E-Minders September 2016

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 "Free for Rest of '16" 2016 No-Risk Trial to see what you are missing. Here are 10 Good Reasons to try us now.

You can subscribe below to receive a complimentary E-Minders subscription - even if you don't subscribe to TheCorporateCounsel.net. Our hope is that once you get to know us, you will understand the true value of a subscription to TheCorporateCounsel.net. Note that subscribers to TheCorporateCounsel.net should sign up below for E-Minders too, as we don't have the e-mail addresses for many people in our community.

Our Executive Pay Conferences: 10% Reduced Rate: We have posted the registration information for our popular conferences – "Tackling Your 2017 Compensation Disclosures: Proxy Disclosure Conference" & "Say-on-Pay Workshop: 13th Annual Executive Compensation Conference" – to be held October 24-25th in Houston and via Live Nationwide Video Webcast. Here are the agendas – 20 panels over two days.

Discounted Rates – Act by September 9th: Huge changes are afoot for executive compensation practices with pay ratio disclosures on the horizon. We are doing our part to help you address all these changes – and avoid costly pitfalls – by offering a special early bird discount rate to help you attend these critical conferences (both of the Conferences are bundled together with a single price). So register by September 9th to take advantage of the 10% discount.

It's Done - 2017 Edition of Romanek's "In-House Essentials Treatise": We are happy to say the 2017 Edition of Romanek's "The In-House Essentials Treatise" is done – and it has been sent to the printers. Here's the 90 pages of our "Detailed Table of Contents" listing the topics – so you can get a sense of the Treatise's practical nature. You will want to order now so you can receive it as soon as possible.

With over 1700 pages, this tome is the definition of being practical. You can return it any time within the first year – and get a full refund if you don't find it of value.

It's Printed: 2017 Edition of Romanek's "Proxy Season Disclosure Treatise": Broc Romanek has wrapped up the 2017 Edition of the definitive guidance on the proxy season – Romanek's "Proxy Season Disclosure Treatise & Reporting Guide" – and it's been printed. With over 1500 pages – spanning 32 chapters – you will need this practical guidance for the challenges ahead. Here's the Detailed Table of Contents listing the topics so you can get a sense of the Treatise's practical nature.

Upcoming Webcasts on TheCorporateCounsel.net: Join us on September 8th for the webcast – "After Brexit! Current Developments in Capital Raising" – to hear Manatt Phelps' Katherine Blair, Calfee Halter's Kris Speen and Davis Polk's Michael Kaplan explore the latest developments in the capital markets, including alternatives such as PIPEs, registered direct offerings, "at-the-market" offerings, equity line financing and rights offers.

And join us on September 27th for the webcast – "Virtual-Only Annual Meetings: Nuts & Bolts" – to hear HP's Katie Colendich, Broadridge's Cathy Conlon, Ciber's Tara Dunn, GoPro's Eve Saltman and the Veaco Group's Kris Veaco as they describe the recent trend towards virtual-only annual meetings, including numerous first-hand accounts of the processes necessary to pull them off.

And join us on October 4th for the webcast – "Board Refreshment & Recruitment" – to hear Wilson Sonsini's Lydia Beebe, Davis Polk's Ning Chiu, Spencer Stuart's Julie Daum, South Jersey Industries' Gina Merritt-Epps and Global Governance Consulting's Susan Wolf analyze the latest director recruitment and board evaluation practices.

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 DealLawyers.com: Join us on September 28th for the webcast – "Middle Market Deals: If I Had Only Known" – to hear Joe Feldman of Joseph Feldman Associates about how to best avoid post-closing deal surprises for a mid-market deal.

And join us on November 15th for the webcast – "This Is It! M&A Nuggets" – to hear Weil Gotshal's Rick Climan, Kaye Scholer's Joel Greenberg and McDermott Will's Wilson Chu impart a whole lot of practical guidance!

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.

Welcome to John Jenkins! (Because Two Bald Men Are Better Than One)

We're excited to announce that John Jenkins has joined us — and he will be partnering with Broc to run our websites, print publications, etc. Although some say that we hired John as a ringer for our hockey team, he can tell you that John knows all. He has been one of our primary resources for tough questions over the years. You're gonna love him! John has spent 30 years toiling at Calfee Halter in Cleveland as a Partner — and he will continue to serve in that role for them. Ping him at john@thecorporatecounsel.net to say hello...

