June 9, 2010

Corp Fin Issues 17 New CDIs (& Revises One and Withdraws Another)

On Friday, Corp Fin issued seventeen new Compliance and Disclosure Interpretations, revised another CDI and withdrew one. These are those changes:

Section 121A – Item 5.07 of Form 8-K – New Question 121A.02
Section 108 – Rule 0-11- New Question 108.01
Section 108 – Rule 0-11 – New Question 108.02
Section 111 – ’33 Act, Section 2(a)(11) – New Question 111.01
Section 125 – ’33 Act, Section 3(a)(9) – New Question 125.11
Section 139 – ’33 Act, Section 5 – New Question 139.31
Section 132 – Rule 144(d) – New Question 132.17
Section 164 – Rule 165 – New Question 164.01
Section 165 – Rule 166 – New Question 165.01
Section 212 – Rule 415 – Revised Question 212.21
Section 212 – Rule 415 – New Question 212.30
Section 212 – Rule 415 – New Question 212.31
Section 271 – Rule 701 – New Question 271.16
Section 115 – Form S-3 – New Question 115.16
Section 115 – Form S-3 – New Question 115.17
Section 115 – Form S-3 – Withdrawn Question 215.04
Section 101 – Reg FD Rule 100 – New Question 101.11
Section 117 – Item 402(a) – New Question 117.06
Section 119 – Item 402(c) – New Question 119.27

Does Reg FD Prohibit Directors from Speaking Privately with Shareholders?

One area that continues to generate a slew of misinformation from some practitioners is Reg FD. So I was happy to see Corp Fin issue this new CDI:

Question 101.11

Question: Does Regulation FD prohibit directors from speaking privately with a shareholder or groups of shareholders?

Answer: No. Regulation FD prohibits a company or a person acting on its behalf — such as directors, executive officers and investor relations personnel — from selectively disclosing material, non-public information to a shareholder under circumstances in which it is reasonably foreseeable that the shareholder will purchase or sell the company’s securities on the basis of that information. If a company’s directors are authorized to speak on behalf of the company and plan on speaking privately with a shareholder or group of shareholders, then the company should consider implementing policies and procedures intended to help avoid Regulation FD violations, such as pre-clearing discussion topics with the shareholder or having company counsel participate in the meeting.

In addition, because Regulation FD does not apply to disclosures made to a person who expressly agrees to maintain the disclosed information in confidence, a private communication between an independent director and a shareholder would not present Regulation FD issues if the shareholder provided such an express agreement.

FINRA Proposals: Conflicts of Interest and Fixed Price Offering Rules

As part of its initiative to incorporate the NASD’s rules into the FINRA Rulebook, FINRA recently issued two proposals. In this proposal, FINRA proposes to incorporate its conflict of interest rule – NASD Rule 2720 – into the Rulebook as Rule 5121 without change except for references to other rules.

And in this rule filing with the SEC, FINRA proposes to codify what are known as the “Papilsky” or “fixed priced offering” rules (NASD Rules 2730, 2740 and 2750) into the Rulebook as new Rule 5141. This proposal includes numbers of changes to the prior rules.

– Broc Romanek