitcancon conflictwithRegS-Kand create
disagreementininterpretation. A new guidance maybe neededbecause itwillrestore uniformityin
compliance andcomparabilityacrossanindustrytherefore lessconfusion
211 I can work withoutindustryguidesaslongasI can assessSECcommentletters,CDI,NOL,waivers,… Ican
developanypolicy becauseIhave a lotof data guidingmywork
212 It doescreate a lot of confusion. Asa policy staff,itdoesundermine the commissionrules. Thatsaid,if
there isa conflict
213 It will be more useful toconsolidate all industryspecializeddisclosureslocatedelsewhere to RegS-Kif they
do notconflictwithRegS-Kthat meanstheywill addqualityandattractivenesstoRegS-Krequirements.
Theycan be identifiedbasedontheirnames. Itispossible thatCDIor SABhave addressedthese issues
before handintheirQ and A
214 Industryspecificdisclosure requirements shouldapplytoeveryregistrantinaparticularindustrybutwe can
alsoadd some quantitative andqualitative thresholdstodistinguishthem
215 Sophisticatedinvestorsare more likelytovalue industryguidesdisclosure
216 There are specificsustainabilityandpublicpolicyissues importanttoinformedvotingandinvestment
decisionincludingclimate changes,environmentissues,all sustainabilityreport,corporate campaign
contribution,carbonemission,waterscarcity,humrightsandmore. If the real issue isto add qualityand
attractivenesstothe informationinordertohelpinvestorsthe reportandrelyonit forinvestmentand
votingdecision,we shouldnotworryaboutchanging2010 interpretative guidance because the only
informationimprovingthe understandingof the disclosure isenvironmentalcosts(litigationawards,
penalties,fines, remediation,…)
217 Tough sustainabilityrequirementsline item (customerhealthandwell-being,pollutionof air,market
pressure,communityhealthandwell-beingandmore) canleadto informationoverloadandexpensivecosts
of the reportfor fearfor prosecution,penaltiesandreputational costs. Thiskindof disclosure will
camouflage material information. Investorswouldhave hardtime readingthe whole reportand
understandingwhatismaterial inthatdisclosure
218 The sustainabilityreportoncitizenshipwebpage orthe like istoovoluminous,itreportsfromacquisitionof
greenvehiclestoinstallationof greenbathroom. ItismostlyforPR to the greenactivists,keepingthem from
2. joiningthe streetswithhedgefundscrowds. Integratedreportwilladdquality,consistencyand
comparabilitybutwill reducethe amountof informationtobe providedtothe investingpublic.
219 I do notunderstand whythe SEC will addline- itemrequirements. IbelieveSECshould reviewthe
sustainabilityframeworkandfix itwithoutline-itemrequirements
220 I do notbelieve thereare sustainabilityissuesforwhichline itemdisclosuresrequirementswouldbe
consistentwiththe rule
221 The challenge isalack of data as new projectitwill require anew budgetwithnodirectimpactonthe
companybottomline improvement. Theyincrease regulatoryburden,theyincrease operatingcosts, they
can reduce focuson importantlongtermstrategyforthe companyand68% companiesbelievethat
sustainabilityrelatedactionsanddecisionsdonotaddprofitto theirbottomline. But at the same time,they
can provide incentive toinnovate andpayattention toveryimportantsocial,environmentandeconomic
issues.
222 I believethere is noneedforline itemdisclosure requirementsif youinsist,some companieswilldeserve
some waivers,andscaleddisclosure requirements
223 Expertsinthisfieldare toodifficulttosatisfy. There isnothingwrongtothe 2/2/2010 US SEC commission
interpretative guidance. Itis a goodreference. WhatSEC can do isto revise itandadd some quantitative
and qualitativethresholdsformateriality. Ibelieve itwasnotdiscussedproperly.
