August 31, 2004

September E-Minders is Up!

We have posted our September issue of our complimentary monthly e-mail newsletter. FYI, you can sign up to receive it by email by just inputting your email address into this form.

By the way, Blawg rates this blog as the 2nd most popular legal-related blog, out of 630 blogs (by the way, "number of hits" on that site is the number of folks that click on their link to my blog; this blog averages about 3900 visits per day). Not bad, but I'm gunning for #1 - you can rate this blog on that site too ...

Update on Ability to Hold Online Annual Meetings

Without much publicity, several states have joined Delaware to allow companies to hold their annual meetings solely online. In 2001, the Michigan Corporate Statute was amended to provide for shareholder meetings to be held "solely by means of remote communication" unless otherwise restricted by the articles or bylaws (see MCLA Sections 450.1405(3) and (4)). Oklahoma also amended Section 1056 of its Corporations Code in 2001 to permit a meeting consisting solely of remote attendance. Both of these provisions are essentially the same as Section 211 of the Delaware General Corporation Law.

Maryland also now allows for meetings by remote communication, but with a twist. Maryland law provides that the board shall provide a physical place for a meeting of the shareholders at the request of a shareholder (see §2-503 Corporations and Association Article, Annotated Code of Maryland). In comparison, Delaware's §211 gives the board sole discretion and doesn’t provide a right of shareholders to request a physical meeting site, so Maryland law is considerably more restrictive than Delaware or Michigan.

Highlighted by the fact that companies are required to disclosure the nature of director attendence at their meetings, holding a pure online meeting continues to be dangerous from an IR perspective.

Why Discounted Stock Options (or Discounted Stock SARs) – And Not Premium-Priced Options – Might Become Popular After FAS 123 Is Revised

Stewart Reifler of Vedder Price contributed this useful practice pointer to CompensationStandards.com - a hot topic along the lines of the new plenary session just announced for the NASPP Annual Conference entitled "Stock SARs: Everything You Need to Know About Implementing The New Equity Vehicle of Choice."

August 30, 2004

Sample 8-K In-House Memo Regarding Material Definitive Agreements

Following on the heels of the popular Sample 8-K In-House Memo for Reporting Chain Insiders that we posted last week, we have posted a Sample 8-K In-House Memo Regarding Material Definitive Agreements in a Word file.

This new sample memo is designed to help explain the tricky thresholds within the concept of "material definitive agreements" to employees in the reporting chain, complete with instructions on how to proceed if an agreement might be considered material for a particular company based on the parameters specified in the memo (the memo has blanks to tailor these parameters for a particular company).

We have posted this sample memo in our "Form 8-K" Practice Area and our Sample Document Library. And don't forget to keep those 8-K questions coming to broc.romanek@thecorporatecounsel.net for our September 23rd webcast on the topic!

SEC Finally Blesses PCAOB's New Documentation Standards

Last week, the SEC approved the PCAOB's Auditing Standard No. 3, which require auditors to retain their records for seven years - and in sufficient detail so that an experienced auditor with no previous connection to the engagement could read them and understand clearly what work had been performed, who performed the work and why the auditor reached its conclusions. The PCAOB had finalized this standard back in early June, so it still is taking the SEC quite a bit of time to approve the PCAOB's standards.

August 26, 2004

SEC Proposes to Delay Accelerated Filer Deadlines

Yesterday, the SEC proposed to postpone for one year the accelerated filing deadline for reports on Forms 10-K and 10-Q by "accelerated filers." Under the current rules, the filing deadline for annual reports on Form 10-K would accelerate to 60 days (from 75) for fiscal years ending on or after December 15, 2004. The deadline would accelerate to 35 days (from 40) for subsequently filed quarterly reports on Form 10-Q. The proposed postponement is intended to allow additional time for accelerated filers and their auditors to focus on complying with the new internal control report and attestation requirements.

This is good news as the results from our current quick survey on this topic reveal that about two-thirds of the respondents might or will have trouble meeting the 60-day deadline - and nearly three-quarters might or will have trouble meeting the 35-day deadline.

