SEC Five-Year Strategic Plan

News Brief

By: Cydney Posner

The SEC has just posted its five-year strategic plan.  While much of it is familiar territory, it does provide some insight into SEC initiatives, including the following items:

  • The SEC will update its rules and guidance to reflect the current requirements for electronic submission and eliminate references to paper-based filings, e.g., 1933 Act and 1934 Act Industry Guides, Regulation C under the 1933 Act, and Regulation S-K and S-B requirements. The SEC also intends to simplify forms currently in use, such as Form D, and standardize those forms used by multiple regulators, such as Regulation A offering statements.
  • The SEC will periodically assess the impact of past rulemakings to gauge their effectiveness and determine whether more effective alternative approaches may have become available. Where possible, these determinations should employ empirical analysis. Pertinent divisions and offices will establish collaborative tools to more effectively conduct and coordinate such ex post analyses, which should inform current rulemaking.
  • The  SEC will enhance market transparency through broader dissemination of information by market participants including
    • Expanding the types of significant events that must be reported;
    • Accelerating the filing periods for which certain activities are reported; and
    • Disclosing company activities which raise concerns about global security risks that are material to investors.
  • The SEC will examine the business processes and supporting technology of the disclosure review program, with an eye towards streamlining these activities, enhancing the information available to the public, and making it easier for the public to analyze that data.
  • The SEC will work closely with the PCAOB on regulation of the accounting profession and the promulgation and interpretation of auditing standards.
  • The SEC will complete rulemaking activities that strengthen corporate and fund governance practices by:
    • Enhancing shareholder access to the proxy process, and bolstering the disclosure requirements related to shareholder proxy access;
    • Expanding interpretive guidance regarding critical disclosure requirements such as MD&A, and
    • Enhancing SRO efforts to strengthen market governance.
  • The SEC will redesign its website to improve access to information, expand the use of technology to provide investors with prompt, accurate responses to their questions and complaints, and implement selected e-government initiatives sponsored by the Administration that improve the public’s ability to interact with federal agencies.
  • The SEC supports ongoing convergence initiatives between the FASB and the IASB to enhance the quality of financial reporting worldwide. The SEC also will support ongoing efforts to improve audit standards and mechanisms for their oversight worldwide.
  • The SEC will follow up on recommendations from the staff study and report on the Adoption by the United States Financial Reporting System of a Principles-Based Accounting System, and complete a report for the President and Congress on the use of, and financial reporting for, off-balance sheet transactions and the special purpose entities used to facilitate such transactions.
  • Taking into account the increasingly global nature of the markets, the SEC will propose rules and analyze public input on updating the national market structure. The SEC will also enhance the operational efficiency of the clearance and settlement process in markets with a view toward straight-through processing.
  • The SEC will assess the need for a regulatory structure for credit rating agencies. In doing so, the agency will evaluate alternatives for obtaining disclosure from a broader community of filers, including hedge fund managers and government-sponsored enterprises.
  • The SEC will seek additional ways to break down internal organizational barriers and foster greater collaboration among divisions and offices on rulemaking initiatives. The SEC will establish collaboration tools to more effectively gather and analyze data from across the SEC and manage rulemaking activities. The SEC will also explore new ways to collect and disseminate rulemaking-related information electronically.
  • The SEC will work to enlist the assistance of the Office of Economic Analysis (OEA) earlier and more often in the rulemaking process, so that the SEC’s rules and regulations will be more firmly grounded in economic reasoning and analysis.
  • Under current law, the SEC collects fees from the securities industry that offset the budget. In 2007, the law reduces the fees collected by the SEC from their peak in 2006 of about $2.1 billion to an estimated $1.1 billion. In anticipation of this drop in fee collections, the SEC wants to consider whether self-funding or other changes to the fee and funding structure are necessary.
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