E-Minders April 2015

In This Issue:

E-Minders is our monthly e-mail newsletter containing the latest developments and practical guidance for corporate & securities law practitioners.

We view TheCorporateCounsel.net as the gathering place for the community and encourage those who may not yet be members to take advantage of a No-Risk Trial to see what you are missing. Here are 10 Good Reasons to try us now.

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Early Bird! Our Pair of Popular Executive Pay Conferences: We just posted the registration information for our popular conferences - "Tackling Your 2016 Compensation Disclosures" & "12th Annual Executive Compensation Conference: Say-on-Pay Workshop" - to be held October 27-28th in San Diego and via Live Nationwide Video Webcast on TheCorporateCounsel.net. Act now for the early bird discount - which expires April 24th - to get as much as 33% off! Here are the agendas.

2015 Edition of Romanek's "In-House Essentials Treatise": Broc Romanek has wrapped up the 2015 Edition of the definitive guidance on securities law for the in-house lawyer and it's been sent to the printers— Romanek's "In-House Essentials Treatise." With over 1000 pages—spanning 18 chapters—you will need this practical guidance for the challenges ahead.

Upcoming Webcasts on TheCorporateCounsel.net: Join us on May 5th for the webcast - "Form S-8: Share Counting, Fee Calculations & Other Tricks of the Trade" - to hear Gibson Dunn's Krista Hanvey, Davis Polk's Kyoko Takahashi Lin and Kaye Scholer's Jeff London discuss a topic rife with uncertainty and traps for the unwary.

And join us on June 2nd for the webcast - "Escheatment Soup to Nuts: Handling Unclaimed Property Audits & More" - to hear Reed Smith's Diane Green-Kelly, Keane's Valerie Jundt and Exelon's Scott Peters cover everything you need to know about escheatment, from the basics to handling the growing number of unclaimed property audits.

And join us on July 14th for the webcast - "Nasdaq Speaks '15: Latest Developments and Interpretations" - to hear senior members of the Nasdaq Staff - Arnold Golub, David Strandberg, Stanley Higgins and Cyndi Rodriguez - discuss all the latest.

And join us on July 16th for the webcast - "Cybersecurity: Governance Steps You Need to Take Now" - to hear Weil Gotshal's Paul Ferrillo and Randi Singer, as well as PhishMe's Allan Carey, get into the nitty gritty of how cybersecurity is now a huge governance concern and what you should be doing (including how to best train employees).

There is no cost for these webcasts if you are a member of TheCorporateCounsel.net. If you are not a member, take advantage of our no-risk trial to access the programs. You can sign up for this no-risk trial online, send us an email at info@thecorporatecounsel.net - or call us at 925.685.5111.

Upcoming Webcasts on CompensationStandards.com: Join us on June 16th for the webcast - "Proxy Season Post-Mortem: The Latest Compensation Disclosures" - to hear Mark Borges of Compensia, Dave Lynn of CompensationStandards.com and Morrison & Foerster and Ron Mueller of Gibson Dunn analyze what was (and what was not) disclosed this proxy season.

No registration is necessary - and there is no cost - for these webcasts for CompensationStandards.com members. If you are not a member, take advantage of our no-risk trial to access the programs. You can sign up online, send us an email at info@compensationstandards.com - or call us at 925.685.5111.

Upcoming Webcasts on DealLawyers.com: Join us on June 11th for the webcast - "Selling the Public Company: Methods, Structures, Process, Negotiating, Terms & Director Duties" - to hear Greenberg Traurig's Cliff Neimeth, Richards Layton's Ray DiCamillo and Richards Layton's Mark Gentileanalyze the legal and commercial parameters of what you can - and can't do (or should and shouldn't do) - when shopping and agreeing to sell control of a public company are evolving due to judicial decisions, legislative developments and market conditions.

And join us on September 16th for the webcast - "Evolution of M&A Executive Pay Arrangements" - to hear Morgan Lewis' Jeanie Cogill, Sullivan & Cromwell's Matt Friestedt and Wachtell Lipton's Andrea Wahlquist cover the latest in executive compensation arrangements in deals.

