The SEC and Financial Regulations Rodeo with Marcie Clark, DFIN’s Director of Global Filing Services

Dana Barrett - Welcome to the Insider by DFIN, I'm Dana Barrett, and joining me today is Marcie Clark, Director of Global Filings for DFIN, how are you?

Marcie Clark - I'm great, how are you, Dana?

Dana Barrett - I am well. We brought you in today, because we want to talk about all things SEC, and financial regulations, and all of the, I think we're calling it a rodeo, all of the craziness that's been happening.

Marcie Clark - Yes

Dana Barrett - But before we do all that, I want to hear a little bit about your background, how you got into working with the SEC, and these regulations and DFIN. I feel like this is not the kind of thing one thinks about when they're a little kid and they say, "I want to grow up and work with SEC regulations."

Marcie Clark - Right, absolutely not. So, honestly, I joined DFIN via bound in acquisition, and I was actually doing a favor for a friend, believe it or not, yes, so I had a girlfriend that worked at a placement agency, a little different from a temp agency, it's different from a temp agency. So, they actually place you at a location, and you have to stay there for like 90 days and she had a opportunity to receive $5,000.

Dana Barrett - So, if you stay there 90 days, she gets a bonus.

Marcie Clark - Absolutely, and so she said, "Please go do this assignment for me and let's split it, I'll split the money with you." and that was 25 years ago.

Dana Barrett - Took the job. You were like, "Well, I'll stay more than 90 days."

Marcie Clark - It was very cool and the role was a bit challenging, which I love challenges, and I stayed, and I'm still here.

Dana Barrett - That is probably one of the best corporate origin stories of all time. Most people are like, I work my way up from the mail room. This is what I always wanted to do. You're like, "Nope, doing a favor for a friend."

Marcie Clark - Doing a favor, right and at the end of the 90 days, I did get my $2,500.

Dana Barrett - Nice. $2,500 and a career, that you've been in for 25 years.

Marcie Clark - Absolutely.

Dana Barrett - So, I guess she gets thanks for that.

Marcie Clark - Yes. Absolutely, she does.

Dana Barrett - So, let's get into your role at DFIN now, what do you do? What's your day to day?

Marcie Clark - So, my role, in my 25 years, have primarily been spent cultivating and creating relationships at the SEC. I've been in a number of roles at DFIN, but the role that I'm currently in has been a bit challenging, but again, I love challenges and from day in and day out, it's a different day with the SEC. So, we discuss, and we influence change at the SEC, with all the new rules, regulations that are coming out. The SEC released 16 new proposed rules in Q1 of 2022, opposed to none in 2021.

Dana Barrett - Well, hold on, let's back up, how many opposed and none?

Marcie Clark - 16, proposed rules.

Dana Barrett - And these are not things that are like three sentences. This is lots of text to go through, lots of changes that people need to understand.

Marcie Clark - It's incredible. You know, one rule could be 500 pages. You could have a rule that's 300 pages, but we have to go through each and every rule. We contact the rule writers when there are things that are grey, to get a better understanding of that particular rule, because we have obligations to our internal and external clients, to be able to deliver and understand what this ruling is about and how it impacts our customers.

Dana Barrett - So, why are the rules coming so fast now?

Marcie Clark - So, the SEC is making sure, lately, that they are leaning towards structured data. So the structured data is, you know, for the market, it's for analysts to be able to look at these SEC filings pretty quickly, and in a more robust fashion than they have been machine readable data. Then the SEC, you know, is moving toward that structured data platform, just the help investors as well. So, there's a lot of the rulings include the structured data, include the iXBRL or XBRL components and requirements. So, the SEC right now, has been in at a record pace. There are more employees at the SEC than they ever had in the history of the EDGAR System, and when they went live, So, they are ramping up with the rules, regulations. They have ongoing platforms with EDGAR Next, the proposal for the next generation of the EDGAR System, and then also with their quarterly updates, and requirements for the filing community.

Dana Barrett - So, let's talk about EDGAR Next and the redesign what what's going on with that. So, a lot of that has to do with all this new data layer that you were talking about. What's the timing on that?

Dana Barrett - What are the expectations and what are the implications of it?