224 SEC shouldeliminate andmodifysome exhibitsrequirementsinitem601, exhibit3(a) Article of
Incorporation,itison line andshouldbe requiredtobe online unlessanymaterial changestoit,exhibit3(b),
exhibit14,exhibit95can be providedonForm10-K and hyperlinkonForm10-Q unlessthere isanymaterial
changesto it. Lettake the riskto eliminateexhibit100
225 Exhibit3(a) Article of Incorporationshouldbe requiredonlinepostingandexhibit95 can be providedon
Form 10-K and hyperlinkonForm10-Q unlessthere isanymaterial changesto it
226 There isno problemonthe usefulnessof these exhibits. Theycanbe foundeasilyatthe endof the report
227 Sophisticatedinvestorsare likelytovalue mostof these exhibits
228 It isexpensive becausewe have alotof documentstoprovide here,extensive businessrelatedlanguage,…
229 We shouldcontinue toallowregistrantstoomitschedulesandattachmentforexhibitsfiledunderitem601
(b)(2). Itshouldbe some quantitative thresholdsappliedtothisomissionandexemption
230 Immaterial schedulesare uselessandawaste of time inany reports. SEC shoulddevelopguidelineswith
quantitative thresholdsandqualitative factorsonhow registrantscouldevaluate materiallypurposes
includingschedulesandattachments. The benefitisthatitwill reduce immaterial schedules. The challenge
isto designreliableguidance. SECshouldrequire registrantstodisclose how theyassessedmateriallyfor
purposesof omissionof schedulesandattachments
231 SEC shouldrequire registrantstoinclude withsuchexhibitsalistbrieflyidentifyingthe contentsof all
omittedschedules
232 Requestingaconfidential treatmentisalongprocess,itiswhyI believe thatitmakessense. SECcan allow
registrantstoomitpersonallyidentifiableinformation(PII) withoutmakinganyformal requestfor
confidentialtreatmentSECshouldlimitthisaccommodationtoinformationcontainedinschedulesand
attachmentstoexhibits.
233 We shouldrevise item601(a)(4) toexclude immaterial amendments. SECshoulddevelopguidelinesrelated
to materialityregardingamendmenttobe requiredto.
234 SEC shouldrequire registrantstoidentifychangesinthe amendedand restatedcontractssuchasby
underliningorhighlightingthe changes. Thisrequirementisnotdifficulttocomplywith.
235 No,there isnothingwrongwithinstruction1
236 Yes,instruction1 isa true guideline forall filingstodeal with materiality. SECdoesnotneedtoexpand
clauses(A) and(B) of instruction1.
237 No we cannoteliminate thislimitation‘anyincomplete exhibitmaynotbe incorporatedbyreference inany
3. subsequentfiling’
238 SEC can revise item601(b)(10(ii) toinclude quantitativethresholdsorissue aCDI. It will helptodiscourage
immaterial contractfiling. Thatsaid,the informationwillbecome more usefultothe investors
239 SEC can issue a CDI to define the typesof contractsnotmade inthe ordinarycourse of businessthat
registrantsare requiredtofile asexhibits
240 These contractsare important to investorsbecause theyhelpinvestorsunderstandthe resultsof operations
includingpastorfuture,IBNR,ARor/and cash flow. No,SECshouldnotlimitsubparagraph(ii) tonewly
reportingregistrants. No, SECshouldnoteliminate subparagraph(ii) andrequireregistrantstofileonly
material contracts that are to be performedinwhole orinpartor afterthe filingof the report. Aslongas the
contracts remainmaterial toinforminvestorsaboutthe registrants’resultsof operationsandfinancial
conditions,itmustbe filedwiththatexhibit. Underincurredbutnotreported,the contract remainmaterial
informationforthe registrant’sinvestors
241 Yes,SEC shouldexpandthe typesof contractunderitem601(b)(10)(ii)
242 SEC can revise item601(b)(10)(ii)toinclude categoriesof contracts. SECcan use relevanttime frame (about
a fiscal year),percentage thresholdand topmanagement/directorsinvolvement. The benefitis thatitwill
focuson material contractand the challenge istoproperlycomplywiththe rule
243 The informationoncontract filedunderitem601(b)(10)(ii)isveryimportanttothe investingpublic. It
dependstothe materialityof the differenttypesof contract
244 Immaterial inamountisverynecessarystandardbywhichtodetermine whenacontractneedstobe filed.
Registrantsmusttestthisstandardfor inclusionor exclusion. Inmyview,if acontract ismaterial inamount,
it issignificant. Itwill make sensetorevise item601(b)(10)(ii) toexcludeonly contractsthatare immaterial
to amountand significance. Yes,itwill facilitate compliance if SECcan revise item601(b)(10)(ii) to state in
the affirmative thatregistrantsmustfileall material contractsmade inthe ordinarycourse of businessthat
fall withinone ormore categorieslistedbelow…
245 Yes,it justmeansthat relatedpartyinvolvedandthe amountisover$120,000, the contract mustbe filed
because thisinformationisuseful toinvestors. Itwill make sensetorevise item601(b)(10(ii) toinclude
relatedpartytransactionunderitem404(a). The benefitisthatitwill limitkickback. Challenge isthatitfails
to addressthe aggregatednature of these contracts,all of themcan come fromseveral relatedparties
246 SEC can attemptto consolidate item601(b)(10(i) and601(b)(10(ii) torequire all contractsthatare material
to an understandingof the registrantfinancial condition andresultsof operationstobe filed. All the
contracts will be capturedwiththisrequirement. Thisinformation doesenhance investors understandingof
the registrantfinancial conditionandresultsof operations. The challenge is thatsophisticatedinvestorswill
start micromanage the company. The benefitisthatitdoesprovide clarityandconsistencytothe registrants
intheirefforttocomplywhile beingtransparencytoinvestors
247 SEC shouldconsolidateall qualitativeand quantitative thresholdsfordeterminingwhencontractsidentified
initem601(b)(10)(ii) andadoptit
248 SEC can revise item601(b)(10)(ii)(B) todefine‘substantial dependence’. SECshouldlookat‘relatedparties’
and ‘contingency’inordertodefine ‘substantial dependence’.