SEC Staff Provides Written 8-K Guidance

Okay, I know that sometimes I can be cruel. The guidance - in the form of an August 20th no-action response - is very limited and provides equal treatment for Fannie Mae under Instruction 5 to Item 2.03 of 8-K. Fannie needed the interp because its debt isn't '33 Act registered due to an exemption available by Section 4(5) of the '33 Act (and Instruction 5 is limited by its terms to securities sold in registered offerings).

August 25, 2004

Clarification on Application of 8-K Rules to Option Grants, Etc.

In the wake of the ABA Annual Meeting, there has been a bit of confusion as to whether companies need to file a 8-K each time an option is granted under the new 8-K rules. Some law firms mistakenly sent out memos indicating that indeed is the case after hearing SEC Staffers speak at the meeting.

Thankfully, I understand that the SEC Staff has provided oral informal guidance that if the form of an option agreement is on file then - in accordance with Instruction 1 to S-K Item 601(b)(10) - the grant of an option does NOT trigger the need to file an 8-K (assuming the award grant fits within the form of award already on file with the SEC). Further, the adoption of an equity compensation plan that must be approved by shareholders does not trigger an 8-K until shareholder approval is obtained.

I have posted a number of law firm memos that address these points - and more - in Section B.26 of the Sarbanes-Oxley Law Firm Memos (look at the bottom of B.26, the last 4-5 memos).

Nasdaq Posts More Staff Interpretative Letters On Governance Listing Standards

The Nasdaq has updated the PDF of staff interpretative letters that it has posted on its website. The PDF is now 66 pages and is dated August 17th - and includes all the staff's interps for 2002 and 2003. The latest set of staff interpretative letters
begin with Letter 2003-25 and address:

- qualification of a director under revised definition of "independent director" (2003-26, 27, and 35)
- availability of exemptions from corporate governance requirements for non-US issuers (2003-28, 44 to 48, 50 and 51)
- completing transactions prior to the end of the 15-day approval period
for listing additional shares if Nasdaq has completed its review of proposed transactions (2003-42 and 2003-52)
- shareholder approval requirements for a change of control (2003-31, 39, 32, 43, and 52)
- shareholder approval requirements for equity compensation plans (2003-29, 30, 33, 34, 36-38, and 49)
- need for shareholder approval of exchange or rights offerings (2003-31 and 43)
- need for shareholder approval for private placements (2003-25, 32, 39-42, and 52)
- voting rights (2003-53)

Thanks to Suzanne Rothwell of Skadden Arps for the heads up as usual!

The Use of Clawback Provisions: Putting a Price on Disloyalty

Check out one of the latest practice pointers on CompensationStandards.com from Lou Rorimer of Jones Day regarding The Use of Clawback Provisions: Putting a Price on Disloyalty. Register now for the October 20th executive compensation conference and gain access to all the pointers on CompensationStandards.com as a bonus!

August 24, 2004

Contract Drafting and Knowledge Management

We have posted an interesting interview with Ken Adams on Contract Drafting and Knowledge Management. It's a great piece for all you contract buffs!

PCAOB Hotline Open for Business!

The PCAOB is opening a new hotline today that will make it easier for employees and others to report problems. The PCAOB hopes that the hotline will encourage people to come forward with information by making it easier to report tips and complaints.

People can contact the PCAOB via a toll-free number (1-800-741-3158), email (tips@pcaobus.org), fax (202-862-8435), by filling out the online form for filing a complaint that is available on the website (pcaobus.org), or snail mail (PCAOB Complaint Center, 1666 K St., NW, Washington, D.C. 20006).

-Submitted by Julie Hoffman

August 23, 2004

New 8-K Rules Effective Today!

Don't forget to use the new 8-K form starting today! To help out, remember that we have posted a cover page of the new form, that includes all the changes from the SEC's technical amendments adopted a few weeks ago.

Also note that the SEC has posted a corrected PDF version of the entire form on its website - if you printed out a PDF anytime before late last week, it was missing the two instructions for new Item 5.02.

And note that I got a little publicity from WSJ.com on Friday - now I really am somebody!

New Corporate Governance Survey

On GreatGoverance.com, we have posted a new survey by Shearman & Sterling regarding the corporate governance practices of the 100 largest companies. The survey results reveal that these companies have taken a wide variety of approaches in complying with the new requirements that took effect this year.

