As reported in a recent Davis Polk blog, Americans for Financial Reform sent a letter signed by over 90 investors, state treasurers, public interest groups and others calling on the SEC to create new COVID-19-related disclosure requirements. The letter says the disclosure requirements would help investors understand how companies are protecting workers, preventing the spread of the coronavirus and responsibly using any federal aid the companies receive. Depending on how companies respond to COVID-19, the letter says the potential impact of losses resulting from COVID-19 will be significant.
The requested disclosures are somewhat lengthy and it’s understandable that the information could be helpful to investors, although it would be more work for companies and securities lawyers. Requested disclosures dealing with cash flow and liquidity concerns and supply chain adjustments may have been addressed, in part, by Corp Fin’s COVID-19 supplemental guidance issued earlier this week. Some of the other requested disclosures relate to worker protections during COVID-19, compliance with public health recommendations about reopening, rationale supporting executive compensation modifications and all election spending and lobbying activity, including funds spent through trade associations.
With companies preparing Q2 disclosures, the SEC is holding a “Roundtable on Q2 Reporting: A Discussion of COVID-19 Related Disclosure Considerations” this coming Tuesday, June 30. SEC Chairman Jay Clayton is moderating the roundtable and it will include Gary Cohn, Former Director of the National Economic Council; Glenn Hutchins, Co-Founder of Silver Lake Partners; Tracy Maitland, President of Advent Capital Management; and Barbara Novick, Vice Chairman of BlackRock. The roundtable is being webcast and can be viewed on the SEC’s website.
-Lynn Jokela, TheCorporateCounsel.net June 26, 2020
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