May 31, 2012

Corp Fin Changes Confidential Submission Process for Foreign Private Issuers

Yesterday, Corp Fin revised its confidential submission processes for foreign private issuers so that they are treated like emerging growth companies for filing drafts, etc. This is good news as the same procedure for all types of drafts should makes it easier for us to remember. This process change is effective on a going-forward basis.

Here is the new paragraph added to Corp Fin's processes:

In addition, foreign private issuers, whether submitting draft registration statements pursuant to this foreign issuer non-public submission policy or as an emerging growth company under the JOBS Act, will be required, at the time they publicly file their registration statements, to also publicly file their previously submitted draft registration statements and resubmit all previously submitted response letters to staff comments as correspondence on EDGAR. All staff comment letters and issuer response letters will be posted on EDGAR in accordance with staff policy. For foreign private issuers making non-public submissions pursuant to this policy, and not pursuant to the procedures available to emerging growth companies, this requirement will only apply to registration statements where the initial draft submission is made after May 30, 2012.

Our New "Board Meeting/Board Committee Disclosure Handbook"

Spanking brand new. Posted in our "Board Meetings" Practice Area, this comprehensive "Board Meeting/Board Committee Disclosure Handbook" provides a heap of practical guidance about the disclosure obligations under Item 407(b) of Regulation S-K.

More on "The Mentor Blog"

We continue to post new items daily on our blog - "The Mentor Blog" - for TheCorporateCounsel.net members. Members can sign up to get that blog pushed out to them via email whenever there is a new entry by simply inputting their email address on the left side of that blog. Here are some of the latest entries:

- Survey: Cybersecurity Risks Foremost on Auditor's Mind
- Do You Have The Correct Authorized Number Of Directors?
- And Even More Board Trends...
- 'Do I need to quit my job?'
- And More Board Trends...
- Notes from PLI's "SEC Speaks" Conference

Deal Cube Tournament: Round One; 6th Match

As noted in these rules (and keep sending more pics for the next tourney), please vote for two of the following four cubes below:

- Movie Projector & Ticket
- Bowling Ball
- Listerine Bottle
- 'Welcome' from Lobby


- Broc Romanek

May 30, 2012

The SEC Is Going After Lawyers

In the "Cady Bar the Door" Blog, David Smyth notes recent examples of SEC's Enforcement going after lawyers - just as Director Rob Khuzami promised in a speech last June for defense counsel who engage in "questionable tactics" to gain advantage for their clients involved in SEC investigations. As David mentions in his blog, in his speech, Khuzami noted one hilarious episode in which a witness in investigative testimony - looking for a toe-tapping signal his lawyer had been warned against during a break - "extended [his foot] so far [under the table] that he was almost doing a split." Also see this DealBook piece entitled "With New Firepower, SEC Tracks Bigger Game" - and this OnWallStreet piece entitled "SEC Whistleblower Tip Rate: 7 A Day."

Meanwhile, Bloomberg reported last week that Enforcement has stopped investigating Lehman (a rumor which was then disputed in this NYT piece). And the SEC announced that it has barred one of its former Staffers from practicing before the Commission - Section 102(e) actions are rare and almost unheard of for SEC alumni - over12 hours of billables on the Stanford case...

Early Bird Discount Ends Tomorrow! "Proxy Disclosure Conference" Lineup!

We are very excited to announce that Corp Fin Director Meredith Cross will be part of our "7th Annual Proxy Disclosure Conference" on October 8th in New Orleans (and by video webcast). Just look at this beautiful baker's dozen of panels for this Conference:

1. An Interview with Meredith Cross, Director of the SEC's Division of Corporation Finance
2. Say-on-Pay Disclosures: The Proxy Advisors Speak
3. The Executive Summary & Other Ways for Disclosure to Facilitate Solicitation
4. The Latest SEC Actions & CD&A Developments: Compensation Advisors, Clawbacks, Pay Disparity & More
5. Refining Your Pay-for-Performance Message & Addressing the Impact of Your Vote
6. Getting the Vote In: The Proxy Solicitors Speak
7. Dealing with the Complexities of Perks
8. Conducting - and Disclosing - Pay Risk Assessments
9. Overcoming Form 8-K Challenges
10 Handling the Golden Parachute Requirement
11. Challenges for Smaller Companies: Their First Year
12. How to Handle Preliminary Proxy Statements
13. How to Handle the 'Non-Compensation' Proxy Disclosure Items

Register Now for Early Bird Rates - Act by May 31st: For the early bird discount rate, register by May 31st. This Conference is paired with "Say-on-Pay Workshop: 9th Annual Executive Compensation Conference" and they will be held October 8-9th in New Orleans and via Live Nationwide Video Webcast.

Governance Accessibility

In this podcast, consultant Karen Kane discusses her new book "Voices of Governance: Why Oversight Is Important to All of Us," including:

- What led you to write the book? What can shareholders take away from it?
- What is the primary message that boards can take away from the book?
- What is the biggest surprise you found while writing the book?

Deal Cube Tournament: Round One; 5th Match

As noted in these rules (and keep sending more pics for the next tourney), please vote for two of the following four cubes below:

- Lava Lamp
- Tipping Bucket
- Clear Jar
- Standard w/ Two Acquisitions Announced


- Broc Romanek

May 29, 2012

Say-on-Pay: Now 32 Failures - And Two Companies Fail In Consecutive Years!

I've added 14 more companies to CompensationStandards.com's failed say-on-pay list for 2012! We are now at 32 companies that have failed to garner major support - with Chiquita Brands garnering support only in the teens (19.8%; see Mark Borges' analysis of this failure)! Hat tip to Karla Bos of ING Funds for keeping me updated!

And Hercules Offshore became the first (41% support in '11 and 48% in '12) - and Kilroy Realty became the second (49% support in '11 and 30% in '12) - company to fail two years running...

And this list doesn't include the recent voting results from Cablevision Systems - a company which did not have say-on-pay on its ballot this year because the frequency is triennial (per page 26 of their proxy statement; triennial was the choice of shareholders last year) - whose members of the compensation committee received less than majority support presumably due to pay issues. The company has a plurality vote standard so there is no direct impact from this vote. And this result doesn't get picked up in the "failed SOP" count even though I would consider it to be a more serious failure than a nonbinding SOP vote...

Webcast: "Looking Out for #1: How to Manage Your Career"

Tune in tomorrow for the webcast - "Looking Out for #1: How to Manage Your Career" - to hear Peggy Foran of Prudential Financial, Charlotte Lee of Lee Hecht Harrison|DBM, Randi Morrison of TheCorporateCounsel.net and Axiom and Susan Wolf of Global Governance Consulting discuss the latest developments in job choices and promoting yourself from within your current job, as well as hunting, recruiting and how to market yourself.

Deal Cube Tournament: Round One; 4th Match

As noted in these rules (and keep sending more pics for the next tourney), please vote for two of the following four cubes below:

- Casket (Opens & Closes; Deal Closed on Halloween)
- Golf Set with Putter, Cup and Balls
- Bear & Bull Coin
- Rounded


- Broc Romanek

May 25, 2012

Hot Technology IPOs - And The Troubles That Follow...

