SEC Staff Reinterprets Non-GAAP Rules

SEC Staff Reinterprets Non-GAAP Rules

Blog Focus on Audit Committees, Accounting and the Law

On May 17, 2016, the SEC’s Division of Corporation Finance escalated the SEC’s efforts to curb perceived misuse of non-GAAP financial measures with the issuance of a revised set of Compliance and Disclosure Interpretations (CDIs). This action follows a series of speeches by SEC Chair Mary Jo White and SEC senior staff members and an uptick in comment letter activity, all focused on what a member of the SEC staff described in one speech as a “troubling increase over the past few years in the use of, and nature of adjustments within, non-GAAP measures by companies.”  (See our prior post.)  

As discussed in detail in this WilmerHale client alert, the new and revised CDIs:

  • adopt a very prescriptive approach to the “equal or greater prominence” requirement that applies to SEC filings and earnings releases; and
  • highlight a number of practices that the staff may now challenge as being misleading, and therefore prohibited under Regulation G from any public disclosure.  


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