February 3, 2004

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SEC Speaks at Northwestern’s San Diego Program

We will be posting notes from this popular conference in the next day or two. One item that had the audience talking was the remarks from SEC Enforcement Director Steve Cutler. Steve stated that he was concerned about the granting of options at a time when a company was aware of a potentially positive event that had not yet been publicly disclosed. He acknowledged that this did not violate insider trading laws; rather it raised disclosure issues.

The audience asked questions but Steve was unable to provide much guidance – so this is an issue to watch (since it was unclear if Steve realized that options normally are granted before disclosure about them is made). For example, one question was if a preventive cure could be a set date for option grants arranged in advance. The answer was “no,” because this was not an insider trading issue and thus could not be cured with a Rule 10b5-1 plan for granting options.

SEC Continues in Growth Mode

Yesterday, the SEC released its request to Congress for its 2005 budget – $913 million (which includes $20 mm owed from last year). This amount is 12.5% above the amount recently received by the SEC for fiscal 2004. This budget request – the first crafted by Chairman Donaldson since his arrival in February 2003 – would permit the SEC to hire 106 new employees and is double the SEC’s 2002 budget. Good thing the SEC will be moving into a new building in a year or so…