In the wake of the much-hyped Facebook IPO, we are slowly finding out about alleged circumstances that have already led to a bevy of lawsuits. As I tweeted yesterday, will this IPO be full employment for litigators? But Facebook is not alone, it's hard to forget the gunjumping adventures of the recent Groupon IPO - or even how a Playboy interview found its way into the Google IPO prospectus.

Here are some recent Facebook IPO articles:

- WSJ's "Some Big Firms Got Facebook Warning"
- Reuter's "Facebook, banks sued over pre-IPO analyst calls"
- Reuter's "Facebook: The List of Incompetents"
- Forbes' "Facebook Lawsuits Start Flying: Targets Include Zuckerberg, Morgan Stanley, Nasdaq"
- D&O Diary's "Facebook IPO Fizzle Draws Securities Suits"
- NYT's "Questions of Fair Play Arise in Facebook's IPO Process"
- Bloomberg's "Facebook IPO Debacle Triggers Legal Debate"
- WSJ's "Facebook Shows There's a Sucker Born Every Minute"

Recently, the SEC's Office of the Chief Accountant provided guidance in a letter to the International Swaps and Derivatives Association about whether implementation of certain provisions of Dodd-Frank that relate to OTC derivatives would affect hedge accounting.

Former CEO Settles Reg FD Case with SEC: Six Years After the Conduct

Last week, the SEC's Enforcement Division announced this litigation settlement with Edward Marino, former Presstek CEO, over previously-filed charges that he aided and abetted Presstek's violations of Regulation FD by agreeing to pay $50k without admitting or denying the allegations. What is remarkable is that this settlement comes nearly six years after the conduct...

Speaking of the "good ole days," how about a stock option backdating case? Last week, the Ninth Circuit affirmed a verdict and order requiring former Maxim CFO to pay penalties and disgorgement of over $2.1 million in SEC v. Jasper.

Deal Cube Tournament: Round One; Third Match

As noted in these rules (and keep sending more pics for the next tourney), please vote for two of the following four cubes below:

- Milwaukee Brewers Beer Tap
- Pill Bottle
- Palindromic News
- Curved


- Broc Romanek

May 24, 2012

Corporate Political Spending: A Hot Topic That Will Not Go Away

Did you see how many comments have been received on the rulemaking petition submitted to the SEC by a group of academics about political disclosure spending last summer? Over 250,000! Most are form letters but 500 are unique, which is still very high for a petition. Remember this is not a SEC rulemaking! The bizarre thing is that this development doesn't quite jibe with the fact that shareholder proposals on this topic have not received overwhelming support by shareholders so far this proxy season (on average about 27%, per this blog).

Anyways, I attended an interesting conference from The Conference Board about corporate political spending last week. Like I imagine for many of you out there, this is an area that I confess to not know much about - but needed to get up-to-speed fast given how it's the hottest topic of the proxy season and not one that is likely to die down anytime soon. But it's not just hot for the proxy season - it's hot for the masses. Here are notes from a panel of journalists that bear this out:

Eliza Newlin Carney from Roll Call was rubbing her hands about what a good story corporate political spending is: lots of big numbers that people are interested in: money, power, lots of people interested in outcomes - what she called "a perfect storm" - probably making a lot of the company attendees rather worried. Peter Cook from Bloomberg asked some good questions and affirmed that he gets thousands of interested comments on his stories on the subject, a level he said was high.

Tom Hamburger from the Washington Post professed a desire to hear more from the audience, and said any "progress" on disclosure was probably illusory because it still lacks bipartisan support and that identified leaders in the area of disclosure are still able to direct money to secret efforts, as evidenced by the action of several health insurers to provide money to the Chamber of Commerce to defeat Obamacare.

All the journalists agreed corporate money in politics was going to keep them employed on the beat for a very long time. Also, Trevor Potter wrapped up with an assessment of the DC Circuit Court decision on the Van Hollen v. FEC case. Potter thought the Supreme Court would probably come down on the side of disclosure and not agree to hear any appeal that might be lodged.

Over the course of the day, I became more familiar with ALEC (American Legislative Exchange Council) and ALECexposed.org. I thought it was interesting that not much was said about the popular discontent with corporate influence, a la Occupy Wall Street. My favorite panel involved the topic that might matter the most - what is the board's role in all of this? Let me know what you think about that...

Does Corporate Political Spending Belong in SEC Disclosure Documents?

The movement to require companies to disclose their corporate political activities is not a new one. It goes back decades as a bill seeking that is floated nearly every year as far back as I can remember. Of course, this notion never had the type of popular support that it now enjoys in the post-Citizens United era. The question remains - is this type of disclosure appropriate for filings made with the SEC or should it be mandated through another avenue?

On the one hand, the purpose of disclosure filed with the SEC is to enable investors to make investment decisions. There are cogent arguments that corporate political spending disclosure is meaningful to investors because they would be able to see if a company is doing something that can blow up its reputation - something that can happen fast in today's social media world, particularly with politics as kindling. Boycotts are now much easier to form online and that can hurt a company's bottom line.

On the other hand, some argue that they have talked to institutional investors and most say they won't make their investment decisions based on this type of disclosure. Encouraged by the Center for Political Accountability, as noted in this press release, over 100 companies now provide detailed disclosure of their political spending on their websites. Are investors reading those disclosures?

Or is this one of those topics where SEC disclosure is mandated for the social good more than investors? There are plenty of examples of that today - think conflict minerals or global security risk and terrorism - or even go back in time to Y2K. This likely will be a debate that will be settled by Congress, as so often happens...

More on our "Proxy Season Blog"

We continue to post new items regularly on our "Proxy Season Blog" for TheCorporateCounsel.net members. Members can sign up to get that blog pushed out to them via email whenever there is a new entry by simply inputting their email address on the left side of that blog. Here are some of the latest entries:

- Norges Bank on Proxy Access
- Research: Who Companies Name As Proxies With Power to Vote Proxies Received
- Corp Fin Allows Companies to Omit Arbitration Proposals
- Western Union Moves to Declassify, But Drops Proxy Access Plan
- Chevedden Submits Brief to Fifth Circuit in KBR Appeal
- Corp Fin Reverses Position on Net Neutrality Proposals

Deal Cube Tournament: Round One; Second Match

As noted in these rules (and keep sending more pics for the next tourney), please vote for two of the following four cubes below:

- Globe with Bride
- Brazilian Soccer Ball
- Shamu the Whale
- Badge


- Broc Romanek

May 23, 2012

Deal Cube Tournament: It's On! Vote Daily - And Often...

Thanks to the many of you that have emailed pictures of your deal cubes. I have collected over 130 of them, all posted in our fabulous "Deal Cube Museum."

Please continue to send pics as I intend to conduct other deal cube tourneys after this inaugural one concludes. Think of those recurring reality shows - we are now in just Season 1. There will be many seasons including All-Stars and maybe even reunion episodes! Remember, quality of the deal cube is irrelevant - any cube can win! Underdogs do it all the time...