No registration is necessary - and there is no cost - for these webcasts for DealLawyers.com members. If you are not a member, take advantage of our no-risk trial to access the programs. You can sign up online, send us an email at info@deallawyers.com - or call us at 925.685.5111.

SEC Adopts Reg A+

In late March, the SEC adopted rules and forms under Section 3(b) of the Securities Act - known as "Reg A+" - as required by Section 401 of the JOBS Act. Here's the 453-page adopting release - and memos are posted in our "Regulation A/A+" Practice Area. Stinson Leonard Street's Steve Quinlivan and Cooley's Cydney Posner have blogs about it - as well as this blog from MoFo's Anna Pinedo, Dave Lynn and Marty Dunn, an excerpt of which is below:

The SEC's proposed rules already had provided a very practical format for private issuers seeking to raise capital. The proposing release generated mixed comments, with practitioners largely supporting the SEC's proposal, and others raising concerns about the pre-emption of state securities review.

From today's open meeting, and without having yet reviewed the final rules, it sounds like the SEC has taken an approach that seeks to promote capital formation, while preserving the disclosure requirements (both initial disclosure requirements and periodic reporting requirements for larger offerings) and other investor protection measures that were central to the proposing release.

The final rule establishes two tiers: Tier 1, for offerings that raise up to $20 million in proceeds in a 12-month period, including no more than $6 million of securities sold on behalf of selling securityholders, and a Tier 2, for offerings that raise up to $50 million in proceeds, including no more than $15 million of securities sold on behalf of selling securityholders. This will permit smaller and emerging companies to have an opportunity to raise substantial capital. The $50 million limit is, by statute, subject to periodic review by the SEC to determine whether the threshold is reasonable. The final rule also will include a limitation on the overall amount of securities that may be sold on behalf of selling securityholders. The exemption will not be available to certain bad actors and to other entities, such as investment companies.

The final rule, consistent with the proposed rule, modernizes the offering process by, for example, requiring that Regulation A+ offering statements be filed on EDGAR. The final rule incorporates a confidential submission process, similar to that available to EGCs relying on the JOBS Act, as well as the use of test-the-waters communications. Consistent with the proposed rule, a Tier 2 offering will be subject to rigorous disclosure standards, including a requirement to include audited financial statements, as well as to an investor limit. Issuers conducting Tier 2 offerings will also be subject to a requirement to file annual, semiannual and current event reports.

Most important to the success of Tier 2 offerings, Tier 2 offerings, given the detailed disclosure requirements and SEC review, will not be subject to state securities review. In addition, the final rule provides for a Tier 2 issuer to concurrently file a short-form Form 8-A to register a class of securities under Exchange Act Section 12(g) or 12(b)—this means that a Tier 2 issuer will, if it chooses to do so, be able to conduct a Regulation A+ offering and list on a national securities exchange.

SCOTUS' Omnicare: Pleading Standard for Section 11 Clarified

We're posting oodles of memos on the Omnicare decision by the Supreme Court in our "Securities Litigation" Practice Area. Here's a recap from this Proskauer memo (& see this Cooley blog):

The U.S. Supreme Court ruled today that a statement of opinion in a registration statement cannot be actionable as a misstatement of fact under § 11 of the Securities Act of 1933 if the issuer actually believed the opinion expressed. However, the statement of opinion can be actionable on an omissions theory if the registration statement omits material facts about the issuer's inquiry into, or knowledge about, the statement of opinion and if those omitted facts conflict with what a reasonable investor would have expected from a contextual reading of the statement of opinion. The decision in Omnicare, Inc. v. Laborers District Council Construction Industry Pension Fund could lead to additional litigation about whether statements of opinion are actionable, but the Court imposed some important constraints on investors' ability to assert § 11 claims predicated on statements of opinion.

