September 28, 2012

More on "Earnings Call Disruptions: Why Don't They Happen More Often?"

Recently, on "The Mentor Blog," I included an audio clip from a recent earnings call that went awry when someone accidentally blurted out some profanity in what may have been a cross-call (I have since deleted the audio clip in case the person's name could be made out). Many members responded with their own stories or analysis including:

- In my many years here, I have only had one interruption which was caused by an inexperienced operator - to wit, the operator inadvertently connected her "management line" into the call so that while my CEO was speaking the operator and an IR person came over the line discussing the volume on the call. No harm done and almost immediately corrected, but I think the most common way it can happen is for either the operator or the inside IR person to accidentally hit that button (I suggest that perhaps it would best if they labeled it with giant "Dr. Evil" lettering, "DO NOT PUSH" or something similar).

- While this has never happened to me or any former client, I have heard narratively of management teams not remembering to "turn off" their mikes following the end of the call so that extraneous commentary is accidentally added to the recording. As politicians and newscasters know, don't make jokes or add commentary while "on set" regardless of whether or not you believe that you aren't being recorded.

- On one of our first calls after going public a while back, our CFO kicked the speaker connection under the table and we were dropped. The conference call service did a great job of asking people to hang on the line and we called back in. He got a lot of grief internally for a while (we told him to sit away from the speaker connection, etc.). As far as the listeners knew, it was just a glitch in the system (we were probably off for 2 minutes or so).

- We've only had one in 11 years due a power failure on our end. Being in the Northeast, we do sometimes get more concerned during the winter.

- I wonder how many people are recording the "prepared remarks" in advance for playback and then only fielding questions "live." We've contemplated it but are never done far enough in advance to pull it off. Plus, we don't have enough quality recording equipment in house to make it work. With that said, with an iPhone, I'm sure it would sound 100x better than a high quality recording from 2002.

- In my experience, I would say that it's because the telephone/web conference coordinators and the investor relations personnel who are literally physically running the meeting are fairly skilled about running the call itself, handling the question sequencing and maintaining muting and other similar functionality (and reminding others of this too).

- Could the process be spoofed? I.e., could I dial in and register as if I were an analyst known to the company? I suppose so, but if two callers registered as the same person, that would obviously raise suspicions.

- Jim Brashear noted: "The reason you don't see more disruptions is that companies only allow questions and comments from credible, known analysts and investors. They don't take random calls from just anyone. My companies have allowed anyone to dial in and listen to earnings calls, but if someone wants to be able to ask a question or make a comment they have to register their name and organization. When the caller presses the button to be added to the queue for asking a question, we can see in the conference room their name and organization in a list of everyone that was added to the queue. We can choose to prioritize or ignore the names, as we choose. "

Transcript: "JOBS Act Update: Where Are We Now"

We have posted the transcript of the popular webcast: "JOBS Act Update: Where Are We Now."

Instead of "Just Vote No" Campaign - "Just Stay Home" and Don't Vote...

With elections on everyone's mind, I thought it was appropriate to point out this interesting blog from Keith Bishop from a few months back about the use of a strategy to prevent quorum from being reached rather than just voting no against a board...

- Broc Romanek

September 27, 2012

Webcast: "Ten Hottest Topics for the Conflict Mineral Rules"

Tune in today to the webcast - "Getting Beyond Denial: Conflict Mineral Rules More Important (And Apply Sooner) Than You Thought" - to hear the panel address these 10 questions (the panelists will not rehash the new rules; read these memos for that):

1. "Product" Determination: A key element in Step 1 in the conflict minerals disclosure process requires issuers to determine whether it manufactures or contracts to manufactures products. Is it clear what a product is? For instance, what product is a cable television company selling? The entertainment or the set top box leased to customers? How about an airline? Use of seat?

2. Examples of Product Manufacturing: There has been a number of interesting fact patterns regarding whether a company is manufacturing a product. For instance, does a company that assembles products, such as a computer systems integrator that sets up a network with off-the-shelf components, "manufacture" a product?

3. Degree of Influence for "Contract to Manufacture": There have also been a number of questions regarding when a company has the degree of influence necessary to trigger the "contract to manufacture" provision in the rule. For instance, if a manufacturer sets performance requirements for the components it buys that will naturally require certain materials to be used in the product, is that enough? And what if you sell a product that includes your intellectual property, such as a Mickey Mouse doll that includes a voice recording supplied by the company?

4. Tricky "Functionality" Conclusions: Is it possible to conclude that the packaging used for a product is not "necessary to the functionality or production" of the product? For instance, are the cans used for soft drinks necessary to the functionality of the drink? How about the tin boxes that certain cookies are delivered in?

5. Various Approaches to Preparation: What steps should companies take now to prepare for reporting on 2013? Should they send letters to suppliers now? If so, will they need to resend letters next year? And what should companies be asking suppliers to disclose to the company? Does the answer to this question depend on the conflict mineral involved?

6. Differences in Approach By Industry: What is the approach to preparation in particular industries? Includes discussion of electrical, gold industries.

7. Changes to Sourcing Policies: The SEC's adopting release for the new rules states that "[a]n issuer's policies with respect to sourcing of conflict minerals will generally form a part of the issuer's reasonable country origin inquiry." Are companies changing sourcing policies to assist with compliance with the new rules? For instance, are companies restricting sourcing from the covered countries? Or, if a company sources from a covered country should it only source from large mining companies, as opposed to artisanal mining sources?

8. Whether Audit is Required (and How): Have companies started to consider what auditor they will use, if an audit is required? The SEC made it clear that a company's existing financial statement auditor can be used, but is that a good or bad idea? Are there auditor independence considerations?

9. Disclosure Issues: Is there any part of the required disclosures in the Form SD that will be most problematic for companies to make? And what happens if an issuer does not file its Form SD? Or if it files the Form SD late? Does it impact Form S-3 eligibility?

10. Possibility of Lawsuit to Stay Rules: What's the possibility that a lawsuit will be filed that will block the effectiveness of the new rules? If so, how will that process work?

Please take a moment to participate in this "Quick Survey on Conflict Minerals." And check out this LA Times article - and this WSJ piece - on the subject...

JOBS Act: Draft Registration Statements To Be Filed on EDGAR Starting Monday

Yesterday, the SEC announced that draft registration statements can be filed on Edgar starting Monday, October 1st using submission form types DRS and DRS/A. This is a significant logistical development for those emerging growth companies and foreign private issuers that qualify for a confidential SEC Staff review. These companies can choose to continue to use the SEC's secure email system for an unspecified period of transition time rather than use Edgar. The SEC will announce later when use of Edgar for draft registration statements will be mandatory.

Yesterday, the SEC posted this 32-page guide - mainly consisting of screen shots - on how to file draft registration statements on Edgar.

