SEC Considering Harvey Relief as Companies Detail Storm’s Impact

By Sara Merken, Bloomberg BNA 

The Securities and Exchange Commission said Aug. 30 that it is evaluating the possibility of granting relief from filing deadlines and other regulatory requirements for companies impacted by tropical storm Harvey.

“Agency officials have been and will remain in close communication with market participants and key market infrastructure providers, as well as the Financial Industry Regulatory Authority and other regulators concerning the storm and its aftermath,” Chairman Jay Clayton said in a statement. “We are also actively working with firms in affected areas to ensure that investors continue to have access to their securities accounts.”

Harvey slammed into Houston as a Category 4 hurricane Aug. 25, bringing massive rainfall and widespread flooding that has stranded thousands of residents and shuttered businesses over the last few days.

A handful of public companies, including Federated National Holding Co., and ClubCorp Holdings Inc., already are warning investors about financial and operational impacts from the storm, with similar reports expected from other companies in the coming days.

Sunrise, Fla.-based insurance underwriter Federated said in an Aug. 30 financial filing that it anticipates a $4 million loss from the storm, due to its underwriting of homeowner and automobile insurance in Texas and Louisiana.

The day before, Dallas-based country club operator ClubCorp said its clubs in the Houston area remain closed. However, ClubCorp added that its merger with Apollo Global Management LLC, scheduled for shareholder approval Sept. 15, shouldn’t be impacted.

The companies described their problems in Form 8-Ks, financial disclosure documents used to alert shareholders and the SEC about significant events that may impact operations, such as a bankruptcy or change in leadership.

“I would bet that you will see more of these 8-Ks,” Alan Dye, a Washington-based partner and corporate securities lawyer at Hogan Lovells, told Bloomberg BNA. Companies are likely “waiting until they can assess the impact of the damage” so they only have to file the form once, he said.

Oil and Gas Industry

Other companies that have filed 8-Ks thus far over Harvey are oil and gas company SM Energy Co., chemical distributor Univar Inc., and Plano, Texas-based Denbury Resources Inc., an oil recovery company.

Univar, in an Aug. 29 filing, said it expects Harvey to significantly disrupt its customer and supplier production in the immediate area as well as throughout the U.S.

Denbury, the first company to issue a Form 8-K over Harvey, said Aug. 27 that it has temporarily suspended oil production in its Houston area fields, which represent net production of about 16,000 barrels of oil per day.

SM Energy said Aug. 28 that it is experiencing “temporary curtailments” of some of its production due to the storm.

Harvey made landfall for the second time Aug. 30, drenching Texas and Louisiana again. Rain totals of more than 50 inches have been reported and more is expected this week. Flooding is expected through the end of the week.

To contact the reporter on this story: Sara Merken in Washington at smerken@bna.com

To contact the editor responsible for this story: Yin Wilczek at ywilczek@bna.com

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