SEC Chair White Addresses Status of Rulemakings (Vaguely)

In late March, SEC Chair White testified about the SEC's budget before the House Financial Services Committee. Although the testimony included a rundown on pending - and upcoming - rulemakings, there really wasn't much in the way of when things will actually happen (and no mention of crowdfunding), as reflected by this excerpt:

Corporation Finance, along with other Commission staff, continues to work to implement provisions of the Dodd-Frank Act relating to executive compensation matters and payments by resource extraction issuers. In addition, the staff is currently conducting the review of the accredited investor definition as it relates to natural persons as mandated by Section 413 of the Dodd-Frank Act.

Check out Broc's CompensationStandards.com blog about pressure that 58 House Dems are putting on the SEC to adopt the pay ratio rules. And this article notes the SEC has spent $2.75 million so far to write, enforce and litigate the conflict mineral rules…

Cybersecurity: How to Handle Questionnaires from Shareholders

Broc came across this interesting blog from McKenna Long's Bill Ide & Crystal Clark about how companies should react to questionnaires being sent by some pension funds to companies about their board oversight of cybersecurity preparedness. Here's an excerpt:

Certain pension funds have sent extensive, joint questionnaires to directors of public companies seeking detailed information as to the cybersecurity oversight systems and controls in place. Our view is that until the SEC provides further guidance, companies will generally find it in their interest to respond to such shareholder inquiries. Such disclosures, however, should be kept at a high level to demonstrate appropriate awareness and attention, while not disclosing specifics that could compromise the company's cybersecurity strategy or raise issues under Regulation FD.

Proxy Access: BofA Becomes 10th to Adopt Own Bylaws

As noted in this Reuters article, Bank of America filed this Form 8-K to note that it has adopted a proxy access bylaw with a formula of 3%/3-year formula - along with a group cap of 20 shareholders & nomination cap of 20% of board seats. As noted in this piece, BofA conferred with the NY Comptroller's office and other pension funds before making this move - even though the proponent at BofA was retail holder John Harrington.

Hat tip to Simpson Thacher's Yafit Cohn for pointing out that BofA is the 10th company to adopt their own proxy access bylaws:

1. CF Industries Holdings (5%, 3 yrs, cap of 20%, group of 20)
2. General Electric (3%, 3 yrs, cap of 20%, group of 20)
3. HCP (5%, 3 yrs, cap of 20%, group of 10)
4. Boston Properties (3%, 3 yrs, cap of 25%, group of 5)
5. YUM! Brands (3%, 3 yrs, cap of 20%, group of 20)
6. Arch Coal (5%, 3 yrs, cap of 20%, group of 20)
7. Prudential Financial (3%, 3 yrs, cap of 20%, group of 20)
8. Cabot Oil & Gas (5%, 3 yrs, cap of 20%, group of 10)
9. Priceline Group (5%, 3 yrs, cap of 20%, group of 20)
10. Bank of America‎ (3%, 3 yrs, cap of 20%, group of 20)

Then there is Big Lots and Whiting Petroleum, which have reached agreements with the NY Comptroller's office to adopt bylaws with the thresholds 3%, 3 yrs, cap of 25%, no group limit. These companies have not yet filed bylaw amendments.

Also note that Citigroup has filed its definitive proxy statement, in which the board supports the shareholder proponent's proxy access proposal as earlier announced.

Proxy Access: GE Permitted to Exclude "Substantially Implemented" Shareholder Proposal

As Broc predicted in this blog last month, companies that adopt proxy access bylaws in the face of a shareholder proposal are successfully arguing that the shareholder proposal is "substantially implemented" under Rule 14a-8(i)(10). General Electric is the first company to receive a favorable Corp Fin response along these lines (signed by Corp Fin's Chief Counsel). The now-mooted shareholder proposal sought thresholds of 3%/3 years, with a cap of 20% of the board. GE's bylaw included these same thresholds, but added a group limit of 20.