Whistleblowers: What Should You Do Now With Your Agreements? (Let's Call It a Trend)

Here's news from Scott Kimpel of Hunton & Williams: As described in this press release, the SEC brought yet one more settled administrative case against a public company — Health Net — based on confidentiality & waiver provisions contained in employee severance agreements — paying a $340k penalty. Like in the BlueLinx action brought in early August, the SEC determined that these provisions violated the anti-whistleblower rules it adopted under Dodd-Frank — and again, there is no indication that the company actually sought to enforce the offensive provisions. Here's the SEC order, which contains excerpts of the impermissible contractual language.

Toni Chion, an Associate Director in the SEC's Enforcement Division, supervised both cases — which may suggest that the cases are the product of a broader enforcement sweep...

Non-GAAP CDIs: The First Comment Letters

We've been covering Corp Fin's new non-GAAP CDIs extensively — including two blockbuster webcasts. Here's an update from Scott Kimpel of Hunton & Williams:

Sufficient time has passed since the Corp Fin Staff issued the new CDIs on non-GAAP financial measures such that comment letters based on them are becoming publicly available. Below are a sampling of letters that have become publicly available in the last several weeks — which raise issues with presentation of non-GAAP metrics.

A common comment relates to ordering & prominence under Item 10(e), but they seem to run the gamut and hit on each of the new CDIs. So far, it appears the Staff has largely been accepting a company's promise to make changes in the next quarterly reporting cycle. It will be interesting to see if Corp Fin becomes more assertive after a few more quarters of reporting. The samples are:

1. Alexandria Real Estate Equities (Item 10(e) prominence)

2. Ameren Corp (Item 10(e) prominence; tax effecting)

3. Crown Holdings (performance vs. liquidity measures; reconciliation; non-GAAP measure without corresponding GAAP measure; tax effecting)

4. Katy Industries (reconciliation; Item 10(e) prominence)

5. Moelis (full non-GAAP financial statement)

6. National Retail Properties (non-cash adjustments, Funds From Operations)

7. Occidental Petroleum (non-GAAP measure without corresponding GAAP measure)

8. Sterling Bancorp (Item 10(e) prominence; non-GAAP measure without corresponding GAAP measure)

9. Timken (Item 10(e) prominence)

10. US Steel (Item 10(e) prominence)

11. Waters Corp. (Item 10(e) prominence; smoothing)

Also see the recent May-June issue of "The Corporate Counsel" print newsletter, which provides great guidance in this critical area...

Heavy Non-GAAP Users More Prone to Restatements & Internal Control Weaknesses?

Here's an excerpt from this Cooley blog by Cydney Posner: This article in the WSJ suggests that there may be even more to it than just potentially misleading numbers: according to a study by consultant Audit Analytics, conducted for the WSJ, companies that lean heavily on non-GAAP measures to significantly pump up their earnings "are more likely to encounter some kinds of accounting problems than those that stick to standard measures...."

Corp Fin's Non-GAAP Comments: MD&A's Executive Summary

Here's a blog by Duane Morris' Rich Silfen: As many of us have noticed, the first comment letters from the Staff in the SEC's Division of Corporation Finance, following Corp Fin's recent issuance of new CDI guidance on the presentation of non-GAAP financial measures, have become available publicly. The comment letters shed additional useful light on Corp Fin's views concerning non-GAAP presentations.

One of the comment letters sent to Alexandria Real Estate Equities on June 20th provides a particularly helpful glimpse into Corp Fin's views about the use of non-GAAP information in the executive summary of MD&A. The staff's letter includes the following comment in reference to MD&A in the registrant's 2015 Form 10-K:

We note that in your executive summary you focus on key non-GAAP financial measures and not GAAP financial measures which may be inconsistent with the updated Compliance and Disclosure Interpretations issued on May 17, 2016 (specifically Question 102.10). We also note issues related to prominence within your earnings release filed on February 1, 2016. Please review this guidance when preparing your next earnings release.

Indeed, the executive summary portion of the MD&A — when initially conceptualized in the SEC's 2003 release providing interpretive guidance in the preparation of MD&A — was supposed to include an overview to facilitate investor understanding. The overview was intended to reflect the most important matters on which management focuses in evaluating operating performance and financial condition. In particular, the overview was not supposed to be duplicative, but rather more of a "dashboard" providing investors insight in management's operation and management of the business.

Looking back at the release to write this blog entry, I note references, with regard to Commission guidance on preparation of the MD&A overview, explaining that the presentation should inform investors about how the company earns revenues and income and generates cash, among other matters, but should not include boilerplate disclaimers and other generic language. The Commission even acknowledged that the overview "cannot disclose everything and should not be considered by itself in determining whether a company has made full disclosure."

