SEC Issues Revised Statement for Well-Known Seasoned Issuer Waivers (with Lofchie Comment)
The SEC Division of Corporate Finance released a revised statement on well-known seasoned issuer ("WKSI") waivers where there has been a violation of law.
The SEC's guidance provides that a "waiver, which could include conditions or undertakings, may be granted if a review of all of the facts and circumstances leads the Division to conclude that granting the waiver would be consistent with the public interest and the protection of investors." In making that determination, the SEC stated it will consider the nature of the violation or conviction and whether it involved disclosure for which the issuer or any of its subsidiaries was responsible, or calls into question the ability of the issuer to produce reliable disclosure currently and in the future. The consideration will involve the following questions:
- What was issuer responsible for and what was the duration of the misconduct?
- What remedial steps did the issuer take?
- What is the impact if the waiver request is denied?
Lofchie Comment: Firms that are in the process of negotiating settlements for which they may require a waiver may wish to discuss with the SEC whether the revised guidance could impact their settlement terms.