Deal Cube Contest Process & Rules

Process:
1. There are 64 deal cubes in the 1st tournament. Additional tournaments will be held so please keep those pics coming.
2. A selection committee has ranked (ie. "seeded") the 64 cubes - unlike the NCAA hoops tourney, the committee's seedings are used for internal purposes and won't be revealed until a winner is crowned.
3. In each of the first two rounds, half of the remaining cubes will be eliminated. For those two rounds, four cubes will be pitted against each other - and the two cubes obtaining the lowest number of votes will be eliminated. Thus, a voter can cast two votes on a group of four cubes.
4. In the last four rounds, two cubes will be pitted against each other and a voter can cast one vote on a group of two cubes.
5. Voting will take place on a poll placed on this blog daily. There will be a break between each round to allow votes to be cast for the last few contests in each round for more than a few days.
6. Polls will remain open for each round for quite a while - so don't worry if you miss reading this blog for a day (or a week).

Rules:
1. There are no rules. Just like it's unfair if folks that work the hardest on a deal wind up with no cube, it is possible that an inferior cube can attract more votes than a superior cube if someone figures out a way to obtain more votes for their cube (egs. casting multiple votes, having friends and family vote, offering bribes for votes).
2. FCPA doesn't apply - so bribing of the selection committee (ie. Broc) will be considered.
3. Have fun and tell your friends about our contest.

Deal Cube Tournament: Round One; First Match

As noted in the rules above, please vote for two of the following four cubes below:

- McDonald's Fries
- Louisville Slugger Baseball Bat
- Building
- Standard with Spine Embedded


- Broc Romanek

May 22, 2012

Say-on-Pay: Failures #15-18

I've added four more companies to CompensationStandards.com's failed say-on-pay list for 2012: OM Group - 23%; First California Financial - 42%; Charles River Laboratories - 36%; and Comstock Resources - 35%.

A few weeks ago, Mark Borges blogged about the first failed say-on-golden parachutes vote...

Exxon's Executive Pay Webcast Represents Another Method of Shareholder Outreach

Ning Chiu of Davis Polk bring us this news from her blog:

This proxy season there has been a lot of focus on companies filing additional soliciting materials to supplement proxy disclosure, with a particular focus on executive compensation in light of the say-on-pay vote. Exxon Mobil has taken a particularly interesting approach turning a two-dimensional paper communication into something more dynamic by inviting interested persons to a company-sponsored webcast on executive compensation.

The webcast represents an additional proactive step Exxon has taken. On the same day it filed its proxy statement, Exxon took the unusual step of also filing a colorful presentation filled with data, graphs and photos to explain how its pay-for-performance approach focuses on the long-term nature of its capital-intensive business. In supplemental information filed more recently, Exxon took issue with specific aspects of the ISS analysis, including the peer group selected, which Exxon asserted failed to adjust for its size and complexity, since the company's revenue is more than 4X larger by revenue and 3.5X larger by market capitalization than the median of the peer group.

On the webcast, which included a presentation, Exxon representatives discussed the company's business environment, the scale and scope of the company and its focus on the long-term nature of its business strategy. The company explained that together, these form the basis for customized compensation decisions, including a lengthy "hold-to-retirement" policy and a unique approach on the deferral of 50% of annual bonuses, a measure rarely seen outside of financial institutions. The company's focus on executive training, retention and succession was emphasized, including the fact that the company achieves its retention goals without change in control or severance agreements with senior executives. The company also discussed the shareholder engagement it undertook as a result of last year's say-on-pay vote. In response to questions during the webcast, the company noted how its programs focus on performance assessments that take a more holistic approach rather than concentrating on formulas that inspire executives to reach for only certain specific goals. The company received several questions about specific aspects of its pay decisions, the reasons for the webcast and the proxy advisory firms' recommendations.

In his blog, Mark Borges recently provided this analysis of ExxonMobil's executive pay disclosure and more...

Early Bird Discount Ending Soon! "Proxy Disclosure Conference" Lineup!

We are very excited to announce that Corp Fin Director Meredith Cross will be part of our "7th Annual Proxy Disclosure Conference" on October 8th in New Orleans (and by video webcast). Just look at this beautiful baker's dozen of panels for this Conference:

1. An Interview with Meredith Cross, Director of the SEC's Division of Corporation Finance
2. Say-on-Pay Disclosures: The Proxy Advisors Speak
3. The Executive Summary & Other Ways for Disclosure to Facilitate Solicitation
4. The Latest SEC Actions & CD&A Developments: Compensation Advisors, Clawbacks, Pay Disparity & More
5. Refining Your Pay-for-Performance Message & Addressing the Impact of Your Vote
6. Getting the Vote In: The Proxy Solicitors Speak
7. Dealing with the Complexities of Perks
8. Conducting - and Disclosing - Pay Risk Assessments
9. Overcoming Form 8-K Challenges
10 Handling the Golden Parachute Requirement
11. Challenges for Smaller Companies: Their First Year
12. How to Handle Preliminary Proxy Statements
13. How to Handle the 'Non-Compensation' Proxy Disclosure Items

Register Now for Early Bird Rates - Act by May 31st: For the early bird discount rate, register by May 31st. This Conference is paired with "Say-on-Pay Workshop: 9th Annual Executive Compensation Conference" and they will be held October 8-9th in New Orleans and via Live Nationwide Video Webcast.

- Broc Romanek

May 21, 2012

Jobs Act: More EGC Confidential Submissions Go Public

Last week, I blogged how LegalZoom was one of the first companies to announce its upcoming IPO after first submitting its registration statement under Corp Fin's confidential submission policy and I analyzed the risk factors and other EGC-related disclosures in that Form S-1.

There have now been about a dozen Form S-1s filed by EGCs - most of them likely emerging from confidential submission but not all - including:

- Blue Earth
- Cimarron Software
- Kythera Biopharmaceuticals
- OncoMed Pharmaceuticals
- Plesk Corp
- Shutterstock
- Simple Products Corp
- Supernus Pharmaceuticals

By the way, I disagree that EGC risk factors are a "turn-off" as mentioned in this article. As I wrote in my recently-posted "Risk Factors Handbook," companies typically have between 20-30 risk factors in their disclosure - with IPOs having even more. Facebook has about 50. Do you think one more risk factor will even be noticed by the rare investor who bothers to read a prospectus?

I just announced an August 15th webcast - "JOBS Act Update: Where Are We Now" - that will analyze evolving market practices and the latest from the SEC. The program features Corp Fin Deputy Director Lona Nallengara, Steve Bochner, Joel Trotter, Michael Kaplan and Dave Lynn.

NYSE Proposes Listing Qualification Changes to Accommodate JOBS Act

In the "Dodd-Frank Blog," Jill Radloff gives us this news:

The ripple effect of the JOBS Act is beginning to show as the NYSE has proposed to adjust its listing qualification standards to reflect that emerging growth companies, or ECGs, under the JOBS Act only need to present two years of audited financial statements.