Hot Off the Press! Nasdaq's Compensation Committee Proposal

Yesterday, I blogged about the NYSE proposal - 58 pages - implementing the Rule 10C-1 requirements for compensation committees was posted. Then later in the day, I updated the blog to note that Nasdaq's proposal - 97 pages - was posted yesterday morning. Folks have 21 days to comment once the proposals are published in the Federal Register. We'll be posting the inevitable slew of memos in's "Compensation Committees" Practice Area.

What You Need to Do Now: These soon-to-be-adopted new rules will be a hot topic during our "7th Annual Proxy Disclosure Conference"" (and the combined "Say-on-Pay Workshop") coming up in just over a week - October 8-9th in New Orleans and via Live Nationwide Video Webcast. If you haven't been to our Conferences before, give it a try - particularly this year when New Orleans needs the tourism dollars. Here are the agendas for the combined conferences. Register Now.

- Broc Romanek

September 26, 2012

Hot Off the Press! NYSE & Nasdaq's Compensation Committee Proposals

Late yesterday, the NYSE proposal - 58 pages - implementing the Rule 10C-1 requirements for compensation committees was posted. Then Nasdaq's proposal - 97 pages - was posted this morning. We'll be posting the inevitable slew of memos in's "Compensation Committees" Practice Area (Mark Borges already has blogged about it).

What You Need to Do Now: These soon-to-be-adopted new rules will be a hot topic during our "7th Annual Proxy Disclosure Conference"" (and the combined "Say-on-Pay Workshop") coming up in just over a week - October 8-9th in New Orleans and via Live Nationwide Video Webcast. If you haven't been to our Conferences before, give it a try - particularly this year when New Orleans needs the tourism dollars. Here are the agendas for the combined conferences. Register Now.

Survey: Employees Use Internal Channels for Reporting Misconduct

Here's news from this blog by Davis Polk's Ning Chiu:

Amidst concerns that the SEC whistleblower rules will encourage employees to bypass internal protocols and take allegations of misconduct directly to the Commission, a survey by the nonprofit organization, the Ethics Resource Center, found that only one out of six employees ever reported misconduct to regulators or other outside channels, and 84% of those individuals said that they took this step only after trying to work through their companies' own procedures. Just 2% of employees surveyed initiated reporting outside of their companies and never informed their employers.

"Inside the Mind of a Whistleblower" is a recent supplement to a 2011 survey that received over 4,000 responses. For companies that want to promote an ethical culture, it may be discouraging to learn that more than 1 out of 3 employees who have observed misconduct indicated that they never made it known. The strongest motivation for reporting misconduct comes from whether the individual believed corrective action would be taken, and not surprisingly, the main reason employees failed to inform anyone was the belief that nothing would change as a result of their efforts. Fear of retaliation, and the employee's own sense of financial security (those whose earnings recently increased are more likely to report), were other factors that affected the likelihood of revealing perceived misconduct.

63% of those asked stated that the ability to make anonymous reports was a positive factor. However, a vast majority of employees sacrificed this benefit and instead first reached out to their supervisors, and another quarter initially turned to higher management. People who tend to report misconduct want problems to be fixed, and are not influenced by rewards, or bounties, offered to whistleblowers, but monetary gain does make a difference to certain employees who would otherwise not be inclined to make a report.

The organization's 2012 survey was limited to 2,100 employees at Fortune 500 companies and shows similar findings, as only 1% of respondents said that they initially reported misconduct outside of their companies. Employees at larger companies seemed to be more cognizant of possible wrongdoing, as over half of the Fortune 500 employees said they had observed misconduct in the past year, compared to 45% of employees across a larger group of U.S. companies.

Most of these employees initially approached their supervisors or higher management, with 11% contacting a hotline. However, 17% of employees then made a second report outside of their companies, generally because they were disappointed with the responses.

While the surveys were conducted after the SEC adopted its whistleblower rules, their usefulness in predicting whether employees will approach the SEC directly as permitted under those rules is limited by the broad nature of the misconduct discussed by the respondents, involving primarily workplace environment issues rather than financial reporting, and the lack of clarity surrounding when these actions were discovered and subsequently reported.

Study: Political Contribution Disclosures at S&P 200

Here are some stats from the Center for Political Accountability - in conjunction with the Zicklin Center for Business Ethics Research - from their latest political contribution disclosure study for the S&P 200:

- Almost 60% disclose at least some information about political spending. This includes 47% that make some disclosure of their direct political spending and another 11% that say their policy is not to engage in such political spending.
- 40% are opening up about their payments to trade associations, often a conduit for secret political spending. 36% make some disclosure of their payments to trade associations, while 5% said they ask trade associations not to use their payments for political purposes.
- Even in a climate of increased hidden spending, 75 out of 88 large companies that were studied for two years in a row get improved scores for disclosure of political spending and for accountability.
- The 2012 Index identifies these top leaders for disclosure and accountability: Merck, with an overall score of 97 out of 100; Microsoft, overall score of 94; Aflac, 93; Gilead, 92; and Exelon and Time Warner, Inc., 88 each.
- Companies showing the greatest improvement from 2011 to 2012 are Costco, receiving a score of 85, up from 3 last year; Disney receiving a score of 67, up from 12; and Capital One, which improved its overall score from 20 to 63.

- Broc Romanek

September 25, 2012

The Twitter Handbook: Overcoming Your Fears

Over the past 18 months, I have spoken at least a dozen times to groups about how social media impacts the securities laws, corporate governance - and your career. In our "Social Media" Practice Area, I have posted "The Twitter Handbook: Overcoming Your Fears" which I drafted as a common sense "nuts & bolts" guide that walks you through the process of signing up for Twitter, learning how to use it and understanding how to navigate Twitter etiquette and the rules of the road. I drafted it to help those of you out there that are scared of the unknown and might not be the most tech savvy. It's only five pages long. Feel free to email me any questions you might have on any of the basics, etc.

Here's something unusual that the FTC is doing: "FTC in Three." Answering 3 questions via social media (Twitter & Facebook) each week. Anyone can submit questions via these social media vehicles - then the FTC chooses three of them and answers them in a video. I guess it shows the agency is hip and cool and williing to answer questions...

Don't Tweet: "Board meeting. Good numbers=Happy Board"

This WSJ article entitled "Facebook and Twitter Postings Cost CFO His Job" will make the day for many lawyers that I have spoken in front of - the ones who want a hat to hang their hat when they try to convince a CEO client that they shouldn't be on Twitter. In my opinion, those lawyers are the next generation of lawyers that follow those from 25 years ago that warned clients not to use email because of the things that might be said in writing. I wonder if lawyers were advising clients a hundred years ago not to use telephones?

My point is not that everyone should be on Twitter - in fact, it's far from that. It's that I dislike the kneejerk reaction of those that tell clients not to do something technological just because they don't understand it. The fear of the unknown. Far too many lawyers have not spent more than a handful of minutes trying to understand Twitter - or social media in general for that matter - so I'm not convinced they are qualified to give an educated opinion on the topic.

