Q3 SEC in Focus (EY publication)

Clayton outlines his guiding principles and agenda
In his first major speech as Chairman of the Securities and Exchange
Commission (SEC or Commission), Jay Clayton laid out eight guiding
principles for his chairmanship:
• The SEC must balance all three elements of its mission: investor
protection, facilitation of capital formation and maintenance of fair,
orderly and efficient markets.
• The SEC should address the long-term interests of Main Street investors.
• The SEC’s historic approach to regulation is sound.
• The cumulative consequences of regulatory actions can have lasting effects.
• The SEC must evolve as markets evolve in response to technology and innovation.
• Effective rulemaking must incorporate retrospective reviews to evaluate whether rules
are functioning as intended.
• Rulemaking must consider the costs of both compliance and demonstrating compliance.
• The SEC must coordinate effectively with other federal, state and international
regulators, standard setters and self-regulatory organizations.
While incremental regulatory changes may not seem significant on their own, in the aggregate
they can dramatically affect the market, Mr. Clayton said. He noted that the scope of required
disclosures in SEC filings has significantly expanded over the years and today’s requirements
may be influencing companies to remain private.
Issue 4, 5 October 2017
SEC in FocusQuarterly summary of current SEC activities
In this issue:
Clayton outlines his guiding
principles and agenda ................. 1
Clayton emphasizes cybersecurity
disclosures ................................. 2
SEC rulemaking and
implementation .......................... 3
SEC accepts comments on the
PCAOB standard on auditor’s
reporting model ....................... 3
Recent updates to SEC staff
guidance..................................... 3
SEC staff clarifies nonpublic
review program........................ 3
Scope of nonpublic review
program................................... 3
Omission of annual and interim
financial information from
draft registration statements.... 4
Updates to Financial Reporting
Manual..................................... 4
SEC and staff issue guidance on
pay ratio disclosure
requirements ........................... 5
Relief for some PBEs on effective
dates for the new revenue and
leases standards....................... 5
SEC guidance changes to reflect
new revenue standard.............. 5
SEC staff issues FAQs on rules
that modernize investment
company reporting................... 6
Staff clarifies guidance on
financial reporting obligations
for Form 8-A filers.................... 6
Other SEC activities....................... 6
Current practice matters ............... 7
Personnel changes......................... 8
Enforcement activities................... 9
Jay Clayton

EY AccountingLink | ey.com/us/accountinglink
2 | SEC in Focus Issue 4, 5 October 2017
Agenda items
Mr. Clayton said he intends to focus on increasing the attractiveness of the public capital
markets and bolstering the Commission’s enforcement and examination programs, among
other areas. He reiterated his concerns about the decline in the number of US listed
companies and his support of SEC actions that make it easier for companies to go public.
He also reminded companies that, if they believe that required financial statements would not
provide material benefits to investors and would be costly to obtain, Rule 3-13 of Regulation
S-X allows them to request SEC staff permission to omit this information or to submit
alternative information that might be of comparable benefit to investors at a reduced cost.
In discussing his priorities for enforcement and examination programs, Mr. Clayton said he
“fully intend(s) to continue deploying significant resources to root out fraud and shady
practices in the markets, particularly in areas where Main Street investors are most exposed.”
How we see it
Until the two open seats on the Commission are filled, Mr. Clayton’s ability to fully implement
his agenda may be limited to taking actions that do not require the Commission’s vote. This
is due in part to the need for all three commissioners to be present to form a quorum. That
is, a commissioner could prevent a vote on any proposed action that he or she does not
support, simply by not being present.
Clayton emphasizes cybersecurity disclosures
In a recent statement, Mr. Clayton emphasized the importance of identifying and managing
cybersecurity risks and reminded registrants to make appropriate disclosures about
cybersecurity risks and incidents in SEC filings.
