October 4, 2012

Apple in the Crosshairs: Reg FD, Privacy, Etc.

Part of being the highest profile company in the land means that more attention is paid to what you do. From a compliance standpoint, Apple hasn’t always embraced that attention. For example, the fact that their announcements might move markets (eg. Steve Jobs health) – or even perhaps what they say about their financial performance during product announcements – as illustrated by this recent blog by Gus Schmidt of Gunster entitled “Did Apple violate Regulation FD at its iPhone 5 release conference?“.

In addition, as this blog notes, Apple recently received a shareholder proposal asking the company to publish a report explaining how its board is overseeing privacy and data security risks. Note that one thrust of this proposal is about personal information privacy. That can encompass issues such as what personal information is collected by apps, where it is stored, how it is used and shared, and how user consent is obtained.

The SEC’s cybersecurity disclosure guidance from last year did not mention the word privacy, although federal and state privacy laws can be implicated in the context of a data breach involving personal information (what the SEC described as a cyber incident). In light of the recent legislative focus on privacy and data security topics, and increased media focus on Big Data and companies’ privacy practices, the SEC might conclude that shareholder proposals related to information privacy risks or cyber security risks raise significant policy issues and therefore are not excludable under Rule 14a-8(i)(7) for the reasons discussed in Staff Legal Bulletin No. 14E. In the coming proxy season, more companies may see shareholder proposals focused on cyber security and privacy risks. So, now is a good time for their management and boards to focus on their risk management in those areas. Thanks to Jim Brashear of Zix Corp. for his insight!

Now Effective: Higher Filing Fees at the SEC

Don’t forget that fees to register securities at the SEC went up effective October 1st. Here is my blog about the rate increase from last month…

I’m bummed the baseball team here – the Washington Nationals – let the Teddy mascot win the daily race against his fellow Presidential mascots during yesterday’s game. Having him consistently lose was starting to become a national “thing” – and that’s great branding. No more. But I have “Natitude” for the coming playoffs…

How to Transition Existing Draft Registration Statements to Edgar

Yesterday, Corp Fin posted this sample letter that it has sent to companies whose draft registration statements are under review so they can transition them to the new Edgar process – using Form DRS – explained in this blog.

– Broc Romanek