November 16, 2005

The NASD’s Underwriting Review Process for WKSI Shelf Offerings

During the PLI Securities Law Institute, Elisse Walter of the NASD addressed an open issue regarding WKSI shelf offerings and NASD Rule 2710: In the near future (but not likely to happen before the December 1st effective date of the ’33 Act reform), the NASD’s review procedures are likely to be modified so that these offerings are cleared within one day of the date they are filed – this is good news because a full review otherwise could take weeks. This change won’t affect shelf offerings exempt from the filing requirements of Rule 2710 that are not subject to Rule 2720.

While it will still be necessary to file prospectus supĀ­plements and post-effective amendments required to be filed under Rule 2710, the NASD likely will not require that such materials be approved prior to use (but the NASD likely will “spot check” these materials for compliance). Here are more notes from that PLI panel, including comments from Elisse on free writing prospectuses and the NASD’s outstanding proposal on fairness opinions.

Looking for SEC Staffer Phone Numbers?

Now that the SEC’s HQ has relocated, I’ve been fielding requests from members looking for an updated SEC Phone Directory with new phone numbers. Unfortunately, I believe the 2004 SEC Phone Directory is the latest.

Although not as useful, the SEC does have a personnel locator phone number that you can call: (202) 551-6000. This number leads to an automated function or you can opt out to speak with an operator. I will let you know when an updated SEC Phone Directory is available.

Gemstar Wants Prison for Ex-CEO

According to this article, Gemstar-TV Guide International has filed a victim’s statement with the Los Angeles federal probation office seeking harsher punishment for fired CEO Henry Yuen, who presided over a $248 million accounting fraud. The former CEO’s plea agreement with the Justice Department calls for a proposed six-months in home detention, a $250,000 fine and a $1 million charitable contribution.

Victims of crimes have the right to protest proposed plea bargains if they contend the punishment isn’t adequate. Companies rarely file such statements – but this illustrates how companies should take steps now to deal with bad actors before the going gets rough (egs. revisit employment agreements and D&O insurance and indemnification arrangements).