“Issuers and other market participants must take their periodic and current disclosure
obligations regarding cybersecurity risks seriously, and failure to do so may result in an
enforcement action,” said Mr. Clayton. In an earlier speech, Mr. Clayton said the SEC needs to
be cautious about punishing responsible companies that suffer sophisticated cyber breaches.
He also highlighted the CF Disclosure Guidance: Topic No. 2, Cybersecurity, which the staff of
the Division of Corporation Finance issued in 2011, and said issuers should consider this
guidance when preparing disclosures about cybersecurity risks and events.
“Issuers should consider whether their publicly filed reports adequately disclose information
about their risk management governance and cybersecurity risks, in light of developments in
their operations and the nature of current and evolving cyber threats,” said Mr. Clayton.
Cybersecurity is a recurring theme that has been raised not only in the statement mentioned
above but also in Mr. Clayton’s testimony before the Senate Banking Committee and in his
other public remarks. The SEC also announced the formation of a Cyber Unit within its
Enforcement Division that will target cyber-related misconduct such as market manipulation
schemes involving false information spread through electronic and social media and hacking
to obtain material nonpublic information.
How we see it
With the increase in frequency and severity of cyber attacks and data breaches, as well as
Chairman Clayton’s emphasis on cybersecurity disclosures, we believe the SEC staff is
likely to focus on these disclosures in its reviews of filings.
EY resources
• New SEC Chairman Jay Clayton
outlines views in policy speech
(SCORE No. 04401-171US)

SEC rulemaking and implementation
SEC accepts comments on the PCAOB standard on auditor’s reporting model
In our comment letter, we recommended that the SEC approve the new Public Company
Accounting Oversight Board (PCAOB or Board) standard on the auditor’s reporting model.
We also recommended that the Commission conduct a comprehensive post-implementation
review of the standard to determine whether it has achieved its objectives or whether there
have been unintended consequences. We also urged the Commission to consider whether
additional rulemaking is warranted to further mitigate the risk of auditor and issuer liability
resulting from the standard’s implementation.
The PCAOB standard requires auditors to include significantly more information in their
reports, including a discussion of critical audit matters for audits of large accelerated filers
beginning in 2019 and most other filers in 2020. The standard also requires auditors to add
information about auditor tenure, clarify the language about the auditor’s responsibilities and
change the organization and format of reports beginning with periods ending on or after
15 December 2017.
The Commission is required to take action on this standard by 26 October 2017. In considering
a PCAOB rule, the SEC can only approve or disapprove the rule. It cannot make line item or
specific revisions, although the SEC can provide instructions regarding implementation or
amend rules once they become effective.
Recent updates to SEC staff guidance
SEC staff clarifies nonpublic review program
In the SEC staff’s first action to make it easier for companies to go public under Mr. Clayton,
the Division of Corporation Finance began accepting draft registration statements from all
companies for nonpublic review on 10 July 2017. Previously, only emerging growth
companies (EGCs) and certain foreign private issuers filing registration statements for an
initial public offering (IPO) were able to submit draft registration statements.
The Division of Corporation Finance recently clarified the scope of the nonpublic review
program and which interim and annual financial statements EGCs and non-EGCs may omit
from their draft registration statements.
Scope of nonpublic review program
The Division of Corporation Finance clarified that Securities Act registration statements
submitted by all companies before an IPO (e.g., registration statements for an exchange offer
of debt securities on Form S-4) are eligible for nonpublic review.
The SEC staff further clarified that an issuer eligible to participate in the nonpublic review
program that already has a registration statement on file and in progress may switch to the
nonpublic review process for future pre-effective amendments to its registration statement.
The issuer must agree to publicly file its amended registration statement, the initial draft
submission and all draft amendments in accordance with the timeline specified in the SEC
staff’s June 2017 announcement about the expansion of the nonpublic review program.