One notable development is the frequency and degree to which a number of the companies exceed the minimum requirements of the new rules and standards either in policy or practice. For instance, almost half adopted more stringent independence requirements than required by the applicable listing standards - but in practice, independent directors comprise 75% or more of the boards of an even larger number of the surveyed companies. Similarly, many of the surveyed companies voluntarily chose to disclose publicly the name of more than one audit committee financial expert, though only required to name one.

There are several areas in which the survey results differ from expectations. It is clear that directors have been devoting more time to fulfilling their responsibilities - and although this expectation is reflected in the significant increase in the aggregate amount of annual cash retainers paid to directors, the number of board meetings increased only slightly from the previous year and less than one-third of the surveyed companies limit the number of public company boards on which their directors may sit (and at least one director at over 40% of the surveyed companies serves on five or more public company boards).

August 19, 2004

ABA Annual Meeting Notes

We have posted bullet point highlights from the two sessions at the recent ABA Annual Meeting that featured Corp Fin Director Alan Beller. These ABA Meeting Notes are in Section F of the Sarbanes-Oxley Law Firm Memos.

New Nasdaq Proposal for Non-US Issuers

Currently, Nasdaq doesn't impose initial listing requirements relating to share price or market value with respect to non-Canadian foreign issuers seeking to list on the Nasdaq SmallCap Market. By contrast, domestic issuers must have a bid price of at least $4 and a market value of publicly held shares of at least $5 million for initial listing. On August 11th, the SEC issued a proposal by Nasdaq to amend Nasdaq Rule 4320 to apply these same initial inclusion requirements to non-Canadian foreign issuers.

Musings on Google's Acceleration Request

As a two-time Corp Fin'er, I couldn't help but smile after reading the varying accounts in the business media yesterday that speculated about the "technical" reasons why the Google S-1 had not yet been declared effective. Brought back memories of seeking an Assistant Director (preferably one that didn't ask a lot of questions) to sign off on those triplicate delegated authority forms before a deal could hit the street - the Staff still uses those ancient forms. Dem were da days...

August 18, 2004

SEC Brings It Regarding Perks - Targeting Not Just Those That Receive Perks!

Yesterday, it was reported that the SEC Enforcement Staff is planning to bring a civil lawsuit against Tyson Foods related to certain perks given to its top officers and board members, including Tyson family members. Specifically, the SEC Staff alleges that company's proxy statements for 1997 through 2003 didn't fully disclose $1.7 million in perks enjoyed by former Senior Chairman Don Tyson, and the company failed to maintain adequate internal controls on the personal use of company assets and the disclosure of perks and personal benefits.

Notably, Tyson said the SEC Staff also told the company it is considering recommending that the Commission bring administrative cease-and-desist actions against two Tyson employees who are not executives - these are the employees that were responsible for reporting the perks; not those that enjoyed the perks! Folks like me and you...

We are on the verge of announcing the program for the October 20th Executive Compensation conference - and a practical panel discussing how to properly report perks has been penciled in since day one. Now, that panel takes on even greater signficance. Register now to learn how to save your hide - as well as obtain access to the practice pointers already posted on CompensationStandards.com.

8-K In-House Memo for Reporting Chain Insiders

As the August 23rd effective date for the new 8-K rules approaches, many companies are rushing to adopt policies that designate who can approve certain things, identify who is either responsible for learning of (or most likely to learn of) certain events and charging those people with implementing disclosure processes as well as forming a subgroup of their disclosure committee to assess whether a trigger has occurred.

In a Word file, we have posted an 8-K In-House Memo for Reporting Chain Insiders - and hope to post more samples soon in our Sample Document Library.

Amendments to NYSE Corporate Governance Listing Standards

The NYSE has posted a rule filing it made with the SEC on August 3 that would amend its corporate governance listing standards. In a number of cases, the amendments codify prior interpretations of the NYSE corporate governance rules provided in a series of FAQs.