And as for this particular CFO, consider this: isn't the company far better off finding out now that he seems to not know what is appropriate to tell others? If this CFO has so little disregard for what his compliance obligations are, imagine what he was telling others on the golf course! Social media is just like any other avenue of communication - either you have a filter or you don't. And if you don't, you shouldn't be in the kind of job that requires you to have one. See John Palizza's blog about this case...

Survey: Board Use of Technology

According to a survey conducted by Thomson Reuters Governance, Risk & Compliance, here's a snapshot of ways that board materials are shared with directors:

- Board packs/books delivered physically by courier - 61%
- Board members print electronic files and carry them - 75%
- Documents sent to board members via personal, non-commercial email addresses - 73%
- Always establish email accounts and use exclusively for board communications - 10%

- Broc Romanek

September 24, 2012

Study: Peer Group Benchmarking Falsely Used Because Talent Isn't Transferable

A new study - entitled "Executive Superstars, Peer Groups and Over-Compensation - Cause, Effect and Solution" - examines flawed peer group methodology, finding that CEO pay has become untethered from both broader organizational wage structure and from economic fundamentals due to the use of peer benchmarking. Funded by the IRRC Institute, Professors Charles Elson and Craig Ferrere of the University of Delaware wrote the study. Here's a NY Times article about the study from yesterday - and here's IRRC's press release.

This new study makes it clear that peer grouping with minimal board discretion is a seriously flawed methodology even when the peer groups are fairly constructed. The authors note their study is the first to document that peer group benchmarking has accidentally become the de facto standard even though it never was designed to determine CEO compensation.

The fact that most CEOs aren't transferable is something that we have been saying for a long time (eg. this blog). And we also have been warning compensation committees that if they rely heavily on peer groups - and don't use alternative benchmarking techniques like internal pay equity instead - they can be in trouble in court since so many have warned that pay has skyrocketed over the past two decades due to peer group benchmarking. In other words, it arguably isn't reasonable to rely on peer group surveys any more (here's my latest rant on this topic). Will boards and their advisors finally wake up on this issue? They should before the lawsuits come - because then it will be too late...

COSO Issues Draft Update of Internal Controls Framework

Last week, the Committee of Sponsoring Organizations of the Treadway Commission (known as "COSO") released an exposure draft of its Internal Control over External Financial Reporting (ICEFR): Compendium of Approaches and Examples for comment. This is a big deal as it's a new look at 20 years worth of internal control guidelines. The final product is expected in early 2013...

Concerns Over PCAOB's New Auditing Standard 16, Communications with Audit Committees

Good stuff from this blog by Davis Polk's Richard Sandler and Elizabeth Weinstein:

As we discussed here, the PCAOB recently approved Auditing Standard No. 16, Communications with Audit Committees. While the bulk of the new standard concerns communications that the auditors are required to provide to the audit committee, one notable provision relates to inquiries required to be made of the audit committee by the independent auditor. Under the new standard, auditors are required to inquire whether the audit committee "is aware of matters relevant to the audit, including, but not limited to, violations or possible violations of laws or regulations." This expands the inquiries of the audit committee required by previous auditing standards, which required the auditor to inquire of the audit committee regarding the matters important to the identification and assessment of risks of material misstatement and fraud risks.

As at least one comment letter on the proposed standard noted, the new standard could jeopardize attorney-client and work product privileges. In its adopting release, the PCAOB acknowledged the criticisms of the comment letter regarding the risk of loss of privileges, but declined to exclude the language. The PCAOB stated that it did not remove the language because "limiting the scope of information that the audit committee might provide to the auditor could severely affect the auditor's ability to conduct an effective audit...Due to the audit committee's oversight responsibilities, it is appropriate for the auditor to ask the audit committee for information relevant to the audit, including matters related to violations or possible violations of laws or regulations." The final standard did exclude language from an interim proposal which would have required the auditor to inquire of the audit committee about matters that "might be" relevant to the audit, somewhat narrowing the scope of inquiry. However, the risk of loss of privileges remains an issue. The PCAOB did not provide guidance to companies regarding mitigating such risk.

If approved by the SEC, Auditing Standard No. 16 will be effective for audits of financial statements for fiscal years beginning on or after December 15, 2012.

- Broc Romanek

September 21, 2012

Senator Rockefeller Seeks Information on Cybersecurity from Fortune 500

Here's news from this Gibson Dunn alert:

U.S. Senator Jay Rockefeller announced on Wednesday that he has sent letters to the chief executive officers of all Fortune 500 companies requesting information by October 19, 2012 on how each company is addressing cybersecurity. The broad requests for each company's views on cybersecurity--including how each company developed its own practices and the role of the federal government in developing cybersecurity practices--follow recent unsuccessful efforts by Senator Rockefeller and other lawmakers to pass legislation imposing heighted cybersecurity standards at the national level. The most recent effort, introduced by Senator Joe Lieberman and co-sponsored by Senator Rockefeller, was voted down in the U.S. Senate last month despite White House support.

This is not the first effort by lawmakers to focus on cybersecurity outside of the legislative process. In May of last year, Senator Rockefeller and four other Senators petitioned the SEC to issue guidance to public companies concerning their obligation to provide disclosure about cybersecurity. The SEC's Division of Corporation Finance responded last October by releasing guidance to public companies to assist them in assessing what disclosures should be made when faced with cybersecurity risks and incidents. (Gibson Dunn's alert discussing that guidance is available here.) Senator Rockefeller has also petitioned the White House to issue an executive order that would accomplish similar goals as the Lieberman/Rockefeller bill--such as establishing a voluntary program to designate cybersecurity standards for companies in control of critical infrastructure. Critics argue that such efforts circumvent the legislative process, would create new liability risks for covered businesses, and potentially impose an impractical "one-size-fits-all" approach to cybersecurity across very different settings and businesses.

Although responses to Senator Rockefeller's letters to the Fortune 500 CEOs are voluntary, many businesses will likely offer some response (although that need not come from the CEO). The letters include eight questions designed to discover how companies are addressing cybersecurity and the views of the CEOs on the system the Lieberman/Rockefeller cybersecurity bill would have established if voted into law, including concerns the CEO might have with the voluntary program contemplated in the bill. Recipients of the requests should, of course, recognize that their responses (or failure to respond) may be used in the political battle over cybersecurity regulation and could potentially trigger further contact or Congressional inquiry.

Also see this blog by Adam Veness of Mintz Levin...

Shareholder Proposals: The Latest Count on Proxy Access Proposals

In this blog, Professor Larry Hamermesh updates his survey of the voting results on proxy access shareholder proposals during this year. He notes: "In the last couple months there have been three additional votes (at Forest Laboratories, Medtronic and H&R Block). As the updated voting tabulation reflects, these three most recent votes didn't add much to any argument that the SEC's now-invalidated 3 year/3% ownership thresholds gave shareholders less than they would have voted for themselves: we're talking favorable votes of 8% or less of the outstanding shares, and less than 10% of the shares actually voted. That compares to the 46%-51% approval levels at Nabors Industries and Chesapeake Energy for proposals that pretty much tracked the SEC's threshholds."

