QUICK TAKE: ICBA Likes New SEC Disclosure Rule

Community bankers are rejoicing.

The Independent Community Bankers of America (ICBA) is happy as the Securities and Exchange Commission issued a ICBA-supported final rule reducing disclosure requirements for publicly held community bank holding companies. ICBA said that the unanimously approved rule will promote capital formation and reduce compliance costs for small SEC registrants without jeopardizing investor protections.

“ICBA and community bankers thank the Securities and Exchange Commission for unanimously approving this common-sense update to its disclosure requirements,” ICBA President and CEO Rebeca Romero Rainey said. “While this rule will support capital formation and lending in local communities, ICBA continues urging the agency to extend the exemption to the auditor-attestation requirements of Sarbanes-Oxley section 404(b). We’re encouraged that SEC Director Jay Clayton directed staff to examine this request and look forward to working with the agency on this issue.”

The new rule expands the number of SEC registrants that qualify for scaled disclosures by raising the threshold from $75 million in public float to $250 million. Public companies with public floats between $250 million and $700 million are also eligible for the scaled disclosures provided their annual revenues do not exceed $100 million. ICBA expressed support for the SEC plan in a 2016 comment letter and joint letter as part of the Corporate Governance Coalition for Investor Value.

ICBA also continues to strongly endorse the recommendation of the agency’s Advisory Committee on Small and Emerging Companies to exempt these companies from the Sarbanes-Oxley section 404(b) auditor-attestation requirements. These banks are already subject to Federal Deposit Insurance Corp. auditing requirements, and the costs of SOX 404(b) auditing rules far outweigh investor protections and benefits.