Separately, the SEC staff said at its meeting with the Center for Audit Quality (CAQ) SEC
Regulations Committee in September 2017 that Form 8-A pursuant to Section 12(b) of the
Exchange Act of 1934 (Exchange Act) and registration statements pursuant to Section 12(g)
of the Exchange Act are not eligible for nonpublic review. The staff said that a Form S-4
registration statement may be eligible, depending on the facts and circumstances, and
companies seeking a nonpublic review should contact the respective Assistant Director office.
EY resources
► EY Comment Letter, The
auditor’s report on an audit of
financial statements when the
auditor expresses an
unqualified opinion
EY resources
► To the Point, SEC staff
substantially expands scope of
confidential review program for
draft registration statements
(SCORE No. 04157-171US)

Companies should keep in mind that, under the Freedom of Information Act (FOIA), interested
parties can request draft registration statements submitted under the nonpublic review
program. Registration statements submitted confidentially by EGCs using relief provided by
the Jumpstart Our Business Startups Act are exempt from FOIA requests.
Omission of annual and interim financial information from draft registration
statements
The SEC staff issued two Compliance and Disclosure Interpretations (C&DIs) that clarify when
EGCs and non-EGCs may omit from draft registration statements annual and interim financial
information that they reasonably believe they will not be required to present separately at the
time of the contemplated offering (for EGCs) or the initial public filing (for non-EGCs). The
C&DIs state that both EGCs and non-EGCs must include all required interim financial
statements when they first file their registration statement.
The SEC staff provided the following examples: A calendar-year company that submits a draft
registration statement in November 2017 and reasonably believes that it will commence an
offering in April 2018 (if an EGC) or will publicly file a registration statement in April 2018 (if
a non-EGC) may omit the audited financial statements for the earliest year that will not be
required for an April 2018 offering or filing (i.e., 2015 for EGCs and 2014 for non-EGCs) as
well as interim financial information for 2017 and 2016. However, this interim financial
information would be required in the draft submissions if the public filing by an EGC or a non-
EGC is anticipated to occur in January 2018 before the full-year audited financial statements
for 2017 are available.
Previously, the SEC staff did not allow EGCs to omit interim financial information from their
confidential submissions.
Additionally, the staff affirmed during the CAQ Regulations Committee meeting in September
2017 that the relief to omit annual and interim financial information from draft registration
statements extends to eligible draft registration statements for securities to be listed on a national
securities exchange under Section 12(b) of the Exchange Act (i.e., Forms 10, 20-F, 40-F).
How we see it
Companies considering omitting interim financial information from their draft registration
statements should evaluate whether doing so could delay the offering because the SEC staff
would not have had the opportunity to review any results for the latest year. Companies
may mitigate this risk by voluntarily providing current year interim information, without
comparative prior year interim information, in their draft submissions.
Updates to Financial Reporting Manual
The Division of Corporation Finance updated its Financial Reporting Manual to:
• Allow registrants to request permission from the Division’s Office of the Chief Accountant
(CF-OCA) to substitute abbreviated financial statements in lieu of the full financial
statements of an acquired business identified as a predecessor
• Provide contact information for staff within the CF-OCA for companies and their advisers
to use when requesting financial statement waivers under Rule 3-13 of Regulation S-X or
obtaining clarifications on applicable rules and SEC filing requirements
• Incorporate the C&DIs discussed above on the financial information EGCs and non-EGCs
can omit from draft and publicly filed registration statements

SEC and staff issue guidance on pay ratio disclosure requirements
The Commission released interpretive guidance stating that it won’t bring enforcement
actions challenging pay ratio disclosures based on estimates made in good faith. The guidance
also clarifies that registrants can use existing internal records, such as tax or payroll records,
to determine the median employee’s annual compensation for use in the pay ratio disclosures
that many registrants will begin making in 2018.
The SEC staff separately released guidance and examples to help registrants determine how
they can use statistical sampling methods and estimates in calculating their pay ratio. The
staff also updated its C&DIs on pay ratio disclosures to reflect the Commission guidance.
