The SEC’s reform drive: simpler markets?
In a 10 June 2026 statement based on remarks at the US Chamber Capital Markets Summit, SEC Division of Corporation Finance Director Jim Moloney set out the thinking behind two current proposals: Registered Offering Reform and Filer Status Reform. The SEC’s seeks to strip away years of “layered on” disclosure rules, resulting in a leaner framework.
These are two of a very significant number of reform proposals that the SEC has released in the last few weeks, many of which have overlapping comment periods, making it hard to keep up. We think that the proposals to make quarterly reporting optional should be of much greater concern to users, and to issuers, {Ed — we would struggle to provide a better comment letter than the one submitted last week by Professor Shivaram Rajgopal, not least for his points on XBRL disclosures} but these two proposals are worth understanding and considering too.
The Filer Status proposal would lift the large accelerated filer threshold from $700 million to $2 billion in public float, moving around 81% of issuers onto a lighter reporting regime. What does that mean?
It would mean that the vast majority of US registrants:
- Could provide simplified financial statement presentations as permitted under Article 8 of Regulation S-X.
- Delay compliance with new or revised financial accounting standards for up to five years from their initial registration; and
- Avoid obtaining auditor attestation on internal control over financial reporting (ICFR) today required by SOX Section 404(b)
Removing ICFR attest arrangements (management would still need to make certain assertions about the adequacy of their internal controls) is probably the part that appeals most strongly to many issuers, but equally, seriously alarms investors. A significant body of investor opinion is of the view that the ICFR attest mechanisms (introduced in the Sarbanes Oxley (SOX) reforms post Enron) have kept a lid on fraud and provided a constant operational discipline on management teams that have helped to keep investors informed. On the other hand, many management teams feel that ICFR implementations have become formulaic, tied tightly to the US audit regulator’s requirements, without necessarily taking into account the nuances or specifics of a company’s operations.
The Registered Offering proposal would expand shelf registration (Form S-3) to far more smaller issuers by scrapping the seasoning and public-float tests. We recognise that this is a lot of jargon for our mostly international audience! Shelf registration is a mechanism that simplifies (and in particular, reduces the requirement for SEC staff review of) certain kinds of — generally follow on — capital issuance. It makes an awful lot of sense for companies in a capital intensive environment to have significant flexibility in this regard. At present, the right to use a “shelf registration” has been limited to experienced and substantial companies. That doesn’t work, for example, for fast moving groups like biotech startups and certain software firms. On the other hand, if a significantly larger number of companies can very rapidly raise additional capital, it makes for a more complex portfolio management exercise for investors that may see rapid additional calls on them if they want to avoid their investments diluting.
The SEC is trying to make the public markets more attractive to the thousands of companies that today can raise very substantial funding through private equity and private capital (PE/PC). While reform is clearly necessary, it’s a tough balancing act. Not on the table, so far, are changes to s12(g) of the Securities Exchange Act, which used to oblige large private companies to at least report to the SEC, and in many cases, to bring an IPO forward. The JOBS Act and then a range of structural changes have made those provisions largely obsolete. We are old fashioned but remain of the view that disclosure is an immensely powerful tool that sets incentives appropriately. Especially, of course, digital disclosures!
As consultations run through July, respondents who value machine-readable disclosure may want to make that case while the renovation plans are still on the drawing board. Read Moloney’s full statement here.