Among other things, the amendments (which still must be approved by the SEC):

- clarify the definition of "executive officer"
- amend the independence tests generally to clarify the operation of the 3-year look-back
- revise the independence definitions related to employment and receipt of direct compensation to clarify that service as an interim executive officers (as well as an interim Chairman or CEO) will not disqualify a director
- clarify that exception for charitable contributions from the independence standard related to payments for services exceeding the greater of $1 million or 2% of consolidated gross revenues is only intended to apply to "contributions" and, therefore, the independence standard covers any business-based payments to such a charitable organization
- narrow the independence standard related to prior employees of the company's auditor, but bring a director with a family member who is a current partner of the audit firm under the standard
- clarify that the non-CEO compensation arrangements that are the responsibility of the compensation committee are those of "executive officers" and that the board may delegate its authority to approve "executive officer" compensation to the compensation committee
- provide that qualifications to the annual CEO certification must be specified and disclosed
- require that listed companies submit Annual and Interim Written Affirmations to the NYSE, including foreign private issuers and preferred- and debt-listed companies (but only to the extent these types of companies must comply with the audit committee requirement in NYSE Rule 303A.6).

August 17, 2004

SEC Staffer Joins Our 8-K Webcast Panel

Ray Be from Corp Fin's Office of Rulemaking has joined our September 23rd panel -"Reality Bites: More on the New 8-K Rules." Ray was the primary draftsman of the 8-K rules. Don't forget to email me your questions for the panel to address!

Please note that we have posted a Word file of the cover page of the new 8-K
- as well as a PDF of the SEC's official version of the new 8-K. Both of these are in the "Form 8-K" Practice Area.

50 Nuggets III Transcript is Posted!

We have posted the transcript from "50 Nuggets in 50 Minutes III."

Negotiated M&A Deal Point Trends

Based on the early response to my interview with Wilson Chu and Larry Glasgow on Negotiated M&A Deal Point Trends, I think that we need to cover more M&A issues on our site. Let me know if you think that is true...

August 16, 2004

Google to Playboy: They're Real and They're Fabulous

This was a headline from SiliconValley.com - and if you haven't figured it out by now, I can't resist throwing in some Seinfeldism whenever I get a chance.

Well, Google continues to give plenty of securities law fodder to the business media - this time, a violation of the quiet period that has led to Amendment No. 7 to Form S-1 that includes an interview of the two Google founders with Playboy magazine as Appendix B, complete with three corrections to statements they made in the interview (the interview was conducted in April, just before the S-1 was originally filed).

The three corrections are made in a new risk factor on page 22 that notes that the interview may constitute a Section 5 violation - but the three corrections are not noted or cross-referenced in Appendix B itself. However, in my opinion, none of the corrections relate to matters that are investment deal-breakers since they don't deal with financial performance (they relate to amount of storage in Gmail; number of employees at Google; and how often searches are made daily with Google's search engine).

According to media reports, the SEC Staff required Google to include the entire interview in the prospectus - which at least one account labeled as unprecedented. The practice in the past is that the Staff would force the issuer to include only the statements that realistically could impact investment decisions. But in this case, perhaps Google was faced with the prospect of a delay in the offering and the easiest solution was to include the entire interview rather than do a prolonged negotiation with the SEC Staff as to what statements should be included.

As the Wall Street Journal notes today, if Google had gone public in a year or so, the '33 Act reform that Corp Fin is working on these days might have made the Playboy interview a non-issue.

NYSE Regulatory Reorganization

As part of a NYSE regulatory reorg, the Listed Company Compliance division - including Corporate Compliance headed by Janice O'Neill and Financial Compliance headed by Glenn Tyranski - has been structured so that it reports to Rick Ketchum, who is Chief Regulatory Officer. As a result, now all regulatory, governance and compliance units are aligned under the leadership of Rick Ketchum and separate from the NYSE's business divisions.

SERP Design and Value/Cost Considerations

Dozens of additional practice pointers have been added to CompensationStandards.com in the past two weeks as our task force continues to churn them out - including one by Bill Gerek of the Hay Group on SERP Design and Value/Cost Considerations. Register now for the October 20th executive compensation conference and gain access to all the pointers on CompensationStandards.com as a bonus!

