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The U.S. Securities and Exchange Commission may re-float large portions of its infamous “aircraft carrier” proposal. The proposal was declared dead about 18 months ago, but SEC corporate finance director David Martin said Monday he expected to recommend resurrection of at least part of the aircraft carrier, so-named because of the enormity of the plan. “The aircraft carrier had some good things and bad things,” Martin said at the American Bar Association annual convention in Chicago. “I hope we will dust off the good things.” The bulk of the original plan would have eliminated shelf registrations, which allows a company to comply with registration requirements up to two years prior to a public securities offering and which are a preferred method used by large corporations to quickly enter the capital markets. The agency would have replaced shelf registrations with a requirement that companies make all their disclosures every time they sell securities. It also would have required delivery before an offering either of the prospectus or a term sheet. Corporations had argued that these new requirements could slow their access to capital markets by up to 24 hours, and some even threatened to move their securities business to overseas markets. The agency already has separately attacked many of the less-controversial components of the aircraft carrier, including making it easier to switch between private and public offerings. Martin declined to specify what parts of the aircraft carrier proposal he intended to resurrect, saying he first wants to brief Harvey Pitt, sworn in Friday as SEC chairman. Martin said Pitt has repeatedly stated he wants to conduct a complete review of SEC regulations. “That gives us the license to go back to our files and shelves and pull out things that may have been rejected before,” Martin said. Starting the review process from scratch is unnecessary because the SEC’s corporate finance division already conducted a comprehensive analysis when it originally crafted the aircraft carrier proposal, he said. As part of wide-ranging remarks, Martin said the agency is considering changing how it communicates with the bar and the public, noting that it often is hard to differentiate between legal bulletins, no action letters and current issues bulletins, among other SEC documents. The many ways of communicating agency policy shifts makes the process less transparent to the public, he added. Martin also said the precipitous drop in initial public offering filings is allowing the corporate finance staff to spend more time analyzing companies’ quarterly earnings, or 10K, filings. The corporate finance division director said he is urging examiners to tread carefully when reviewing 10Ks, saying the staff lawyers should ask themselves if they would be embarrassed if the contents of the comment letter were published in The Washington Post. “We are not there yet,” he said, adding that that “materiality” is the key to deciding if 10K comments are appropriate. On other fronts, the SEC corporate finance division is trying to devise a middle ground for accounting reviews, saying that at present the agency either conducts a comprehensive exam or none at all. The division’s priorities continue to include revenue recognition, segment reporting and market risk disclosure, Martin said. Copyright (c)2001 TDD, LLC. All rights reserved.

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