And here's a nice piece of "SEC posting practices" trivia! This was a reconsideration of GE's initial no-action request that originally argued another exclusion basis (but not (i)(9)) before GE adopted its own proxy access bylaw. So if you're one of the crazies that looks at the SEC's chronological list of responses posted every day and didn't see this one - that's because it's included in the "2014 list" of responses because it's a follow-up to a request made in December 2014. Meanwhile, here's news how 40% of shareholders supported the proxy access shareholder proposal at Apple...

Speaking of access, although the type of provision that Jim McRitchie criticizes at Pru in his blog was not adopted as part of Rule 14a-11, it's become standard as part of the "private ordering" that is going on. As of today, 19 of the 24 companies that have adopted proxy access included this type of provision - and 15 of those impose exactly the same provision as Pru (a 25% minimum vote threshold and a two-year delay period). Personally, Broc thinks it's reasonable to cut someone off if they don't get 25%. Bear in mind that under this limitation, a shareholder who doesn't cross the 25% threshold can still renominate the candidate - they just have to bear the expense themselves instead of causing the company to be the only one bearing the expense of a contest.

Proxy Access: All Sorts of Developments

As was covered during the just completed webcast - "Proxy Access: The Halftime Show" - there are all sorts of developments, such as:

- TIAA-CREF has quietly sent letters to 100 companies urging them to voluntarily adopt access within the next 6-8 months (see this WSJ article, including my quote at the end)
- At least 4 proxy access shareholder proposals have been withdrawn by the NYC Comptroller as part of a settlement (per this Ning Chiu blog)
- Per Ning's blog: "Many companies are opposing the proposals in their proxy statements, while at least one company has included the proposal, but with the board in favor of it. Most opposing the proposal are arguing against the need for proxy access at all, or have indicated a willingness to adopt access, but at a higher ownership threshold."
- And Ning says: "Other companies are offering shareholders a choice between a management proposal (either binding or precatory) along with a shareholder proposal, with different ownership thresholds for the two types of proposals."

Proxy Access: Pru Becomes 1st to Adopt Without Shareholder Proposal Pressure (& 1st "Dueling Proposals" Proxies Filed)

Big news! Prudential has become the first company to adopt proxy access proactively without having a shareholder proposal. Under a bylaw amendment adopted yesterday, Pru adopted a 3%/3-year formula - along with a group cap of 20 shareholders & nomination cap of 20% of board seats. Coincidence that Peggy Foran is the corporate secretary at Pru? Now you know why she has earned the "Lifetime Achievement Award" at the upcoming "The Women's 100″ conference.

Meanwhile, Exelon filed its preliminary proxy statement and it includes dueling proxy access proposals: the NYC Comptroller proposal and an alternative board proposal with a formula of 5%/3-years (group cap of 20 investors & 20% of board). Interestingly, the board proposal is also precatory. AES Corp and Cloud Peak Energy also have filed their proxy statements with dueling proposals. AES Corp with a management proposal that is non-binding - and Cloud Peak with a binding management proposal (& the proxy includes bylaw text).

Shareholder Proposals: Another Flip-Flop? "Upon Further Reflection"

It looks like the Corp Fin Staff has reversed course on a line of proposals that asks the board to adopt a policy that the board chair shall be an independent director who is not a current or former employee of the company, and whose only nontrivial professional, familial or financial connection to the company or its CEO is the directorship. After Pfizer received a no-action response from the Staff in December allowing the exclusion of this type of proposal for being vague & indefinite under (i)(3) (which itself was an extension of this Abbott Labs letter dated 1/13/14 - there the proposal said that the directorship could be the "only connection" to the company and the Staff allowed exclusion as vague under (i)(3)), a number of companies filed similar no-action requests.

Then in early March, the Staff started to issue responses to those requests (eg. this one to Boeing) and it appears to have changed its tune. Here's an excerpt from those Staff responses:

We are unable to concur in your view that ____ may exclude the proposal under rule 14a-8(i)(3). You have expressed your view that the proposal is vague and indefinite because it does not explain whether a director's stock ownership in accordance with the company's stock ownership guidelines is a permissible "financial connection." Although the staff has previously agreed that there is some basis for your view, upon further reflection, we are unable to conclude that the proposal, taken as a whole, is so vague or indefinite that it is rendered materially misleading. Accordingly, we do not believe that ______ may omit the proposal from its proxy materials in reliance on rule 14a-8(i)(3). (emphasis added)

Broc highlighted the "upon further reflection" language above because he doesn't recall ever seeing that language in a Staff response before. So with the (i)(9) debate raising the profile of the shareholder proposal process, it's possible that the playing field may continue to evolve for no-action requests under Rule 14a-8...

