December 19, 2008

ABA’s Blawg 100: We Finally Made It!

After repeatedly being passed up for any sort of blog awards (the blog is six and a half years old!), Dave and I finally made the “ABA Blawg 100″ list. We are grateful for the recognition, particularly since we know that the corporate & securities law community does read our stuff (for some reason, the annual blog lists typically are dominated by law-marketing oriented blogs and solo practitioners).

Now, if we can only get Jesse Brill recognized in the “Directorship 100.” The list purports to be about the 100 “most influential players in corporate governance” – but there are many on the list that have never expressed a public opinion about their governance views (and even a few who are not a friend of good governance).

Not only is Jesse not afraid to take a position that might not be popular with his corporate colleagues, he has developed practical tools and processes to effectuate change towards responsible executive pay practices. He pushed tally sheets until they became mainstream – and now he has pushed internal pay equity, wealth accumulation analyses and hold-through-retirement provisions so that they soon also will become the norm (many Johnny-come-lately organizations are rushing to issue papers about these now hot topics). Over the years, he has convinced some big name CEOs (egs. John Reed, Jamie Dimon) to speak at our annual Conference about responsible pay practices, a task much harder than you can imagine!

Being on any of these lists is certainly nice, but I would take them all with a grain of salt. That’s why we have never created any sort of lists (despite the temptation to do so, as it generates a lot of media attention – we all sure do love our lists).

The FASB’s “Alternative Model” for FAS 5 Loss Contingencies

On Monday, the FASB issued its long-awaited “alternative model” for disclosures of loss contingencies under FAS 5. Described in this handout from a meeting of the FASB Advisory Council, the model is characterized as “a collection of ideas that the staff would like to field test” – and is not intended to represent either the FASB Staff’s or the Board’s proposal for a final statement.

Her Majesty’s Government: Corp Fin Grants Schedule 13D Relief for UK’s Investment in the Banking Sector

From the Blog: Last week, Corp Fin issued this no-action letter entitled “Her Majesty’s Government.” Is that the coolest name for a government response or what? It’s so “James Bond.”

Corp Fin’s relief allows the United Kingdom to file an “Alternative” Schedule 13D when the UK Treasury takes ownership interests in the UK banks that is taking place due to the recapitalization of the UK banking industry, a recap “scheme” blessed by the Bank of England and the UK Financial Services Authority. For example, the UK Treasury is acquiring a 57.9% interest in the Royal Bank of Scotland’s holding company.

The “Alternative” Schedule 13D is intended to dovetail with the notification required to be filed with the FSA under DTR 5.1.2R (this is in Chapter 5 of the FSA’s “Disclosure & Transparency Rules”). Under Corp Fin’s relief, this alternative 13D will consist of a cover page, the UK notification and the 13D signature page. A form of the alternative Schedule 13D is attached as Annex I of the incoming letter of the no-action request – and here is the alternative Schedule 13D filed by the Royal Bank of Scotland.

Why Hasn’t the US Treasury or Fed Filed Any Schedule 13Ds?

What about Schedule 13Ds filed by the US Treasury or the Federal Reserve for their investments in AIG, Fannie, Freddie, etc.? We looked pretty hard for Schedule 13Ds filed by the US government and didn’t find any. We aren’t the only ones wondering where these filings are – Professor Davidoff mused about this also a while back.

Just like the Professor, at first, the only rationale I could think of was that the Treasury figures nobody is going to sue it for not meeting filing requirements. But then I remembered Section 3(c) of the Exchange Act, which provides an exemption from the provisions of the Exchange Act for “any executive department or independent establishment of the United States, or any lending agency which is wholly owned, directly or indirectly, by the United States, or any officer, agent, or employee of any such department, establishment, or agency, acting in the course of his official duty as such….” Depending on the nature of the entity making the investment, it may be able to rely on Section 3(c) to avoid filing beneficial ownership reports. So that may be what is being relied upon…

Congrats to Betsy Murphy, who was named the SEC’s Secretary. Betsy has served in Corp Fin for many years, including as the head of rulemaking. She will get a great asset to the SEC in her new position!

– Broc Romanek