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As the rumors predicted, the SEC will hold an open Commission meeting next Wednesday – July 25th – to propose some version of shareholder access; adopt a definition of “significant deficiency”; approve the PCAOB’s AS #5; and issue a concept release on IFRS.

Is the SEC Allowed to Float Drafts of Proposals?

As Dave blogged last week, the WSJ reports that a draft of the SECs’ shareholder access proposal has been making the rounds – but until we see what is announced at the open meeting, it is hard to know what version of it will actually be proposed.

Some members have asked whether the SEC is permitted to circulate a draft outside of the SEC before the Commission meets to formally propose a rule. I guess that depends on one’s interpretation of the Administrative Procedures Act (which is the Act that governs rulemaking by the federal government). I am far from an APA expert, but I think that the biggest issue is not so much that someone at the SEC gave a copy of a draft proposal rule to someone – the issue may be that the SEC did not process any comments received on a draft in accordance with the APA (ie. make them publicly available). Every so often, you will see a memo briefly summarizing a meeting between SEC Staffers and outside parties that is posted on the public comments section of the SEC’s website; this is done to comply with the APA.

On the other hand, some members have distinguished between talking about the general concepts with outside parties (as being generally okay) – from releasing specifics about a proposal even before the Commission has voted on it. One member points out that “leaks” are nothing new and occurred way back in the day when the tender offer rules were revised in the early ’80s – and that this resulted in some quasi-whistleblowing activity. I suspect that floating drafts goes on more than we know – but I would bet the final product probably is the better for it…

IRS Agents: Reading SEC Comment Letters (and Responses)?

McGuire Woods put out this interesting client memo earlier this week:

“IRS officials continue to explain how the IRS will use FIN 48 Disclosures and SEC correspondence in examining taxpayers. As previously reported (see “IRS Releases Internal Memoranda on FIN 48“), the IRS is studying whether its policy of restraint on tax accrual workpapers remains sufficient in the new world of uncertain tax position disclosures. For now, the policy of restraint remains in effect with respect to FIN 48 workpapers. Nevertheless, the IRS is forging ahead with training examiners to more effectively audit taxpayers using FIN 48 Disclosures, as well as publicly available Securities and Exchange Commission (SEC) correspondence on those disclosures. In fact, FIN 48 Disclosures are the “centerpiece” of this year’s training for IRS agents, according to Robert D. Adams, Senior Industry Advisor to LMSB Division Commissioner Deborah Nolan.

In addition to the FIN 48 Disclosures, IRS agents are being trained on reading SEC comment letters issued to taxpayers and the accompanying taxpayer responses. Some disclosure filings made to the SEC are selected for review. SEC staff may provide filers with comments on these filings in situations in which the SEC believes the filings could be improved or enhanced. Once the SEC reviews are completed, the comment letters and responses are made available online in 45 days. Although the purpose of SEC filings is to give investors the information they need to make informed decisions about the financial position of companies, including risks associated with tax positions, comment letters and responses with respect to these filings may provide ‘helpful’ tax information to IRS agents.”

Last Chance: Early Bird Discount Expires Tomorrow

For those watching via webcast, don’t forget that the Early Bird deadline expires tomorrow – Friday, July 20th. So this is your last chance to take advantage of a nice discount on the Member Appreciation Package to catch these October Conferences by video webcast:

– “Tackling Your 2008 Compensation Disclosures: The 2nd Annual Proxy Disclosure Conference” (10/9)
– “Hot Topics and Practical Guidance Conference: The Corporate Counsel Speaks” (10/10)
– “4th Annual Executive Compensation Conference” (10/11)

We know that next proxy season will be as challenging as this past one, as the SEC continues to tweak its rules or interpretations of them – and as companies tweak what they disclosed after they see what emerging best practices are. So take advantage of this discount while you can.

We promise that these Conferences will be as practical as they were last year. These Conferences focus on developing practical skills with proven effectiveness. If you have questions, please contact me – or our HQ at info@thecorporatecounsel.net or 925.685.5111.

– Broc Romanek