SEC Chair Speaks: Fee-Shifting, Activism & Proposal No-Action Process

In late March, SEC Chair White delivered this speech that:

- Warned that someday the SEC might shift its focus on fee-shifting bylaws from concerned only about adequate disclosure to taking action to ensure shareholders aren't stifled from seeking redress (see this blog; also see this blog about how Prof. Coffee found defects in Delaware's proposed fee-shifting legislation)

- Noted some activism is "constructive" and said that in "certain situations, activism seeks to bring about important changes at companies that can increase shareholder value" (see this WSJ article & NY Times article about how Delaware CJ Strine wants the SEC to enhance its 13D disclosure rules on activism)

- On the debate over the SEC's "no view" on Rule 14a-8(i)(9) this season (see this new letter from the Business Roundtable on that topic), she said (see this blog):

If a management proposal is made in response to a shareholder proposal on the same subject matter, does that end the inquiry — and the company may exclude the shareholder proposal because it ‘directly conflicts' with management's proposal? What if the proposals have the same subject matter, but the terms differ? What if management's proposal could be viewed as a proposal that, if adopted, may purport to provide shareholders with the ability to do something, such as call a special meeting or include a nominee for director in a company's proxy materials, but that, in fact, no shareholder would be able to meet the criteria to do so? If a company excludes a shareholder proposal because it conflicts with the company's own proposal on the same subject matter, should the company have to disclose to its shareholders the existence of the shareholder proposal? What if the company's competing proposal was offered only in response to the shareholder's proposal — should the company have to disclose its motivations for its own proposal? .... In impartially administering the rule, we must always consider whether our response would produce an unintended or unfair result. Gamesmanship has no place in the process.

More on "MD&A Omissions Can Be Actionable in Section 10(b) Claims"

A few months ago, Broc blogged about a split between the 9th Circuit and 2nd Circuit on whether an alleged failure to make a disclosure required by Item 303 of Regulation S-K is an actionable omission under Section 10(b) and Rule 10b-5. Now, Kevin LaCroix blogs about a recent decision in Tile Shop Holding Securities Litigation, in which District of Minnesota Judge Ann Montgomery followed the Second Circuit's ruling on the question and held that an alleged failure to make a disclosure under Item 303 can serve as the basis of a Section 10(b) securities claim. The ruling is interesting in a number of other respects as well.

Battle Over SEC's ALJs Takes a Turn

Broc blogged before about the controversy over the SEC's use of administrative law judges. Here's the intro of this Reuters article:

As the Securities and Exchange Commission follows through with its promise - or threat, depending on how you look at these things - to bring more of its enforcement actions as administrative proceedings before judges employed by the commission, at least a half-dozen defendants have brought constitutional challenges to the SEC's right to pursue charges outside of federal district court. They've asserted two different theories: First, administrative proceedings violate their Seventh Amendment and due process rights because there's no jury and the evidentiary rules favor the SEC; and second, the entire administrative law judge system violates separation-of-powers doctrine under the U.S. Supreme Court's 2010 decision in Free Enterprise Fund v. Public Company Accounting Oversight Board.

The good news this week for SEC defendants facing administrative proceedings is that U.S. District Judge Rudolph Randa of Milwaukee believes both constitutional arguments to be "compelling and meritorious." But the bad news in Randa's ruling in Bebo v. SEC is bad indeed. The judge dismissed Laurie Bebo's suit seeking a preliminary injunction to block the SEC from moving ahead with its administrative proceeding against the former CEO of Assisted Living Concepts, concluding that he does not have jurisdiction to resolve the constitutional questions.