Many companies have presented in their MD&A overview those non-GAAP measures used by management to operate the business and otherwise manage the company. Where appropriate, references typically are made to the information appearing elsewhere in the document, presented to enable compliance with applicable rules and guidance for non-GAAP presentations. Interestingly, the staff, in its comment, questions the "prominence" of the non-GAAP presentation in the context of the earnings release (noting that the staff provides less specificity in the portion of its comment relating to the MD&A overview).

This focus on prominence — to the extent the staff's concerns relate to the MD&A overview — is worth further consideration in preparing MD&A disclosure. In this connection, query whether the staff — in questioning prominence — could be expressing a view that when management analyzes for investors the measures on which it focuses in managing the business, if management relies on non-GAAP measures, it necessarily must focus on (and explain) — with no less prominence — the corresponding GAAP measures.

More on "Proxy Access Shareholder Proposals: Is Corp Fin Back to Square #1?!?"

Here's a follow-up note from Keir Gumbs of Covington about Broc's blog illustrating how Corp Fin is not going back to "Square #1": To clarify how to best interpret the H&R Block no-action letter — the letter was about amending an existing bylaw, not just the adoption of a bylaw:

RESOLVED: Shareholders of H&R Block, Inc (the "Company") ask the board of directors (the "Board") to adopt, and present for shareholder approval, revisions to its provisions allowing "Shareholder Nominations Included In The Corporation's Proxy Materials" and associated bylaws to ensure the following:
1. The number of shareholder-nominated candidates eligible to appear in proxy materials should be one quarter of the directors then serving or two, whichever is greater.
2. Loaned securities should be counted toward the ownership threshold if the nominating shareholder or group represents that it has the legal right to recall those securities for voting purposes, will vote the securities at the annual meeting, and will hold those securities through the date of that meeting.
3. There should be no limitations on the number of shareholders that can aggregate their shares to achieve the required 3% ownership to be an "Eligible Shareholder."
4. There should be no limitation on the renomination of shareholder nominees based on the number or percentage of votes received in any election

The letters last year were asking companies to adopt bylaws, which gave the companies the ability to argue that they'd implemented the proposal. The Corp Fin Staff picked this up in their response. Note for example the difference in language:

The proposal requests that the board amend its "proxy access" bylaw provisions in the manner specified in the proposal.

We are unable to conclude that H&R Block has met its burden of establishing that it may exclude the proposal under rule 14a-8(i)(10). Based on the information presented, we are unable to conclude that H&R Block's proxy access bylaw compares favorably with the guidelines of the proposal. Accordingly, we do not believe that H&R Block may omit the proposal from its proxy materials in reliance on rule 14a-8(i)(10).

The use of the word "amend" in the description of the bylaw, the use of the phrase "burden" and "Based on the information presented" tells me that:

1. The Staff viewed this as an amend the bylaw proposal (and not an adopt a bylaw proposal like those that it confronted earlier this year; and

2. The use of the burden language signals that there is an argument that they could have made that would have been successful; the staff rarely uses burden language except to signal that the company didn't make the right arguments.

Compare that with the language used in the letters where the Staff granted relief earlier this year:

The proposal requests that the board adopt a "proxy access" bylaw with the procedures and criteria set forth in the proposal.

There appears to be some basis for your view that Quest Diagnostics may exclude the proposal under rule 14a-8(i)(10). We note your representation that the board has adopted a proxy access bylaw that addresses the proposal's essential objective. Accordingly, we will not recommend enforcement action to the Commission if Quest Diagnostics omits the proposal from its proxy materials in reliance on rule 14a-8(i)(10).

Commentary: I've been saying since earlier this year that the fight over bylaws was not ended by the letters last year. This proposal — and ones like it — may survive challenge to the extent that they are asking companies to adopt changes to bylaws that have already been adopted.

This will be especially true with respect to what I call "single issue" proposals that focus on one or more specific features of a company's proxy access bylaw. In those cases, it seems like the Staff will find it hard to say that a bylaw has implemented a proposal where the proposal identifies a provision in that bylaw that is material and asks the company to change that provision.

Conflict Minerals: IPSA Uncertainty Likely to Carry Over to '17

Here's the intro from this note from Elm Sustainability Partners: With the Securities and Exchange Commission's decision earlier this year to forego an appeal to the US Supreme Court of NAM v. SEC, much uncertainty hangs around the requirement for filers of Form SD and Conflict Minerals Reports (CMRs) to conduct an Independent Private Sector Audit (IPSA) for filing year 2016. We expected the question to be resolved once and for all before the end of CY2016. However, that now appears doubtful.