At the Printers: 2013 Executive Compensation Disclosure Treatise

We just wrapped up the Lynn, Borges & Romanek's "2013 Executive Compensation Disclosure Treatise & Reporting Guide." For those that want to access it online, it's now posted on For those that like a hard copy, it will be finished being printed in a few weeks.

How to Order a Hard-Copy: Remember that a hard copy of the 2013 Treatise is not part of a membership so it must be purchased separately - however, members can obtain a 40% discount by trying a no-risk trial now. This will ensure delivery of this 1200-plus page comprehensive Treatise as soon as it's done being printed.

And note there an additional 40% off when you purchase this Treatise in combination with the just finished Romanek's "Proxy Season Disclosure Treatise & Reporting Guide."

- Broc Romanek

September 20, 2012

Survey Results: Rule 10b-18 & Buybacks

Here are the survey results on Rule 10b-18 & buybacks:

1. Does your company conduct share buybacks only if they comply with Rule 10b-18:
- Yes - 77.3%
- No - 13.6%
- Not sure, it hasn't come up - 9.1%

2. If your company has conducted a buyback outside of Rule 10b-18, does it:
- Routinely conduct buybacks outside of Rule 10b-18 - 18.2%
- Occasionally conduct buybacks outside of Rule 10b-18 - 81.8%
- Inadvertently conducted a buyback outside of Rule 10b-18 one time - 0%

3. If your company has conducted a buyback outside of Rule 10b-18, did noncompliance involve:
- The volume limits - 44.4%
- The timing of repurchases - 0%
- The price of repurchases - 22.2%
- Use of more than one broker - 11.1%
- Other - 22.2%

Please take a moment to participate in this "Quick Survey on Proxy Solicitors" and this "Quick Survey on Delegation of Authority."

Our New "Accountant Changes & Disagreements Disclosure Handbook"

Spanking brand new. Posted in our "Change in Auditors/Reaudits" Practice Area, this comprehensive "Accountant Changes & Disagreements Disclosure Handbook" provides a heap of practical guidance about how to navigate under Item 304 of Regulation S-K and Item 4.01 of Form 8-K. This one is a real gem - 28 pages of practical guidance...

Say-on-Pay: Now 58 Failures

I've added one more company to our failed say-on-pay list for 2012 on as RBC Bearings failed during the past week with less than 30% support. We are now at 58 companies in '12 that have failed to garner major support. Hat tip to Karla Bos of ING Funds for keeping me updated.

- Broc Romanek

September 19, 2012

Dave & Marty on JOBS Act Rulemaking and Ireland

In this podcast, Dave Lynn and Marty Dunn discuss:

- Proposed changes to Rule 506 and Rule 144A under Title II of the JOBS Act
- Our upcoming conferences
- Favorite things about Ireland

Double Talk on Cost-Benefit Analyses

We want the SEC to conduct better cost-benefit analyses. But, in some cases, we want to rush rulemaking so they don't have time to do them. And around and round we go. The fun of Congress. Learn more in this AdvisorOne article about a JOBS Act joint House hearing last week.

Here is a Huffington Post article discussing a study which puts the cost of the financial crisis at $12.8 trillion. However, the financial industry - and some members of Congress - don't want such costs to be considered when evaluating new rules related to the crisis.

The Second Deal Cube Tourney: Round One; 16th 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:

- Ice Cream Sundae
- Mickey Mouse
- Colorful Globe
- Standard

- Broc Romanek

September 18, 2012

The Latest Governance Surveys

Last week, PwC issued it 2012 Annual Corporate Director Survey - and Shearman & Sterling issued its "2012 Trends in Corporate Governance of the Largest US Public Companies."

PwC's survey findings include:

Board Composition and Behavior
- Questioning board performance. Nearly one-third of directors believe someone on their board should be replaced. Diminished performance because of aging and lack of expertise were cited as the two primary reasons.
- Finding new directors. When seeking new board members, 91 percent of directors say they take suggestions from other directors, with 11 percent considering investor input for candidates. A quarter consider racial and gender diversity as "very important."
- Reconsidering board leadership. About half of boards that have a combined CEO and Chair position are already discussing splitting the role at their next CEO succession.
- Self-evaluations prompt changes. Two-thirds of directors (66 percent) made changes during the last 12 months as a result of their full-board or committee self-evaluations.
- Continuing director education. Over half of directors (52 percent) believe some form of annual board education should be required. Of those with this belief, over 40 percent had less than four hours of outside training last year, and 21 percent did none at all.
- Time commitments increase. More than half of directors say the amount of time they spent on board work rose last year. Two-thirds of those increased their hours over 10 percent, and one-fifth more than 20 percent.

Executive Compensation
- Voices that influence compensation. Directors rate the following groups as "very influential" or "influential" when it comes to their boards' decisions about executive compensation: 86 percent cite compensation consultants, followed closely by the CEO (79 percent), and then institutional investors (54 percent).
- Responding to say-on-pay. In the second year of say-on-pay, 64 percent of companies took some action to address voting results: 41 percent modified compensation disclosures, 29 percent made compensation more performance-based and 23 percent worked more closely with proxy advisory firms. Two percent of directors indicated that their companies decreased executive compensation.
- The influence of proxy advisory firms. Over 60 percent of directors estimate that proxy advisory firms have more than a 20 percent influence on proxy voting at their company. Almost half of directors rate quality of the firms' work as "fair" or "poor."

Strategy Oversight
- More time wanted on strategy. Strategic planning topped the board's "wish list," with over 75 percent of directors saying they want to devote more time to it, up from 60 percent of directors who wanted to do so last year.
- Getting the right information. Two-thirds are satisfied with the customer satisfaction research management provides, while nearly 72 percent are satisfied with information about employee values and satisfaction. However, a number of boards do not receive any information about either customers or employee satisfaction (20 and 16 percent, respectively); and 21 percent are dissatisfied with competitive intelligence.

Podcast: Whether the Conflict Minerals Rules Will Work

In this podcast, Dan McGroarty of American Resources Policy Network provides some insight into whether the SEC's new conflict minerals rules will ultimately lead to the goal that Congress envisioned when it mandated the rulemaking in Dodd-Frank, including:

- How do you think the SEC's recent conflict minerals rulemaking will impact corporate practices in using these minerals?
- What do you think companies should do in reaction to the rulemaking?
- How might activists proceed from here to target companies that still use minerals in countries with major human right violations?

For next Thursday's conflict minerals webcast, the panel will not spend any time going over the actual rules - they'll presume you've read some of the numerous memos (or maybe even the SEC's adopting release). Instead, the panel will go over these 10 pressing questions on everyone's mind.