August 12, 2004

Reality Bites: More on the New 8-K Rules

I have received a phenomenal number of 8-K questions as the August 23rd effective date draws near, which is understandable given that the new 8-K requirements present tricky new challenges about when – and what – to disclose.

So we are holding a webcast on September 23rd - "Reality Bites: More on the New 8-K Rules" - that will supplement our May webcast on the topic (of course, you can review that transcript now). The agenda for the September 23rd webcast principally will be framed by questions e-mailed in advance to broc.romanek@thecorporatecounsel.net. So e-mail your questions now!

The panel for the September 23rd webcast consists of: David Martin of Covington & Burlin; Ron Mueller of Gibson Dunn; Bill Tolbert of Jenner & Block; and Brink Dickerson of Troutman Sanders.

8-K Transition Interp

At the ABA Annual Meeting earlier this week, Corp Fin Director Alan Beller confirmed that the old Form 8-K rules apply for events occurring before the effective date, August 23, but are reported after the 23rd. However, for EDGAR programming reasons, the new Form 8-K template and format must be used for any 8-Ks filed on - or after - the effective date.

August 11, 2004

More on Item 703 Stock Repurchase Tables

We have added two additional informal Corp Fin interpretations (that I have heard secondhand from several members - not directly from the Staff) regarding the Item 703 stock repurchase table to "Staff Interps re: Item 703 Disclosures about Stock Repurchases" in our "Stock Repurchase" Practice Area. These interps relate to tax-withholding and restricted stock units.

Sentencing Guidelines Transcript Available

We have posted the transcript from our July 21st webcast, "How the New Sentencing Guidelines Impact You."

The PTO Goes Online

Finally, the U.S. Patent and Trademark Office has made available all documents in the files of pending published U.S. patent applications online. This is a huge change as it is now generally possible to learn more about what a competitor is trying to patent - and to learn it significantly sooner. I know that this isn't relevant for our members - but thought it was notable and shows how the SEC was far ahead of its time when it developed EDGAR back in the early '80s.

August 10, 2004

The SEC's 5-Year Plan

On Thursday, the SEC posted its five-year strategic plan, as required by the Government Performance and Results Act of 1993. The 59-page plan outlines broad strategies to accomplish what could be considered the SEC's long-standing four goals: (1) enforce compliance with federal securities laws, (2) sustain an effective and flexible regulatory environment, (3) encourage and promote informed investment decision-making, and (4) maximize the use of SEC resources.

Most of the strategies outlined in the plan have been well-publicized over the past year as Chairman Donaldson has been making his mark. For example, the new Office of Risk Assessment is leading the way to implement the "doctrine of no surprises." Another example is the SEC's push to eventually utilize XBRL in an effort to upgrade EDGAR.

On the Corp Fin front, the transformation of the disclosure review process - including the criteria used for selection - is mentioned repeatedly. This transformation already has begun and is bound to evolve in the near term.

I am a fool for trivia and love all the factoids spread throughout the plan, such as 600,000 documents are filed annually through EDGAR and 18 million pages are contained in the 12,000 annual reports filed annually.

The SEC University

One of the more notable aspects of the 5-year plan is that the SEC is developing an online and in-person training program called the SEC University. One of the rationales for "SEC-U" (which is the abbreviation that the plan uses on page 48) is that 14% of the SEC's managers are eligible to retire in 2005 - hence, the need to train new leaders. Corp Fin has conducted in-person training for years - but it will be interesting to see what type of online training the Staff develops.

50 Nuggets III

Join Alan Dye and I as we wind our way through 50 practice pointers in a webcast tomorrow - 50 Nuggets in 50 Minutes III.

If you are not yet a member, take advantage of a no-risk trial to see what you are missing. Here are 10 Good Reasons to try us! And now you can take advantage of our special offer to try a "Rest of 2004" no-risk trial to either TheCorporateCounsel.net or Section16.net for only $315!

August 9, 2004

Demystifying Google's Rescission Offer

Last Wednesday, Google filed a rescission offer in a new registration statement with the SEC (which was then amended on Friday), offering to repurchase more than 23 million shares of its stock and 5.6 million options that were illegally issued to approximately 1,000 of its employees and consultants. This rescission offering is not directly related to the IPO.

