September 2, 2004

Getting Sued as Acquiror’s Counsel

There is a pretty interesting blog today in the Deal’s Guy Blog regarding a scary new case blaming acquiror’s counsel for lack of disclosure – here is an excerpt from that blog: “How many times have you delivered disclosure schedules that contained a one-line reference to a set of closing docs that evidence an otherwise complex transaction? In light of Vega, can you sleep at night knowing that you’ve “properly disclosed.” What happened to caveat emptor and opposing counsel’s obligation to its client to figure out what’s in that stack of documents?”

The Filing of Schedule 13Ds

As we head into the unofficial end of the summer, I thought I would ruminate about the latest doings by the colorful owner of the Washington Redskins – and they are not sport-related. Dan Snyder filed a Schedule 13D for Six Flags on Monday, noting that he had been buying up stock recently and intended to pressure management to make changes (it is noteworthy perhaps that well known M&A lawyer, Dennis Block, was hired to prepare the 13D).

The next day, long-time 11% owner Bill Gates (yes, that Bill Gates) files a 13D also expressing displeasure with management and noting that he might seek a board seat. In the press, these two business giants say they are not working in concert, which is believable given that Gates has owned his shares for five years (he had filed a Schedule 13G and amended it three times). Whatever they do, I hope they don’t get rid of the old bald dude from those commercials…

Nasdaq Rule 2710 Clean-Up

For those of you wanting to be as accurate as possible, here are some corrections to Rule 2710 – either to the Rule itself or the CCH version of it:

1.In the CCH looseleaf text of Rule 2710, as amended, the Fifth Exception for Purchases Based on a Prior Investment History states that a prior investment must be at least one year before the filing of the offering – but the right language is “two years.” The two years was in the NTM04-13 announcing adoption of the rule, in the SEC approval order, and in Amendment No. 9 to the filing (the last amendment with the full text filed). The error stems from the second publication for comment which erroneously included one year. (I only wish it were one year, to be consistent with new Rule 2790.)

2. The errors in the published text of the amended rule in Notice to
Members 04-13 have been corrected in the CCH looseleaf version, which are that:

“a. the Listed Securities definition covers markets registered with the SEC pursuant to Section 11A of the Securities Exchange Act of 1934, i.e., Nasdaq; and

b. the exemptions from the lock-up requirements for securities that are not an item of value cover Listed Securities.

2. The NASD staff takes the position that the availability of the S-3/Rule 415 exception from filing is determined at the time of each takedown off a shelf registration (of course, based on the pre-1992 standards for the form). Thus, a shelf registration could come into and out of compliance with the filing exception during the life of the shelf.”