Marcie Clark - So, EDGAR Next, my goodness, is a very large undertaking to overhaul the EDGAR System. It's primarily about security, ensuring that registrants, the submissions that we send to the SEC are secure. So, there's different components to EDGAR Next. There was a timeline on the table of release of this spring, the influence of registrants and the consortium, they have taken the timeline off the table. They have engaged the filing community, and the law firms, the business community, to ensure that they have the right system, that they're going to put the right system in place with EDGAR Next. But it is a massive undertaking that will impact the filing community and registrants, of how we file and how we transmit today.

Dana Barrett - Okay. So, there was a deadline, well, a date on the table of spring of 2022. Which is almost over. So, clearly, that's not happening. They've put that off. Have they given a new timeline or that right now they're just kind of stepping back?

Marcie Clark - Well, they've been hosting meetings weekly with the filing consortium, and to get feedback about the user stories and how they want to lay out EDGAR Next. Well, they've taken that timeline off the table, based on the feedback that they've been receiving from us during these meetings. So, they've gone back to the drawing board, so-to-speak, to actually redesign their user stories, and then they'll come back to us. But there's no timeline right now, but they're going to allow us and our, us, restaurants, to filing community, enough time to program systems, to put processes in place, and to implement whatever's necessary to accommodate the EDGAR Next features.

Dana Barrett - So, that's the implication piece, right? Like when it does come out, and it is approved and you've got a real deadline, then you've going to get all your systems integrated to it, and working with it and you know, so, that you can use it.

Marcie Clark - Correct. Yes.

Dana Barrett - All right, you kind of tossed out the word "consortium," in the last response there, but I'm going to back up and get you to sort of tell me what consortium are you referring to, and what's your role there?

Marcie Clark - The filer consortium is a collective group of filing agents, law firms, and software companies. Though, we are competitors in various realms of our business, we are a collective unit, as a part of the consortium when we go to the SEC. We have a common goal to ensure that the SEC, responds. So, it's not only a DFIN only issue, or another filing agent issue. It is us as a collective unit, making an influencing change at the SEC. So, the members of the consortium, define DFIN as the Goliath in this space, and we do upwards of 150,000 plus EDGAR submissions every year and I lead those efforts for DFIN.

Dana Barrett - So, you sit on the consortium, and you're basically speaking for the Goliath.

Marcie Clark - Absolutely. I speak to the SEC. If I need, present material that we, as a collective unit, have come up with, then that information I'm normally the face that goes to the SEC or the individual that goes to the SEC. Because we do, by sheer volume, we are the number one leading filer of SEC submissions in the US for the SEC.

Dana Barrett - Wow. When did the consortium get started? How long has it been around? Like since the beginning of time?

Marcie Clark - It predates Marcie.

Dana Barrett - Okay, well, but that's saying something, because you've been doing this for 25 years in some form or fashion, right? So, it's been around for a minute.

Marcie Clark - It was around prior to me joining DFIN, and again, that's 25 years ago, and somebody else was leading the effort from a law firm perspective and then once that person no longer was at the company, it was like, "Marcie, can you, do this for us? Marcie, can you give us this?" Absolutely, and then they felt like, because we had such a large, or have such a large presence, with the volume of filings that we submit to the SEC, that we were the right person to, or the right company, to lead that effort and I totally agreed, because we do outnumber of our submissions by a long shot for the next company behind us.

Dana Barrett - And is the industry at large, pretty much in agreement when you are going to the SEC as the consortium, saying these are our needs?

Marcie Clark - Yes, because we collectively have discussions, we have meetings. Here are our pain points and again, so it's not just a DFIN issue, or another competitor's issue.

Dana Barrett - That it is an industry. It's a collective.

Marcie Clark - It's a collective and so, you know, once we gather our information I am the one that presents it over to the SEC.

Dana Barrett - How much pushback does the SEC give, or are they pretty receptive? I got a smile on that one.

Marcie Clark - They're very receptive and again, if DFIN, is impacted in any way, and again, it's not just all about DFIN, because we're going as this collective unit, but we speak louder than the competitors.

Dana Barrett - - I mean, they're clearly listening, because if they're pulling back, and they're, you know, they realize that if the market's not going to be able to work with them because, you know, then it doesn't work. The whole thing falls apart. You mentioned, and I want kind of go back to all of this, you know, fast and furious changes that are coming. The new proposed changes that the SEC wants to make. What is the implication for, you know, companies now that have filings coming up, or are looking at IPO or looking to go private, or whatever the case may be, and are starting to make some changes, with all this stuff coming. Do they need to wait, and see what's coming? Are people on hold? Are they trying to hurry up and get things done before these new changes come, like what's happening?