According to media reports, some state regulators (e.g. California) are actively investigating violations raised by Google's prior offerings and these reports claim that Google's IPO has been postponed due to these investigations. However, the fact that this rescission offering is happening should not have been surprising to the mainstream media since the IPO prospectus - since April - has included a section entitled "Rescission Offer" that revealed these violations and the proposed resolution. This is not something that by itself should hold up the IPO - much less imperil it - since it was clearly planned for from the beginning. Rather, it's a soft IPO market that likely is forcing a postponement of the IPO.

According to Google's disclosure, the shares causing the violations are from Google's option plans. Although there are specific federal and state exemptions for sales of shares underlying options, it is not too uncommon for private companies to technically pop out of those exemptions and be left with no exemptions to rely on and no way to register the sales. The SEC likely will not do anything about Google's Rule 701 violations unless there was fraud involved, which doesn't seem to be the case. Remember that under Section 12, purchasers - not the SEC - have a cause of action to seek rescission.

Although it isn't disclosed, it's possible that Google crossed the Section 12(g) threshold some time back and was required to register its common stock under the '34 Act (companies that have more than 500 shareholders and $10 million in assets at calendar year end must register under Section 12(g)). Since it hadn't conducted a public offering, Google probably never imagined - as is the case for a number of larger private companies - it could possibly be required to file a Form 10 with the SEC.

Now that a IPO appears imminent (despite the postponement), any offerees that accept the rescission offer would be out of their minds as Google's anticipated IPO offering range is between $108 and $135 a share and the rescission offers are well below those levels; as low as a dollar and change in some cases.

The rescission offer prospectus does include a risk factor that alludes to this disparity: "The amount you would receive in the rescission offer is fixed and is not tied to the fair market value of our common stock at the time the rescission offer closes. As a result, if you accept the rescission offer, you may receive less than the fair market value of the securities you would be tendering to us." But this risk factor doesn't mention the anticipated range of the IPO. It will be interesting to see if any rescission offerees tender their shares.

Does a Federal Right of Rescission Survive a Rescission Offer?

One risk factor in the Google rescission prospectus raises an interesting issue: "If you affirmatively reject or fail to accept the rescission offer, it is unclear whether or not you will have a right of rescission under federal securities laws after the expiration of the rescission offer. The staff of the Securities and Exchange Commission is of the opinion that a person's right of rescission created under the Securities Act of 1933 may survive the rescission offer. However, federal courts in the past have ruled that a person who rejects or fails to accept a rescission offer is precluded from later seeking similar relief."

If Google's stock price tanked in the aftermarket, could rescission offerees attempt to exercise their rescission rights then (note that the rescission prospectus states that the offer expires in September - most states require that rescission offers remain open for at least 30 days)? E-mail your thoughts (and any materials on rescission offerings) on this topic to me and I will address it later in the week as we are in the midst of building a "Rescission Offerings" Practice Area.

Is a Dutch Auction a Postive Development for Investors?

Yesterday's Washington Post contained this editorial from Yale School of Management professor Barry Nalebuffon on this hot topic.

By the way, here is Google's IPO auction website...

August 5, 2004

SEC Adopts Technical Amendments

The SEC adopted technical amendments yesterday to the Form 8-K release, originally adopted on March 16, 2004. Among the changes:

• the addition of a fourth checkbox to Form 8-K to allow a company to satisfy the disclosure requirements of Rule 13e-4(c), the Regulation M-A provision for issuer tender offers, by including that disclosure in a Form 8-K;

• revision of the requirement to disclose the source of funding under Item 2.01 of Form 8-K, Completion of Acquisition or Disposition of Assets, if a material relationship exists between the company and the source of funding (instead of if a material relationship exists between the company and the seller of the assets);

• Revision to Item 5.05(c) of Form 8-K, Amendments to the Registrant's Code of Ethics, or Waiver of a Provision of the Code of Ethics, to provide that a company disclosing an amendment to, or waiver from, its code of ethics on its website must do so within four business days (rather than five);

• amendment to Item 5(a) of Form 10-K (disclosure of unregistered sales) to disallow the exclusion of sales made under Reg S; and

• re-addition of paragraph (b) of Item 5 of 10-Q/10-QSB that was inadvertently deleted.

