TheCorporateCounsel.net

Not surprising given the confusion right now in the Reg FD area, one member disagreed with some statements that I blogged about a few weeks back regarding the Flowserve settlement, particularly what corporate practice should be in light of it. Here is that member’s take:

“The facts and circumstances of Flowserve created a perfect storm of bad facts that resulted – appropriately – in an enforcement action. But it is not wise to make a blanket statement about the number of days after which one violates FD. Reg FD concerns selective disclosure of material information.

In Flowserve’s case, where it had previously lowered its guidance 3 times during the year, the fact that it was sticking with its prior guidance was material. Additionally, the timing was such that it was near the end of the period for which the guidance had been given.

I don’t know what analysts who covered the company were expecting, but it seems that they were expecting another lowering of guidance. These facts alone distinguish many other situations involving public company earnings guidance. If a company issues guidance at the beginning of the fiscal year and there is nothing to suggest that guidance could or should change, and depending on the history of the company maintaining or changing guidance, I would not find it an FD violation if there was a reaffirmation months later.

The facts of Flowserve also revealed that there was a failure to follow the company’s own stated policy and a long delay in filing an 8-K to disclose the reaffirmation. The subsequent denial by the two Flowserve executives of the reaffirmation was also a contributing factor to the result.”

To help clear up some of the uncertainty in this area, join us for a webcast -“The Latest Regulation FD Practices” – on Monday, May 2nd to hear John Huber of Latham & Watkins, Keith Higgins of Ropes & Gray and Stan Keller of Palmer & Dodge analyze how companies have reacted – and should be reacting – to the series of SEC Reg FD enforcement actions that have taken place over the past year, including the Flowshare settlement.

In the meantime, you can peruse the numerous law firm memos regarding Flowshare that we have made available in our “Regulation FD” Practice Area.

Recent Developments in Delaware Entity Law

Like last year, Lou Hering provides the lowdown on the latest Delaware law developments regarding LLCs and other entities in this interview.

SEC Intends to Delay Option Expensing

Today, the WSJ reports that the SEC intends to delay the implementation date of the FASB’s option expensing rule until next January, effectively giving them a six-month reprieve. It is reported that companies whose fiscal year starts from mid-year through year-end wouldn’t qualify for the delay.

If approved by the SEC (which would override the FASB), the delay would mark the second time that the implementation date has been delayed. Last year, the FASB voted to give companies six additional months, from last December until June 15, 2005, which is the effective date as it stands today.