The Second Deal Cube Tourney: Round One; 15th 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:

- Star Wars JEDI Spaceship (infamous Enron entity)
- Saw Blade on Tree Stump
- Two Clear Cell Phones
- Diamond-ish (ISS going public)

- Broc Romanek

September 17, 2012

More STOCK Act Blunders: Executive Branch Employee Provision Enjoined

A few months ago, I blogged about how Congress blundered when drafting the STOCK Act as a loophole for spouses and children of members of Congress were not covered. Now a US District Court has preliminarily enjoined the enforcement of a STOCK Act provision requiring senior executive branch officials to disclose their financial transactions, as noted in this Huffington Post article. If you recall, instead of coming up with an insider trading law to cover just themselves, they decided to throw in a bunch of senior government employees without thinking it through...

Webcast: "M&A Deal Protections: The Latest Developments and Techniques"

Tune in tomorrow for the webcast - "M&A Deal Protections: The Latest Developments and Techniques" - to hear Greenberg Traurig's Cliff Neimeth; Potter Anderson's John Grossbauer; and Richards Layton's Ray DiCamillo discuss the latest in "deal protection" techniques.

The Second Deal Cube Tourney: Round One; 14th 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:

- Standard w/ Rare Corp Fin Logo
- Jamba Juice Cup
- Recreational Vehicle
- Pig

- Broc Romanek

September 14, 2012

More on "The State of Cybersecurity Disclosure"

Recently, Dave blogged about how Corp Fin has commented upon cybersecurity disclosures during the past year since the Staff issued CF Disclosure Guidance: Topic No. 2, Cybersecurity. Since then, Bloomberg ran this article noting how some high profile companies have received futures comments in this area (including Google and Amazon) (Gunster's Securities Edge blog covered this yesterday). One member wrote in:

This story is consistent with my experience with a number of clients, some of who have only minimal cyberrisks - that they had determined not to be material - but were told that they needed to add a risk factor. Any company that has an attack described in the media should expect a comment, regardless of the level of attack. Most companies do not want to elaborate on the details in responses to the Staff, because doing so could make them more vulnerable.

Feel free to share your own experiences (on a confidential basis as always)...

Death Rattles for Mass Media Covering Business Stories?

As long as I am blasting reporters this week. When I returned from vacation a few Sundays ago, I was struck by how thin the Business section was for the NY Times. It was merely 8 pages long - and the last page was entirely comprised of ads. For the Sunday issue. I breezed through the section in about 3 minutes. And given my area of interest, I mainly focused on a lead article that claimed that SEC Commissioner Aguilar had voted against SEC Chair Schapiro's proposal for money market reform without previously raising any issue with it. [Several years ago, the Washington Post completely disbanded a separate Business section other than on Sunday - now, any biz stories are buried in the middle of the "A" section.]

As money market reform is not in my bailiwick, I don't have any strong opinions as to what is the proper reform - but I do know enough to believe that the NY Times article was wildly off the mark as Aguilar has actively participated in SEC roundtables on the topic going back as far as two years (as well as speeches). This article was corrected for this point the next day - but the tone of the article lived on.

My point is that I am much more likely to trust blogs written by folks in the field than reporters who have a tough job covering a wide sea of topics for which they have a passing familiarity, boxed in by the stress of strict deadlines. It doesn't look good for the mass media unless they continue to transform their reporting model by using real pros to cover these highly specialized topics that are nearly impossible to pick up in a day. There are several examples of successful reporters doing this type of thing - the NY Times' Steven Davidoff and Forbes' Francine McKenna for starters (although to be fair, they are columnists. They may write about news but are paid to put a definitive, personal spin on it. We still need beat reporters to cover and analyze the news).

The Second Deal Cube Tourney: Round One; 13th 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:

- Manhole Cover
- Dog Food Bowl
- Predator & Prey
- Pyramid

- Broc Romanek

September 13, 2012

3 Weeks Until Combined "Proxy Disclosure Conference" and "Say-on-Pay Workshop"

With just a few weeks left, your colleagues are registering in droves for the combined pair of "7th Annual Proxy Disclosure Conference" & "Say-on-Pay Workshop: 9th Annual Executive Compensation Conference" that will be held October 8-9th in New Orleans and via Live Nationwide Video Webcast. Here is our list of states for which the Conferences are eligible for CLE.

Did you know that approximately 2000 people attend this Conference every year? And the vast majority of our attendees are in-house. They have figured out that we work hard to ensure that the panels are practical and that you leave with valuable knowledge - and new friends. If you haven't been to our Conferences before, give it a try - particularly this year when New Orleans needs the tourism dollars. Here are the agendas for the event. Register Now.

In my capacity as the DJ for our Conferences - "Dr. Broc" - I'll soon be putting together my set list. Here's a sampling of last year's set list. Feel free to send suggestions...

Congress Delays Bill to Increase Executive Power Over Independent Regulatory Agencies

I almost can't write about this stuff anymore. I don't like being so negative. But how are agencies supposed to be "independent" when Congress controls the purse strings - and now some in Congress want to ramp up the President's oversight of these agencies through the `Independent Agency Regulatory Analysis Act of 2012,' as noted in this DealBook article. And again, they are trying to get a bill passed without any hearings!

Lots of folks oppose this #badidea, as noted in these letters from:group of unions, Coalition for Sensible Safeguards, Better Markets and Americans for Financial Reform. Last night, the Senate Committee on Homeland Security and Governmental Affairs decided to punt the vote until after the November election.

I just announced a webcast - "How the SEC Really Works" - in which you will learn how the various offices within the SEC work and the real role of the SEC Commissioners, etc. You also will learn how members of Congress (and their Staff) interact with the SEC.

The Second Deal Cube Tourney: Round One; 12th 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:

- Statuette of Ceres, Goddess of Grain
- Cadbury Crème Egg
- Shopping Cart
- Crystal Ball

- Broc Romanek

September 12, 2012

Hot New Item! SEC Commissioner Trading Cards!

As someone who grew up being a wheeler-dealer in baseball cards - I amassed over 25k cards in the mid-70s when I was a young teenager - my head got turned when I read this article about how the Coalition for Accountability in Political Spending was using the tactic of handing out SEC Commissioner trading cards outside of the Union Station Metro Station (which is next to the SEC's HQ) in an effort to have the SEC adopt rules that would mandate political contributions disclosures (remember the rulemaking petition in this area that received a quarter million comments). I love it (meaning the trading cards)! Here are pictures of the trading cards, as well as pics of the street teams handing them out, etc.

I hate the Citizens United decision. Living in a swing-state, I am witnessing firsthand the destruction to our society wrought by that wrong-headed decision. Something clearly needs to be done to fix the problems caused by the decision before we are truly living in that world dominated by Biff from "Back to the Future Part II."

Wouldn't it be groovy to have trading cards of the SEC Staffers themselves? Who would be the valuable Charizard? And would rare cards of folks that didn't stay long be worth more than tenured Staffers who spent their entire careers there? "I'll trade you a Howard Morin for a Bobby O and MaryAnne Busse, but only if you throw in a Terry Hatfield as a kicker"...

