Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Saturday, May 26, 2007

Perspectives on The Past Week's Stories

The biggest stories include the SEC's deregulatory efforts on behalf of small companies.  The SEC has been under tremendous pressure to exempt small public companies from SOX section 404.  Instead, on Wednesday, it approved interpretive guidance that it expects will allow for reduced costs in implementing internal controls, particularly at smaller public companies.  The SEC says that companies should focus on what really matters -- risk and materiality.  It also said that smaller companies, which become subject to SOX 404 this year for the first time, should benefit from the "scalability" (I didn't know that was a word!) and flexibility of the new approach.  PCAOB provided similar relief for auditors at its Thursday meeting.

The SEC this week also proposed rules on capital-raising by small companies.  The proposed rules address recommendations made by the SEC's Advisory Committee on Smaller Public Companies and include:  a new system of securities regulation for smaller public companies (up to $75 million in public float); availability of shelf registration to companies with a float below $75 million; and a shortened holding period of six months under Rule 144 for restricted securities.

The other big news item is China's decision to invest in something other than U.S. Treasury bills.  It will purchase $3 billion of non-voting securities in private equity firm The Blackstone Group.  This will constitute a less than 10% stake in the firm, which is going public soon.

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