February 27, 2003

Just in time for Friday's "SEC Speaks" program (affectionately known as "SEC Spleaks" by alumni), Corp Fin has released a summary of significant issues addressed in its review of 10-Ks of the Fortune 500 companies. The Summary states that comment letters have been sent to more than 350 companies - and that the Staff is continuing to work with many companies as they respond to comments. This Summary is at http://www.sec.gov/divisions/corpfin/fortune500rep.htm.

The Summary is an objective, factual summary that concentrates on what the SEC staff sees as common deficiencies - staffers already are saying that they anticipate a similar review of "large" - but not necessarily the Fortune 500 - companies for next year, focusing on the same type of issues (i.e. revenue recognition, restructuring charges, liquidity) - as well as compliance with the new rules.

February 27, 2003

Here is an interesting Washington Post article about people declining director positions - http://www.washingtonpost.com/wp-dyn/articles/A8160-2003Feb26.html.

For TheCorporateCounsel.net subscribers, we have posted an interview with Amy Goodman about pre-approval policies for non-audit services at http://www.thecorporatecounsel.net/member/InsideTrack/02_25_03_Goodman.htm.

February 26, 2003

The March Issue of TheCorporateCounsel.net's Eminder is now available at
http://www.thecorporatecounsel.net/E-minders/.

February 25, 2003

Following up on issues identified in its January 24th report to Congress on the state of the credit rating industry, the SEC approved a 4th credit rating agency yesterday. Canada's Dominion Bond Rating Service now joins Moody's, S&P and Fitch to rate debt in the US.

As noted in the SEC's January 24th report, a lack of competition might be hurting the ability of investors to get the most timely and accurate ratings from these agencies. In about a month, the SEC expects to issue a concept release on the possible restructuring of how the credit rating industry is regulated. The SEC's Jan. 24th report is at http://www.sec.gov/news/studies/credratingreport0103.pdf.

For TheCorporateCounsel.net subscribers, we have posted sample disclosures regarding corporate goverance in the proxy statement and how companies disclose SEC enforcement actions in our "Disclosure" practice area at http://www.thecorporatecounsel.net/member/Disclosure/.

February 24, 2003

As will be covered more completely in the upcoming issue of E-Minders, a union proponent has filed an appeal with the Commission over the exclusion of a shareholder proposal.The proposal would require Citigroup to include board nominees on its proxy card if such persons were nominated by shareholders that owned at least 3% of the company’s stock. Unlike the typical shareholder proposal, the Citigroup proposal would be binding as it seeks to amend the company’s by-laws.

On Friday, the SEC posted the adopting release for Regulation AC (Analyst Certification) at http://www.sec.gov/rules/final/33-8193.htm.

For TheCorporateCounsel.net subscribers, we have posted an interview with Bruce Mendelsohn on MD&A - see http://www.thecorporatecounsel.net/member/InsideTrack/02_21_03_Mendelsohn.htm.

February 21, 2003

The NASPP just started conducting an online survey regarding cashless exercises after Section 402 of Sarbanes-Oxley. The early results are interesting...for example:

- Our company currently allows same-day-sale exercises by insiders.(Total responses: n=311)
n=183 (58.84%) Yes
n=121 (38.91%) No

- Does your company allow insiders to use the broker(s) designated by the company?(Total responses: n=238)
n=143 (60.08%) Yes
n=22 (9.24%) No
n=73 (30.67%) We don’t have a designated broker

- Did you discontinue cashless exercises after the adoption of Section 402 of Sarbanes-Oxley?(Total responses: n=189)
n=121 (64.02%) Yes
n=69 (36.51%) No

This survey runs until mid-March - please participate (it is not limited to NASPP members) by going to http://www.naspp.com/survey/2/doSurvey.asp?SurveyNo=4.

February 20, 2003

The SEC is open...and Chairman Donaldson is on the job. Yesterday, the SEC posted its final rules on definition of "dealer" whereby it excluded banks for certain de minimus transactions - see http://www.sec.gov/rules/final/34-47364.htm.

For TheCorporateCounsel.net subscribers, we have conducted informal surveys of recent disclosures regarding disclosure controls and procedures - and posting reports on corporate websites - and analyzed the results. These results are in the "Disclosure" section of our "Practice Areas" at http://www.thecorporatecounsel.net/member/CriticalAccounting/.

February 18, 2003

Adding pressure on companies to voluntarily expense options, late last week, Ernst & Young became the first major accounting firm to reverse its position on expensing options.

In a letter to the Financial Accounting Standards Board, Ernst & Young stated that it strongly supported efforts by both the FASB and the International Accounting Standards Board to develop a method to ensure that "stock-based compensation is reflected in the financial statements of issuing enterprises." For more information about E&Y's position, see the NY Times article – “Ernst & Young Changes Mind on Options” from February 14th.

The SEC remains closed today due to bad weather...

On TheCorporateCounsel.net, we have posted an interview with David Lynn of Wilmer Cutler on CEO/CFO certifications - see http://www.thecorporatecounsel.net/member/InsideTrack/02_14_03_Lynn.htm.