249 Quantitative thresholdswillbe basedonthe size of the registrantmarketcapitalizationortotal assets.
Quantitative thresholdswillbringconsistencyandclaritytothe disclosure while reducingimmaterial
disclosure. Itwill be goodtotie quantitative thresholdstomarketcapitalizationortotal assets
250 It will addclarityto the registrantefforttocomplyif SECdefines‘dependsto a material extent’. Itisnot
necessarytomake distinctionbetweenfranchise,licenseagreementsandthe like.
251 I preferwhenquantitative thresholdsare basedon total assetsinsteadof fixedassets(see Dot.com),that
meansrevisingitem601(b)(10)(ii)(C) tofix itto10% of total assetsthresholds. Iwouldnoteliminatea
prescriptive thresholdforprinciplebasedrequirements.
252 Item601(b)((10)(ii)(C) shouldnolongerfocusonfixedassets. SECshouldexpandthisitemtoincludeIP
4. (intellectualproperty),patentlicenses,…Yes,alittle ‘clind’oeil’toitem2.01of form8-K will be appropriated
because 10% of total assetsmakessense.
253 The informationprovidesbyregistrantintheirauditor’spreferabilityletterismeaningless. If SECcould
developsome kindsof quantitative andqualitativethresholdstriggeringanychangesitwouldhave been
helpful
254 There isno particularlanguage addingclarity,consistencyandqualitytothe preferabilityletter. Rarely,
there isany real reasonfor changesotherthanto improve the registrant’sbottomline. Itdoesnotdepend
on the nature of the change
255 SEC shouldrevise item601(b)(18). The same auditorcan onlyissue anunqualifiedopiniontothe disclosure
while readinghis preferabilityletter. The eliminationof thisexhibitwill create alotof changeswithout any
suspicionof fraudfromthe investingpublic
256 It isnot appropriate tomake any indicationbutthe investingpublic(sophisticatedinvestors) will suspect
these changesincludingtheirtimingandthe improvementtheybringtothe bottomline,leverage,rating,…
257 SEC shouldrevise item601(b)(21) torequire registrantstodiscloseall subsidiaries. The benefitisthatitwill
keepthe registrantfromhidingsome small subsidiarieswithhighaggregatedvalue
258 No,SEC shouldnotexpand the exhibitrequirementtoinclude additional disclosureaboutthe registrant’s
subsidiaries
259 Yes,SEC shouldrequire registrantstoinclude anorganizationchartor corporate structure chart or similar
graphicdepictingtheirsubsidiariesandtheirbasisof control. Thischartcan helpinvestorsunderstand
where the registrantresultof operationsandfinancial conditionsare comingfrom. SEC shouldrequire an
organizational chartas exhibitof the annual report. There isno challenge todesignthischart
260 Thisdefinitionof ‘significantsubsidiaries’excludes‘insignificantsubsidiaries’. Thisdisclosure shouldnot
exclude anysubsidiaryatall
261 SEC shouldrequire registrantstodisclose theirLEIand the LEI of theirsubsidiariesonthe listof subsidiaries
filedunderitem601(b)(21). The benefitisthatinvestorswillknow the existence of the reference code to
uniquelyidentifyalegallydistinctentitythatengagesinafinancial transaction. Asyouknowthe commission
prescribesdisclosure of anobligorLEIwithrespectto a ratingactioninvolvingacreditratingof an obligoras
an entitysoit doeshave effect. Asof December2015, the cost of obtaininganLEI fromGlobal Masters
EntityIdentifier(GMET) utilityinthe USwas $200 plusa $19 perrecord surcharge for the LEI Central
OperatingUnit.
262 At thistime,Ido not see anyreasonto require LEI,maybe financial servicesregistrantsmayneeditbutSEC
needstoperform more researchonthisutilizationbefore makingadefinitivedecisiononthe LEI
requirement
263 SEC shouldmake a goodresearchstudybefore torequire ittolarge acceleratedfilersorwell-known
seasonedissuers(WKSI)