In its rule filings, the NYSE notes that its initial listing standards require listing applicants to meet theapplicable financial criteria over a period of three fiscal years. As the staff of the NYSE bases its determination as to a company's compliance with the financial initial listing standards only on publicly available audited financial data, an EGC which availed itself of the right to file only two years of audited financial data as part of its initial public offering registration statement or subsequent registration statements would be unable to qualify for listing under those particular financial listing standards. The NYSE proposes to amend the initial financial listing standards in Sections 102.01C and 103.01B to permit an EGC to meet the applicable standard on the basis of the two years of audited financial data actually reported, rather than the three years of financial data that would otherwise be required.

The proposed amendment would only be applicable to EGCs that actually avail themselves of their ability to report only two years of audited financial information. Under the proposed amendments, EGCs would still be required to meet the same aggregate financial requirements, but would be required to do so over a two-year period rather than a three-year period, if they have availed themselves of the JOBS Act provision allowing EGCs to file only two years of audited financial statements.

May-June Issue: Deal Lawyers Print Newsletter

This May-June issue of the Deal Lawyers print newsletter was just sent to the printer and includes articles on:

- Lessons Learned: Martin Marietta Materials vs. Vulcan Materials
- Delaware Chancery Enjoins Hostile Bid Based on Confidentiality Agreement Breach
- The JOBS Act: Implications for Private Company Acquisitions and M&A Professionals
- After the JOBS Act: The Increased Need for Common Sense
- Groping for Gold: $305 Million in Plaintiff Attorney Fee Awards Under Grupo México

If you're not yet a subscriber, try a no-risk trial to get a non-blurred version of this issue on a complimentary basis.

- Broc Romanek

May 18, 2012

Sarbanes-Oxley is Turning 10! You Ready to Party?

On July 30th, the Sarbanes-Oxley will celebrate its tenth birthday. You may not like SOX, but your job may not have been created "but for" the Act. It was definitely a "fuller employment" event for many in our community. As we approach the anniversary, there is bound to be a number of reminisces written, most of which will bound to be negative in their outlook. But as noted in this recent NY Times article (I'm quoted!), there also have been many benefits. Going back, here are some thoughts from Lynn Turner on SOX's history - here are my own remembrances of how the Act snuck up on us...and below are two polls, one for funsies and one for real...

Poll: The Long-Term Impact of Sarbanes-Oxley

When it comes to the long-term impact of Sarbanes-Oxley, please indicate which of these has had the biggest impact on your practice in this anonymous poll:


Poll: How Will You Celebrate Sarbanes-Oxley?

Please indicate how you intend to celebrate Sarbanes-Oxley's ten-year anniversary in this anonymous poll:


- Broc Romanek

May 17, 2012

Chaos in the SEC's Inspector General's Office: "He Said, They Said"

For a long time I've been outspoken about how the SEC's former Inspector General - David Kotz - took advantage of his position to make a "name" for himself (here is one example). Then suddenly he left in January under a cloud of ethical questions about his own activities as noted in this blog (and I also noted other questionable activity in this blog; Kotz has not yet been replaced as the IG position remains open - here is the job posting). Last week, Bloomberg reported that the SEC was hiring an outside investigator to look into Kotz's conduct during his tenure at the agency - including allegations of sexual misconduct in the office per this WSJ article.

Looks like there could be a bizarre culture in that small SEC office. According to this Reuters article, one of the newer members of that office - David Weber, assistant inspector general - has been placed on admin leave after "talking openly about wanting to carry a concealed firearm at work and some employees complained he was a physical threat." And this guy's lawyer claims that he is the victim of retaliation because he had previously complained about alleged misconduct in the IG's office. This Huffington Post has more details in this blog. Although I think we will find out still more juicy details about this office's culture soon enough as the investigation into it develops...

NYSE Proxy Fee Advisory Committee's Report: Recommends Fee Drop of 4% on Average

After 18 months of work, the NYSE Proxy Fee Advisory Committee released its report yesterday with recommendations for changes to the fees that banks and brokers charge companies for forwarding proxy materials to shareholders who hold stock in "street name." This is the process by which the fees that Broadridge charges gets set for work on behalf of their broker clients. Under NYSE Rule 465, any fee changes must be approved by the SEC - fee rates were last changed a decade ago.

Here's an excerpt from Davis Polk's Ning Chiu's blog on the topic:

The Report painstakingly describes the careful work by PFAC in considering each of the four different type of proxy fee designed to compensate brokers for different services, an examination of the existing rationale based on the work involved and an evaluation of whether a change in fee is warranted based on recent developments, such as a move toward less paper distributions. According to the Report, it is expected that overall fees paid by companies will decrease by about 4% under the revised structure.

PFAC's recommendations include several changes to the existing fees and also streamlining the proxy fee categories to increase transparency. In addition, PFAC supported allowing companies to ask brokers for a list of the identity of non-objecting beneficial owners (NOBO) based on number of shares held or of those that have not yet voted proxies, without needing to pay for an entire list of all NOBOs. In order to encourage further retail investor voting, PFAC also recommended that the NYSE broach with the SEC the idea of a fee to pay for an "investor mailbox," through which investors can access proxy materials and voting forms through their brokers' website. For those interested in learning more, here's an archived version of a webcast sponsored by the NYSE.

PFAC's work is only the beginning. The NYSE indicated that it will initiate discussions regarding the PFAC's recommendations with the SEC, after which the NYSE would expect to submit a rule change proposal to the SEC reflecting the outcome of these discussions. Any rule filing proposal would be published for public comment prior to SEC approval.

More on "The Mentor Blog"

We continue to post new items daily on our blog - "The Mentor Blog" - for TheCorporateCounsel.net members. Members can sign up to get that blog pushed out to them via email whenever there is a new entry by simply inputting their email address on the left side of that blog. Here are some of the latest entries:

- Unintended Consequences of the STOCK Act
- The iPad and the Law
- 7th Circuit Ruling Expands Rights of Whistleblowers to RICO
- Delaware Weighs In: Indemnification and Advancement of Expenses
- Boards Trends in the S&P 1500

- Broc Romanek

May 16, 2012

Can - and Should - Companies Close Shareholder Meetings to Journalists?

As I blogged recently, journalists have been asking me if they can be shut out of an annual shareholders meeting. The answer is "yes" if state law allows the company to only admit shareholders as of the record date into the meeting (which I believe most state laws do). This type of restriction typically is disclosed in the company's proxy statement. Here is one example of such a disclosure:

Attendance at the Annual Meeting

You will need proof of ownership to enter the Annual Meeting. If your shares are held beneficially in the name of a bank, broker or other holder of record and you plan to attend the Annual Meeting, you must present proof, such as a bank or brokerage account statement, of your ownership of common stock as of March 1, 2012, to be admitted to the Annual Meeting. At the Annual Meeting, representatives of the company will also confirm your shareholder status. Shareholders must also present a form of personal identification to be admitted to the Annual Meeting. NO CAMERAS, RECORDING EQUIPMENT, ELECTRONIC DEVICES, BAGS, BRIEFCASES, PACKAGES OR SIMILAR ITEMS WILL BE PERMITTED AT THE ANNUAL MEETING. This is permitted under state law.



I checked in with independent tabulator Carl Hagberg who noted:

Although good practices dictates that companies allow journalists if they want to foster good relations with the media, etc., it depends on the company. And for some companies, it depends on the year (some years they allow journalists or don't even guard the door that closely - and for others, they are strict, probably because of some controversy brewing).

