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The United States Securities & Exchange Commission (the SEC or the Commission) recently held its annual “SEC Speaks” conference in Washington, DC on February 20 and 21, 2015, which recapped the SEC’s prior year and emphasized SEC regulation and enforcement priorities for the coming year. Chair Mary Jo White and other SEC commissioners highlighted various topics that have and will continue to impact the securities market and various market participants, including issuer registrants. We have highlighted the below trends and matters that may specifically affect our foreign private issuers:

  • Emphasis on enforcement. In 2014, the SEC brought 755 enforcement cases, which was the highest number of cases in the history of the Commission, and obtained over US$4.1 billion in monetary relief ordered – also an agency record. The SEC brought a wide range of actions and focused on innovative, high impact cases to punish and deter wrongdoers in a way that sent important messages to the market. These cases included actions to halt a fraudulent bond offering, issuing the largest-ever whistleblower award – US$30 million, as well as several actions for deficient financial reporting/disclosures, auditor independence and various accounting issues. Going forward, the SEC has remarked that they will continue to focus on bringing enforcement actions in 2015, particularly actions that have a real impact, which can be used to send the “strongest message of deterrence” and to serve as a warning to registrants and the investment community.
  • Examinations. The SEC conducted over 1,850 registrant examinations, which included the use of data analytics and a cybersecurity sweep of over 100 registrants to test their cybersecurity and web-based preparedness. As such, foreign private issuers are encouraged to continue maintaining their disclosure policies and staying up-to-date on their periodic reporting and annual compliance responsibilities. As for the cybersecurity sweep, while the 2014 examination focus was on broker-dealers and investment advisers, there is always the possibility that these examinations can expand to registrants, particularly with respect to the cybersecurity sweeps, as the SEC has previously emphasized their focus on registrants’ ability to maintain proper cybersecurity protocols and measures.
  • XBRL. The SEC would like to continue pushing for the continued application and improvement of XBRL (eXtensible Business Reporting Language) to make financial information more accessible to investors. However, the SEC highlighted potential difficulties with certain US Congressional action, legislation of which, if passed, could exempt a majority of reporting companies. While foreign private issuers that prepare financial statements in accordance with International Financial Reporting Standards currently are not required to incorporate XBRL into their filings, it remains to be seen whether the SEC will be able to settle on a suitable XBRL taxonomy for foreign private issuers in the near future given these Congressional measures.

  The full text of the various remarks by the SEC can be found here:


Christopher Shen is a registered foreign lawyer in Baker & McKenzie's Hong Kong office. His practice primarily focuses on international capital markets, with extensive experience advising issuers, financial institutions and selling shareholders on debt, equity-linked and equity capital markets transactions that originate from the United States, PRC, Russia, Thailand, Malaysia, Singapore, Hong Kong, Taiwan and Macau.

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