THE US SEC RELEASES UPDATED GUIDANCE ON DISCLOSING CRYPTOCURRENCY RISKS. THE SEC OUTLINED INFORMATION THAT PUBLIC CORPORATIONS MAY BE REQUIRED TO DISCLOSE TO INVESTORS, INCLUDING IF THE COMPANIES HAVE ANY FINANCIALLY MEANINGFUL EXPOSURES TO COUNTERPARTIES WHO HAVE DECLARED BANKRUPTCY OR OTHERWISE BECOME INSOLVENT.
ON THURSDAY, THE U.S. SECURITIES AUTHORITY ENCOURAGED PUBLICLY TRADED COMPANIES TO CONSIDER IF THEY SHOULD INFORM INVESTORS OF ANY POTENTIAL EFFECTS OF THE UNREST IN THE CRYPTOCURRENCY MARKET.
UPDATED GUIDANCE ON DISCLOSING CRYPTOCURRENCY RISKS:
THE SECURITIES AND EXCHANGE COMMISSION (SEC(TASKED )’S WITH ENSURING PUBLIC COMPANIES DISCLOSE INVESTORS’ ESSENTIAL INFORMATION) GUIDANCE ON CORPORATE FINANCE IS THE MOST RECENT INDICATION THAT AUTHORITIES ARE ON HIGH ALERT FOR ADDITIONAL FALLOUT IN THE WAKE OF THE FAILURE OF BIG CRYPTO FIRMS LIKE FTX AND BLOCKFI INC.
THE SEC OUTLINED INFORMATION THAT PUBLIC CORPORATIONS MAY BE REQUIRED TO DISCLOSE TO INVESTORS, INCLUDING IF THE COMPANIES HAVE ANY FINANCIALLY MEANINGFUL EXPOSURES TO COUNTERPARTIES WHO HAVE DECLARED BANKRUPTCY OR OTHERWISE BECOME INSOLVENT.
ANY PUBLICLY TRADED COMPANIES THAT ARE EXPOSED TO THE CURRENT VOLATILITY IN THE CRYPTOCURRENCY MARKET MUST FOLLOW THE ADVICE. DESPITE THE FACT THAT PUBLICLY TRADED COMPANIES ARE ALREADY OBLIGATED BY LAW TO PROVIDE INVESTORS WITH FINANCIAL MATERIAL INFORMATION, THE SEC FREQUENTLY RELEASES MORE DETAILED GUIDELINES REGARDING HOW THEY SHOULD MANAGE RISKS FROM SIGNIFICANT OCCURRENCES.
THE SEC STATED IN A SAMPLE LETTER THAT “COMPANIES MAY HAVE DISCLOSURE RESPONSIBILITIES UNDER THE FEDERAL SECURITIES LAWS BECAUSE OF THE DIRECT OR INDIRECT IMPACT THAT THESE INCIDENTS AND RELATED EVENTS HAVE HAD OR MIGHT HAVE ON THEIR COMPANY.”