May 6, 2011

Corp Fin Begins to Comment on Dodd-Frank Disclosures

Recently, Anne Cotter of Leonard Street & Deinard blogged the following in the “ Blog“:

The SEC has begun to issue comments on Dodd-Frank disclosures included in SEC filings. While perhaps the comments to date are not great in number, they demonstrate the SEC is capable of asking difficult questions about the impact of Dodd-Frank on an issuer’s operations. We recommend that issuers consider the impact of Dodd-Frank when preparing their Form 10-Ks and other disclosure documents. The more significant comments we noted are set forth below.

FXCM Inc.: The SEC comment stated in part “Based on your description of your CFD business in the prospectus, it appears that the CFDs would fall within the definition of swap under the current language of Section 206A of Gramm-Leach-Bliley and would fall within the definition of a swap under Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Please explain in a detailed legal analysis how your proposed plan of business would operate under both the federal securities law and the Commodity Exchange Act.”

The issuer’s response, in part, stated “To the extent that CFDs were deemed to be swaps, futures, forwards or other instruments over which the CFTC has jurisdiction or will, as a result of the Dodd-Frank Wall Street Reform and Consumer Protection Act, have jurisdiction in the future, the CFDs offered and sold by the Company’s non-U.S. subsidiaries would be fully outside of such jurisdiction since they are offered exclusively outside the U.S. and exclusively to non-U.S. persons. . . [citations omitted] Further, Congress provided in Dodd-Frank that the CFTC’s jurisdiction over swaps would not generally reach swap transactions outside the U.S. Specifically, Dodd-Frank provides that the provisions of the Commodity Exchange Act relating to swaps shall not apply to transactions outside the U.S. unless they ” have a direct and significant connection with activities in, or effect on, commerce” in the U.S. or contravene rules promulgated by the CFTC to prevent the evasion of provisions of the Commodity Exchange Act related to swaps. Section 722(d) of Dodd-Frank (to be codified in Section 2(i) of the Commodity Exchange Act).”

Randgold Resources Limited: The SEC comment stated “We note your operations in the Democratic Republic of the Congo (DRC) produce gold which is defined as a conflict mineral in the recent Dodd-Frank Wall Street Reform and Consumer Protection Act. With a view toward possible disclosure, tell us whether or not your mining operations acquire or purchase gold and/or other conflict minerals from local mining companies and/or artisanal miners.” The issuer responded “The Company respectfully advises the Staff that the Company’s Kibali Project in the Democratic Republic of the Congo is a development project which is currently at the feasibility stage, and consequently is not yet an operating mine and does not produce any gold. Furthermore, the Company does not purchase gold or other conflict minerals from any local mining companies and/or artisanal miners.”

First Horizon National Corporation: This issuer responded to a comment requesting the issuer provide a “more robust discussion of your trust preferred loans.” In part the issuer’s response stated “Since the vast majority of trust preferred issuers to which FHN has extended credit have less than $15 billion in total assets, the passage of the Dodd-Frank Act is not expected to significantly affect future payoff rates for these loans.”

A Transcript of Berkshire Hathaway’s Loooong Annual Meeting

Most companies hold annual meetings that are over in a manner of minutes. Berkshire Hathaway is an anomaly was its annual meeting is the cause for pilgrimages for 30,000 investors to Omaha every year. Thousands – if not millions – in merchandise is sold at the event. With a hat tip of Jim McRitchie’s, here is a 24-page transcript of some of the remarks made by Warren and Charlie Munger from the all-day event.

Francine McKenna of re:theauditors also made the trip this year and here is her blog about the event (and here’s a piece from Francine raising questions about the format of journalists screening the questions submitted). The Q&A period was held during the first 7-plus hours of the meeting, with the formal business being covered during the last half hour (which many in the crowd decided not to stay for)…

The SEC’s Foreign Private Issuer Stats

Here’s some good stuff from Vanessa Schoenthaler and her “100 F Street Blog“:

Recently, the SEC released its updated list of registered and reporting foreign private issuers for the year ended December 31, 2010. Of the 970 issuers accounted for approximately:

– 35.8%, or 347 issuers, were organized in Canada;

– 12.9%, or 125 issuers, were organized in the Cayman Islands;

– 7.6%, or 74 issuers, were organized in Israel; and

– 5.0%, or 49 issuers, were organized in the British Virgin Islands;

The remaining 38.7 % of issuers were organized in 47 different countries.

Most foreign private issuers, 46.5% of them, were listed on the NYSE/Amex/Arca markets, 27.1% were listed on the Nasdaq markets and the remaining 26.4% were quoted in the over the counter markets.

By the way, SEC Chair Schapiro already has provided the first in what is likely a long line of testimonies before Congress on the SEC’s 2012 budget even though the agency’s 2011 budget was just approved. She wants to add over 700 new Staffers for fiscal ’12…

– Broc Romanek