May 8, 2017

WKSI Waivers: More Guidance and never Everybody Concurs

WKSI Waivers: More Guidance and never Everybody Concurs

As you can see here, on March 12, 2014, the Division of Corporation Finance from the Registration (SEC) revised its previous assistance with granting waivers to well-known seasoned issuers (WKSIs) to carry on to become qualified as WKSIs despite otherwise disqualifying misconduct. Interestingly, on April 24, 2014, the SEC further updated its revised guidance, as reflected here. Any issuer preparing a WKSI waiver request must make sure to base its request around the latest guidance, which appears to point that acquiring a WKSI waiver might be harder moving forward than previously.

Particularly, the SEC expanded its description from the framework it’ll use for figuring out if your WKSI waiver request establishes a showing of excellent cause. The SEC added the next language to the guidance, which signifies the bar continues to be elevated for acquiring a waiver if the main cause from the ineligibility would be a criminal conviction or perhaps a scienter based disclosure breach: “Where there’s a criminal conviction or perhaps a scienter based breach involving disclosure that the issuer or any one of its subsidiaries was responsible, the issuer’s burden to exhibit good cause that the waiver is justified could be considerably greater.”

Additionally, the SEC revised its guidance concerning the thought on the outcome the denial of the waiver request might have, by broadening the weather it might consider. The guidance now claims that “We may also take a look at any effects the issuer’s lack of WKSI status might have for that markets in general and also the investing public in thinking about whether a waiver could be in conjuction with the public interest and also the protection of investors.” In comparison, within the March guidance, review from the effects such loss might have around the markets in general and also the investing public was qualified through the following language: “in light from the issuer’s significance towards the markets and it is connectedness with other market participants.” This language continues to be taken off the guidance indicating the SEC might take a wider method of reviewing the results of the issuer’s lack of WKSI status.

The issuance of the newest WKSI waiver guidance seems to mirror the continuing debate inside the SEC concerning the frequency that WKSI waivers along with other accommodations are granted to most of the world’s largest banking institutions, which debate has lately gone public (see here and here). Considering this enhanced public scrutiny, individuals seeking WKSI waivers should be much more conscious from the SEC’s revised guidance in preparing their WKSI waiver demands.


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