Later today, TheCorporateCounsel.net is hosting a webcast program on "Understanding the New 'Audit Committee Financial Expert'" - see http://www.greatgovernance.com/Programs.html.

February 14, 2003

Yesterday, the SEC released a draft of the upcoming EDGAR Filer manual - which contains information about the Online Forms website that will be used to accept filings for Forms 3, 4, & 5. The manual describes the process a user would go through to create and submit a form via their website.

Section 3 of the Draft Manual contains screen shots of the new SEC website that will be devoted to Section 16 filings - and what steps you will need to take to create the form. The Manual has an address for the SEC's new website - https://www.onlineforms.edgarfiling.sec.gov - but I was unable to connect to it, so I assume it is not ready yet.

As expected, yesterday the Senate confirmed William Donaldson as SEC chair - its official...

For TheCorporateCounsel.net subscribers, in addition to our own SOX Scorecard, we have posted 8 other scorecards - they all are very handy and located under "Special Features" when you click on "Sarbanes-Oxley Scorecards."

February 13, 2003

I don't think anyone doubts that the new 2-day filing framework for Form 4s has led to more delinquencies - and recent disclosures bear this out.

Thanks to Alan Dye, we just posted a horde of recent disclosures sorted out by 20 different topic areas on TheCorporateCounsel.net and Section16.net.

February 12, 2003

Yesterday, William Donaldson was confirmed by the Senate Banking Committee as next chair of the SEC - full Senate approval is expected shortly - and Mr. Donaldson should be in office by next tuesday...

From the Division of Corporation Finance, Dennis Garris will be leaving as head of the Office of Mergers & Acquisitions to join Alston & Bird - Associate Director Bill Tolbert is also leaving to go back to Ohio.

On GreatGovernance.com, we have posted a lengthy annotated corporate governance guidelines - graciously donated by Cynthia Krus of Sutherland, Asbill & Brennan.

February 11, 2003

As some board committees are exercising their soon-to-be "right" to hire advisors - or if the governance committee hires a new outside law firm to conduct a one-time governance "gut-check" - the question remains: who does the advisor/law firm work for?

This question must be resolved right away when a retainer letter is drafted. The best answer we have heard so far is "individual directors on behalf of the board." If you have a different conclusion or a sample retainer letter for a board committee, contact broc.romanek@thecorporatecounsel.net.

February 10, 2003


Today, we posted three new portals on GreatGovernance.com - Whistleblower; Audit Committee; and Corporate Governance/Nominating Committee. These portals will be continously expanded over time.

February 7, 2003

Yesterday, the SEC adopted final rules regarding analyst certifications - see the related Washington Post article at http://www.washingtonpost.com/wp-dyn/articles/A38058-2003Feb6.html.

CCBN has posted a white paper on how to post corporate governance information on corporate websites - http://media.corporate-ir.net/media_files/priv/e-mails/ccbn/corpgov/CorpGov_Whitepaper.pdf.

For TheCorporateCounsel.net subscribers, we just posted several sample back-up certifications - with more samples to come soon.

February 6, 2003

William Donaldson had his Senate confirmation hearing yesterday - and sounds like the SEC will continue to not be a "kinder, gentler" place...the NY Times headline captures the essence of his testimony - "SEC Choice Says He's No Harvey Pitt."

The FEI is wrapping up a study on the compliance costs of Sarbanes-Oxley...could be an eye-opener...going private anyone?

For TheCorporateCounsel.net subscribers, we have posted our first interview - Lou Rorimer on Proxy Season Disclosure.

February 5, 2003

At a recent conference, Corp Fin Director Alan Beller stressed that the SRO listing standard proposals would be out by the end of February - and that the SEC staff was still trying to "harmonize" the NYSE and Nasdaq proposals.

At its open meeting yesterday, the SEC proposed a self-regulatory organization for mutual funds - and postponed final rules on analyst certifications until today's open meeting.

For TheCorporateCounsel.net subscribers, we have posted sample codes of ethics!

February 4, 2003

In analyzing the new attorney conduct rules, the application to chief legal officers remains murky if that person uncovers the problem - as that person then must report to him/herself and get back to him/herself, etc. There are other issues like this that undoubtably will become grist for a staff legal bulletin.

Corporate governance reforms may not always be what they seem - check out this Washington Post article on Disney - http://www.washingtonpost.com/wp-dyn/articles/A20824-2003Feb3.html.

The SEC has posted the adopting release regarding disclosure of voting policies and records by mutual funds at http://www.sec.gov/rules/final/33-8188.htm.

On TheCorporateCounsel.net, we are putting the finishing touches on our final redesign of the site - let us know if further tweaks are needed - send suggestions to broc.romanek@thecorporatecounsel.net. We have also posted our February E-Minders at http://www.thecorporatecounsel.net/E-minders/.

February 3, 2003

On Wednesday, the Senate will consider the confirmation of William Donaldson as SEC chair. Mr. Donaldson has been busy selling his multi-million dollar portfolio of securities in anticipation.