July 26, 2013

Corp Fin Chief Counsel Tom Kim: Beyond a Short-Timer

After nearly six years of service as Corp Fin’s Chief Counsel (& Associate Director), Tom Kim has left the SEC to return to private practice. Tom was one of the SEC’s best and brightest, overseeing the venerable Chief Counsel’s office during a time of great change. Tom leaves having accomplished the rare legal job trifecta (government/in-house/law firm), having also worked in SEC Chair Cox’s office, for General Electric and Latham & Watkins. Tom is using up some of his vacation days before officially departing the agency.

Survey: Most Companies Not Ready for Conflict Minerals Compliance

With the SEC’s conflict minerals rules seemingly in limbo until the court decision this week, perhaps a PwC survey – discussed in this WSJ article – showing that most companies are not ready to comply is not surprising – but it is scary based on the consensus in the memos about the court decision that any appeal will take some time. Here are stats from the PwC survey pulled from this Elm Consulting blog:

– 26% of the respondents did not know if the rule was even applicable to their companies.
– 58% of respondents see this only as a compliance exercise and don’t anticipate additional value from the required efforts.
– 26% of respondents have not established a conflict minerals policy or feel it isn’t applicable.
– For those that have gathered some data on their suppliers, 54% of the respondents could not determine if minerals originated from covered countries or not.
– Almost 27% of respondents plan on relying solely on due diligence information received from suppliers; 58% don’t know if they will extend their efforts beyond their Tier 1 suppliers.
– For data management, 76% of respondents have not determined if they will implement a conflict minerals specific IT solution; almost 9% plan on using an existing system for their conflict minerals data.
– 44% of respondents expect to file a Form SD, but only 8% expect to also file a Conflict Minerals Report, or CMR (required where a company knows, or has reason to believe, that minerals originated from the Covered Countries).
– 9% of respondents expect that their CMR will be audited in 2013 (we are not sure why this number is greater than the number of respondents who think they will issue a CMR to begin with); 26% of respondents expect to defer the audit because they anticipate being classified as “undeterminable” for 2013.
– 25% of respondents appear not to have developed their internal team and don’t know how needs to be involved.
– 34% of respondents don’t know how many direct suppliers are in their supply chain; 23% have between 100 – 1000 and 17% have less than 100.

Director Roles in Going Private Deals

In this podcast, Matt Orsagh of the CFA Institute talks about the SEC’s recent enforcement case in which it charged and fined Revlon for misleading shareholders – as well as the company’s independent directors – as a result of a “going-private” transaction:

– What was the SEC’s recent Revlon enforcement action about?
– How can independent directors break down informational barriers during “going-private” transactions?
– Why are so many boards short-term focused – actively or passively?
– How should boards communicate with shareholders about these types of transactions?

– Broc Romanek