Financial Disclosures About Guarantors and Issuers of Guaranteed Securities and Affiliates Whose Securities Collateralize a Registrant’s Securities

Summary

SIFMA provides comments to the Securities and Exchange Commission (SEC) in response to the SEC’s proposal on Rules 3-10 and 3-16 under Regulation S-X.

SIFMA’s recommendations focus on improving the quality of disclosure for investors while making the registration process less burdensome for the SEC and registrants

Excerpt

December 3, 2018

Securities and Exchange Commission 100 F Street, N.E. Washington, D.C. 20549-1090

Attention: Mr. Brent J. Fields, Secretary

Re: Financial Disclosures About Guarantors and Issuers of Guaranteed Securities and Affiliates Whose Securities Collateralize a Registrant’s Securities (File Number S7-19-18)

Dear Secretary Fields:

The Securities Industry and Financial Markets Association (“SIFMA”) is writing in response to changes proposed by the Securities and Exchange Commission (the “Commission”) to the rules regarding financial disclosures about guarantors and issuers of guaranteed securities and affiliates whose shares collateralize a registrant’s securities (the “Proposal”). We appreciate the opportunity to provide comments to the Commission on the Proposal.

In our comment letter to the Commission’s 2015 request for comment on the financial disclosure requirements for certain entities other than a registrant,3 we offered suggestions for changes to Regulation S-X, including to existing Rule 3-10 and Rule 3-16. Our suggestions were focused on improving the quality of disclosure for investors while making the registration process less burdensome for the Commission and registrants. The Proposal seems to reflect consideration of our suggestions, and we laud the work that the Commission has done to propose changes that will make compliance with Rule 3-10 and Rule 3-16 easier for issuers while providing more useful information to investors. In this letter, we suggest some revisions to the proposed changes to Rule 3-10 and Rule 3-16 that we believe could result in more issuers registering offerings of guaranteed securities and securities collateralized by shares of affiliates. We also believe our proposed revisions preserve the quality of the disclosure that investors will receive and, indeed, stand to make the disclosure less complex and more informative.