FINRA's New Rule 5123: Kicks In Beginning December 3rd

Here's news from Cleary Gottlieb: "On September 5th, FINRA announced a December 3rd effective date for new FINRA Rule 5123 (Private Placements of Securities). Upon effectiveness of the Rule, FINRA members that sell certain securities in private placement transactions under Section 4(a)(2) of the Securities Act or Rule 506 of Regulation D to individual, non-institutional investors who do not meet limited exemption criteria will be required to file the offering documents used, or file a notice stating no offering document was used, with FINRA within 15 days after the date of first sale. FINRA members also will have to file any material amendments to any filed offering document within 15 days after the date of first sale made using the amended document. All filings made under FINRA Rule 5123 will be confidential and submitted electronically through the FINRA Firm Gateway system.

FINRA Rule 5123 will not apply to many of the most common private placement transactions, including (i) sales pursuant to Rule 144A or Regulation S, (ii) sales to qualified institutional buyers (QIBs), institutional accredited investors, qualified purchasers, employees and affiliates (as defined in FINRA Rule 5123) of the issuer, eligible contract participants, or knowledgeable employees (as defined in the Investment Company Act), even if sales are made pursuant to Section 4(a)(2) or Rule 506, and (iii) sales of certain investment grade, non-convertible debt or preferred securities or certain short-term debt securities. Additionally, the filing required by FINRA Rule 5123 is a "notice" filing only. FINRA will not conduct any pre-sale review or clearance of any private placement offering documents."

September-October Issue: Deal Lawyers Print Newsletter

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

- Dealing With Activist Hedge Funds
- A Year-End Rush for the Exit? Tax Uncertainty and Transactional Planning
- Shareholder Activism Via Board Control Often Requires Long Range View
- The Nuts & Bolts of NDAs
- Asset Acquisition Due Diligence: Search for Hidden Unclaimed Property Liabilities Required

If you're not yet a subscriber, try a "Free for Rest of '12" no-risk trial to get a non-blurred version of this issue on a complimentary basis.

The Second Deal Cube Tourney: Round One; 11th 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:

- Old-Fashioned Movie Reel & VHS Videotape
- Michael Jordan (he served on company's board)
- Indian Headdress
- Colorful Bottle

- Broc Romanek

September 11, 2012

PowerPoint Training: Conflict Minerals

In the wake of my scare tactics wielded in this blog last week, a number of members asked if we had a PowerPoint to share to help train senior managers and directors about the SEC's new conflict minerals rules. We have posted such an item in our "Conflict Minerals" Practice Area, courtesy of Andrew Gerber of Womble Carlyle. Tune into our upcoming webcast to train yourself: "Getting Beyond Denial: Conflict Mineral Rules More Important (And Apply Sooner) Than You Thought."

Yesterday, the SEC posted its notice to solicit comment on the PCAOB's auditor-audit committee communication rulemaking.

California Court Acknowledges Delaware Decision: "Quasi-California Corporation" Statute Violates Internal Affairs Doctrine

Here's news excerpted from this Wilson Sonsini memo:

Companies incorporated outside of California but with significant California contacts (so-called "quasi-California corporations") have struggled with exactly how to comply with the long-arm statute found in Section 2115 of the California Corporations Code. The statute purports to impose a number of provisions of the California Corporations Code on quasi-California corporations, including the state's requirement to obtain separate approval from holders of each class of capital stock on a merger "to the exclusion of the law of the jurisdiction in which [the quasi-California corporation] is incorporated."

Section 2115 has been thought to be legally infirm for some time, particularly after a decision by the Delaware Supreme Court in 2005. However, there never has been an acknowledgement by a California court that Section 2115 reaches too far. That changed earlier this year, when a California Court of Appeal stated in dicta that certain matters of internal corporate governance fall within a corporation's internal affairs and should be governed by the laws of the corporation's state of incorporation.

The Second Deal Cube Tourney: Round One; 10th 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:

- TNT to Implode Dunes Casino
- Sonic Care Toothbrush
- Pink Panther Gumby Holding Globe
- Curved

- Broc Romanek

September 10, 2012

Trying My Patience: More on "Study: SEC's Revolving Door Is No Biggie"

SEC Enforcement Director Rob Khuzami recently penned this blog on the SEC's 'revolving door' myth that I blogged about last month. We both saw things similarly - that the mass media was trying to turn the "revolving door" into something it isn't, just as the academics found - and I was going to leave this blog at that.

Then I got mad. Last week, Bloomberg came out with this silly article - entitled "Top Bank Lawyer's E-Mails Show Washington's Inside Game" - in which I bet the reporters wrote the article's title before they slugged through a bunch of emails from the SEC that they accessed via a FOIA request. In a way, I felt kind of sorry for them. I'm sure they were hoping for so much more.

I'm not sure why but the reporters decided to focus on former SEC Commissioner/Market Reg Director Annette Nazareth - and her big "abuse" is that she sent friendly emails to Commissioners and Staffers with whom she used to work with. The horror! In one email, she provides her ten cents on certain provisions of Dodd-Frank. What a scandal! And there is much more nonsense in this long and detailed piece. Do you think other emails traded with the Staff by thousands of others have a different tone than the ones singled out in the article? All of the highlighted emails were innocuous - with the crime that they were written by a human and not a machine. These are emails for heaven's sakes. Not formal memos.

I kept reading, waiting for a smoking gun. But basically it showed that Annette did her job on behalf of her clients - and that the SEC did it's job of not treating her differently. If anything, the article's title should have been "We Stuck Our Noses In Other People's Emails and Proved the Revolving Door Study Was Correct." It's really unbelievable that Bloomberg's editors let this thing see the light of day (as well as the WaPo editors who re-ran the Bloomberg piece yesterday).

Sadly, other publications blindly decided to run with the theme floated in the Bloomberg piece, such as this Advisor One article. This New York Magazine article expounds on the Bloomberg piece and goes as far to liken the responsibilities of lawyers to journalists. Here's an excerpt: "We don't like these kinds of cozy relationships between journalists and the sources they cover, and we roundly criticize journalists who step over the line." It's news to me that this type of code applies to lawyers. In fact, all government agencies want input from the outside - without it, we would get laws that don't work. [And I certainly wouldn't characterize the type of emails in the article as "cozy." They were normal informal emails. They weren't talking about going to the ballgame together, etc. - and even that type of email doesn't show anything sinister.]

The problem with this exaggerated journalism is that it could impact someone's reputation. And even more importantly - looking at the big picture - it could cause some bright folks from deciding to ever work at the SEC. Why take a huge pay cut to serve your country if you will then be pilloried for continuing relationships with those you worked with when you leave?

