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As Steve Quinlivan notes in this blog, a new Corp Fin CDI 141.05 (Securities Act Rules) indicates that companies may use IP addresses to effectively limit their offers to particular states or territories to qualify for Rule 147’s intrastate offering exemption:

In a new CDI, the SEC indicates it may be possible to use IP addresses to control internet communications so that offers are made only in one state and qualify for the intrastate exemption under Rule 147.  In Securities Act Rules CDI 141.05, Corp Fin states:

“Issuers could implement technological measures to limit communications that are offers only to those persons whose Internet Protocol, or IP, address originates from a particular state or territory and prevent any offers to be made to persons whose IP address originates in other states or territories. Offers should include disclaimers and restrictive legends making it clear that the offering is limited to residents of the relevant state under applicable law. Issuers must comply with all other conditions of Rule 147, including that sales may only be made to residents of the same state as the issuer.”

See also this Cooley blog, which addresses the practical implications of this CDI – i.e., the alleged difficulty in implementing these technological measures such that they serve as a reliable control.

SEC Charges Company With Accounting Fraud & Uses SOX Clawback

As described in this recent press release, the SEC charged Saba Software and two of its former VPs for an accounting fraud where management directed its Indian subsidiary’s consultants to falsify timesheets so that the company could hit its quarterly financial targets. Both the company and VPs agreed to settle the charges.

The SEC also used Sarbanes-Oxley’s Section 304 to claw back $2.5 million in incentive compensation and stock profits from the CEO, who was not charged with misconduct.

See also this Reuters article discussing the clawback, and noting SEC Enforcement Chief’s Andrew Ceresney’s remarks about the case, including the fact that it reflects “the SEC’s increased focus on financial reporting fraud” and underscores “the need for companies with offshore operations to have effective internal controls.”

Podcast: Shareholder Engagement on Executive Pay

In this podcast, Frank Glassner of Veritas discusses engaging with shareholders on executive pay, including:

– What do you think has caused the increase in shareholder engagement on executive pay issues?
– What are the advantages of engaging with shareholders?
– What are some of the pitfalls of engaging with shareholders?
– Is there a better than average method of engaging with shareholders?
– What would a best practice with shareholder engagement process look like, and what do you think companies should do?

– by Randi Val Morrison