As of last Friday, a judge had not yet been assigned to the case in the lower court that is to provide the SEC direction. And the SEC's Flex Agenda published June 6, 2016 does not list the matter as a rule making activity currently planned by the Commission.

So for the time being, it appears the the CY2016 IPSA trigger will be identical to CY2015 — the IPSA is necessary only when an issuer voluntarily chooses to classify a product as "DRC Conflict Free" or "not DRC Conflict Free" after due diligence. It is important to understand that when the Reasonable Country of Origin (RCOI) indicates that there is no reason to believe that tin, tantalum, tungsten or gold in a product did originate — or may have originated — in the Covered Countries, only a Form SD is to be filed and no IPSA is required in such instances.

Evolving Director Compensation

In this 23-minute podcast on CompensationStandards.com, Russ Miller & Yonat Assayag of ClearBridge Compensation Group discuss the evolution of director compensation, including:

1. What is the upshot of the recent director compensation lawsuits?
2. Why haven't boards been sued more frequently since there is the tricky circumstance that directors set their own pay?
3. How are companies reacting by changing their plans? (see their study: "S&P 500 Trends in Director Pay Limits")
4. Are directors resisting the movement to amend their pay plans & place limits on their pay?
5. What is the role of the compensation consultant in helping directors set their own pay?

This podcast is also posted as part of Broc's "Big Legal Minds" podcast series. Remember that these podcasts are also available on iTunes or Google Play (use the "My Podcasts" app on your iPhone and search for "Big Legal Minds"; you can subscribe to the feed so that any new podcast automatically downloads...

Escheatment: "Has Delaware Engaged In a Game That Shocks The Conscience?"

Big news on the unclaimed property front! Here's the intro of this blog by MarketSphere's Clive Cohen (also see the memos in our "Unclaimed Property" Practice Area): On June 28th, the U.S. District Court for the District of Delaware issued a potential landmark unclaimed property audit-related memorandum opinion in the case between Temple-Inland and the State of Delaware. The decision is very satisfying for holders who have either experienced extreme extrapolation and sampling methods conducted by third-party auditors during audits (especially on behalf of Delaware) — or have feared they might be in such a situation in the future.

The most important part of the court's decision deals with a motion for summary judgment requested by Temple-Inland relating to its substantive due process claim. The decision concludes that Delaware's extrapolation methodology and audit techniques during an audit of Temple-Inland violated its constitutional right to substantive due process.

A remedy for this violation has not yet been provided by the court. Although the ultimate effect of this case on future audits in Delaware or elsewhere is unknown, it is believed by many that this could be the beginning of a "kinder, gentler" — and fairer — unclaimed property audit process throughout the industry. To see a legal analysis of this decision, we suggest you visit the recent blog written by our friends at McDermott, Will and Emery.

Perhaps the most shocking (and satisfying) aspect of this court decision is the comment made by Judge Gregory M. Sleet: "[t]o put the matter gently, [Delaware has] engaged in a game of ‘gotcha' that shocks the conscience." In fact, "shocking the conscience" was a necessary condition in order for the court to conclude that the combined actions of Delaware and its auditor, Kelmar, violated constitutional substantive due process.

Escheatment: Pennsylvania, Massachusetts & Arkansas Join the Fray

A recent question in our "Q&A Forum" (#8863) highlights how states other than Delaware are getting aggressive in the escheatment area. Here's part of the answer to that query — thanks to Reed Smith's Diane Green-Kelly for her expertise (also see our "Escheatment Handbook"):

It is important that each company consult with counsel on the degree of authority to provide to the transfer agent and the manner in which records are made available. It is important, as well, that in the end of the audit if shares are deemed abandoned, the test for last contact precisely fit the particular state's definitions. Each state has a slightly different standard, and a company can become at risk for a claim of negligent escheat if shares are escheated prematurely.

Kelmar takes a "one size fits all" approach in these audits, which is incorrect. A number of companies have had to save shares from escheat in a number of equity audits by Kelmar because of this incorrect interpretation of the law.

You should consult with counsel who are familiar with these audits. For a few thousand dollars in legal advice, you can save yourself from considerable liability and headaches.

More on "Pay Ratio: Makes It Onto 'Jeopardy'!"