It's been a long slow trend towards closing the meetings to journalists. In the old days, the media had a special breakout room, etc. I haven't heard of that much anymore - plus now everyone is treated as a potential journalist (as reflected in the all caps language in the proxy statement excerpt above). A few hundred companies webcast their meetings and those obviously are very accessible.

My 'educated guess' is that most large companies - and most smaller 'community-oriented and consumer-oriented companies' too - still go out of their way to welcome the media. A few of the larger companies still sort of 'confine them' to a "press room" with an A-V feed. And less than 5% officially exclude them.

The problem with exclusion is the natural - and usually well-warranted assumption - that companies that won't admit the press have (or foolishly feel) they may end up having "something to hide" that comes out in their meeting. Nothing tends to draw more interest from the press than circumstances like this - and ironically, it usually serves to make any news stories much more juicy and much more prominent than they would otherwise have been. Learn more about this topic from my meeting admission criteria article.


Our New "Properties Disclosure Handbook"

Spanking brand new. Posted in our "Properties Disclosure" Practice Area, this comprehensive "Properties Disclosure Handbook" provides a heap of practical guidance about the disclosure obligations under Item 102 of Regulation S-K, a topic never covered in any other securities law treatise...

Checking Out TradingView.com

In this podcast, Stan Bokov of TradingView.com explains how TradingView.com works, including:

- When was TradingView.com launched?
- What can investors do on it?
- What is the business model?
- How might someone within a company use it?

- Broc Romanek

May 15, 2012

Just Added! Corp Fin Director Meredith Cross to "Proxy Disclosure Conference" Lineup!

We are very excited to announce that Corp Fin Director Meredith Cross will be part of our "7th Annual Proxy Disclosure Conference" on October 8th in New Orleans (and by video webcast). Just look at this beautiful baker's dozen of panels for this Conference:

1. An Interview with Meredith Cross, Director of the SEC's Division of Corporation Finance
2. Say-on-Pay Disclosures: The Proxy Advisors Speak
3. The Executive Summary & Other Ways for Disclosure to Facilitate Solicitation
4. The Latest SEC Actions & CD&A Developments: Compensation Advisors, Clawbacks, Pay Disparity & More
5. Refining Your Pay-for-Performance Message & Addressing the Impact of Your Vote
6. Getting the Vote In: The Proxy Solicitors Speak
7. Dealing with the Complexities of Perks
8. Conducting - and Disclosing - Pay Risk Assessments
9. Overcoming Form 8-K Challenges
10 Handling the Golden Parachute Requirement
11. Challenges for Smaller Companies: Their First Year
12. How to Handle Preliminary Proxy Statements
13. How to Handle the 'Non-Compensation' Proxy Disclosure Items

Register Now for Early Bird Rates - Act by May 31st: For the early bird discount rate, register by May 31st. This Conference is paired with "Say-on-Pay Workshop: 9th Annual Executive Compensation Conference" and they will be held October 8-9th in New Orleans and via Live Nationwide Video Webcast.

Our New "Code of Ethics/Conduct Disclosure Handbook"

Spanking brand new. Posted in our "Code of Ethics" Practice Area, this comprehensive "Code of Ethics/Conduct Disclosure Handbook" provides a heap of practical guidance about the disclosure obligations under Item 406 of Regulation S-K and Item 5.05 of Form 8-K.

SEC's Enforcement Division Takes On Deloitte & Touche in China

I've blogged numerous times about the risks of investing in some Chinese companies - and the challenges that regulators have with them here (see this blog). Last week, the SEC announced an enforcement action against Shanghai-based Deloitte Touche Tohmatsu for its refusal to provide the agency with audit work papers related to a China-based company under investigation for potential accounting fraud against US investors. Here is Francine McKenna's blog entitled "Why Is The SEC Pursuing Deloitte Shanghai? Looks Like It's Personal."

Last week, the PCAOB posted its "2011 Annual Report," weighing in at 50 pages...

- Broc Romanek

May 14, 2012

JOBS Act: EGC Status As a Risk Factor

As noted in this article, LegalZoom is one of the first companies to announce its upcoming IPO after first submitting its registration statement under Corp Fin's confidential submission policy. Here's the company's Form S-1 that it filed on Thursday, presumably after responding to comments from the Staff.

The company's prospectus has several disclosures related to its status as an "emerging growth company." For example, notice this risk factor on page 20 (there are several other risk factors that also touch upon EGC status - or risks of losing that status):

We are an "emerging growth company," and we cannot be certain if the reduced reporting requirements applicable to emerging growth companies will make our common stock less attractive to investors.

We are an "emerging growth company," as defined in the Jumpstart Our Business Startups Act, or the JOBS Act. For as long as we continue to be an emerging growth company, we may take advantage of exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies, including not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved. We could be an emerging growth company for up to five years, although circumstances could cause us to lose that status earlier, including if the market value of our common stock held by non-affiliates exceeds $700 million as of any June 30 before that time, in which case we would no longer be an emerging growth company as of the following December 31. We cannot predict if investors will find our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be more volatile.

Under the JOBS Act, emerging growth companies can also delay adopting new or revised accounting standards until such time as those standards apply to private companies. We have irrevocably elected not to avail ourself of this exemption from new or revised accounting standards and, therefore, will be subject to the same new or revised accounting standards as other public companies that are not emerging growth companies.

That matches the theme of this statement on the prospectus cover page:

We are an "emerging growth company" under the federal securities laws and will be subject to reduced public company reporting requirements. Investing in our common stock involves risks. See "Risk Factors" beginning on page 11.

In addition, there is this MD&A statement on page 50 under "Recent Accounting Pronouncements":

As an emerging growth company under the JOBS Act, we have elected to opt out of the extended transition period for complying with new or revised accounting standards pursuant to Section 107(b) of the Act. This election is irrevocable.

Don't forget that our just-published May-June issue of The Corporate Counsel contains in-depth and practical guidance on the JOBS Act. If you're not yet a subscriber, try a no-risk trial now to get the issue rushed to you.

JOBS Act: Corp Fin Updates Its Confidential Submission Process

When Corp Fin initially announced its procedures for making confidential submissions under the JOBS Act last month, it stated that it would be implementing a system for electronic transmission. On Friday, Corp Fin provided an updated announcement that launches an electronic transmission process that replaces the procedures announced back in April - this is available for emerging growth companies and certain foreign private issuers. Someday, these submissions will be made via Edgar - but Edgar still needs to be reconfigured to allow for that.

Here's an excerpt from the updated announcement:

All issuers submitting draft registration statements confidentially pursuant to the JOBS Act or for non-public review under the Division policy must follow these instructions on how to use the secure e-mail system. All draft submissions must be in text searchable PDF format and should include a transmittal letter identifying the issuer and the type of submission. Emerging Growth Companies should confirm their status as an EGC in their transmittal letters. We will confirm receipt of submissions via secure e-mail.

