September 9, 2013

Webcast: “Reg D Offerings: What Is Happening Now”

Tune in tomorrow for the 75-minute webcast – “Reg D Offerings: What Is Happening Now” – to hear WilmerHale’s Meredith Cross, Morrison & Foerster’s Dave Lynn, Calfee’s John Jenkins, Western Reserve Partners’ Dave Mariano and SecondMarket’s Annemarie Tierney analyze the SEC’s new rules and how market practice will likely develop in their wake.

SEC Brings First Reg FD Case In Nearly Two Years

On Friday, the SEC brought this enforcement case against the former investor relations head of First Solar, after he indicated in phone conversations with some analysts and investors that the company was unlikely to receive a much-anticipated loan guarantee from the Department of Energy. When First Solar broadly disclosed this material information in a press release the next morning, its stock price dropped 6%.

As noted by Davis Polk’s Ning Chiu in this blog, the SEC decided not to bring any action against First Solar because of the company’s “extraordinary cooperation.” The SEC determined that, prior to this violation, the company “cultivated an environment of compliance through the use of a disclosure committee that focused on compliance with Regulation FD.” The SEC’s press release noted that the company immediately discovered the selective disclosure and promptly issued a press release the next morning – and reported the misconduct to the SEC. The company also undertook remedial actions, including conducting additional Regulation FD training. The former IRO agreed to pay $50,000 to settle the SEC’s charges (see this Dick Johnson blog entitled “Reg FD: Does $50,000 get your attention?“).

The SEC hadn’t brought a Reg FD case since November 2011 – here’s a list of the 15 SEC enforcement actions involving Reg FD over the years…

SEC Issues Second Wave of Whistleblower Program Awards

As noted in this memo posted in our “Whistleblowers” Practice Area, the SEC recently announced that it expects to pay a combined $125,000 (which is 15 percent of monetary sanctions collected) to three whistleblowers who helped the SEC and DOJ stop the CEO of a sham hedge fund.

Meanwhile, this Courthouse News Service article notes that a SEC attorney in the New York regional office has sued the agency, alleging that the Commission retaliated against her after she complained that a supervisor blocked efforts to investigate investment managers.

As noted in this memo, this November, in Lawson v. FMR LLC, the Supreme Court will hear argument on whether “whistleblowers” employed by a privately held contractor or subcontractor of a publicly traded company are protected from retaliation by Sarbanes-Oxley. The Court granted certiorari to review the judgment of the U.S. Court of Appeals for the First Circuit in a case involving two self-proclaimed whistleblowers employed by private contractors performing services for publicly traded mutual funds.

– Broc Romanek