The Commission and SEC staff guidance was issued in response to public feedback on the
unexpected challenges that issuers are facing as they prepare to comply with the pay ratio
rule, which was mandated by the Dodd-Frank Wall Street Reform and Consumer Protection
Act (Dodd-Frank Act). The rule requires registrants to begin disclosing the ratio between the
pay of their median employee and their chief executive officer or other principal executive
officer for the first fiscal year beginning on or after 1 January 2017. Emerging growth
companies, smaller reporting companies, foreign private issuers and most registered
investment companies are exempt from the requirement.
Relief for some PBEs on effective dates for the new revenue and leases standards
The Financial Accounting Standards Board issued Accounting Standards Update 2017-13 to
incorporate the announcement from the SEC Observer to the Emerging Issues Task Force that
the SEC staff would not object if entities that are considered public business entities (PBEs)
only because their financial statements or financial information is required to be included in
another entity’s SEC filing use the effective dates for private companies when they adopt
Accounting Standards Codification (ASC) 606, Revenue from Contracts with Customers, and
ASC 842, Leases.
This would include entities whose financial statements are included in another entity’s SEC
filing because they are significant acquirees under Rule 3-05 of Regulation S-X, significant
equity method investees under Rule 3-09 of Regulation S-X or equity method investees whose
summarized financial information is included in a registrant’s financial statement notes under
Rule 4-08(g) of Regulation S-X.
SEC guidance changes to reflect new revenue standard
The SEC staff issued Staff Accounting Bulletin (SAB) 116 to align its revenue guidance with
ASC 606. SAB 116 states that once entities adopt ASC 606, they should no longer apply SAB
Topic 13, Revenue Recognition, and SAB Topic 8, Retail Companies. It also modifies Section A,
Operating-Differential Subsidies, of SAB Topic 11, Miscellaneous Disclosure, to clarify that
registrants should present revenue from operating-differential subsidies separately from
revenue from contracts with customers or as a credit in the costs and expenses section of the
statement of income.
The SEC also issued a release stating that registrants should no longer use Securities
Exchange Act Release 23507 or refer to the criteria in Accounting and Auditing Enforcement
Release 108 to recognize revenue for bill-and-hold arrangements upon adoption of ASC 606.
Instead, those entities should use the guidance for bill-and-hold arrangements in ASC 606.
In a second release, the SEC said manufacturers should recognize revenue and provide the
disclosures required by ASC 606 when vaccines specified in the release are placed into
federal government stockpile programs. This release updates the Commission Guidance
Regarding Accounting for Sales of Vaccines and Bioterror Countermeasures to the Federal
Government for Placement into the Pediatric Vaccine Stockpile or the Strategic National
Stockpile. The updated guidance applies to the same vaccines as the previous guidance.
EY resources
► To the Point, SEC finalizes ‘pay
ratio’ rule (SCORE No. CC0415)

Until they adopt ASC 606, registrants should continue to refer to prior Commission and staff
guidance on revenue recognition topics.
SEC staff issues FAQs on rules that modernize investment company reporting
The staff of the SEC’s Division of Investment Management issued frequently asked questions
(FAQs) about the investment company reporting modernization rules that the SEC adopted in
October 2016. The FAQs address (1) compliance dates and general filing obligations,
(2) Form N-PORT, (3) Regulation S-X and (4) Form N-CEN.
Staff clarifies guidance on financial reporting obligations for Form 8-A filers
The SEC staff issued new C&DIs to clarify when financial statements for a Regulation A
offering with a concurrent Exchange Act registration must be current and when annual and
quarterly financial statements must be filed.
The C&DIs clarify that an entity that files a post-qualification amendment for a Regulation A
offering concurrently with Form 8-A to register a class of securities under the Exchange Act
for trading on a national securities exchange must provide current financial statements (i.e.,
not older than nine months from the qualification date of a post-qualification Form 1-A).
