March 12, 2004

“Conduct of the Annual Meeting”

We have posted a transcript from last week’s popular webcast regarding Conduct of the Annual Meeting.

Real-Time Disclosure is Here!

Yesterday, the SEC adopted new 8-K requirements that represent a fundamental change in the disclosure framework, moving toward the real-time reporting framework that Harvey Pitt first envisioned way back before Enron and SOX. There are quite a few changes in the final rules compared to the proposal, including 4 – rather than 2 – day filing deadlines (with no provision for an extension of the deadline).

There are 8 new items in 8-K, 2 existing items are expanded and 2 items are transferred from the periodic reports. There is a safe harbor from Rule 10b-5 for 7 of the new items – and the safe harbor extends only until the due date of the next periodic report for the relevant period in which the 8-K event occurred. Non-binding merger letters of intent are not required to be disclosed.

As the press release from the SEC bears out, this really could be a dramatic change in philosophy – one Commissioner said that bad information is worse than delayed information. However, early analysis of the new rules indicates that companies may still decide to hold off on making disclosure until they are ready to make complete disclosure – so they might miss the 4 day deadline by a few days and take a risk (rather than giving incomplete information to the market and taking a bigger risk).

For all companies, the effective date of the new rules is August 23, 2004 – so it takes effect after the 2nd quarter 10-Q deadline for calendar year companies. Five law firms already have put out memos on this SEC action – see B.26 of our “Sarbanes-Oxley Law Firm Memos.”

Securities Settlements and Myth of Opting-In

2003 was a historic year for securities settlements – and there is a trend for some institutional investors to “opt out” of class actions lawsuits. This effectively means that companies are faced with simultaneous class actions. Learn more from fellow blogger, Bruce Carton on 2003 Securities Settlements and Opting Out of Class Actions.