Also check out this Reuters article entitled "Chamber to propose recommendations for SEC enforcement policies"...

More on "SEC Probing How Companies Treat Whistleblowers"

Last month, Broc blogged how the SEC has sent letters to several companies asking for years of nondisclosure agreements, employment contracts and other documents to investigate whether companies are muzzling corporate whistleblowers. Here's more from this blog by David Smyth entitled "The SEC Will Be Your Employment Law Agency, Too." Here's an excerpt from that blog:

Now the Commission is wading deeper and deeper into the employment law business. We've known for some time that the SEC was looking for cases in which to enforce the Dodd-Frank anti-retaliation provisions of the whistleblower rules. It brought such a case against Paradigm Capital Management just last June. Also last year, SEC whistleblower chief Sean McKessy warned against companies writing severance agreements to buy their former employees' silence with post-employment benefits. "And if we find that kind of language, not only are we going to go to the companies, we are going to go after the lawyers who drafted it," he said.

But thanks to the Wall Street Journal's Rachel Louise Ensign, that's not all. Oh, no; that's not all. In an article from last week, she reports that the Commission is actively looking for that kind of language. It has sent a request letter asking a number of companies "to turn over every nondisclosure agreement, confidentiality agreement, severance agreement and settlement agreement they entered into with employees since Dodd-Frank went into effect, as well as documents related to corporate training on confidentiality." The letter also asks for "all documents that refer or relate to whistleblowing" and lists of terminated employees.

Also check out this blog by Keith Bishop entitled "Is Anything Fishy With The SEC's Whistleblower Inquiries?." And this Kevin LaCroix blog entitled "Whistleblowing: What Difference Does it Make?"...

Here's a blog from Mintz Levin on this topic. And also see this blog by Steve Quinlivan entitled "Three Dodd-Frank Whistleblower Anti-Retaliation Claims Fail." And this blog from Steve about how the 2nd Circuit has upheld the SEC's denial of a whistleblower award...

Whistleblowers: DOL Adopts Final Rules

The Department of Labor finally has gotten around to adopting final rules for whistleblower procedures as required by Section 806 of Sarbanes-Oxley, which reflects Dodd-Frank-imposed amendments and clarifies OSHA's procedures for handling whistleblower claims. The DOL & OSHA have been operating under interim final rules since 2011 - and the new rules are similar to those. As reflected in this memo, the new rules provide employees with 180 days to file complaints and now allow allegations to be made orally...

NYSE Broadens "Late Filer" Rule to 10-Qs & "Materially Defective" Filings

As noted in this memo from the NYSE, the exchange has amended its rules so that companies that don't timely file their 10-Qs with the SEC - or who has a 10-K or 10-Q that's materially defective - is considered a "late filer." Previously, only a late 10-K would cause a company to be deemed "late." "Materially defective" situations include filing a 10-K without an auditor's report or the auditor subsequently withdraws its report, or a company discloses that its financials should no longer be relied upon.

SEC's "RoboCop" Moves on Schedule 13Ds

In mid March, the SEC brought 8 enforcement actions against Schedule 13D filers for failing to amend their Schedules. Here's a good description from this blog by Steve Quinlivan of Stinson Leonard Street:

It's well known that Federal securities laws require beneficial owners to promptly file an amendment when there is a material change in the facts previously reported by them on Schedule 13D, commonly referred to as a "beneficial ownership report." It sounds easy to comply with, but the 13Ds can be on file for years, the obligations can be forgotten and facts can change rapidly in certain circumstances. The SEC has now sent a strong reminder to the world that it takes 13D updating obligations seriously. The SEC charged eight officers, directors, or major shareholders for failing to update their stock ownership disclosures to reflect material changes, including steps to take the companies private. Each of the respondents, without admitting or denying the SEC's allegations, agreed to settle the proceedings by paying a financial penalty.