These C&DIs also clarify that Regulation A issuers that register on Form 8-A can file within 90
days after the effective date of their Form 8-A their first annual report on Form 10-K for the
preceding fiscal year. They can also file their first Form 10-Q (or 10-Q’s covering two
quarters) up to 45 days after the effective date of their Form 8-A or by the required due date
of the Form 10-Q (as if the issuer had been required to file Form 10-Q), whichever is later.
Since the SEC amended Regulation A in 2015 to increase the annual limit on exempt public
offerings to $50 million, the number of offerings has increased and companies have begun
listing their securities on national securities exchanges.
Other SEC activities
SEC begins search for new PCAOB chair and Board members
Mr. Clayton announced that the SEC is searching for successors for PCAOB Chairman James
Doty and other members of the PCAOB. One of the seats on the five-member board is vacant,
two are held by members whose terms have expired and one is held by a member whose term
expires this month. Mr. Doty, who has been Chairman since 2011, has agreed to continue in
that role during the search process.
In making the announcement, Mr. Clayton highlighted a number of PCAOB accomplishments
under Mr. Doty, including enhancements to the PCAOB’s inspection processes for issuer and
broker dealers, several major standard-setting initiatives, increased use of economic analysis
and expanded cooperation with international regulators.
SEC searches for small business advocate, creates capital formation committee
The Commission announced that it is searching for an Advocate for Small Business Capital
Formation, who will be responsible for overseeing a new SEC office, the Office of the Advocate
for Small Business Capital Formation. This office, created by Congress in 2016, will advocate
for the interests of small businesses and small business investors.
In addition, the SEC is creating the Small Business Capital Formation Advisory Committee to
replace its Advisory Committee on Small and Emerging Companies (ACSEC). The Advocate of
Small Business Capital Formation will be a member of this new committee along with 10 to
20 members appointed by the Commission.

During its last meeting, ACSEC approved its final report to the Commission, which included all of
its recommendations made over the past six years and identified areas for continued focus by the
Commission, the SEC staff and the new Small Business Capital Formation Advisory Committee.
SEC’s DERA issues report on access to capital and market liquidity
Access to capital and market liquidity have not declined after the implementation of financial
regulations following the 2010 Dodd-Frank Act, according to a report to Congress from the
SEC’s Division of Economic and Risk Analysis (DERA). DERA studied whether financial
regulations mandated by the Dodd-Frank Act, particularly the Volcker Rule,1
adversely
affected market liquidity in the US and businesses’ ability to raise capital. While the report
acknowledged that quantifying the effects of any one regulation on capital markets is
challenging, the staff provided trends in debt and equity markets that support its conclusion.
The report also noted that companies raised $2.58 trillion more capital through US private markets
than they did through registered offerings in the US from 2010 through 2016. This finding is
consistent with EY’s study2
that also observed a significant increase in capital available through
private markets in recent years, which has allowed many companies to stay private longer.
Initial coin offerings could be subject to federal securities laws
In a recent report, the staff of the SEC’s Division of Enforcement concluded that the digital assets or
tokens referred to as DAO tokens offered and sold in 2016 by an unincorporated organization
(i.e., The DAO) were securities and subject to federal securities laws. While the facts and
circumstances of other initial coin offerings (ICOs) or token sales may differ, the SEC staff
cautioned market participants involved in these transactions to carefully evaluate whether the sales
may be subject to registration under the federal securities laws or whether an exemption exists.
In recent years, virtual organizations have increasingly raised capital by selling ICOs online
and using blockchain technology to process the transactions. The DAO exchanged its tokens
for digital currency called Ether. The SEC staff concluded in the report that any entity
engaged in exchanging digital token securities must register as a National Securities
Exchange or operate pursuant to an exemption of such registration (e.g., operate as an
alternative trading system, or ATS, that is exempt from the definition of an exchange under
Rule 3a1-1(a)(2) and complies with Regulation ATS).
In a recent speech, SEC Chief Accountant Wesley Bricker also emphasized that both the
issuers and the holders of digital tokens need to appropriately consider the accounting and
financial reporting considerations of these assets in their financial statements.