So Bloomberg reporters, please step up and be real journalists. There is plenty of real news to cover these days. If you can't think of anything, give me a half hour to troll through your emails and let's see what I come up with. I imagine it will be a whole lot juicer than the trivial trove of nothingness that you found here...

NYSE Proposes 4% Average Drop in Proxy Distribution Fees

A few weeks ago, the NYSE filed this proposal with the SEC that follows up on some of the NYSE Proxy Fee Advisory Committee's recommendations from May to streamline proxy distribution fees and make them more transparent. If approved by the SEC, the net effect of the proposed changes would be a decrease in proxy distribution fees of approximately 4%, with the impact depending on a company's circumstances.

Dodd-Frank: SEC Sends Credit Rating Standardization Study to Congress

On Friday, the SEC delivered the credit rating standardization study to Congress as mandated by Section 939(h) of Dodd-Frank.

The Second Deal Cube Tourney: Round One; 9th 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:

- "Big One That Got Away" - Blank Cube
- E.F. Hutton-Drexel Burnham RIP
- Satellite Dish
- Globe

- Broc Romanek

September 7, 2012

European Proposal: Boards With Less Than 40% Women Problematic

There is no issue that lights up the Twittersphere in the corporate governance area than board diversity. Thus, people certainly were tweeting heavily earlier this week when news of a proposal by the European Union justice commissioner that companies allocating fewer than 40% of the slots on supervisory boards to women could face serious sanctions after 2020. [Although certainly not tweeting at the record 50k per minute that occurred last night during the President's speech.]

For this proposal to go forward, the European Commission must first approve it in the coming weeks, then the legislation would need approval from the EU's 27 governments and the European Parliament. As the studies in our "Board Diversity" Practice Area show, the number of women on US boards remains around 10% (with 30-40% of boards not having a single woman!) - with not much improvement in recent years...

"Getting Beyond Denial: Conflict Mineral Rules More Important (And Apply Sooner) Than You Thought"

I have calendared a webcast for September 27th with the longest title I have ever used - "Getting Beyond Denial: Conflict Mineral Rules More Important (And Apply Sooner) Than You Thought" - because I think the significance of the SEC's new conflict mineral rules has been missed by some. And because one subtlety to the new rule's 2014 effective date is that although it is a long time before companies are required to first report, those disclosures are going to cover 2013 - so companies need to have their ducks in a row by 2012 year-end. That's right - by the end of this year!

Federal Court Find Delaware's Confidential Chancery Court Arbitration Statute Violates 1st Amendment

Last week, the US District Court of Delaware delivered this decision - in Delaware Coalition for Open Government v. Strine - holding that Delaware's confidential Chancery Court arbitration statute violates the First Amendment of the US Constitution. My understanding is that defendants plan to appeal. We are posting memos in our "Securities Litigation" Practice Area.

Mailed: July-August Issue of "The Corporate Executive"

We just mailed the July-August Issue of The Corporate Executive, and it includes pieces on:

- Barnes & Noble's Gaffe: Grant Limits Under Section 162(m)
- Recent Court Decisions May Create Openings for Litigation
- Follow-Up: One Tax Question Resolved for 2013
- Say-on-Pay Round-Up: Year 2

Act Now: Get this issue rushed to when you try a "Free for Rest of 2012" No-Risk Trial to The Corporate Executive.

- Broc Romanek

September 6, 2012

Survey Results: Insider Trading Policies: Pledges & Margin Accounts

Here are the survey results on insider trading policies related to pledges & margin accounts:

1. Does your company's insider trading policy prohibit insiders from pledging their company shares?
- Yes - 37.7%
- No - 62.3%

2. If your company's insider trading policy does not prohibit pledges, does your company:
- Discourage or advise against pledges - 55.^%
- Require preclearance for pledges - 66.7%
- Include criteria that must be met for pledges (e.g., financial wherewithal, limited to a specified percentage of holdings) - 18.6%

3. If your company's insider trading policy requires preapproval or satisfaction of certain criteria for pledges, who makes that determination?
- CEO - 0%
- CFO - 4.2%
- GC - 79.2%
- Board Committee - 4.2%
- Other - 16.7%

4. Does your company's insider trading policy prohibit insiders from using margin accounts with their company shares?
- Yes - 40.4%
- No - 59.6%

5. If your company's insider trading policy does not prohibit margin accounts, does your company:
- Discourage or advise against margin accounts - 65.2%
- Require preclearance for margin accounts - 56.5%
- Include criteria that must be met for margin accounts - 17.4%

6. If your company's insider trading policy requires preapproval or satisfaction of certain criteria for margin accounts, who makes that determination:
- CEO - 0%
- CFO - 11.8%
- GC - 88.2%
- Board Committee - 0%
- Other - 11.8%

Please take a moment to participate in this "Quick Survey on Proxy Solicitors" and this "Quick Survey on Delegation of Authority."

Failure to Produce Audit Records: Hong Kong Regulators Also Face Troubles

Check out this development on audit paper requests featuring a court battle between Hong Kong's Securities and Futures Commission and Ernst & Young Hong Kong after E&Y failed to produce SFC-requested records.. It appears that it's not just the PCAOB that's having problems gaining access to China-based companies' audit papers due to an auditor's interpretation of China's State Secrecy laws (as covered in this blog).

It will be interesting to see how E&Y is going to defend itself on this in open court, particularly given there's a recent new law on accountant liability in Hong Kong that significantly ups the ante for auditors. Thanks to Liza Mark of Dorsey & Whitney for pointing this development out and her insight into this area!

To expound on Hong Kong's new accountant liability law, it's a little convoluted - the Hong Kong Legislative Council just passed a comprehensive rewrite of the existing Companies Ordinance of Hong Kong (Cap 32). One of the major initiatives of the rewrite provides for the imposition of criminal liability on auditors of Hong Kong incorporated companies for "inaccurate auditor's report. Here's a set of FAQs for the new Companies Ordinance rewrite - and here's the Major Initiatives explanation. This memo does a good job of summarizing the situation. Note that the amended Companies Ordinance is waiting on implementation regulations, so it will take a while before it's implemented.

Mailed: July- August Issue of "The Corporate Counsel"

We just mailed the July- August Issue of The Corporate Counsel, and it includes pieces on:

- Dodd-Frank Marches On: SEC Adopts Compensation Committee/Adviser Independence Rules
- Compensation Adviser Conflict of Interest Questionnaire
- Whose EDGAR Filing Is It, Anyway?
- Disclosures Regarding an SEC Investigation--The Latest Developments
- JOBS Act Update

Act Now: Get this issue rushed to when you try a "Free for Rest of 2012" No-Risk Trial to The Corporate Counsel.

- Broc Romanek

September 5, 2012

The Conflict Minerals Release Meets "The Meaning of Life"

Here's a classic from John Jenkins of Calfee Halter: So I'm sitting here in my office on a sunny afternoon on the Thursday before Labor Day, and I get the bright idea to tackle the SEC's release adopting the final version of the Conflict Mineral disclosure rules required by Dodd-Frank.

