October 6, 2015

D&O Questionnaires: Do You Need to Update for AS #18?

Each year about this time, I get questions from members about whether they need to update their D&O questionnaire (remember our “D&O Questionnaire Handbook“). That’s a tough question to answer so far this year as there hasn’t been a consensus yet about how to handle the PCAOB’s new Audit Standard #18 regarding related-party transactions (see our memos on AS #18).

From what I hear, the Big 4 auditors have not been forthcoming – or consistent if they are – about what they need from their clients in response to AS #18. In some cases, it appears that an independent auditor might ask a client to have D&O questionnaires elicit a list of all the members of an insider’s immediate family on the questionnaire so that the auditor can then search for transactions with those individuals. For info on how “related party” is defined for purposes of AS #18, see #8536 in our “Q&A Forum.” Give me your feedback – and stay tuned for more…

Nasdaq has released a bunch of “Top 10″ lists, such as the “Top 10 Frequently Asked Questions” and “10 Most Popular Staff Interpretations & Listing Council Decisions”…

SCOTUS & Insider Trading: Newman Stands!

As noted in this Paul Weiss memo, on the first day of the US Supreme Court’s 2015-16 term, SCOTUS declined take up the government’s petition for writ of certiorari in United States v. Newman, a landmark decision that dismissed indictments against two insider trading defendants. By declining to hear the petition, the Supreme Court ensures that the Second Circuit’s decision in Newman will remain binding in the Second Circuit and influential across the country as it has already had a significant impact on the law of insider trading.

Two of Newman’s holdings are particularly important: first, that the government must prove that a remote tippee knew or should have known of the personal benefit received by a tipper in exchange for disclosing nonpublic information; and second, that the benefits alleged by the government in Newman were not sufficient to support a conviction, as they were not sufficiently “consequential.”

Webcast: “Transaction Insurance as a M&A Strategic Tool”

Tune in tomorrow for the webcast – “Transaction Insurance as a M&A Strategic Tool” – to hear Dechert’s Markus Bolsinger, Aon Transaction Solutions’s Matt Heinz, Pepper Hamilton’s Jim Epstein, Norton Rose Fulbright’s Scarlet McNellie and Haynes and Boone’s George Wang discuss all the “in’s & out’s” as insurance in M&A transactions has gained in popularity.

– Broc Romanek