July 1, 2005
NASD Fairness Opinion Proposals
The NASD has proposed new Rule 2290, which requires certain disclosures and procedures for the issuance of fairness opinions by NASD member firms. This proposal follows up on the request-for-comment issued by the NASD in November 2004.
The disclosure requirements would require opinions to be included in a proxy statement to disclose certain information, including: (1) any payment or compensation that the member will receive that is contingent upon the successful completion of the transaction; and (2) whether the fairness opinion was approved or issued by a fairness committee following the procedures required by the proposed NASD rules.
The procedural requirements would require that any member issuing a fairness opinion have procedures regarding the approval of fairness opinions, including: (1) the process to determine whether the valuation analyses used in the fairness opinion are appropriate for the type of companies that are involved in the transaction; and (2) the process to evaluate the degree to which the amount and nature of the compensation from the transaction benefits any individual or class of officers, directors or employees relative to the benefits to shareholders of the company, is a factor in reaching a fairness determination.
Check out our Fairness Opinion Practice Area on DealLawyers.com for more information on this.
SEC Tidbits
The SEC recently published its Performance Budget for 2006, which aligns the goals and measures developed for the SEC’s Strategic Plan for Fiscal 2004-2009 with the SEC’s budget request. It contains interesting data points, such as:
– In 2004, 84% of responses to exemptive, no-action letter, and interpretive requests are issued within six (!) months.
– The number of new foreign private issuers registering under the 1933 and 1934 Acts decreased from 130 in 2001 (with $267 billion securities registered) to 63 in 2004 (with $146 billion securities registered).
– The agency turnover rate has decreased from 9.1% in 2001 to 6.3% in 2004.
Submitted by Julie Hoffman