More on our "Proxy Season Blog"

We continue to post new items regularly on our "Proxy Season Blog" for TheCorporateCounsel.net members. Members can sign up to get that blog pushed out to them via email whenever there is a new entry by simply inputting their email address on the left side of that blog. Here are some of the latest entries:

- Even More on " Adjournment and Circulation of Proxy Cards"
- SEC Staff Comments: Questioning Qualifications of Financial Reporting Staff
- Reminder: SEC Interpretation on Reconciliation for Use of Non-GAAP Measures in CD&As - OPERS: Auditor Ratification Dependent on % of Non-Audit Fees Paid
- A Final Look at E&S Proposal Results
- Shareholder Proposals: Questions of Proof of Ownership Continue

- Broc Romanek

May 11, 2012

Say-on-Pay: Failures #9-14 in US; Things Getting Heated Overseas

Here's something I blogged on CompensationStandards.com's "The Advisors' Blog" yesterday:

I've added five more companies to our failed say-on-pay list for 2012: Manitowoc - 48%; Mylan - 48%; Tower Group - 30%; Cenveo - 40%; and Sterling Bancorp - 41% (results disclosed in 10-Q rather than 8-K). As noted in this article, Knight Capital Group lost its SOP vote on Wednesday.

As Europe faces upheaval, so do the voting results on pay in the United Kingdom and Switzerland - even going so far as to cost the CEO of Aviva his job, as noted in this WSJ article! Barclays, Credit Suisse and UBS. And check out this Reuters article.

Transcripts: Our Two Blockbuster JOBS Act Webcasts

We have posted the transcripts for our pair of popular webcasts on the JOBS Act:

- "The New World of IPOs: Dissecting the JOBS Act"
- "JOBS Act & More: How Private Placements and Reg D Are Changing"

TechCrunch recently ran this blog noting that SolarCity is one of the first companies to use Corp Fin's confidential submission process for an IPO by an emerging growth company under the JOBS Act. Here is SolarCity's Rule 135 notice.

A "Secret" Way to Invest in Facebook Before It Goes Public

With six pre-effective amendments to its Form S-1 under its belt, Facebook's IPO is set to price next week - amid lower than expected demand according to this Bloomberg article (or oversubscribed per this Reuters piece) - and the SEC's Enforcement staff probably has it's hands full as some folks are pretty brazen in their shady dealings, playing off the Facebook deal. I'm not sure if this is one of them - but this 4-minute video entitled "A "Secret" Way to Invest in Facebook Before it Goes Public" sure sounds fishy...

- Broc Romanek

May 10, 2012

"War-Time Rules" for Annual Shareholder Meetings? Yep, In Charlotte

Paranoia will destroy ya. A few weeks ago, I blogged about "How to Deal With 'Occupy Your Annual Meeting'." I mentioned how companies should not overreact to the demonstrations that mainly are part of the Occupy movement (see this 5-minute video of the demonstrations outside of Cigna's annual meeting). So far, things have gone fairly smoothly although EQT had its meeting delayed for a few hours (hat tip to the Society of Corporate Secretaries for alerting me to that).

What has blown my mind is that the city of Charlotte appears to have taken it upon itself to apply the "war-time rules" that it will use for the Democratic National Convention later this year for the Bank of America and Duke Energy shareholder meetings. As noted in this Charlotte Observer article, the police have expanded powers during these meetings - even allowing them to prohibit people from carrying backpacks, satchels and coolers into the designated public places. As noted in this article, four people were arrested yesterday outside BofA's meeting.

Good grief. I am all for being prepared for an annual shareholders meeting and preventing harm, but this development sure smacks of Big Brother, as noted in this Huffington Post blog. Below are pics that a member sent me from outside the BofA meeting yesterday...

bofa sign.JPG

JOBS Act: Trading & Markets Issues Six FAQs on Crowdfunding Portals

On Monday, the SEC's Division of Trading & Markets issued six FAQs on crowdfunding portals.

The ABA's Business Law Section has submitted this comment letter on the JOBS Act to the SEC...

Deregistration Under JOBS Act

In this podcast, David Scileppi of Gunster discusses the process of deregistration under the JOBS Act - and provides some practice tips, including:

- How does JOBS Act facilitate ability of banks to deregister?
- What is the SEC Staff's guidance on this so far?
- What is the process for banks to follow if they determine they are eligible to deregister?
- Any surprises when doing one of these deregistrations?

bofa.JPG
- Broc Romanek

May 9, 2012

Busted! Yahoo's Resume Lies: How Much Should You Investigate a Director Nominee?

Recently, both Yahoo CEO Scott Thompson and a director who led the CEO search a few months ago that led to his hiring - Patti Hart - were outed by activist hedge fund manager Dan Loeb for lying on their resumes (the lies are in the company's preliminary proxy statement too). As noted in this article, Yahoo's CEO refuses to step down - although the director is leaving as noted in this Form 8-K (she is leaving at the request of the board where she serves as CEO per this Bloomberg article) and the board has formed a special committee to investigate as noted in these additional soliciting material. As mind-boggling as this is, I think lying on resumes is not as rare as you would think. And the ramifications can be huge - as can be seen from the ongoing Yahoo saga.

Which leads us to a related question: "Should a company dig pretty deep into a potential director nominee's past before they are placed on the ballot?" This was an issue that was debated internally before I finalized my "D&O Questionnaire Handbook." To be honest, I was surprised that background vetting of director nominees is not a standard practice today - so the response to that question on page 25 of the Handbook reflects current practice and not where I think the ball should be (or will end up perhaps after this Yahoo saga). But maybe I'm wrong. I'm curious to hear your thoughts...

If I were to falsify my resume, I would list my interests as "traveling, surfing & martial arts" and see how that played with the ladies...

The SEC Redesigns Its Home Page

Yesterday, the SEC rolled out a redesign of its home page. This is the first time the agency has overhauled its home page since the site was launched (there have been minor tweaks here and there). So far, the site's underlying pages haven't changed - including the important item of the URLs not changing (which would kill millions of links over the Internet if that happened). However, the site gradually changed during the day yesterday - so perhaps the full launch is not yet complete. Personally, I'm not a big fan of moving pictures on home pages (usability principle: gratuitous graphics can distract users from critical content).

Poll: What Do You Think of the SEC's New Home Page?

Please take a moment to provide your opinion anonymously about the SEC's new home page:


- Broc Romanek

May 8, 2012

Clarifying Confusion Over Proxy Distribution Invoices

Recently, I have heard from a few members who received increasingly threatening invoices from non-Broadridge service providers who claim to have forwarded proxy materials to shareholders on behalf of the company. Since most companies have only received invoices from Broadridge in the past in this area, they were confused and wondered whether these invoices were legitimate and whether Broadridge had "outsourced" its distribution services.

Here is what is happening: While Broadridge does not outsource its distribution services, it has until recently, facilitated invoicing for the three other providers of proxy services serving some banks and brokers - Mediant, Inveshare and ProxyTrust - by aggregating their beneficial fees with its own, collecting the fees and then passing those fees to those entities. As of last month, Broadridge decided that these providers should invoice companies directly.

Unfortunately, while Broadridge apparently notified its clients (although perhaps not as carefully as it should have since I have heard that the letters looked like junk mail), some of the providers are not helping themselves by resorting to very threatening and short letters rather than explaining who they are and what is happening.

