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Steps to Take to Ensure SEC Compliance

Aug 24, 2022 | Securities

Compliance with the securities laws, the rules and regulations thereunder means adhering to the rules and regulations of the Securities and Exchange Commission (SEC). The SEC imposes a number of strict registration, reporting, and disclosure requirements that companies must satisfy to avoid revocation of an offering, deregistration, or other adverse consequences. The concept of using your stock as currency to promote your business will be worthless if you are deregistered as a public company. Below are some of the most crucial steps to take to ensure SEC compliance.   

1. Ensure You Have Audited Statements

The SEC requires that companies reporting under the ’34 Act file of audited financial statements along with an annual report and Form 10-K. In addition to being required under the ’34 Act, audited statements provide the public and potential investors with additional assurance that a company’s financial statements are reliable.

The auditor is an independent certified public accountant who examines the financial statements prepared by the company’s management. They provide a written report which states their opinion as to whether the financial statements are fair and comply with the set of accounting standards referred to as “Generally Accepted Accounting Principles.” 

2. Submit Disclosures and Financials Four Times a Year

Once your company’s registration statement has been declared effective by the Securities and Exchange Commission, it becomes subject to Exchange Act reporting requirements. To remain compliant with the SEC’s requirements, quarterly reports must be submitted on Form 10-Q and an annual report must be provided with Form 10-K on an ongoing basis. These reports must be certified by the CEO and CFO.

Form 10-Q requires disclosures regarding unaudited financial statements, an analysis of the company’s financial condition, legal proceedings, and information about internal controls and procedures. Investors may use this form to assess the legal and financial risks associated with a company. Similarly, Form 10-K provides investors with the data they need to make informed decisions regarding the purchase and sale of shares. While Form 10-K discloses financial risks, it also covers recent events, special issues, and management discussion and analysis.   

3. Provide Current Disclosures on an Ongoing Basis

In addition to the ongoing quarterly and annual disclosures that must be provided, a company must also file current reports. Companies must file reports on Form 8-K to disclose the occurrence of certain events.  The deadline to file Form 8-K is within four business days. Such events can include the completion of an acquisition, changes in control of the company, notice of a delisting, or amendments to the charter and bylaws.  Any significant event should be disclosed on Form 8-K.

4. Hold Annual Meetings and Comply with the Proxy Requirements

A reporting company must comply with the SEC’s proxy rules whenever proposals are submitted by management to shareholders that will be subject to a vote. The proxy rules require the company to provide certain disclosures in a proxy statement to shareholders — along with a proxy card in a specific format — when authority to vote the shareholder’s shares is solicited.

Form PRE 14A is mandatory for all corporations that require shareholder votes and must be filed before Form DEF 14A, which represents the proxy in its final form. This form is filed in connection with the announcement of annual meetings, stock issuance, the election of directors, altering a company’s articles of incorporation, and certain other events. It provides information regarding the date, time, and location of the meeting, as well as voting procedures, and shareholders’ rights.               

Contact an Experienced New York Securities Attorney to Learn More

The SEC has numerous rules and regulations that must be satisfied to ensure compliance. It’s best to have a knowledgeable attorney on your side who can advise you regarding SEC compliance and other securities matters. Brinen & Associates provides high-quality legal services for securities matters in a wide range of industries. Call (212) 330-8151 or send us a message to schedule a consultation. 


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