Monthly Archives: November 2013

November 12, 2013

Dave & Marty: Together Again!

Yesterday brought the earthshaking news that Marty Dunn has joined Morrison & Foerster. Dave & Marty are together again, having worked as a team before at the SEC. Is this akin to LeBron, D Wade and Chris Bosh joining forces in Miami? Or the birth of the “Super Friends” cartoon? Congrats to both of them!

Tune in today for the webcast – “Audit Committees in Action: The Latest Developments” – during which PCAOB Board Member Jay Hanson, Morgan Lewis’ Linda Griggs, Home Depot’s Stacy Ingram and Deloitte’s Bob Kueppers will analyze all the latest developments impacting the audit committee.

Are You Creative? The 2014 SEC Calendar Contest

Come on and participate in a contest that Bradley Smith of PR Newswire has put together for a “2014 SEC Calendar.” Art or photo submissions are due by December 7th. I am serving as one of the judges. Bribes are always welcome…

Poll: Nickname for the Dave & Marty Team

Vote on how you prefer to refer to the Dave & Marty team going forward (vote total will be binding):



– Broc Romanek

November 11, 2013

More Exclusive Forum Litigation: This Time It’s Charters

Check out this blog by Prof. Brian Quinn about a lawsuit filed against Edgen Group, a Delaware corporation with an exclusive forum provision in its charter. I agree with Brian – it’s hard to imagine that this litigation will wind up with a different result than in the Chevron/FedEx case

In the wake of the plaintiffs voluntarily dismissing their appeal in the Chevron/FedEx case, many are wondering what they should be doing now. I just calendared a new webcast – “Exclusive Forum Bylaws: What Now?” – featuring Wilson Sonsini’s David Berger, Chevron’s Lydia Beebe, Davis Polk’s Ning Chiu and Bill Kelly and Wachtell Lipton’s Ted Mirvis. Tune in!

Webcast: “Audit Committees in Action: The Latest Developments”

Tune in tomorrow for the webcast – “Audit Committees in Action: The Latest Developments” – during which PCAOB Board Member Jay Hanson, Morgan Lewis’ Linda Griggs, Home Depot’s Stacy Ingram and Deloitte’s Bob Kueppers will analyze all the latest developments impacting the audit committee.

Two Words To Add To Your Legal Vocabulary: You Ever “Argufy” Before the Delaware Supreme Court?

A while back, Keith Bishop blogged this in his “California Corporate & Securities Law” Blog: Recently, I received a notice from the Delaware Supreme Court informing me that a case in which one of my clients is a party has been called for argument. The notice asked that the enclosed “oral argument scheduling acknowledgment form” be completed and returned. I was immediately struck by the signature block which calls for the signature of the “Argufier or Local Counsel’s Signature”. I must confess that this is the first time in nearly 30 years of legal practice that I’ve come across the word “argufier.” In fact, I could find only one reported decision in any state or federal court that actually uses the word:

My Brothers note that not “a single applicable case” has been cited to the point “that judges performing forming like functions must receive the same salaries.” Here I cannot resist noting — for the amusement and possible enlightenment of readers in other States — that this is a peculiarly hearty old wheeze of Michigan trial courts (Michigan’s magniloquent own, so to speak). True, it is now hoary and shopworn. Yet it remains an occasional favorite of elder argufiers when they have no authority, and no reasoning of their own, with which to impress the wide-eyed attenders of periodic assizes.

Taylor v. Auditor General, 103 N.W.2d 769, 786 (Mich. 1960) (Black, J. Dissenting).

Another word that I sometimes run into is “amote,” which means to remove someone, such as a corporate director, from office. See In Re Burkin, 1 N.Y.2d 570, 572 (1956) (“At common law, stockholders have the traditional inherent power to remove a director for cause which is known as ‘amotion’.”) When I see “amote,” however, I think of love, not the unpleasant business of kicking someone out of office. I think of love because “amote” looks like the etymologically unrelated Latin phrase, “amo te”.

In Latin, “amo te” means “I love you.” Thus, whenever I see the word “amote”, I’m reminded of the story of Dr. Fell who was the Dean of Christ Church, Oxford in the 17th century. The story goes that an errant student had been called into Dr. Fell’s office to face possible expulsion. Dr. Fell offered the student absolution if the student could translate on the spot this epigram from the Roman poet Martial: “Non amo te, Sabidi, nec possum dicere – quare; Hoc tantum possum dicere, non amo te.” The student immediately gained pardon with the following translation:

I do not love thee, Dr Fell,
The reason why I cannot tell;
But this I know, and know full well,
I do not love thee, Dr Fell.

