Intelligize's review and analysis of SEC comment letters on COVID-19 disclosures reinforces the principles espoused by the SEC's/staff's recent disclosure guidance and public statements, particularly: "CF Disclosure Guidance: Topic No. 9" (reported on here) and SEC Chair Clayton/Corp Fin Dir. Hinman's joint statement: "The Importance of Disclosure – For Investors, Markets and Our Fight Against COVID-19" (reported on here) - as well as basic long-standing financial reporting disclosure principles.
The firm identifies these key comment letter takeaways:
- Understand the continuum between risk factors’ reasonably likely known effects and MD&A’s known trends.
- Provide forward-looking insights about the impact of COVID-19.
- Provide a complete picture with your metrics.
- Clarify the impact of any facility closures or supply chain issues.
- Ensure that material information included in press releases also appears in SEC filings.
Among the lessons learned as respects both COVID-19 impacts and - most vividly pre-pandemic, cybersecurity - is to regularly review hypothetical risk factors for updating and potential MD&A disclosure in the event the risk factor has actually manifested, in which case it is no longer appropriately disclosable as hypothetical. All referenced comment letters are linked in the post for easy reference.
See the discussion of "Disclosure issues" in this Jim Hamilton’s World of Securities Regulation post (also noted above) and additional resources on our Financial Reporting page under Coronavirus (COVID-19). This post first appeared in the weekly Society Alert!