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The SEC Proposes Enhanced Disclosure Requirements for Short-term Borrowing

Earlier today, in an open meeting, the Securities and Exchange Commission proposed a new set of rule amendments designed to expand and enhance company disclosure of short-term borrowings.  If adopted the amendments would require reporting companies to include detailed quantitative and qualitative information about short-term borrowings in their filings with the Commission.

In her opening statement at the meeting Chairman Shapiro commented that:

The proposed rules we are considering today, if adopted, would shed greater light on a company’s short-term borrowings, including a practice some refer to as balance sheet ‘window-dressing.’ Under these proposals, investors would have better information about a company’s financing activities during the course of a reporting period — not just a period-end snapshot. With this information, investors would be better able to evaluate the company’s ongoing liquidity and leverage risks.

The Commission also approved additional interpretive guidance relating to discussions of liquidity and capital resources in Management’s Discussion and Analysis of Financial Condition and Results of Operations.

Comments on the proposed short-term borrowing rule amendments can be made here and are due 60 days after amendments’ publication in the Federal Registrar.  The MD&A guidance is effective as soon as it’s published in the Federal Registrar.

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