Current practice matters
SEC provides relief for companies and individuals affected by hurricanes
The SEC issued an order providing temporary relief to companies and individuals affected by
hurricanes Harvey, Irma or Maria from certain filing and regulatory requirements of the
federal securities laws.
The order extends the deadlines to file or furnish reports required under Section 13(a) or
15(d) of the Exchange Act (e.g., Forms 10-K, 10-Q, 8-K). The extended deadlines are 10
October 2017 for those affected by Hurricane Harvey, 19 October 2017 for those affected by
Hurricane Irma and 2 November 2017 for those affected by Hurricane Maria.
The order also temporarily allows independent auditors to help clients reconstruct accounting
records that were lost or destroyed in the hurricanes. Such bookkeeping services are usually
prohibited under SEC Rule 2-01(c)(4)(i). Before accepting such an engagement, the auditor
must carefully evaluate whether the scope of the proposed services falls within the relief
provided under the order and obtain audit committee pre-approval.
EY resources
► Technical Line, Accounting for
the effects of natural disasters
(SCORE No. 05106-171US)

The order also temporarily exempts registered investment companies from their obligation
to transmit annual and semi-annual reports to investors who are affected by any of the
hurricanes. In addition, the Commission adopted an interim final temporary rule extending
the deadlines for affected issuers to file specified reports and forms required by Regulation
Crowdfunding or Regulation A.
Recent SEC staff comments and trends
Non-GAAP financial measures moved to the top spot in our analysis of the SEC staff’s areas of
focus in comment letters during the year ended 30 June 2017. After increasing significantly
during the last six months of 2016, the number of comments on this topic moderated in the
first six months of 2017.
Management’s discussion and analysis continued to be the second most-frequent topic for
staff comment. Other frequent areas of comment included fair value measurements, segment
reporting, revenue recognition, intangible assets and goodwill and income taxes.
More companies triggering SEC Rule 701 financial reporting obligations
As companies remain private longer and continue growing, they often trigger the requirement
under Rule 701 to provide financial statements and other disclosures to employees and other
covered persons who purchase or receive securities that in the aggregate exceed $5 million
in a 12-month period. SEC Rule 701 provides a registration exemption allowing private
companies to offer stock-based compensation (e.g., stock options, restricted stock awards,
employee stock purchase plans) to their employees and other covered persons. A private
company that triggers the reporting requirement but fails to provide the required information
loses the registration exemption for the entire offering made during the 12-month period in
which it exceeds the $5 million threshold.
How we see it
As a best practice, private companies that use the Rule 701 exemption should implement
robust controls to track the volume and expected timing of sales or grants under their equity
compensation plans, to avoid unintentional noncompliance with the disclosure requirements.
Personnel changes
Peirce and Jackson nominated as SEC Commissioners
Hester Peirce, a Republican, and Robert Jackson Jr., a Democrat, were
nominated by President Donald Trump to serve as SEC Commissioners.
Ms. Peirce is a senior research fellow and director of the Financial Markets
Working Group at George Mason University’s Mercatus Center and has
served as senior counsel for the Senate Committee on Banking, as a staff
attorney in the SEC’s Division of Investment Management and as counsel
to former SEC Commissioner Paul Atkins. She was nominated two years
ago by President Barack Obama but wasn’t confirmed.
Mr. Jackson is a law professor at Columbia University and director of the
school’s Program on Corporate Law and Policy. His work at Columbia
includes the empirical study of executive compensation and corporate
governance matters. He also co-chaired a group that petitioned the SEC in
2011 to mandate that public companies disclose their political spending.
Prior to joining Columbia in 2010, Mr. Jackson served as an adviser to
senior officials at the Treasury Department and in its Office of the Special
Master for TARP3
Executive Compensation.
