There was good news and bad news from the SEC this week.
First, the good news.
It’s unofficial, but Bloomberg reported this week that the SEC is “shelving” its proposed overhaul of Form 13F. (Hopefully, “shelving” doesn’t mean being put on the shelf to be taken down later on, as in a shelf registration. In a hopeful sign, the Bloomberg piece says that “some within the [SEC] have been notified it’s dead.”) As readers of this blog know, I was not a fan of the overhaul; from my perspective, it was a misstep in what has otherwise been a run of pretty good rulemaking by the SEC.
As if to prove that investors and companies sometimes have more in common than one might think, the proposal was criticized by a broad swath of groups. Companies objected to the fact that it would make it even harder to identify and communicate with their investors (that was the major concern I expressed in my blog posting). But investors weren’t happy with it either; some questioned whether the proposal would generate the cost savings the SEC cited as one of the principal benefits. In fact, the Bloomberg article cites a Goldman Sachs study to the effect that of the 2,238 comment letters received on the proposal, only 24 supported it.
The article states that the SEC “still believes that the…trigger [for 13F filings]…hasn’t been altered in four decades [and] needs to be changed.” True, perhaps, but the SEC’s approach was to throw out baby (i.e., the benefits of 13F filings) with the bathwater. The SEC is also quoted to the effect that “[t]he comments received illustrate that the form is being used in ways that were not originally anticipated.” Also true, but that speaks to many larger issues, including so-called proxy plumbing, that the SEC needs to address. In the meantime, this quick fix was not a fix at all.
Now for the bad news.
Bill Hinman, the Director of the SEC’s Division of Corporation Finance, or “CorpFin,” has announced that he will be leaving by the end of the year. That’s not a surprise; in fact, high-level departures are common at the end of a president’s term, even if he (or, hopefully one day, she) is re-elected. However, it’s still a loss. Bill has presided over some of the best rulemaking in a long time, including making significant strides in disclosure effectiveness, a topic I hold dear. Of course, I don’t agree with everything the SEC has done under his watch, and there are topics – such as proxy plumbing, noted above – that I wish it had addressed. But, overall, Bill has been a good leader, and I wish him well.