Robert Louis Stevenson makes a brief allusion to Dr. Fell in Chapter 2 of his book, Dr. Jeckyll and Mr. Hyde, and Hannibal Lecter uses the alias “Dr. Fell” in the 2001 film, Hannibal.

– Broc Romanek

November 8, 2013

32,000 Pay Ratio Comment Letters So Far…

It’s still early – as most comment letters don’t get submitted until right before the deadline, which is December 2nd for this rulemaking – but the SEC already has received more than 32,000 comment letters on its pay ratio proposal, including roughly 20k using one form letter and another 8k using a second form, 3k using a third form and 1k using a fourth. Most of the form letters simply say they support Dodd-Frank’s Section 953(b). The others express more explicit support for the actual SEC proposal. So far, there haven’t been too many meetings with SEC Commissioners on this rulemaking – here’s that list.

My favorite one so far comes from a woman who claims she is with “Baker Schonchin Holdings Corporation,” a company that I couldn’t find via an online search:

We, at Baker Schonchin Holdings Corporation, believe it in our best interest, and that of our shareholders, employees, business partners, government affiliates, and customers, to willingly disclose payroll statistics, which include, but are not limited, to the following information: Name of Employee, Job Title, Yearly Salary, Department, City, State, Country, and any related pertinent details.

We strive towards a more transparent, ethical, and accountable business entity, so that we may present a more favorable corporate philosophy, but more importantly, that we are the # 1 leader, in moving forward, as a corporation, that refuses to do those practices, that are illegal, secret, or otherwise unsavory in nature. We strongly encourage our peers, to ensure that disclosure of salaries of all employees, is done so in a way that affirms the fair practices that are already in place, with respect to the vision, mission, and values of said company. Thank you.

I hope you noticed the initials of the company cited: “BS Holdings”…

Juan Monteverde on Pay Disclosure Lawsuits

In this podcast, Juan Monteverde of Faruqi & Faruqi provides some insight into how he determines which disclosure lawsuits to pursue, including:

– What types of disclosure lawsuits are you pursuing these days?
– How do you determine which particular company’s disclosure to target?
– Have you been discouraged by some of the court’s rulings?
– Do you think you might use pay ratio disclosures as fodder for lawsuits once the SEC adopts a final rule?

Check out Mike Melbinger’s blog about “something benignly calling itself the “Shareholder Foundation,” which is a front group (or “shill”) for strike suit lawyers seems to be getting in on the game, presumably based on the [limited] success and [very wide] publicity achieve by Faruqi.”

Say-on-Pay: Now 65 Failures – Oracle

Last week, Oracle became the 65th company to fail its say-on-pay in ’13 – see the Form 8-K. Oracle has failed two years in a row (last year with 41% support) and CEO Larry Ellison’s pay has received much press. Here’s a recent DealBook column about the latest vote – and some information from CalSTRS about Ellison’s pay…

– Broc Romanek

November 7, 2013

Analysis: Differences Between Crowdfunding & Private Placement Fees & Strategies

Many thanks to Morgan Lewis’ Sean Donahue for sharing his notes from a recent NYC/DC Bar program on the new Regulation D rules that included speakers from the Corp Fin Staff. I’ve also posted a deck from Professor John Coffee on the new rules about the impact of the new rules on the SEC’s Enforcement Division – and a comparison of Rule 506 and crowdfunding under Section 4(6). Also see this paper from Jason Parsont which spells out those differences in greater detail.

I’ve also posted this interesting deck from David Weild of IssuWorks that includes a comparison of the fees charged by the various crowdfunding platforms – as well as a comparison of the various types of placement fees charged in private placements. David wraps up with his analysis of how fee structures and placement strategies are likely to emerge. And of course, I’ve been posting memos on the SEC’s crowdfunding proposal in our “Crowdfunding” Practice Area.

This Reuters article tracks comments made by Corp Fin Director Keith Higgins about how many private deals are happening now that the restrictions on general solicitation have been changed. Here’s Keith’s written testimony – see footnote 18 for the private deal stats. And here’s a Bloomberg article entitled “A Dating Service for Those Who Love Hedge Funds.”

