Atkins notes a D.C. Circuit court vacated SEC's 75% independent director and independent chair requirement over 20 years ago.
“More than 20 years ago, the U.S. Court of Appeals for the District of Columbia Circuit vacated a rulemaking that would have mandated a board with no less than 75% independent directors and an independent chair as a condition to reliance on certain exemptive rules.”
Atkins proposes making electronic delivery the default method for investor communications as a key pillar of his agenda.
“By proposing to permit electronic delivery (e-delivery) to become the default method for issuers, market intermediaries, and others to communicate with investors, we are taking another stride toward a regulatory framework suitable for the modern era, a key pillar of my agenda.”
SEC speeches and statements
“Two new exemptions from registration under the Securities Act would be created for offerings of covered investment contracts: a “startup exemption” for up to $5 million over a four-year period, and a “fundraising exemption” permitting up to $75 million during each 12-month period.”
Atkins clarifies that exempting some crypto assets from securities laws does not exempt all crypto activities.
“That the securities laws do not apply to all crypto assets and activities, however, does not mean that the securities laws do not apply to any crypto assets or activities.”
Atkins hopes e-delivery will enable interactive and customized disclosures impossible with paper.
“I hope to see interactive and customized disclosures, something that is not possible with paper.”
Atkins argues default paper delivery creates unnecessary expenses that reduce American investors' returns.
“Default paper delivery results in a constant source of unnecessary expenses that are paid for by American investors and reduce their investment returns.”
Atkins criticizes the SEC for requiring firms to design disclosures for paper first, even under the new e-delivery rule.
“The SEC still assumes and sometimes requires that firms, in the first instance, will design disclosures for viewing on paper (whether it is paper that firms mail or, now with Reg E-Delivery, paper that customers can print from home printers).”
Atkins says public market benefits cannot be re-created privately and aims to extend them to more issuers.
“benefits that “simply cannot be re-created privately.” 1 This morning, I would like to focus on the Commission’s recent efforts to extend those benefits to a broader range of issuers”
Atkins emphasizes efficient stewardship and minimizing costs to PCAOB-funded companies, brokers, and dealers.
“I strongly encourage applications from candidates interested in furthering the public interest through the efficient stewardship of PCAOB resources.”
Atkins explains Regulation E-Delivery would allow electronic delivery without requiring affirmative consent from investors.
“If adopted, Regulation E-Delivery would establish requirements and conditions under which essential information could be delivered electronically to investors and others without first obtaining their affirmative consent to do so.”
Atkins states the SEC is simplifying registration and disclosure to let more companies go public.
“Under the leadership of Chairman Atkins, the Commission is proposing and adopting rules that simplify registration and disclosure requirements and allow more companies to go public with fewer unnecessary regulatory hurdles.”
Atkins says the agenda includes proposals to transform the disclosure regime to revitalize IPOs.
“This agenda includes a number of proposals critical to realizing that mission by transforming our disclosure regime.”
Atkins says the Commission proposed allowing companies to file semiannually instead of quarterly.
“In May, the Commission proposed amendments that, if adopted, would allow public companies the option to file one semiannual report each year, in lieu of three quarterly reports.”
Atkins lists specific SEC requirements that perpetuate paper-first thinking, including font size and same-page rules.
“Other paper-as-the-standard disclosure rules talk about font size, relative prominence, and disclosures appearing on the same page.”
Atkins says the Division will also stop responding to Rule 14a-8(j) notices with non-objection letters.
“It also will no longer respond to notices filed under Rule 14a-8(j) with a letter indicating that it will not object if a company omits a proposal from its proxy materials.”
Atkins says the goal is cutting requirements that lack proportionate benefits, not cutting arbitrarily.
“The goal is not to cut for the sake of cutting but to cut requirements that do not yield proportionate benefits.”
Atkins announces Reg E-Delivery proposal making electronic delivery the default for securities disclosures without requiring affirmative consent.
