New Proposed Rule to Affect EDGAR Filing System

September 3, 2020

WHAT HAPPENED?

On Aug. 21, 2020, the United States Securities and Exchange Commission proposed a new rule under Regulation S-T, Rule 15, which aims to make the EDGAR filing process more efficient, consistent, and reliable. The Rule would alter the process for certain types of corrective disclosure and make the system more secure for users.

PROPOSED REQUIREMENTS

Proposed requirements for Rule 15:

1. The SEC would have the power to correct filings containing errors due to internal or processing mistakes. For example, in the case of an outage of the EDGAR system, the date the filing would have been processed had the outage not occurred would be assigned to the posted document.
2. The SEC would have the power to remove, redact, or prevent distribution of sensitive personally identifiable information via the EDGAR system, which is routinely included in some filings.
3. The SEC could prevent submission of filings containing cybersecurity threats including malware or viruses. Currently, filings with images or certain submission types have the potential to carry malware.
4. If a filing were to be submitted with an incorrect unique identifying number, filers would be allowed to fix the issue via corrective disclosure. This measure is intended to reduce confusion among investors and other EDGAR system users who otherwise would not be able to locate filings without the correct identifying number.
5. The SEC may block filers from making submissions when a dispute occurs, which is not subject to federal securities laws, where there is disagreement about which authorized persons may make filings on the filer’s behalf. If the dispute were resolved, the SEC would allow submissions to be made again.
6. Potentially manipulative or misleading information on EDGAR filings would be blocked by the SEC until it confirms the accuracy of the information. Once confirmed, the filing’s original submission date would be granted, not the date when the SEC determined accuracy.
7. The SEC would be able to prevent use of EDGAR access codes in situations where there may be attempted or actual unauthorized submissions to the system. Under this provision, the filer’s access could be removed or suspended until the SEC determines the issue is resolved.
8. The Rule would grant the SEC power to take further steps if needed when there is a filing concern not covered by one of the above situations.
9. In certain situations where an incorrect or misleading filing enters the EDGAR system, the SEC could take one of the above actions without advance notice. If action were taken without notice, the SEC would send an email notification to the filer or people related to the filing, alerting them of the action.

WHAT DOES THIS MEAN FOR ME?

Rule 15 is part of an ongoing initiative of the SEC to increase transparency, reduce operational hurdles for market participants, and minimize security threats within its systems. The SEC is receiving public comments on the proposed rule via its website.

FilePoint will continue to update you with information about changes to SEC regulations and how they may affect your business. Reach out to FilePoint directly for EDGAR filing assistance or with questions about the proposed rule at file@filepoint.com.