April 24, 2012

Citi Gets Hit With Say-on-Pay Lawsuit in Record Speed: Before 8-K Filed!

As the bloggers on were quick to point out, Citigroup was hit with a say-on-pay lawsuit within two days of the revelation that it had failed to garner majority support for say-on-pay at its annual shareholders meeting last week. In fact, Citi’s Form 8-K reporting the vote results was filed on Friday – and the complaint was filed in the US District Ct.- SDNY on Thursday. The lawsuit was filed before the 8-K!

Here are pieces on this topic from:

Mike Melbinger’s “Copycat Say on Pay Lawsuits Quickly Follow Unfavorable Votes
Mark Borges’ “More on Citigroup
Mark Borges’ “More on the Citigroup Vote
Mark Borges’ “Citigroup Loses Say-on-Pay Vote
William Tysse’s “Citigroup sued after say-on-pay failure – more will be coming
Reuters’ “Citigroup CEO, Directors Sued For Outsized Executive Pay Packages

SEC Issues Warning to Crowdfunders

Yesterday, the SEC issued this warning:

On April 5, 2012, the Jumpstart Our Business Startups (JOBS) Act was signed into law. The Act requires the Commission to adopt rules to implement a new exemption that will allow crowdfunding. Until then, we are reminding issuers that any offers or sales of securities purporting to rely on the crowdfunding exemption would be unlawful under the federal securities laws.

Note that the SEC brought this enforcement case the week after the JOBS act was signed. In that case, the SEC charged a Silicon Valley man who raised millions for two Internet start-ups by falsely promising investors that his companies were on the verge of undergoing successful IPOs and were well on their way to becoming the “next Google.” With crowdfunding, look for these types of cases to swamp the SEC…

Lot of wild stuff going on, like the Wal-Mart revelations I blogged about yesterday on “The Mentor Blog.” Then yesterday, the SEC brought a fraud case against the former CEO of CalPERS – and as the complaint notes, another California fund refused to engage in the same activity as this CEO did. Based on the allegations in the complaint, there seems to have been serious fiduciary violations to the investors in CalPERS Fund, in addition to the fraud charges brought by the SEC. See Keith Bishop’s blog analyzing the situation.

SEC Approves Nasdaq Proposal for Alternatives to $4 Minimum Bid Price Test

As noted in this Cooley alert, last week the SEC issued this order approving a change to Nasdaq’s Capital Market listing standards to allow companies to list at $2 or $3 instead of the current $4 price. This allows companies that currently qualify for Amex to list on Nasdaq instead. Senior Nasdaq Staffers will be talking about this development – among many others – during the upcoming webcast. “Nasdaq Speaks ’12: Latest Developments and Interpretations.”

– Broc Romanek