Important Lessons Come in Small Packages: SEC Focus on MD&A Trends and Uncertainties Disclosure

26 September 2014
View Client Update

Key takeaways:

  • As part of Bank of America’s recent $16.65 billion settlement with the DOJ, Bank of America entered into a $20 million settlement with the SEC to settle claims predicated on a failure by Bank of America to include disclosure regarding known trends or uncertainties in the MD&A portion of its periodic reports.
  • In the wake of the settlement and looking ahead to upcoming 10-Q and year-end 10-K periodic filings, we suggest that senior management initiate a review of their company’s disclosure controls and procedures underpinning the preparation of the MD&A and reinvigorate the process to ensure compliance with the applicable MD&A rules and SEC guidance.
  • In particular, we suggest that the preparation of the MD&A entail a bottom-up review process, reflect substantive input and review by senior management and utilize a clean slate approach to drafting in order to ensure that known trends and uncertainties are identified and, as appropriate, reflected in the MD&A.