The SEC has transitioned to a “full telework posture” in response to the outbreak of COVID-19 in the United States. However, the Commission is taking pains to assure market participants that it is still business as usual at the SEC. The Commission recently published the SEC Coronavirus (COVID-19) Response on its website, which summarizes, among other things, market monitoring priorities, guidance and targeted assistance and relief, and investor protection efforts the SEC is undertaking in response to the Coronavirus.
The SEC is focusing on five market-monitoring priorities:
- Monitoring trading, markets and securities infrastructure to ensure consistent functionality, integrity and resiliency (including review of business continuity plans (BCP)) of U.S. securities and derivatives clearinghouses, exchanges, other market utilities and key market participants.
- Closely monitoring the largest U.S. broker-dealers to stay updated regarding their activities and operations, including BCPs and capital and liquidity.
- Monitoring and outreach to advisors and asset and fund managers, and in particular those with material exposures in markets and asset classes that have been most affected by COVID-19.
- Monitoring and analyzing the effects of COVID-19 on the functioning of U.S. and global securities markets (e.g., market price movements, credit ratings, capital flows, funding requirements, and the availability of credit and capital).
- Monitoring corporate filings and disclosures (e.g., changes in trends and outlook, the addition or modification of risk factors, and discussion of supply chain and distribution matters).
The Commission also is publishing guidance to market participants who are themselves responding to the outbreak. Specifically, the SEC called out the need for issuers to ensure that their financial reporting and disclosure statements should account for the impact, both real and potential, of COVID-19. The Commission also has started to issue conditional relief to participants facing challenges due to travel and social-distancing, including extension of reporting deadlines and permitting virtual board and shareholder meetings.
Lastly, the SEC is actively monitoring for fraud and misconduct affecting U.S. investors relating to COVID-19. The SEC already has issued issue trading suspensions against two issuers because of concerns about the accuracy of the issuers’ claims regarding viable treatments for the coronavirus (see Aethlon Medical, Inc. (2/7/2020) and Eastgate Biotech (2/24/2020)).
For more legal insights visit our Coronavirus (COVID-19) page.
*This alert is provided for information purposes only and does not constitute legal advice and is not intended to form an attorney client relationship. Please contact your Sheppard Mullin attorney contact for additional information.*