Following up on Broc's recent blog about how pay ratio & the SEC have made it onto the "Jeopardy!" TV show, a member pointed out that an entire category was devoted to the SEC last year. Scroll down to the bottom left corner of this Jeopardy board. Here are the five answers:

— The SEC's original purpose was to give confidence to investors who lost money due to the crash of this year ($400)
— The SEC says this illegal type of trading involves "possession of material, nonpublic information about" a stock ($800)
— The SEC regulates this type of 5-letter material that allows shareholders to vote without being present ($1000; Daily Double!)
— Being misleading over a housing market investment cost this "group" $285 million when the SEC got wind of it ($1600)
— She brought down John Gotti; "You don't wanna mess with Mary Jo", said President Obama, in nominating this current SEC head ($2000)

SEC's ALJs: The Stakes Go Up!

Here's a memo from Wachtell Lipton's Wayne Carlin & David Anders: The U.S. Court of Appeals for the D.C. Circuit recently upheld the constitutionality of SEC administrative proceedings in Raymond J. Lucia Cos. v. Securities and Exchange Commission. This is a significant victory for the SEC. In recent years, the SEC has brought increasing numbers of enforcement actions as administrative proceedings, rather than in federal court. A number of litigants have fought back and attempted to challenge the SEC's choice of forum, in part because the administrative process affords much more limited opportunities to conduct discovery and lacks other protections that exist in federal court.

The pivotal issue presented is whether administrative law judges are "officers of the United States" within the meaning of the Appointments Clause of Article II of the Constitution, or whether they are "lesser functionaries." Officers of the United States must be appointed by one of the methods specified in the Appointments Clause, which is not the procedure followed for the SEC's ALJs. The Lucia court was the first court of appeals to consider this issue on the merits, and it concluded that the ALJs are not officers of the United States, thereby rejecting the argument that they are improperly appointed. While other parties may continue to litigate this issue in other circuits, the Lucia decision will likely be influential and will be viewed by the SEC as a vindication of its increased use of the administrative forum.

A decision issued on August 5 by the SEC sitting as an appellate tribunal illustrates some of the perils of the administrative process. In the Matter of John J. Aesoph, CPA and Darren M. Bennett, CPA . The Commission upheld an ALJ's determination that a partner and a senior manager from a Big 4 audit firm engaged in improper professional conduct in their audit of a regional bank in 2008 and 2009. The ALJ had imposed time-limited suspensions from practicing before the Commission, for periods of one year for the partner and six months for the senior manager. The two respondents appealed the decision on the merits to the Commission. In a cross-appeal, the Division of Enforcement argued that the partner should be suspended for three years and the senior manager for two years.

The Commission found that both respondents had engaged in improper professional conduct. In addition, by a 2-1 vote (with two continuing vacancies on the Commission), the Commission determined to impose stiffer sanctions on appeal than its own Division of Enforcement was seeking. The Commission denied both accountants the privilege of appearing or practicing before it, with a right to re-apply for reinstatement (after three years and two years, respectively). Enforcement had not sought a re-application requirement to follow the period of suspension. As Commissioner Piwowar explained in dissent, this requirement can add years to the process of reinstatement, thus making the impact on the respondents much more severe.

With the decision in Lucia, the trend of more cases in the administrative forum is likely to continue. Proceeding administratively also gives the Commission the ability to advance its programmatic goals more directly than it may be able to do in federal court.

Our Revised "Non-GAAP Financial Measures Handbook"

Just revised for the new CDIs! By popular demand, this comprehensive "Non-GAAP Financial Measures Handbook" covers a challenging topic, from the basics to everything you want to know about Regulation G, Item 10(e) of Regulation S-K & Form 8-K's Item 2.02. This one is a real gem — 110 pages of practical guidance — and its posted in our "Non-GAAP Disclosures" Practice Area. Big HUGE hat tip to Joe Alley of Arnall Golden Gregory for revising this beast!

Our New "Form S-8 Handbook"

Spanking brand new. By popular demand, this comprehensive "Form S-8 Handbook" covers the entire terrain, from share counting & filing fees to updating prospectuses & deregistration. This one is a real gem — 69 pages of practical guidance — and its posted in our "Form S-8″ Practice Area.

Our New "Best Efforts Offerings Handbook"

Spanking brand new. By popular demand, this comprehensive "Best Efforts Offerings Handbook" covers Rule 10b-9 and min/max offerings, a topic rarely covered in any deals-related treatise. This one is a real gem — 24 pages of practical guidance — and its posted in our "Best Efforts Offerings" Practice Area.

