June 21, 2010

Course Materials: Nasdaq Speaks ’10 – Latest Developments and Interpretations

Tune in tomorrow for the webcast – “Nasdaq Speaks ’10: Latest Developments and Interpretations” – to hear the latest practical guidance from five senior Nasdaq Staffers and Suzanne Rothwell of Skadden Arps, who will be discussing everything from the latest rules changes to whom do you call to resolve an issue, and much more. Please print out these Course Materials before you tune in.

If you’re not yet a member of, try a “Half Price for Rest of ’10” No-Risk Trial today!

Nasdaq’s New Requirement: Prompt Notification of Any Noncompliance with Governance Listing Standards

Recently, Nasdaq amended its corporate governance listing standards – specifically Nasdaq Stock Market Rule 5625 – to provide that, effective a week ago (ie. June 13th) companies listed on the Nasdaq Stock Market will be required to provide Nasdaq with prompt notification after an executive officer becomes aware of any noncompliance with Nasdaq’s corporate governance requirements, not just “material” noncompliance. This change conforms to an identical change recently made to the NYSE rules. I’m sure the Nasdaq Staff will explain this change during tomorrow’s webcast…

Senate Introduces Revised Carried Interest Taxation Bill

Here is news drawn from this Kirkland & Ellis memo:

Last Wednesday, the Chairman of the Senate Finance Committee introduced a revised carried interest bill that would raise the effective tax rate on net carried interest income in some cases and lower it in others. Under the revised Senate bill, 75% of an investment professional’s carried interest net income would be treated as compensation ordinary income (“OI”) beginning January 1, 2011. Previous House and Senate bills would have treated only 50% of carried interest net income as OI for 2011 and 2012, and a prior Senate bill would have treated only 65% as OI for 2013 and later years.

In a taxpayer-favorable change, the revised Senate bill would treat only 50% of an individual’s net carried interest income as OI to the extent the income relates to an asset (e.g., stock in a portfolio company) held for at least 5 years. This reduced 50% OI recharacterization rate would also apply (subject to extremely opaque legislative language) to an individual’s gain from sale of an interest in an investment services partnership/LLC (the so-called “enterprise tax”) held by the selling partner for at least 5 years to the extent the gain is attributable (1) to an underlying partnership/LLC asset held for at least 5 years (or to all of the gain on such a sale if “substantially all” of the partnership/LLC assets have been held for at least 5 years) and (2) generally to goodwill of the partnership/LLC.

For carried interest income that otherwise would have been taxable as long term capital gain, this bill would produce an effective individual federal income tax rate (before taking into account any Medicare tax) of 34.7% for gain not qualifying for the 50%-5-year recharacterization rate (and hence subject to 75% recharacterization) and 29.8% for gain qualifying for the taxpayer-favorable 50%-5-year recharacterization rate.

– Broc Romanek