William H. Donaldson Holds an Open Meeting On Securities Offering Reform and the Advisers Act of Certain Hedge Fund Advisers

Political Transcript Wire › July 31, 2009

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I don't think there's any question about our authority, although I'm not the lawyer at the table, and the folks down at the other end can chime in if they -- and then the general counsel's office. But I don't think there's any question about our authority.

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William H. Donaldson Holds an Open Meeting On Securities Offering Reform and the Advisers Act of Certain Hedge Fund Advisers

THE SECURITIES AND EXCHANGE COMMISSION HOLDS AN OPEN MEETING ON SECURITIES OFFERING REFORM AND REGISTRATION UNDER THE ADVISERS ACT OF CERTAIN HEDGE FUND ADVISERS

OCTOBER 26, 2004

SPEAKERS: WILLIAM H. DONALDSON, CHAIRMAN, SEC

CYNTHIA GLASSMAN, SEC COMMISSIONER

HARVEY GOLDSCHMID, SEC COMMISSIONER

PAUL ATKINS, SEC COMMISSIONER

ROEL CAMPOS, SEC COMMISSIONER ALAN L. BELLER, DIRECTOR, DIVISION OF CORPORATION FINANCE

MARTIN P. DUNN, DEPUTY DIRECTOR, DIVISION OF CORPORATION FINANCE

AMY M. STARR, STAFF, DIVISION OF CORPORATION FINANCE

PAUL F. ROYE, DIRECTOR, DIVISION OF INVESTMENT MANAGEMENT

GIOVANNI P. PREZIOSO, SEC GENERAL COUNSEL

CONSUELO HITCHCOCK, STAFF, DIVISION OF CORPORATION FINANCE

ANDREW THORPE, STAFF, DIVISION OF CORPORATION FINANCE

DANIEL HORWOOD, STAFF, DIVISION OF CORPORATION FINANCE

ANNE NGUYEN, STAFF, DIVISION OF CORPORATION FINANCE

ROBERT E. PLAZE, STAFF, DIVISION OF INVESTMENT MANAGEMENT

JENNIFER L. SAWIN, STAFF, DIVISION OF INVESTMENT MANAGEMENT

JAMES G. BASHAM, STAFF, DIVISION OF INVESTMENT MANAGEMENT

VIVIEN LIU, STAFF, DIVISION OF INVESTMENT MANAGEMENT

[*] DONALDSON: Good morning, everyone.

This is an open meeting of the United States Securities and Exchange Commission. We have two items on our agenda this morning.

The first item on the agenda is a recommendation from the Division of Corporation Finance that we propose changes that seek to improve the communications, offering and registration processes under the Securities Act of 1933.

Securities offering reform is not a new topic. For decades, people within and outside the commission have evaluated the offering process under the Securities Act and urged reforms. The integrated disclosure (ph) system and short-form registration adopted in the 1980s were important early steps in the reform process. The commission's attention to the offering and communications processes under the Securities Act continued through the 1990s and resulted in the reform proposals in 1998.

The 1998 proposals were intended to modernize the securities offering process to recognize the evolution of the securities markets and securities products since the adoption of the Securities Act and to enable market participants to capitalize on new technologies.

While there was broad commentator support for the underlying premise of the proposals, the need to modernize the securities offering and communications processes, there was dissatisfaction with a number of the specifics of those proposals.

The stated objectives of those proposals on reforming the offering process continue to be supported and merit our attention still. With the significant technological and market developments that have occurred since 1998, the need for reform is even more important today.

The ongoing dissemination of accurate information by public companies about their operations and their securities is essential to the effective functioning of our markets.

The Sarbanes-Oxley Act of 2002 and the commission's recent rule- making and interpretive actions have been directed at enhancing significantly the timing and quality of Exchange Act filings.

Many of the recent changes to the Exchange Act reporting framework provide greater structure and rigor to the process that public companies must follow in preparing their financial statements and Exchange Act reports.

DONALDSON: The enhancements to Exchange Act reporting enable us to rely on these reports to a greater degree as a cornerstone of the reforms that we are considering today.

Of course when considering any reform effort, we are mindful that the existing system of regulating public offerings of securities provides a number of advantages that should be preserved.

As such, rather than introduce a far-reaching new system, today's proposals would further integrate Securities Act and Exchange Act disclosure and processes by making constructive, incremental adjustments to the integrated disclosure and self-registration systems.

Today's proposals involve three main areas: communications related to registering security offerings; procedural restrictions in the offering and capital formation process and timeliness of delivery of information to investors.

A major component of what is recommended involves timely delivery of information. Investors are entitled to materially complete and correct information at the time they make their investment decisions, not just afterwards. The recommendation seeks to make clear that this is the case without requiring any slowdowns or so-called speed bumps for issuers in raising capital.

In addition, communications in the capital markets have changed significantly over time, and today's situation would be unrecognizable to those who wr...

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