More on "The Mentor Blog"

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

— Books & Records: Private Company Employees Get Smart
— Advancement of Legal Fees: "Fee on Fee" Awards
— NASAA: Proposed Policy on Electronic Offering Documents & E-Signatures
— SEC Enforcement: Financial Fraud Cases
— Internal Controls: Leads to Auditor Opinion-Shopping?
— IPOs: Common SEC Comment Letter Issues
— Survey: 50% Evaluated Non-Management Strategies
— Directors Survey: 50% Evaluated Non-Management Strategies
— Women in C-Suite Boost Profitability
— XBRL Guidance & Validation Rules Anticipated Later This Year
— CEO Succession Planning Disclosure Seems to Matter
— Hedge Fund Activism: CEO & CFO Turnover Spike
— IPOs: Common SEC Comment Letter Issues
— Directors Survey: 50% Evaluated Non-Management Strategies
— Women in C-Suite Boost Profitability
— XBRL Guidance & Validation Rules Anticipated Later This Year
— CEO Succession Planning Disclosure Seems to Matter
— Delaware Limits Reach of Its Jurisdiction Over Foreign Corporations
— Companies as Whistleblowers
— ESG: Water Disclosures
— Enforcement: Is the SEC Really Going After Unicorns?
— Cyberliability: Commercial Insurance Policies Might Cover
— Ten Tips for Board Engagement in Company Strategy
— Internal Audit Outsourcing: Benchmarking & Guidance
— SEC Filings: Early Detection of Red Flags?
— Cyber Diligence: Rating Service Firms
— Survey: Over 60% of Compliance Officers Meet with Board Quarterly
— How to Mitigate Audit Fee Increases

People: Who's Doing What & Where

Prohibited? Using the SEC's Logo

Wow, Broc was shocked to check the "SEC Staff Alumni" group that he created on LinkedIn a while back on a whim — and see that it now has over 900 members. Anyone is free to join. Meanwhile, he created this "Securities & Exchange Commission Memories" group on Facebook about two years ago — it's a place where you can see old pictures, hear stories and reminisce about old friends who have passed. Broc believes it's the only group on Facebook devoted to SEC alumni & staffers.

One of the first members to join his LinkedIn group urged me to use the SEC's official logo as the group's logo. He refused as he presumed the SEC has trademarked their logo (with the Patent & Trademark Office; or maybe federal agencies don't even need to bother doing that as it's presumed to be trademarked) and who knows what other laws would be violated if a logo looked too similar to a federal agency's. But Broc does note that rampant use of federal agency logos is happening all over the Web (eg. this Forbes article uses the SEC's logo)...

Sunshine Act: SEC's Quorum Rule Helps to Keep Rulemakings at a Near Standstill

Broc loves blogging about the Sunshine Act. As he's blogged before, the SEC has a quorum rule that has the end result that a single Commissioner can refuse to show up & effectively veto a Commission action when the Commission has three sitting Commissioners or less. Which is the case for the foreseeable future since the Senate has failed to confirm the two folks waiting to be confirmed since last year.

Here's an excerpt from this recent WSJ article about how the quorum rules vary at the federal agencies:

Not all short-handed federal agencies are as hobbled by the restrictions of a 40-year-old open-government law as the top U.S. overseer of derivatives. The Commodity Futures Trading Commission's big-sister agency, the Securities and Exchange Commission, is similarly short-handed, with three of five slots occupied. But the top markets cop gets around the government in the Sunshine Act hitch largely because the law allows regulators to come up with their own definition of a quorum—the number of commissioners required to be present for their agency to act on a matter.

So the SEC came up with a special "quorum" rule, which says no decision can be made without at least three members present—if three is the number of commissioners in office. If the agency drops to only one or two commissioners, that is enough for a quorum, the rule says.
That creates its own complexities: By simply not showing up to a vote, a dissenting commissioner can block the agency from acting altogether. This effective veto power is complicating what is likely Mary Jo White's final year as SEC chairman and could leave undone a raft of rules on issues that tend to split the commission along party lines.

The Sunshine Act was meant to prevent regulators from crafting deals in proverbial smoke-filled rooms. The law prohibits a majority of commissioners at government agencies from "deliberating" on policy matters outside of a public meeting.

At the depleted CFTC—where two of the five slots on the commission have been vacant since August 2015 due to stalling in Congress—two sitting commissioners now make a majority. And because it is a blurry line between discussing policy and deciding it, the three commissioners largely avoid interacting directly. Commissioners rely on their aides to hammer out deals, slowing down deliberations by weeks.

Conference Calendar

What's New on Our Websites

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

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