“the Commission takes a further step in recognizing these developments by proposing Regulation E-Delivery (“Reg E-Delivery”).”
Atkins argues SEC rules prevent firms from using modern technologies like apps, video, and podcasts for disclosure.
“We have made it hard for firms to experiment with cellphone apps, streaming video, podcasts, virtual conference room presentations, and anything else that is not an e-delivered pdf.”
SEC speeches and statements
“Even when a crypto asset was properly treated as a security, prospective issuers were provided no realistic way to comply with the Commission’s registration process.”
Atkins says persons who sought to register crypto offerings were given a bureaucratic runaround with no resolution.
“Persons who sought to register their crypto offerings were often given a bureaucratic runaround with no resolution in sight.”
Atkins explains the proposal eliminates affirmative consent requirement but preserves opt-out rights for paper delivery.
“These entities would not be required to obtain affirmative consent from investors and other recipients, but investors still would be able to opt out of default e-delivery and receive paper copies of information upon request.”
Atkins announces the Commission proposes two registration exemptions tailored for crypto assets sold as investment contracts.
“Today, the Commission proposes new fundraising pathways tailored for the unique characteristics of crypto assets being sold as part of investment contracts.”
Atkins notes federal securities laws do not mandate paper or mail delivery for disclosures.
“It is worth recognizing that the federal securities laws generally do not prescribe paper or mail as the required method of delivery for regulatory disclosures or reports.”
Atkins proposes a test: does disclosure materially change valuation or just burden small companies disproportionately.
“is a given disclosure obligation producing information to investors that materially changes the enterprise value of a company or its stock price?”
Atkins details startup exemption allowing $5 million over four years and fundraising exemption allowing $75 million per year.
“The startup exemption would permit offerings of up to $5 million during a four-year period.”
SEC speeches and statements
“The proposed rules include two offering exemptions tailored for innovations in the crypto asset markets: a “startup exemption,” which would allow for offerings up to $5 million during a four-year period, and a “fundraising exemption” allowing for offerings of up to $75 million each year.”
Atkins cites SEC data showing 80% of U.S. investors prefer e-delivery for non-personal documents, 63% even for personal information.
“The Office of Investor Research within the Commission’s Office of the Investor Advocate found that nearly 80% of U.S investors prefer some form of e-delivery for financial disclosure documents that do not include personal information, and also that a majority (approximately 63%) prefers some form of e-delivery even for documents that do include personal information.”
Atkins cites 40 percent decline in public companies over recent decades as rationale for returning to disclosure foundation.
“Presented with a 40 percent decline in public companies over the past few decades, we are summoned not to create more complexity nor reinvent our mandate, but to restore it to its foundation: that is, disclosure of material information.”
Atkins argues paper-default delivery no longer matches majority investor preferences in the modern era.
“Delivering information via paper unless the investor affirmatively elects otherwise no longer reflects how the majority of investors prefer to receive information.”
Atkins suggests crypto vaults may qualify as investment contracts under the Howey test.
“A vault, for example, could be a common enterprise in which users invest money with a reasonable expectation of profits to be derived from the vault deployer’s and curator’s entrepreneurial or managerial efforts.”
Atkins argues climate disclosure rules exceeded statutory authority and abandoned materiality, deterring companies from going public.
“Finally, we proposed rescinding the prior Commission’s climate disclosure rules — which, I believe, exceeded the Commission’s statutory authority and abandoned the foundational principle that our disclosure rules should be rooted in materiality.”
Atkins emphasizes the SEC is a disclosure regulator, not a merit regulator.
“I have said it many times before, and I will say it again: the SEC is a disclosure regulator, not a merit regulator.”
Atkins asserts materiality has always been rooted in financial considerations under Supreme Court definition.
“Or, said another way, materiality, as defined by the Supreme Court, is and has always been a concept inherently rooted in financial considerations.”