New “Reg S” Practice Area

We have created new practice area for Regulation S. The Practice Area includes FAQs, recent No-Action Letters and a timeline of Reg S. Take a look!

-Submitted by Julie Hoffman

August 4, 2004

Treasury and IRS Issue New ISO Regs

Under new regs issued Monday by the Treasury Department and the IRS, employee-holders of ISOs have the ability to acquire employer stock without realizing income when the option is exercised. The regulations finalize, with minor changes, regulations proposed last summer.

Capital gains treatment is permitted if the employee holds the stock for a required period, the exercise price for the ISO is no less than the fair market value of the underlying stock on the date the ISO is granted, and the ISO plan was approved by shareholders. Additionally, the amount of ISOs that can be granted to an employee is limited.

The final regulations generally will be effective on the earlier of January 1, 2006 or the first regularly scheduled stockholders meeting occurring at least six months after the publication of the final regulations.

New "Lead Director" Practice Area

We have created a new “Lead Director” Practice Area, including FAQs on board leadership and examples from companies’ corporate governance principles and proxy statement disclosures. Check it out.

-Submitted by Julie Hoffman

August 3, 2004

August E-Minders is Up!

We have posted the August E-Minders. Check it out!

SEC Enforcement Actions Down

An article in yesterday's L.A. Times reported that actions brought by the Division of Enforcement are down in the current year (which ends Sept. 30). In the nine months ending June 30, the SEC brought 378 enforcement actions against companies and individuals, compared to 443 enforcement actions in the prior year.

Some experts speculate that the decrease is a result of a change in enforcement strategies and an increase in complex cases, rather than a decrease in corporate fraud. There are select areas, however, where SEC enforcement numbers are rising: freezing assets, suspending trades and officer & director bars.

Pitt’s (non) FOIAble Records

The U.S. District Court for the District of Columbia ruled last week that certain records of former Chairman Harvey Pitt are not required by FOIA to be turned over to the media. The ruling encompasses Pitt’s notes on meetings with Wall Street and accounting executives as well as telephone logs and appointment calendars. Bloomberg had made several requests for information during Pitt’s tenure, but the SEC claimed most of the records were not “agency records” subject to the FOIA.

The court also upheld the SEC’s denial of Bloomberg’s request for documents on a November 2001 meeting on conflicts on Wall Street. Bloomberg sought notes taken by the Staff at the meeting with officials from the NYSE, NASD and several brokerage firms. The court agreed with the SEC's denial, saying that regulators would be hampered if participants didn’t feel free to talk openly at such meetings, or if the thoughts and recommendations of the Staff were “exposed” before a final decision on a policy matter.

-Posted by Julie Hoffman

August 2, 2004

Accelerated Filing Reprieve?

Last week, Jim Quigley, CEO of Deloitte & Touche USA, testified before the House Committee on Financial Services at a hearing on Sarbanes-Oxley. In his testimony, Quigley said it is very challenging for companies to comply with both an accelerated filing schedule and the new internal-controls rules in the same year. Quigley said Deloitte planned to send a letter to the SEC asking the agency to delay implementation.

It appears that the SEC may actually be considering a one-year extension for the accelerated filing deadline for Form 10-Ks, according to a July 26th Wall Street Journal article. Under the phase-in as originally established in 2002, for fiscal years ending after December 15, 2004, 10-Ks will be required to be filed within 60 days of the fiscal year end (rather than the 75 days they had this year).

In addition, accelerated filer companies are required to file their 10-Qs within 40 days after each quarter end this year - with this deadline dropping to 35 days next year.

Our New Survey on Accelerated Filer Deadlines!

We have a hunch that meeting a 35-day 10-Q deadline might be even more challenging than a 60-day 10-K deadline. To find out whether this hunch is correct, we have posted a quick survey on the ability of accelerated filers to meet these upcoming deadlines. Please weigh in on this important debate!

You also might want to review the final results from our recent survey on disclosure committees.

-Submitted by Julie Hoffman