The SEC's orders find that the respondents took steps to advance undisclosed plans to effect going private transactions. Some determined the form of the transaction to take the company private, obtained waivers from preferred shareholders, and assisted with shareholder vote projections, while others informed company management of their intention to privatize the company and formed a consortium of shareholders to participate in the going private transaction. As described in the SEC orders, each respective respondent took a series of significant steps that, when viewed together, resulted in a material change from the disclosures that each had previously made in their Schedule 13D filings. According to the SEC's orders, some of the respondents also failed to timely report their ownership of securities in the company that was the subject of a going private transaction. In addition, six respondents only disclosed their transactions in company securities months or years after the fact, not within two businesses days, as required for these disclosures by insiders.

Left unanswered is the question of "what can I do before I have to amend my 13D and inform the world?"

These don't look like broken windows to me, although some will claim they are, but it's probably more of the SEC's robo-cop program. How hard is it to identify the universe of going private transactions, who had 13D's on file and who didn't amend them. Expect the SEC to continue this approach to pick off more low hanging fruit and send messages in the future.

And here's this Cooley blog on this development. And Alan Dye has blogged on the Section 16 aspects of this development...

Corp Fin's Policy Statement: Reg A & D Waivers

In mid-March, Corp Fin issued this policy statement on waivers under Regulation A and D. This was just one day after SEC Chair White delivered this speech in which she stated that charging individuals is a more effective tool to deter future misconduct than withholding waivers. In other words, refusing to grant a waiver should not be used as an enforcement tool. She also supported the Staff's process by which they review waiver requests - noting that it's "rigorous."

Lately, the heated battle among the SEC Commissioners over "bad actor" waivers has resulted in the Commissioners themselves deciding whether to grant a waiver rather than the Staff. Here's an excerpt from White's speech that sums up how that looks to the outside world:

Unfortunately, the public discussions about the SEC's waiver decisions sometimes do not recognize these important distinctions and can take on a political tone that can blur the analysis.

Here's an excerpt from this blog by Steve Quinlivan that nicely sums up where we go from here: "The policy looks fair on its face. Application is another thing.
Initially I think it will lead to lots of those uncomfortable conversations between client and counsel that say "on the one hand these facts are good" and "on the other hand these facts are not." Should the SEC continue to publish waiver decisions and enough information to ascertain the reasons therefore, eventually the securities bar will figure it out."

Survey Results: Shareholder Engagement

Here's the results from our recent survey on shareholder engagement:

1. For our proxy season-related efforts (ie. not the normal IR stuff), this number of our staffers handles most of the communications with our institutional shareholders:
- More than 3 - 10%
- 3 - 30%
- 2 - 20%
- 1 -30%
- None - 10%

2. Before our annual meeting, our company typically has face-to-face engagement with this number of institutional shareholders:
- More than 12 - 20%
- 7-12 - 10%
- 4-6 - 20%
- 2-3 - 30%
- 1 - 0%
- None - 20%

3. Before our annual meeting, our company typically receives this number of requests for face-to-face meetings from our institutional investors:
- More than 12 - 0%
- 7-12 - 0%
- 4-6 - 10%
- 2-3 - 30%
- 1 -10%
- None - 50%

Take a moment to participate in our "Quick Survey on Hedging Policies" and our "Quick Survey on Conflict Minerals." I also just posted this "Quick Survey on Currency Fluctuations for Incentive Compensation."

Aiding & Abetting Defendants: Motion for Amended Complaint Seeks to Add Company Counsel!

OMG! This motion to amend the complaint in Chen v Howard-Anderson ("aka Occam"), CA No. 5878-VCL (Del. Ch.) is sure to raise eyebrows as it indicates a willingness to bring aiding & abetting claims against company counsel and not just financial advisors and counterparties - something rarely seen before in the public company M&A context. The oppositions to the motion filed on March 4th were filed confidentially. Argument on the motion to add company counsel is being held today.