EY resources
► SEC comments and trends, An
analysis of current reporting
issues, September 2017
(SCORE No. 05443-171US)
► SEC Reporting Update, 2017
trends in SEC comment letters
(SCORE No. 05444-171US)
EY resources
► Technical Line, Financial
reporting obligations under SEC
Rule 701 for private companies
that issue compensation
(SCORE No. 04374-171US)
Hester Peirce
Robert Jackson Jr.

If confirmed by the Senate, Ms. Peirce and Mr. Jackson would fill the two vacant seats on the
Commission.
SEC announces division director appointments
The Commission named Dalia Blass and Jeffrey Harris as directors of the SEC’s Division of
Investment Management and DERA, respectively.
Enforcement activities
Pharmaceutical company settles charges of overstating a performance metric
A pharmaceutical company agreed to settle charges that it misled investors by overstating its
sales metric known as the “conversion rate,” which it described as the percentage of patients
who ultimately purchased its drug after receiving a prescription.
While the actual conversion rate was around 50% during 2013 to 2014, the SEC alleged that
the company’s former chief executive officer misrepresented the conversion rate in certain
public conference calls and in a 2013 investor conference by stating that the number of
unfilled prescriptions is “not a material number” and the “vast majority” of its drug
prescriptions are filled and result in actual sales. The company agreed to pay a $4.1 million
penalty to settle the charges without admitting or denying the charges.
The SEC staff has said performance metrics provide valuable information to investors but has
stressed the importance of having effective disclosure controls to calculate performance
metrics. “Similar to non-GAAP financial reporting, key operating metrics and forecasts may
also be distorted via bias — for example, painting a potentially misleading picture — error or
fraud, all of which undermine the credibility of the reporting. Therefore, it is important that
companies proactively and thoughtfully address risks to their reporting,” Mr. Bricker said in a
speech in May 2017.4
SEC decides most government employees are eligible for whistleblower awards
In an order that awarded nearly $2.5 million to an employee of a domestic government
agency whose tip and continued support helped the Commission bring an enforcement action
against a company, the SEC said most government employees are eligible for whistleblower
awards. They include people who work for a local, state or federal agency, except those who
work for certain regulatory agencies (i.e., the SEC, the Comptroller of the Currency, the
Board of Governors of the Federal Reserve System and the Federal Deposit Insurance
Corporation) or law-enforcement organizations.
The SEC’s whistleblower program has awarded approximately $158 million to 46
whistleblowers since its inception.5
What’s next at the SEC?
The SEC is expected to propose rules, as required by the Fixing America’s Surface
Transportation Act, to implement recommendations in the 2016 Report on Modernization
and Simplification of Regulation S-K. Once the two vacant seats on the Commission are
filled, we expect the SEC to pursue additional rulemaking related to disclosures required by
Regulations S-X and S-K and to increase the number of issuers that qualify as smaller
reporting companies.

1
Volcker Rule refers to part of the Dodd-Frank Act that restricts US banks from making certain speculative investments.
2
Looking behind the declining number of public companies: An analysis of trends in US capital markets
(EYG No. 01934-171Gbl).
3
Troubled Asset Relief Program (TARP).
4
Speech by Wesley R. Bricker, SEC Chief Accountant, at the 2017 Baruch College Financial Reporting Conference.
The text is available at https://www.sec.gov/news/speech/remarks-2017-baruch-college-financial-reporting-
conference-advancing-our-capital.
5
https://www.sec.gov/news/press-release/2017-134.
Endnotes:
EY| Assurance| Tax | Transactions | Advisory
© 2017 Ernst & Young LLP.
All Rights Reserved.
SCORE No. 05667-171US
ey.com/us/accountinglink
About EY
EY is a global leader in assurance, tax, transaction and advisory services. The insights and quality services we deliver help build trust and confidence in the
capital markets and in economies the world over. We develop outstanding leaders who team to deliver on our promises to all of our stakeholders. In so doing,
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EY refers to the global organization, and may refer to one or more, of the member firms of Ernst & Young Global Limited, each of which is a separate legal
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