On April 8, 2020, Jay Clayton, the Chairman of the U.S. Securities and Exchange Commission, and William Hinman, the Director of the SEC’s Division of Corporation Finance, issued an informative public statement with several requests regarding disclosure, particularly forward-looking disclosure, relating to the COVID-19 crisis. The public statement is short, practical and non-technical. We encourage directors, senior executives and anyone involved in disclosure functions to read it in its entirety.
As the SEC’s public statement points out, this quarter, earnings statements and calls “will not be routine.” In many cases, historical information will be substantially less relevant to investors. The SEC has urged companies to provide as much information as is practicable regarding their current financial and operating status, as well as their future operational and financial planning. Chairman Clayton and Director Hinman believe this information will be critical, not just for investors, but for employees, suppliers, customers and the public generally in developing a coordinated plan to responsibly increase economic activity. Company disclosures should, in particular, respond to investor and public interest in: (1) where the company stands today, operationally and financially, (2) how the company’s COVID-19 response, including its efforts to protect the health and well-being of its workforce and its customers, is progressing, and (3) how its operations and financial condition may change as all our efforts to fight COVID-19 progress.
The SEC encourages companies that respond to its call for forward-looking disclosure to avail themselves of the safe-harbors for such statements. Importantly, Chairman Clayton and Director Hinman also note that they do not expect the SEC to second guess good faith attempts to provide appropriately framed forward-looking information.
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