November 25, 2013

Keith Higgins Speaks: ABA’s Business Law Meeting

On Friday, I attended the ABA’s Business Law Fall Section Meeting. For me, the highlight was Corp Fin Director Keith Higgins trying to get the “Dialogue with the Director” session back into a true dialogue mode, throwing out the wild idea of page limits for proxy statements. He merely was suggesting it as a way to get people thinking about how to accomplish one of the goals stated in SEC Chair White’s recent speech on disclosure reform – Keith was not actually advocating it. More on this later.

Keith mentioned that the SEC had a lot of rulemaking going on that was not in the Corp Fin area (see this article about Chair White’s ambitions before the end of the year) – so that it was unlikely that we would see any more Corp Fin rulemaking in ’13 other than the Staff is working hard to implement the Chair’s hope that Reg A+ gets proposed in “the fall.” Keith did say that we might see the outstanding three Dodd-Frank Corp Fin rulemakings (those remaining from the “Gang of 4”) in proposal form sometime in earlyish ’14. Stay tuned.

There was a bit of discussion about Reg D and general solicitation. Here are some notes about that from MoFo’s blog by Anna Pinedo and Ze’-ev Eiger.

And Bonnie Roe of Cohen & Gresser sent me her highlights from the ABA meeting:

1. Keith Higgins said that the 5 factor integration test “feels outmoded” and there is Chair Schapiro’s letter responding to questions from Rep. Issa about what the SEC was doing to assist capital formation which suggests that the 2007 guidance applies to private as well as public offerings (see end of the first full paragraph on p. 8). However, I’m not sure a letter from the Chair and statements by a Corp Fin Director (it was also noted that Meredith had said the 2007 guidance applied more broadly) count as “Commission” guidance. I think everyone likes the idea of the 2007 guidance – it’s figuring out how it applies in the face of Rule 502(a) for private offerings that is the challenge.

2. Some CDIs are due on bad actors. “Affiliated issuer” doesn’t mean affiliate, though we don’t yet know what it includes, and there may be interpretations of when a group holding 20% of the vote includes a bad actor.

3. I didn’t attend the SEC’s Small Business Forum on Thursday but was interested to hear in a committee meeting about a proposal discussed there. AnneMarie Tierney of Second Market suggested a regulation codifying the “4(a)(1-1/2)” exemption to assist option exercises coupled with secondary sales by company officers.

Reg D: The Value of Relationships & More

Much continues to be written about the SEC’s Reg D amendments & proposals as reflected by the numerous memos posted in our “Regulation D” Practice Area. I believe the SEC’s Small Business Forum had record attendance last week because of these new rules. Here’s an interesting blog by MoFo’s Anna Pinedo and Jim Tanenbaum about pre-existing relationships in our social media era and here’s a blog by Anna entitled “Is Any News Article a General Solicitation?” – and in his “Startup Law Blog,” Davis Wright’s Joe Wallin has been blogging regularly about Reg D items…

SEC & DOJ Discuss FCPA Enforcement Trends

Courtesy of Morgan Lewis, here are notes from a recent conference where SEC and DOJ officials talked about FCPA Enforcement trends…

– Broc Romanek