This was not the best idea I've had this week.

We've all made our way through massive SEC releases before (the Aircraft Carrier, the Executive Comp rules, and Securities Act Reform all come to mind), but this 368 page juggernaut may well be the Citizen Kane of bureaucratic prose. I tried to slog through it, but I only got to page 25 or so before the description of the labyrinthine due diligence and reporting requirements mandated by the new rules simply overwhelmed me:

As an exception to this requirement, however, an issuer that must conduct due diligence because, based on its reasonable country of origin inquiry, it has reason to believe that its necessary conflict minerals may have originated in the Covered Countries and may not have come from recycled or scrap sources is not required to submit a Conflict Minerals Report if, during the exercise of its due diligence, it determines that its conflict minerals did not, in fact, originate in the Covered Countries, or it determines that its conflict minerals did, in fact, come from recycled or scrap sources. Such an issuer is still required to submit a specialized disclosure report disclosing its determination and briefly describing its inquiry and its due diligence efforts and the results of that inquiry and due diligence efforts, which should demonstrate why the issuer believes that the conflict minerals did not originate in the Covered Countries or that they did come from recycled or scrap sources. On the other hand, if, based on its reasonable country of origin inquiry, an issuer has no reason to believe that its conflict minerals may have originated in the Covered Countries, or, based on its reasonable country of origin inquiry, an issuer reasonably believes that its conflict minerals are from recycled or scrap sources, the issuer is not required to move to step three.

As I read this paragraph again and again in an effort to comprehend it, a strange thought occurred to me, so I took a break and Googled "Monty Python's Meaning of Life script." Sure enough, there was a copy online, and I quickly scrolled down to the scene where John Cleese plays a headmaster addressing a class full of British public schoolboys. I was right -- the text of the Conflict Minerals Release bears a striking resemblance to Cleese's ramblings in the film:

Headmaster: All right, settle down, settle down. Now before I begin the lesson will those of you who are playing in the match this afternoon move your clothes down on to the lower peg immediately after lunch before you write your letter home, if you're not getting your hair cut, unless you've got a younger brother who is going out this weekend as the guest of another boy, in which case collect his note before lunch, put it in your letter after you've had your hair cut, and make sure he moves your clothes down onto the lower peg for you. Now...

Wymer: Sir?

Headmaster: Yes, Wymer?

Wymer: My younger brother's going out with Dibble this weekend, sir, but I'm not having my hair cut today sir, so do I move my clothes down or...

Headmaster: I do wish you'd listen, Wymer, it's perfectly simple. If you're not getting your hair cut, you don't have to move your brother's clothes down to the lower peg, you simply collect his note before lunch after you've done your scripture prep when you've written your letter home before rest, move your own clothes on to the lower peg, greet the visitors, and report to Mr Viney that you've had your chit signed. . .

The resemblance between the two passages leads me to one of three conclusions. First, the staff members involved in writing this release are big Monty Python fans; second, President Obama appointed John Cleese to the Commission when I wasn't looking; or third, life really is as absurd as the Monty Python guys make it out to be.

My vote goes to the third alternative.

Here's an interesting viewpoint on the conflict minerals rulemaking, courtesy of Marty Rosenbaum's "Conflict Minerals Rules May Foster Corporate Social Responsibility." And we continue to post oodles of memos in our "Conflict Minerals" Practice Area.

Reporting Equity Awards: Twists to Otherwise Durable Standard

Learn about Corp Fin's new approach to reporting equity awards in the Summary Compensation Table and the Director Compensation Table when it comes to complex equity award structures in the Summer issue of our Compensation Standards newsletter. If you're not a member of, get this issue for free when you try a no-risk trial for 2013.

And learn more about this - and many more topics over 13 panels - during our upcoming "7th Annual Proxy Disclosure Conference," which is only five weeks away. We are happy to report that the New Orleans conference hotel made it through Hurricane Issac just fine. But the city needs your support since tourism is the lifeblood of the city. If you can't make it, you can always catch the conference by video. Register Now!

Webcast: "Hot Topics for Smaller Company Legal Depts"

Tune in tomorrow for the webcast - "Hot Topics for Smaller Company Legal Depts" - that will give you tips on how to beat a tight budget, etc. featuring Barbara Blackford, formerly of Superior Essex; Carrie Darling of Encore Capital Group; Bret DiMarco of Coherent; Stacey Geer of Primerica; Isobel Jone of Peet's Coffee & Tea and David Scileppi of Gunster.

Note that we just added SEC Trading and Markets Deputy Director Jim Burns for today's webcast - "JOBS Act Update: Where Are We Now" - that will analyze evolving market practices and the latest from the SEC including last week's proposal to eliminate the ban on general solicitation in Rule 506 and 144A offerings. The program also features SEC Corp Fin Deputy Director Lona Nallengara, Wilson Sonsini's Steve Bochner, Latham & Watkin's Joel Trotter, Davis Polk's Michael Kaplan and Dave Lynn of Morrison & Foerster and

- Broc Romanek

September 4, 2012

Webcast: "JOBS Act Update: Where Are We Now"

Tune in tomorrow for the webcast - "JOBS Act Update: Where Are We Now" - that will analyze evolving market practices and the latest from the SEC including last week's proposal to eliminate the ban on general solicitation in Rule 506 and 144A offerings. The program features SEC Corp Fin Deputy Director Lona Nallengara, SEC Trading and Markets Deputy Director Jim Burns, Wilson Sonsini's Steve Bochner, Latham & Watkin's Joel Trotter, Davis Polk's Michael Kaplan and Dave Lynn of Morrison & Foerster and

If you're not yet a member, try a "Free for Rest of '12" no-risk trial to listen to this critical program - and also catch this Thursday's webcast: "Hot Topics for Smaller Company Legal Depts."

Check out this WSJ article entitled "Warning to Investors: We're an 'Emerging' Company" which states that 55% of investment bankers surveyed "...said they believe the new law's easing of regulatory requirements increases "the chances of scandals at these businesses."

SEC's Filing Fees Going Up 19% for Fiscal Year 2013

On Friday, the SEC issued its 7th fee advisory for the year (along with this methodology). Right now, the filing fee rate for Securities Act registration statements is $114.60 million (the same rate applies under Sections 13(e) and 14(g)). Under the fee advisory, this rate will rise to $136.40 per million, a 19% pop. A pretty hefty price hike, unlike last year's minimal decline.

As noted in the SEC order, the new fees will go into effect on October 1st like last year (as mandated by Dodd-Frank) - which is a departure from years before that when the new rates didn't become effective until five days after the date of enactment of the SEC's appropriation for the new year, which often was delayed well beyond the October 1st start of the government's fiscal year as Congress and the President battled over the government's budget.

On Friday, the FASB posted draft taxonomy on US GAAP, seeking comment by October 29th.

Our September Eminders is Posted!

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

- Broc Romanek