In light of the prisoner dilemma type incentives created by the Delaware Uniform Contribution Among Tort-feasors Law (DUCATL) - as interpreted by the Delaware Chancery Court in Rural/Metro - several commentators have suggested that defendants are increasingly likely to break ranks rather than present a united front in defense of aiding & abetting claims. This likely will contribute to a rise in company counsel appearing as defendants, if not initially included in the complaints filed or in cross-claims filed by co-defendants seeking to preserve and maximize rights of contribution or credit for settlements under DUCATL. This could get real messy.

Like Rural/Metro, the motion to amend the complaint adds new defendants to an action in which discovery is well advanced if not substantially complete, potentially requiring the new defendants - at least Jefferies (like RBC in Rural/Metro) - to go to trial based on a record, particularly discovery - that they may have had little if any role in creating. See paragraph 7 of the motion acknowledging that it is being filed four years after the hearing on a preliminary injunction in the matter.

Conflict Minerals: House Republicans Want SEC to Drop Appeal

Here's the intro from this Cooley blog by Cydney Posner (and here's a blog on whether Congress will actually revisit the conflict minerals rule):

According to this article from the Washington Post with Bloomberg, in February, House Financial Services Committee Chair Jeb Hensarling and three other House members (Scott Garrett of New Jersey, Bill Huizenga of Michigan, and Ed Royce of California) sent a letter to SEC Chair Mary Jo White urging that the SEC end its appeal of the conflict minerals case, National Association of Manufacturers, Inc. v. SEC, currently pending in the DC Circuit. Whether the pressure will have any impact remains to be seen. Hensarling asked for a report on the amount of funds and time spent defending the rule.

Meanwhile, see this Keith Bishop blog entitled "Oxfam America Argues SEC Has "Unlawfully Withheld And Unreasonably Delayed" Resource Extraction Rule." And the transcript from our recent webcast - "Conflict Minerals: Tackling Your Next Form SD" - continues to draw many eyeballs...

"Accredited Investors": Meeting of Advisory Committee on Small & Emerging Companies

This MoFo blog and SIFMA recap covers the latest committee meeting that dealt with the hot button topics for smaller companies - & this discussion draft on the "accredited investor" definition is worth reading...

Form S-8 Share Counting, Fee Calculations and Other Tricks of the Trade

We just mailed the January-February issue of The Corporate Counsel. The issue covers a slew of issues related to Form S-8, such as:

- Deciding Whether Plan Offers Must Be Registered or Exempt
- Eligibility to Use Form S-8
- The Need To Register "Plan Interests"
- The Need To Register Deferred Compensation Plan Obligations
- Calculating Filing Fees
- "Share Counting": Determining How Many Shares To Register
- A Sample Spreadsheet to Help You Audit Your Plan

Act Now: Try a no-risk trial now to get a non-blurred copy rushed to you. Also tune in for our upcoming webcast with the same title as this issue of The Corporate Counsel.

Disclosure Usability: Guess Which Symbol Matches Which Director Attribute!

As noted in this 40-second video, some companies are using nifty symbols to supplement their director attribute disclosures (note: symbols are fuzzy in the video due to low resolutions in the proxy that don't work neatly when copying into a vid).

15 Cool Things About GE's 2015 Form 10-K

This 1-minute video describes how General Electric overhauled its Form 10-K this year to make it investor friendly (here's a hard copy of the slides in the video).

March-April Issue: Deal Lawyers Print Newsletter

This March-April issue of the Deal Lawyers print newsletter includes articles on:

- Five Day Tender Offers: What Can Market Participants Expect?
- Five Day Tender Offers: Conditions and Timelines
- Wake-Up Call for Private M&A Deal Structuring
- Courts Increasingly Skeptical of the Value of Disclosure-Only Settlements
- Transaction Costs: Negotiating Their Tax Benefit
- Food for Thought: Conflicting Views on the "Knowing Participation" Element of Aiding & Abetting Claims

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People: Who's Doing What and Where

In Corp Fin, Dieter King has been named the Assistant Director of AD Office 7- Financial Services I. In addition, former Staffer Courtney Kamlet has joined INC Research as Senior Corporate Counsel.

Conference Calendar

What's New on Our Websites

Among other new additions, during the last month we have:

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