July 28, 2009

Kick-Off: The SEC’s Investor Advisory Committee

Yesterday, after receiving only a handful of comments on its formation, the SEC’s new “Investor Advisory Committee” met for the first time. Run much like an open Commission meeting (a Commissioner even gave a speech), this inaugural meeting was available by webcast (here is the archive). Note the Committee even has its own web page.

In connection with the meeting, the SEC Staff prepared a briefing paper entitled “Possible Refinements to the Disclosure Regime,” which included discussion questions for these topics:

– Disclosure related to investment products & financial intermediaries
– Mutual fund point of sale disclosure
– Mutual fund/broker fee disclosure
– Disclosure to investors in 401(k) plans
– Environmental, climate change and sustainability disclosure
– Climate change and other environmental issues
– Social, governance and other operational matters

As an aside, the SEC adopted amendments to Regulation SHO yesterday to permanently implement more short selling restrictions. The SEC is continuing to consider proposals on a short sale price test and circuit breaker restrictions.

Zacharias v. SEC: DC Circuit Adopts Expansive Meaning of “Underwriter”

Below is recent analysis of a new case excerpted from this Davis Polk memo (which we have posted in our “Securities Act Liability” Practice Area):

In Zacharias v. SEC, the U.S. Court of Appeals for the District of Columbia Circuit affirmed an SEC order finding that two officers and directors of a public company and an unaffiliated third party engaged in a “scheme” to sell securities in violation of the registration requirement of Section 5 of the Securities Act, despite the fact that the only shares sold to the public were freely tradable shares owned by the third party.

The Court’s praise of the SEC decision as “a triumph of substance over form” and the reasoning of the case (as well as the result) stand in contrast to the recent decisions of three U.S. District. Courts that rejected the SEC’s claims of Section 5 violations in the hedging of “PIPEs” securities.

SEC Names Dan Goelzer as PCAOB’s Acting Chair

Yesterday, the SEC announced the appointment of Dan Goelzer to serve as Acting Chair of the PCAOB. A few weeks ago, Mark Olson announced his resignation as Chair which takes effect at the end of this week. Dan has served on the PCAOB’s board since the PCAOB was born. Here is the PCAOB’s press release.

– Broc Romanek