The National Association of Manufacturers (NAM) and the Kentucky Association of Manufacturers announced that they filed a federal lawsuit against the U.S. Securities and Exchange Commission (SEC) over the SEC's new public disclosure requirements for private businesses. An economic analysis released by NAM found that the new requirements will lead to a decrease in liquidity, increased borrowing costs and significant job losses.
The SEC's new disclosure requirements stem from a "novel interpretation" of SEC Rule 15c2-11, resulting in the imposition of the rule's public disclosure requirements on private businesses, according to a press release. NAM said the SEC did not give manufacturers the opportunity to provide comments on the potential impacts of the new rule interpretation.
NAM shared the results of an economic analysis conducted by EY, which said the manufacturing industry will be "disproportionately" changed by this rule, according to the press release. The analysis found that as a result of decreased liquidity and increased borrowing costs, 30,000 jobs will be lost every year for the first five years the rule change is in effect, followed by 50,000 job losses per year for the five years after that, and increasing to 100,000 job losses annually after 10 years.
“The SEC’s attempt to force private companies to disclose confidential financial information publicly is a clear violation of the Administrative Procedure Act,” NAM Chief Legal Officer Linda Kelly said in a statement. “The SEC never allowed public comment on its novel reinterpretation of Rule 15c2-11, there is no conceivable benefit to the new standard, and the SEC did not consider the impact that its about-face will have on privately held businesses—which could exceed 100,000 lost jobs each year. The NAM Legal Center is filing suit to hold the SEC accountable and protect manufacturing growth, job creation and U.S. competitiveness.”
“The SEC’s unlawful overreach threatens privately held manufacturers in Kentucky and across the country, so the Kentucky Association of Manufacturers is proud to join the NAM in this important litigation on behalf of all manufacturers in the U.S. to counter the SEC’s regulatory onslaught,” Kentucky Association of Manufacturers President and CEO Frank Jemley said in a statement.
