Tuesday, August 25. 2020
Specifically, new Rule 15 would:
- redact, remove, or prevent dissemination of sensitive personally identifiable information, which, if released, may result in financial or personal harm
- prevent submissions that pose a cybersecurity threat
- correct system or SEC staff errors
- remove or prevent dissemination of submissions made under an incorrect EDGAR identifier
- prevent submissions when there are disputes over the authority to use EDGAR access codes
- prevent acceptance or dissemination of an attempted submission that the SEC has reason to believe may be misleading or manipulative and allow acceptance or dissemination if the concerns are satisfactorily addressed
- prevent an unauthorized submission or otherwise remove related access
- remedy similar administrative issues relating to submissions
Sensitive Personally Identifiable Information
The SEC has sought to reduce personally identifiable information included in EDGAR submissions that may result in financial or personal harm to individuals should it be released. Proposed Rule 15(a)(1) would permit the SEC to 1) redact submissions containing personally identifiable information; 2) remove submissions containing sensitive personal information; and/or 3) prevent dissemination of submissions containing this information. If the SEC takes these steps, it may communicate as necessary with the filer to facilitate submission of a version of the filing in which the sensitive information has been redacted. The proposed rule would also clarify that the SEC may take further steps to ensure that sensitive personal information does not exist in EDGAR, and it will communicate as necessary with filers to facilitate submissions in which such information is redacted. The action the SEC takes to remove, redact, or prevent dissemination of the sensitive information would be based on when the SEC first becomes aware of the situation.
Proposed Rule 15(a)(2) would specify that the SEC may prevent any submission that to EDGAR that poses a cybersecurity threat. This includes but is not limited to those submissions containing malware or viruses. The SEC will communicate as necessary with the filer regarding a suspected submission. Actions to address cybersecurity threats in EDGAR submissions will benefit all EDGAR users while promoting the reliability and integrity of the system.
System and SEC Staff Errors
If SEC staff determine that a submission has not been processed by EDGAR, has been processed incorrectly by EDGAR, or contains an error attributable to the SEC staff, Proposed Rule 15(a)(3) allows the SEC to correct and/or prevent dissemination of the submission. The rule also declares that the SEC may communicate as necessary with the filer to facilitate filer corrective disclosure. Under the SEC’s existing practice, the SEC first attempts to correct the error without unduly burdening filers and without contacting filers unnecessarily (for example, a system outage delaying acceptance of a filing may prompt the SEC to change the acceptance date to the intended date). The SEC may work proactively with filers to accomplish filer corrective disclosure when necessary.
Incorrect EDGAR Identifiers
Sometimes filings are incorrectly submitted and therefore not associated with the correct unique identifying number. This can cause confusion for filers, investors, and other EDGAR users. Proposed Rule 15(a)(4) specifies that the SEC may remove and/or prevent public dissemination of a submission that has been made under an incorrect EDGAR unique identifying number. Again, in such a case, the SEC may communicate as necessary with the filer and others to facilitate a filer corrective disclosure. When such errors cannot be resolved by filer corrective disclosure, the SEC may need to remove the erroneous submission.
EDGAR Access Code Disputes
In the event the SEC determines that a dispute exists as to which persons have the authority to make submissions on behalf of a filer, Proposed Rule 15(a)(5) dictates that the SEC may prevent a filer from making submissions until the dispute is resolved by the disputing parties or by a court of competent jurisdiction. These disputes may arise when two or more parties each claim control of a filing entity and each demand access to the entity’s EDGAR account, for example. Since these situations often fall outside the scope of federal securities laws, the SEC has asked the disputing parties either to resolve the dispute themselves or have the matter adjudicated under the relevant state corporation law.
Proposed Rule 15(a)(6) dictates that the SEC may prohibit acceptance or dissemination of a submission while evaluating the circumstances surrounding the submission should the SEC suspect that a submission or an attempted submission may be misleading or manipulative. For example, the filer may include statements in the submission that do not relate to the form, fail to provide responsive information, or are otherwise misleading. The SEC may allow acceptance or dissemination of the filing if its concerns are satisfactorily addressed. In these circumstances, the filing would receive the date it would have received as long as other provisions of Rule 15 do not apply.
Should the SEC believe that there has been an unauthorized submission or an attempt to make an unauthorized submission on EDGAR, proposed Rule 15(a)(7) specifies that the SEC may prevent the use of EDGAR access codes. When there are questions as to whether a particular submission or attempted submission was authorized, SEC staff will investigate the circumstances surrounding the submission and evaluate what steps to take. The proposed rule also indicates that in these situations the SEC may prevent any further submissions by the filer or otherwise remove the filer’s access to EDGAR.
Additional Remedial Steps
The SEC cannot anticipate every submission issue that may arise. Therefore, proposed Rule 15(a)(8) would specify that in certain circumstances the SEC may take further appropriate steps to address a matter concerning a submission and communicate as necessary with the filer regarding that submission. Specifically, under the proposed rule, the SEC may take such further steps if a submission issue cannot be addressed solely by filer corrective disclosure or by the actions set forth other sections of the proposed rule.
The proposed rule would not change filers’ obligations under the federal securities laws to ensure the accuracy and completeness of information in their EDGAR submissions. In addition, many administrative and substantive EDGAR submission issues can be addressed through filers submitting a filer corrective disclosure. The SEC will reserve the right to act without any advance notice to filers or any person. Still, the SEC recognizes that administrative actions under the proposed rule should not unduly hinder or delay the EDGAR submission process. Accordingly, proposed Rule 15(b) specifies a method for the SEC to provide notice of its actions under the proposed rule to a filer and any person the SEC considers relevant to the matter. The SEC would send the notice and corresponding factual statements by electronic mail to the email address on record in the filer’s EDGAR account and the email address of any relevant persons.
The public comment period for these amendments will begin following publication on SEC.gov and remain open for 30 days after publication in the Federal Register. You can submit comments using the form available on the SEC’s website or by e-mailing firstname.lastname@example.org with the proposed rules’ reference number in the subject line. You can also use the Federal Rulemaking Portal to submit comments or send your comments by mail to Secretary, Securities and Exchange Commission, 100 F Street, NE, Washington, DC 20549-1090. In all cases, be sure to reference File Number S7-11-20.