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