And all of this is an issue because of the bizarre proxy distribution framework whereby companies get billed by entities with whom they don't have a direct contracting relationship with. In other words, it's odd to get a bill from someone you don't know was providing services to you and where you can't, in fact, confirm that they actually did anything for you.

And to boot, all of these providers wind up posting PDF versions of the company's proxy materials to sites that they use for their brokerage clients and the company doesn't have any say/involvement/verification in that process (such as the quality of the PDF or even the use of an HTML version of the proxy statement, etc.). If anyone really cares about whether shareholders get access to proxy materials, this process needs to get fixed as part of the SEC's proxy plumbing initiative because companies have little incentive to spend the resources to provide "usable" materials online if they actually don't get presented to the shareholders that vote...

What Are the Proxy Distribution Rules Anyways?

For those that want to know which rules govern this scenario: The rules that govern Broadridge's distribution of proxy materials also apply to the other service providers: Rule 14b-1 and 14b-2 under the SEC's proxy rules, NYSE Rule 451 and FINRA Rule 2251. All of the rules generally require that a company provide a bank or broker (or the agent of the bank or broker) with reasonable assurance that the company will reimburse the bank or broker for the reasonable expenses incurred in connection with the distribution of the company 's proxy materials. If a company provides a bank or broker with these assurances, the bank or broker must distribute the company 's soliciting materials to the beneficial owner clients of such banks and brokers.

More on our "Proxy Season Blog"

We continue to post new items regularly on our "Proxy Season Blog" for TheCorporateCounsel.net members. Members can sign up to get that blog pushed out to them via email whenever there is a new entry by simply inputting their email address on the left side of that blog. Here are some of the latest entries:

- Judge Jed Rakoff's Profile Piece
- New Shareholder Initiative Seeking Disclosure of Lobbying
- A Final Review of 2011 E&S Shareholder Proposals
- Calculating Your Deadlines: A Nifty Tool
- Gaming Warren Buffett's Annual Shareholders Meeting
- Corp Fin's 2012 Shareholder Proposal Task Force
- Elimination of Broker Voting: Ineffective Regulation by the SEC?

- Broc Romanek

May 7, 2012

Corp Fin Issues 24 More JOBS Act FAQs

On Thursday, Corp Fin added more JOBS Act FAQs - #18-41 in their series - related to Title I of the JOBS Act regarding scaled disclosure and EGCs. The first 17 were issued three weeks ago. We are continuing to post oodles of memos regarding them in our "JOBS Act" Practice Area. According to this Reuters article, the JOBS Act has piqued the issue of some European companies to do IPOs in the US.

Thanks to the yeoman efforts of our gang of '33 Act experts, we have rushed the May-June issue of The Corporate Counsel to the printers over the weekend, which contains in-depth and practical guidance on the JOBS Act, including how these latest FAQs factor into the new framework. If you're not yet a subscriber, try a no-risk trial now to get the issue as soon as it's dropped in the mail...

Corp Fin Reconsiders CDI on Trust Indenture Act & Asset-Backed Securities

On Thursday, Corp Fin issued the note at the end of Trust Indenture Act CDI 202.01 to note its reconsidering the CDI due a court case as noted below:

202.01 Certificates representing a beneficial ownership interest in a trust are offered to the public pursuant to a registration statement under the Securities Act. The assets of the trust include a pool of mortgage loans with multiple obligors administered pursuant to a "pooling and servicing agreement." Partial payment of the certificates is guaranteed by a third party. The certificates are treated as exempt from the Trust Indenture Act under Section 304(a)(2) thereof. The guarantee of the certificates is exempt under Section 304(a)(7). [March 30, 2007]

N.B.: On April 3, 2012, a federal district court in the Southern District of New York ruled, in denying a motion to dismiss, that the Trust Indenture Act of 1939 applies to asset-backed securities in the form of certificates. See Retirement Board of the Policeman's Annuity and Benefit Fund of Chicago v. The Bank of New York Mellon, No. 11 Civ. 5459 (WHP), 2012 U.S. Dist. LEXIS 47133 (S.D.N.Y. Apr. 3, 2012).

The staff is considering CDI 202.01 in light of this ruling. [May 3, 2012]

CalSTRS Files First Shareholders Derivative Lawsuit

As noted in this NY Times article, CalSTRS has filed a shareholder derivative lawsuit against the officers and directors of Wal-Mart over allegations that the company violated the Foreign Corrupt Practices Act.

Notably, its the first time that this large institutional investor has filed a shareholders derivative lawsuit. In my opinion, this could be the biggest surprise development of a pretty wild proxy season as there is nothing more effective than "governance by gunpoint"...Chesapeake Energy next?

- Broc Romanek

May 4, 2012

Today This Blog Turns Ten: Send Deal Cube Pics In Lieu of $

Please help me celebrate ten years of blogging by emailing me a picture of your favorite, your coolest or your tackiest deal cube (or send more than one!). I will post your photo with the others in our swank "Deal Cube Museum" - either keeping you anonymous or posting it with attribution, up to you - ahead of pitting the various pictures I receive in brackets and allowing y'all to vote for your favorite in a NCAA March Madness like tournament. I have 30 so far - need 30 more!

All good fun. Any deal cube picture will do - it doesn't have to be lucite either (and each picture should be of a single cube, not your wall of them). They all can't be the best - I need mundane ones too. And think of it as a blog birthday present when you email it to broc@naspp.com. Here is what I remember what someone at my old law firm said back in the day: "Those things are just plastic pieces of junk to me, but man some in the firm are more proud of the cubes than their own kids!" I know many of you feel the same and are clinging on to those bad boys! I stupidly threw out two boxes of them about a decade ago save one. And don't forget to send pics of old ones, it's a great way to remember firms that have passed into history - there will be special recognition of the oldest one that I can find...

Yes, I know Corp Fin issued more JOBS Act FAQs yesterday - #18-41 in the series - but it's my birthday party and I'll beg if I want to...fuller coverage of that on Monday...
To get you in the mood, here is a picture courtesy of Jessica Pearlman of K&L Gates showing off her lovely cupboard:

pearlman.jpg

And you can tell that Bob Lamm of Pfizer has been doing this for a while with his display:

deal cube city.jpg

- Broc Romanek

May 3, 2012

The Crowdfunding Analysis Behind Kickstarter

A few days ago, this NY Times article caught my eye about a three-year old site called "Kickstarter" that mainly had been used to raise funds for quirky projects but has now grown to help more serious entrepreneurs conduct fundraising for their innovative gadgets, etc. What blew me away is how a few guys raised a million bucks overnight for a digital watch they had invented - in particular, them going to the bar and coming back that evening to find out how much more they had raised in a few hours. They have now raised $7 million and counting.

