November 21, 2011

Corp Fin Meredith Cross Speaks at ABA’s Fall Meeting

On Friday, I attended the always useful “Dialogue with the Director” session during the ABA’s Business Law Section’s Annual Fall Meeting. Here are a few notes:

– It was standing-room only in the room, quite a difference from recent years. This was surprising given the dearth of recent final rulemakings – so my take it that this may be a more of a byproduct of fewer deals rather than increased interest in what is happening at the SEC.

– Meredith noted she recently participated in her 8th testimony on the Hill during her tenure, which is quite a lot. Her latest was a Senate Banking subcommittee hearing last week where all six Division Directors and the head of OCIE gave updates about their activities. Here is the testimony given during that hearing.

– Corp Fin has finalized most of its required Dodd-Frank rulemakings that had a deadline. They are now actively writing proposals and final rules for the topics that they are still required to tackle under Dodd-Frank in the wake of the SEC revising its processes to ensure future rulemakings comply with the dictates of the court’s decision in the proxy access lawsuit.

– For these remaining rulemakings, there are no timetables yet for when they would be proposed or finalized – but Meredith noted that Senator Menendez pressed her during the hearing last week to propose the pay disparity rules by the end of the year, noting that Corp Fin would try mightily to meet that timeframe but there were no promises (my note: remember that even if Corp Fin made a recommendation to the Commission on a rulemaking, it is out of the Division’s control as to when the Commission acts upon it). There is also the compensation committee/advisor proposal that is outstanding – even when the SEC finalizes its rules on that, the exchanges then have to revise their listing standards.

– Any no-action requests related to shareholder proposals that deal with private ordering of proxy access will be processed within Corp Fin in the normal course. Meredith intends to read them herself too.

– On proxy plumbing, a proposal regarding proxy advisors would likely be the first output from the concept release commentary. Meredith reminded the audience that the SEC’s jurisdiction in this area only extends so far – so that an item like conflicts of interest with a company or proponent could be the subject of a rulemaking, but that others like lack of competition within the industry is not. Regarding complaints that proxy advisor recommendations are made often based on inaccurate information, Meredith noted that there didn’t seem to be much evidence to support those claims – rather, those situations typically involved disagreements based on judgment calls.

– The SEC likely won’t conduct rulemaking in areas where Congress has a bill floating right now, such as restrictions on general solicitation and Section 12(g) thresholds.

Yesterday, this NY Times article slammed the way that law schools teach and noted how “for decades, clients have essentially underwritten the training of new lawyers, paying as much as $300 an hour for the time of associates learning on the job.”

SEC Releases Long-Awaited IFRS Comparison Papers

As described in this article on “Accounting Today,” the SEC Staff released two papers a few days ago. One 52-page paper compares IFRS with US GAAP and the other 65-page paper analyzes IFRS in practice at foreign companies. FEI’s blog includes some comments from the SEC’s Chief Accountant Jim Kroeker related to these papers.

November-December Issue: Deal Lawyers Print Newsletter

This November-December issue of the Deal Lawyers print newsletter was just sent to the printer and includes articles on:

– Nevada: Delaware of the West?
– Caveat Investor for Private Equity: Pointers for Investing Additional Capital
– Delaware Chancery’s $1.3 Billion Damage Award: 19 Take-Aways

If you’re not yet a subscriber, try a “free for rest of ’11” no-risk trial to get a non-blurred version of this issue on a complimentary basis.

– Broc Romanek