On April 8, 2020, SEC Chairman Jay Clayton and CorpFin Director William Hinman issued a Public Statement titled “The Importance of Disclosure – For Investors, Markets and Our Fight Against COVID-19.”

The Statement provides valuable thoughts, advice and guidance as we approach quarter-end earnings releases and reporting.  In previous statements and guidance about the impact of COVID-19 the SEC has consistently made the point that in a period of such dramatic disruption and uncertainty, providing investors information about management’s actions and plans to address this disruption is important, despite the uncertainty involved.

This Statement builds on this theme.  Chairman Clayton and Director Hinman say:

“We urge 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.”

The Statement includes an extensive series of observations about the current environment and its uncertainties.  It then makes a number of disclosure related requests, including:

“Company disclosures should reflect this state of affairs and outlook and, in particular, respond to investor 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.  Historical information may be relatively less significant.”

The Statement also enumerates important disclosure considerations in the current environment, including forward looking information issues.  The topics addressed are:

  • Our Collective, Full Mitigation Response to COVID-19 Has Substantially Affected our Economy and Our Markets.
  • SEC Actions Have Focused on Market Integrity and Function
  • There is Broad Support Among Market Participants for COVID-19 Mitigation Efforts
  • There is Broad Recognition of the Need for a Transition to Forward-Looking, Health and Welfare Strategies
  • Frameworks for Forward-Looking Health and Welfare Strategies are Coming Into Focus
  • Extensive Coordination Across the Public and Private Sectors Will Be Essential to Our Success in Fighting COVID-19
  • Q1 Earnings Reports and Related Investor and Analyst Calls Will Not be Routine
  • There is Intense Investor Interest in Company-Specific Operational and Financial Status and Plans for Addressing the Effects of COVID-19
  • We Request that Companies Provide as Much Information as is Practicable Regarding Their Current Status and Plans for Addressing the Effects of COVID-19
  • We Recognize that Producing Forward-Looking Disclosure Can be Challenging and Believe that Taking On that Challenge is Appropriate
  • Robust, Forward-Looking Disclosures Will Benefit Investors, Companies and, More Generally, Our Fight against COVID-19.  Such Disclosures Will Facilitate Communication and Coordination Among the Public and Private Sectors

As we approach quarter-end, this Statement is important reading.

As always, your thoughts and comments are welcome!