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Item 308(c) of Regulation S-K requires disclosure of any change in the registrant’s internal control over financial reporting that occurred during the registrant’s last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting. One aspect of the 308(c) requirement that often is overlooked is that positive – as well as negative – changes should be disclosed.

However, a cursory review of recent 10-Qs reveals that there don’t appear to be many of these positive disclosures. So far, we have found six examples that are as close to positive as we could find: the first two relate to new software programs (Intuit and Barnes & Noble); the third is the result of a merger (Sears); the fourth appears to be corrections of weaknesses that were not identified as material weaknesses (Sbarro – they had the same disclosure in their 10-K); the fifth is not a material change, but a change that the company thought should be mentioned anyway (Newport); and the sixth is a result of a restatement, but the company didn’t disclose whether it was a material weakness problem (Origen Financial).

Learn more about the challenges of 308(c) disclosures in this interview with David Miller and Amy Seidel on Evaluating Internal Controls on a Quarterly Basis.

SEC Chair Donaldson’s Last Hurrah?

Reuters reports that the SEC will consider the adoption of ’33 Act reform on June 29th – one day before Chairman Donaldson departs the SEC. The SEC has not yet announced whether – or when – an open Commission meeting is scheduled for consideration of this blockbuster reform.

A Development for “Existing Directors” Change-in-Control Triggers

In late April, Vice Chancellor Noble of the Delaware Court of Chancery rejected a fiduciary breach lawsuit in California Public Employees’ Retirement System v. Coulter, which alleged that an existing director change of control trigger impermissibly granted unauthorized distinctive voting powers to the directors who approved the change-in-control agreements. Learn more about the meaning of this case in this DealLawyers.com interview with Eric Keller on “Existing Directors” Change-in-Control Triggers – and you can read the court opinion too.

9/11 and the Securities Industry

Today is the SEC Historical Society’s Annual Meeting and they are hosting a webcast featuring Harvey Pitt and others for “Crisis and Resolve: The SEC and the Securities Industry Remember September 11, 2001.” You can also share your own remembrances of 9/11 and its aftermath with the Society. These remembrances will be kept in their “Papers” section. A noble effort and cause!