Marcie Clark - Well, what we are seeing is companies are trying to make adjustments where it's necessary, because when the SEC, a rule goes final, then you have no option. You have to abide by that particular ruling. So, the proposed, when it's in the proposal phase, it allows companies to make some kind of preliminary adjustments, because you have a period when the rule goes proposed, that you are able to comment back, registrants are able to make comments back according to whatever the proposal is, "Hey, this will impact us this way. This will impact our industry that way." So, companies do some items that, you know, are proposed. They're going to go final, eventually. Post their, after they close the commenting period, there is a phase of implementation, so companies have time to make the appropriate adjustments for the ruling that is coming forth.

Dana Barrett - Does that depend on the rule? How much time you get in that implementation phase?

Marcie Clark - It depends on what it is. Yeah, so sometimes there's, you know, longer lead time. We've asked the SEC to come up with a structured timeline, a timeline that will allow companies, and not when it's when it's a technical change, but when it's a ruling change, allow the industry to be able to make the appropriate changes internally. So they can satisfy their client base and, or the company base.

Dana Barrett - So, it could be something like they're asking for more data on a particular topic, and so if you don't have that data, you've going to have time to collect it, and get it together, and get it in the right format and all the things, right?

Marcie Clark - Correct and abide by that ruling and of course, sometimes these rules have different components to it, that they must, you know, make changes to. So, it's not very easy for them to switch over. So, there is a time frame and so we ask the SEC, just to be a little structured, when these proposed rulings come out, that you give, you know, if it's a technical change you give us a beta site to go and, you know, implement this change in for our different environments.

Dana Barrett - Right, do the testing.

Marcie Clark - Yeah, and allow it to apply to the proprietary software.

Dana Barrett - So, of the, did you say 16 changes, that they're proposing right now?

Marcie Clark - For Q1?

Dana Barrett - So, of those 16, are there any that, you know, really have got your attention, that people are needing to focus on?

Marcie Clark - Absolutely. I would say probably 10 of the 16.

Dana Barrett - Oh, wow. Okay. Okay, you need to give me an example. What's the hottest hot button? What's the most, the biggest, most worrisome?

Marcie Clark - Okay, so there's ESG, there's the modernization of beneficial ownership. There are some SPAC implications. So, there's just a variety of changes that will impact, some of these items that they have proposed, have been years in the making, right? So they come back and they, you know, open commenting periods back from 10 years ago, to make these change the appropriate changes. So, it depends, but you know, there are quite a few of the 16 that are of, like I said, the 10 of the 16, that are hot for particular markets. So, they impact whether it is capital markets, or whether it is investment management. So, it impacts both sides of the business.

Dana Barrett - I do get that. I mean, ESG’s been a big topic and so that's going to be obviously an interesting one to see come down the pike. I have to imagine for some of that, because that's talking about things people haven't even collected data for in some cases, so, there's going to be some amount of rollout time, right? To say, "Well we want to know your diversity and inclusion information." And they're like, "Well, we don't have that yet."

Marcie Clark - Right. Because people haven't collected it in the past. So the SEC continues to, you know, propose these rulings that will impact different phases of the business that have never been impacted before. So, having enough lead time to make the appropriate changes within the company is critical and so, again, as a collective unit, a part of the consortium, we would just add our weight to that, behind it, like we did for EDGAR Next and so the impact of the consortium, and others, you know, allowed us to influence SEC to change, you know, the release, the rollout. So even with proposed rules, as well, there is implications that impact and so if they're very impactful, then we speak loudly, and say, "Hello, this is going to, you know, burden." In some cases, like EDGAR Next, it’s going to, you know, cost millions of dollars for some companies, to adjust their systems. So, they must be cognizant of how these proposed rulings and changes at the SEC will impact registrants.

Dana Barrett - Yeah. It makes a lot of sense. So, if it was 16 in Q1, Q2? What are we thinking?

Marcie Clark - I'm hoping zero, but I don't believe that will happen. I'm not certain right now, but so far nothing in Q2. Is there wood somewhere we can knock on?

Dana Barrett - Fingers crossed. Yes. Marcie, thank you for digging into the SEC regulations and sharing some information about the consortium, and all the work you're doing. I really appreciate it.

Marcie Clark - Thank you, Dana. I appreciate it. Thanks for having me.

Dana Barrett - This has been the Insider by DFIN, we'll see you next time.

This has been the Insider by DFIN. We'll see you next time.