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Federal Register / Vol. 86, No. 234 / Thursday, December 9, 2021 / Rules and Regulations
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registrants will not be a CommissionIdentified Issuer until a conclusive determination has been made. For a period of 15 business days 60 after the provisional identification, a registrant may contact the Commission by email 61
if it believes it has been incorrectly identified and may provide evidence supporting such claims. The Commission will respond to the registrant by email with respect to its analysis of such evidence and its determination. If the Commission agrees with the registrants analysis, the Commission will notify the registrant and will remove the registrant from the provisional identification list. On the other hand, if the Commission does not agree that the registrant has been incorrectly identified, the determination that the registrant is a CommissionIdentified Issuer will be conclusive. If the registrant does not contact the Commission to dispute the provisional identification, the determination that the registrant is a CommissionIdentified Issuer will be conclusive 15
business days after the provisional identification.62
We did not accept the suggestion of one commenter that the staff contact each individual registrant that has been identified for inclusion in the list because we believe website posting will provide sufficient notice and we are concerned that such procedures could further delay issuer identification, which would be to the detriment of investors. Additionally, under the PCAOB Rule 6100, the PCAOB will notify each PCAOB-Identified Firm of its determination and will also publish the list on its website. As such, we do not believe provisional identification of issuers on the Commission website will have a significant additional market impact. Finally, we considered but determined not to publish the list of Commission-Identified Issuers on EDGAR. The EDGAR system is designed to retain filings by and about individual registrants, rather than present collated information. Consequently, the EDGAR
system will not provide a mechanism to publish a list on EDGAR that includes a number of registrants grouped together.
In addition to identifying Commission-Identified Issuers, the list published on the Commission website 60 The term business day means any day, other than Saturday, Sunday, or a Federal holiday.
61 The email address will be provided on the www.sec.gov/HFCAA website when or before the provisional Commission-Identified Issuer list is first populated.
62 In no event would the conclusive determination be made before expiration of the 15business-day period.

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will indicate the number of consecutive years a Commission-Identified Issuer has been published on the list and whether it has been subject to any prior trading prohibitions under the HFCA
Act. We believe it is appropriate to include this information on the list because of the significance of the trading prohibition requirements set forth in Section 104i3 of the Sarbanes-Oxley Act, as discussed in greater detail below.63
F. Process for Trading Prohibition 1. HFCA Act Trading Prohibitions Section 104i3 of the SarbanesOxley Act requires the Commission to prohibit the trading on a national securities exchange or through any other method which is within the jurisdiction of the Commission to regulate, including through over-the-counter trading, of the securities of certain Commission-Identified Issuers trading prohibition. Section 104i3A of the Sarbanes-Oxley Act requires the Commission to impose a trading prohibition on a registrant that is determined to be a CommissionIdentified Issuer for three consecutive years initial trading prohibition.
Section 104i3B of the SarbanesOxley Act provides that the Commission shall end an initial trading prohibition if the issuer certifies to the Commission that it has retained a registered public accounting firm that the PCAOB has inspected to the satisfaction of the Commission.64 Furthermore, if the Commission ends a trading prohibition under Section 104i3B of the Sarbanes-Oxley Act and, thereafter, the registrant is again determined to be a Commission-Identified Issuer, Section 104i3C of the Sarbanes-Oxley Act requires the Commission to impose on such issuer a trading prohibition for a minimum of five years subsequent trading prohibition. Section 104i3D of the Sarbanes-Oxley Act provides that the Commission shall end a subsequent trading prohibition if, after the end of the five-year period, the issuer certifies to the Commission that it will retain a non-PCAOB-Identified Firm.65
In the Interim Final Release, the Commission specifically requested comment on any considerations it should take into account while 63 See
infra Section II.F.
purposes of terminating an initial trading prohibition or subsequent trading prohibition, the Commission will terminate the prohibition if the retained firm is a non-PCAOB-Identified Firm.
65 The five-year period begins on the date on which the Commission imposes a subsequent trading prohibition. See Section 104i3D of the Sarbanes-Oxley Act.
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determining how to best implement the trading prohibition requirements set forth in Section 104i3 of the Sarbanes-Oxley Act.66 A few commenters supported the prompt implementation of the trading prohibition.67 One of these commenters suggested that any deferral of the commencement beyond 2024 would be inconsistent with the HFCA Act.68
Other commenters noted the importance of clear rules relating to the trading prohibition.69 One of these commenters highlighted the importance of the Commission establishing a transparent and well communicated process with clear information and adequate notice of delisting to minimize disruption to investors in such entities.70 This commenter indicated that a transparent process that provides clear information and adequate notice is necessary to provide market participants with the information they need to make investment decisions in a timely manner.
Another commenter recommended that the precise date on which any trading prohibition applies to an issuers securities be made public by the Commission as soon as possible and that we allow no flexibility or ambiguity regarding the date on which the trading prohibition applies.71 This commenter further recommended clarifying whether a trading prohibition would include derivatives, such as options and swaps based on the CommissionIdentified Issuers securities, and that the Commission should clearly establish the impact of a trading prohibition on any other securities market activities, such as clearance and settlement and options exercise and assignment.
Another commenter stated that the Commission should take steps to prohibit the trading of CommissionIdentified Issuers securities on margin to avoid creating unnecessary risks that will disrupt markets and needlessly harm small investors and prohibit the inclusion of Chinese companies in passive index funds.72 On the other 66 See Interim Final Release supra note 3, at 17533.
67 See letters from CII and Sen. Sullivan et al.
68 See letter from CII.
69 See letters from ICI and NYSE.
70 See letter from ICI.
71 See letter from NYSE. This commenter recommended clarifying whether a trading prohibition would commence: i On January 1 of the third year following the Commissions determination that a registrant is a CommissionIdentified Issuer; or ii three years after the date on which the Commission makes its determination that a registrant is a Commission-Identified Issuer. See also infra note 82 and accompanying text.
72 See letter from ASA.

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