Transcript: “Dealing with the Board: Presentations, Etiquette & More”

We have posted the transcript for our recent webcast: “Dealing with the Board: Presentations, Etiquette & More.”

Are the Largest US Law Firms Losing Market Share?

Recently, LexisNexis CounselLink published a report that concludes the largest US law firms (those with 750 or more attorneys) are losing market share to smaller rivals, and specifically firms with between 201-500 attorneys. According to the report, there are two underlying drivers for the shift in the market share: the trend that corporate legal departments are increasingly consolidating their legal work with firms other than the largest firms and smaller firms tend to provide the same value at lower cost and are more inclined to experiment with AFAs (alternative fee arrangements). What is your take on this?

– Broc Romanek

November 6, 2013

The Future? Integrated Reporting

Over the past year, I have posted a number of resources in our “ESG” Practice Area about the growing trend of integrated reporting as more companies find ways to combine their proxy materials with a sustainability report so that they become one online integrated report. A number of the resources highlight companies that are already doing this – although the leaders here tend to be overseas such as this example from Eskom in South Africa. This Forbes article is very useful to help understand the current state of integrated reporting worldwide…

SEC Announces Proxy Advisor Roundtable

Foaming at the mouth? Yesterday, the SEC announced it has scheduled a proxy advisors roundtable for December 5th – a follow on the dormant proxy plumbing project (which included a series of three roundtables back in ’07). No agenda yet and the participants have not yet been lined up. Wonder how it will differ from the House Financial Services Subcommittee hearing on the topic from a few months back…

Check out this recent blog by Manifest’s Sarah Wilson, rebutting many of the common criticisms of proxy advisory firms…

More on “The Mentor Blog”

We continue to post new items daily on our blog – “The Mentor Blog” – for members. Members can sign up to get that blog pushed out to them via email whenever there is a new entry by simply inputting their email address on the left side of that blog. Here are some of the latest entries:

– Separation Anxiety: The Impact of CEO Divorce on Shareholders
– Agreement in Principle: Towards a Single Canadian Securities Regulator
– SEC Chair: Criteria for Seeking Admissions of Wrongdoing & Enforcement Priorities
– Earnings Calls That Get Lost in Translation
– More on Director Disagreements & Resignations

– Broc Romanek

November 5, 2013

Survey Results: Annual Meeting Conduct

Here are the latest survey results about annual meeting conduct:

1. To attend our annual meeting, our company:
– Requires pre-registration by shareholders – 6%
– Encourages pre-registration by shareholders but it’s not required – 16%
– Requires shareholders to bring an entry pass that was included in the proxy materials (along with ID) – 10%
– Encourages shareholders to bring an entry pass but it’s not required – 10%
– Will allow any shareholder to attend if they bring proof of ownership – 71%
– Will allow anyone to attend even if they don’t have proof of ownership – 17%

2. During our annual meeting, our company:
– We hand out rules of conduct that limit each shareholder’s time to no more than 2 minutes – 32%
– We hand out rules of conduct that limit each shareholder’s time to no more than 3 minutes – 31%
– We hand out rules of conduct that limit each shareholder’s time to no more than 5 minutes – 5%
– We announce a policy that limits each shareholder’s time to no more than 2 minutes (but rules are not handed out) – 2%
– We announce a policy that limit each shareholder’s time to no more than 3 minutes (but rules are not handed out) – 2%
– We announce a policy that limit each shareholder’s time to no more than 5 minutes (but rules are not handed out) – 0%
– There is no limit on how long a shareholder can talk (subject to the inherent authority of the Chair to cut off discussion at any time) – 29%

3. For our annual meeting, our company:
– Provides an audio webcast of the physical meeting, including posting an archive – 25%
– Provides an audio webcast of the physical meeting, but does not post an archive – 2%
– Has provided an audio webcast of the physical meeting in the past, but discontinued that practice – 6%
– Is considering providing an audio webcast of the physical meeting but haven’t decided yet – 0%
– Provides a video webcast of the physical meeting (or is considering doing so) – 5%
– Does not provide an audio nor a video webcast of the physical meeting – 63%

4. At our annual meeting, our company:
– Announces the preliminary results of the vote on each matter (unless special circumstances arise such as a very close vote) – 99%
– Doesn’t announce the preliminary results of the vote on each matter – 1%

