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At the “Dialogue with the Director” session at last week’s ABA Spring Meeting in Boston, Corp Fin Director Meredith Cross indicated that the Staff plans to withdraw Regulation S-K Compliance and Disclosure Interpretation Question 116.08, which was issued last month to say that Instruction 3 to Item 401(a) of Regulation S-K only applied in the case of proxy statements, such that Item 401(a) and Item 401(e) disclosures about a director whose term would not continue past the annual meeting would need to be provided directly in Part III of Form 10-K or incorporated by reference into Part III from the proxy statement in order to satisfy the Form 10-K disclosure requirements. Going forward, the Staff’s position will be that biographical information for a non-continuing director need not be included in a proxy statement incorporated by reference into Part III of Form 10-K (in reliance on Instruction 3 to Item 401(a)), however an issuer that is including the Part III information directly in the Form 10-K (and thus does not have the benefit of Instruction 3 to Item 401(a)) would have to include the Item 401(a) and (e) information about the non-continuing director in the Form 10-K. Revised Regulation S-K C&DIs are expected out soon.

FINRA to Re-propose Rules on Broker-Dealer Participation in Private Placements

Also at last week’s ABA Spring Meeting in Boston, FINRA representatives announced that the FINRA Board of Governors had approved a re-proposal of the recent proposal to expand Rule 5122 to govern all private placements in which a member firm participates. As this Morrison & Foerster memo notes:

The most critical proposed revisions for participation of broker-dealers in offerings of unaffiliated entities are:

– Eliminating the provision that 85% of the proceeds (i) be used for the business purposes disclosed in the offering document, and (ii) not be used to pay offering costs, commissions or other compensation to participating broker-dealers and their associated persons;

– Requiring disclosure of use of proceeds;

– Changing the date of filing of the private placement memorandum (“PPM”) to 15 days after either commencement or first offer (not first sale), in order to avoid affecting the capital formation process;

– Creating a new Rule 5123 to address participation of broker-dealers in offerings by unaffiliated entities, thereby leaving the provisions of current Rule 5122 in place (including the 85% use of proceeds provision) for participation in offerings by affiliated entities;

– Retaining the expanded definition of “participation” (from Rule 5110(f)(5)); and

– Possibly adding an exemption for M&A transactions.

More on “The Mentor Blog”

We continue to post new items daily on our blog – “The Mentor Blog” – for TheCorporateCounsel.net members. Members can sign up to get that blog pushed out to them via email whenever there is a new entry by simply inputting their email address on the left side of that blog. Here are some of the latest entries:

– More on “Are Auditors Becoming Irrelevant?”

– Enlightened Companies: Step Up and Co-opt the Fifth Analyst Call

-101 Suggestions for Corporate Law Students

– Study: The Latest IPO Trends

– A Governance Interview with Microsoft’s John Seethoff

– Dave Lynn