Given that the JOBS Act was only recently enacted (but remember the SEC's warning that it needs to adopt rules to implement the new crowdfunding exemption before the floodgates open), I turned to Scott Miller of Ellenoff Grossman & Schole who knows more than me about crowdfunding for some analysis of how Kickstarter operates. Here's what Scott said:

Kickstarter, to date, has been operating based on the general belief that contributors are not purchasing securities (i.e. a profit interest in any of the companies in which they contribute funds) under the current methods used to raise funds on Kickstarter and similar funding sites. These fund sourcing sites do not purport to be an intermediary for a company's offer and sale of its securities, but instead companies only agree to provide contributors with something of value, in consideration for their contributions - in this case a Pebble wristwatch. Based on the assumption that such transactions do not constitute investments in securities, it does not appear to be regulated under U.S. securities laws.

Now that new crowdfunding laws are scheduled to go into effect sometime within the next 245 days, crowd sourcing sites like Kickstarter will need to be more aware of the methods used to raise funds on their sites to assure that they are not subject to regulation under the crowdfunding laws, or, if necessary, that the sites are properly registered and all transactions are conducted in compliance with applicable crowdfunding laws.

Interestingly, even though the article was written after the JOBS Act was signed into law by the President, there is no mention, in the article, of these new crowdfunding provisions. It is possible that the author of the article, as well as Kickstarter and similar crowd sourcing sites, are not yet convinced that crowdfunding, as provided under the provisions of the JOBS Act, will become a viable means of raising capital. For starters, it limits the total amount a company can raise during any 12-month period to $1 million, which is $6 million less than the amount of funds raised by the watch company through Kickstarter.

Also, if the digital watch company - Pebble - had been able to raise $1 million pursuant to the equity crowdfunding laws included in the JOBS Act, at the time these funds were raised, it would have been required to have audited financial statements and also be required to make certain disclosures to the SEC. Finally, Kickstarter, or any other funding portal through which the funds were raised, would be required to register with the SEC. It appears that those with an interest in providing services as funding portals under the new crowdfunding laws, including existing crowd sourcing sites like Kickstarter, are going to wait for a final determination of the registration requirements, before making any decisions on whether to register with the SEC as a funding portal.

We have posted memos regarding the crowdfunding provisions of the JOBS Act in our "JOBS Act" Practice Area.

The PCAOB's New Interactive Registered Auditor Database

A few days ago, the PCAOB updated its site to allow various sorting of registered auditors, such as firm location and type of audit firm practice.

Mailed: March-April Issue of "The Corporate Counsel"

We just mailed the March-April Issue of The Corporate Counsel and it includes pieces on:

- Analysis of the Jumpstart Our Business Startups Act
- Shareholder Proposal Eligibility Issues After Staff Legal Bulletin No. 14F
- Resignation or Retirement of Principal Officer and Appointment of Successor--Including Both Events in One Form 8-K
- Exclusive Forum Bylaws--Challenged in Delaware
- Hart-Scott-Rodino Act Developments--The DOJ and FTC Get Our Attention
- The SEC Staff (Again) Defends the Anti-Waiver Provisions of the 1933 and 1934 Acts
- The Latest on Regulation D
- SEC Backs "Primary Purpose" Test for Determining Whether Benefit is a Perquisite
- Confidential Treatment Requests--"Conditional" Issuer Consent to Release of Information
- More Staff Guidance on S-3 Waiver Requests

Act Now: Get this issue rushed to when you try a 2012 No-Risk Trial today.

- Broc Romanek

May 2, 2012

Survey Results: When Do Blackout Periods Begin?

We have posted the survey results regarding when companies begin their blackout periods (there are results from 10 other surveys in our "Blackout Periods" Practice Area), repeated below:

1. Our blackout period begins:
- More than two days after quarter end - 6.4%
-1-2 days after quarter end - 2.6%
- Exactly at quarter end - 9.0%
-1-7 days before quarter end - 6.4%
- 8-14 days before quarter end - 17.9%
-15-21 days before quarter end - 35.9%
- 22-31 days before quarter end - 16.7%
- More than 31 days before quarter end - 5.1%

2. When our blackout period begins, we:
- Send an email to impacted insiders reminding them of the blackout - 69.2%
- Send a hard copy to impacted insiders reminding them of the blackout - 1.3%
- Don't send any type of reminder - 29.5%

Please take a moment to participate in this "Quick Survey on HSR & Executives' Acquisitions from Equity Compensation Plans " - and this "Quick Survey on Audit Committees and Earnings Releases ."

How Might a "Comply or Explain" Regulatory Framework Work in Practice?

Recently, this Accountancy Age article notes that the UK's Financial Reporting Council examined 60 annual reports to see how companies in the United Kingdom were doing since the country adopted a voluntary "comply or explain" corporate governance code in 2010. The upshot is captured in this excerpt from the article:

It found that companies' explanations for not following the code were "sometimes rather perfunctory". Put bluntly, some companies are blowing corporate governance a raspberry.

Webcast: "LLCs: Understanding Capital Account and Allocation Concepts for M&A"

Tune in tomorrow for the DealLawyers.com webcast - "LLCs: Understanding Capital Account and Allocation Concepts for M&A" - to hear Tarik Haskins of Morris Nichols, Andy Immerman of Alston & Bird and Chris Rosselli of Alston & Bird explain the capital account and tax implications of how LLCs are being used in deals today. Here are Course Materials you should print in advance...

- Broc Romanek

May 1, 2012

Webcast: "The New World of IPOs: Dissecting the JOBS Act"

Tune in tomorrow for a special 75-minute webcast - "The New World of IPOs: Dissecting the JOBS Act" - and hear:

- Lona Nallengara, Deputy Director (Legal), SEC's Division of Corporation Finance
- Steve Bochner, Partner, Wilson Sonsini Goodrich & Rosati
- Michael Kaplan, Partner, Davis Polk & Wardwell
- Dave Lynn, Editor, TheCorporateCounsel.net and Partner, Morrison & Foerster
- Joel Trotter, Partner, Latham & Watkins

Catch the audio archive for last week's companion webcast: "JOBS Act & More: How Private Placements and Reg D Are Changing."

Say-on-Pay: Up to 7 Failures and 35 Companies Filing Supplemental Materials So Far

Over the past week, there have been a flurry of failed say-on-pays (as Mark Borges has beaten me to the punch reporting) and the total for 2012 is now 7. As noted in our list, the latest ones are: NRG Energy (45%); Ryland Group (40%); Cooper Industries (30%); and FirstMerit Bank (47%).

The astounding news - according to the list on page 14 of Semler Brossy's latest recap of say-on-pay results - is that 35 companies so far have filed additional soliciting material to voice displeasure with a recommendation from either ISS or Glass Lewis!

That's an overwhelming number considering that ISS has recommended "against" only 43 companies so far (as noted on page 2)! Although the number of failed SOPs is roughly in line with last year's results, the percentage of companies filing supplemental materials compared to negative recommendations from the proxy advisors is off-the charts...

Law School Survey Shows Tough Job Market at Large Firms

This Law.com article shows things are tough out there...although I hear deal work has really picked up so maybe things will turn around? Learn how to manage your career in our upcoming webcast: "Looking Out for #1: How to Manage Your Career."

Our May Eminders is Posted!

We have posted the May issue of our complimentary monthly email newsletter. Sign up today to receive it by simply inputting your email address!

- Broc Romanek