5. For our annual meeting:
– Our CEO makes a presentation and takes Q&A from the audience – 90%
– Our CEO makes a presentation but no Q&A from the audience – 5%
– We are considering revising next year’s format to eliminate the CEO presentation – 6%
– We are considering revising next year’s format to eliminate the Q&A – 3%
– We are considering revising next year’s format other than the CEO presentation and Q&A but haven’t decided yet – 2%

Please take a moment to anonymously participate in our “Quick Survey on Conflict Minerals” and “Quick Survey on Deferred Compensation Election Timing.” As noted in this blog, the SEC has filed its brief in the appeal of the conflict minerals lawsuit that it won at the lower court level…

PCAOB Issues Staff Audit Practice Alert on Internal Control Deficiencies

Recently, the PCAOB issued “Staff Audit Practice Alert No. 11: Considerations for Audits of Internal Control Over Financial Reporting,” which encourages audit committees to get involved over PCAOB concerns. Learn more about this development in this Davis Polk blog and FEI’s “Financial Reporting Blog“…

Tune in next Tuesday, November 12th for the webcast – “Audit Committees in Action: The Latest Developments” – during which PCAOB Board Member Jay Hanson, Morgan Lewis’ Linda Griggs, Home Depot’s Stacy Ingram and Deloitte’s Bob Kueppers will analyze all the latest developments impacting the audit committee.

Transcript: “The Use of Social Media in Deals”

We have posted the transcript for’s recent webcast: “The Use of Social Media in Deals.”

– Broc Romanek

November 4, 2013

NASAA Proposal: Coordinated A+ Offering Reviews

Last week, NASAA – the organization for state securities regulators – proposed a coordinated review program for Section 3(b)(2) offerings (known as “Reg A+”) in an effort to maximize efficiency and coordination among the states. The comment period runs until November 30th. As noted in this press release, a streamlined multi-state review system would ease compliance costs for small companies attempting to raise capital under Title IV of the JOBS Act.

As noted in this MoFo blog, Corp Fin is in the process of finalizing A+ offering rule recommendations under Title IV for the Commission’s consideration.

Enforcing Form D Filings: A Misguided State Policy

Here’s an interesting blog from Keith Bishop about some insights by Alan Parness about the relatively high number of enforcement actions taken by states for a failure to file a Form D. “Relatively” given the fact that a failure to file the Form doesn’t result in the loss of the ability to use Rule 506. Note this blog was written quite a while ago, well before the SEC’s new changes to the rules…

Now Available: Electronic SEC Confidential Treatment Orders

Here is one that I’ve been meaning to blog about for years (I have all sorts of draft blogs that never see the light of day) – not pressing because it’s not of much significance – Corp Fin’s confidential treatment orders are now available electronically on Edgar. For example, here is an order issued in connection with a CT request made by Antigenics.

– Broc Romanek

November 1, 2013

For Sale (Again): ISS

The last time I blogged about ISS being sold, I noted that ISS had been sold 4x within a decade. I almost don’t believe myself! Perhaps a hot potato phenomenon? More recently, I blogged about an activist hedge fund buying a 5% stake in MSCI, the company that owns ISS. Anyways, MSCI now has posted an announcement that it’s exploring strategic alternatives regarding ISS, including a “full separation.” Here’s a Reuters article.

This news comes on the heels that Ontario Teachers sold 20% of its stake in Glass Lewis to an institutional investment manager as I blogged about in the “Proxy Season Blog.”

Global Proxy Advisory Firms Seek to Develop Best Practices

Meanwhile, a group of six proxy advisors from around the world – ISS, Glass Lewis, IVOX, Manifest, PIRC and Proxinvest – recently announced a consultation entitled “Best Practice Principles for Governance Research Providers” in an effort to come up with principles for their industry. This initiative follows a similar effort by the European Securities and Market Authority (on the “Proxy Season Blog,” I’ve covered ESMA’s efforts several times – including this one and this one). Comments are due by December 20th – with the goal to finalize principles in February.

Wild! This story about a lawsuit filed against Twitter for – allegedly – fraudulently using an aborted sale to set a $10 billion valuation for itself and a floor price for the IPO is pretty shocking. Although maybe the lawsuit’s angle doesn’t quite make sense because some executives want a low valuation so that the IPO pops out of the gate…

Our November Eminders is Posted!

We have posted the November issue of our complimentary monthly email newsletter. Sign up today to receive it by simply inputting your email address!

– Broc Romanek