January 27, 2014

Corp Fin Issues Three “Unbundling” CDIs

Since last year’s Apple court decision on unbundling (and unbundling litigation has spilled over into other contexts), Corp Fin has focused more on this tricky topic through the comment process. On Friday, Corp Fin issued these three CDIs to clarify its unbundling positions under Rule 14a-4(a)(3):

– Question 101.01: charter amendment reducing dividend rate of preferred holders and extending maturity date

– Question 101.02: charter amendment changing common stock’s par value and eliminating provisions for preferred stock, as well as declassifying the board

– Question 101.03: omnibus plan amendment increasing shares reserved for issuance, increasing max amount payable to a single employee, adding restricted stock to types of award eligible to be granted and extending plan’s term

SEC Issues Auditor Independence Section 21(a) Report In Wake of KPMG Settlement for Violating Rules

On Friday, the SEC reached a settlement with KPMG for violations of its auditor independence rules, with KPMG agreeing to pay $8.2 million without admitting guilt. Here’s a Bloomberg article entitled “Is the SEC Going Easy on General Electric?” that notes “the SEC didn’t name the clients, which is odd, because the agency has in other auditor-independence cases.”

At the same time, the SEC issued a Section 21(a) report about the scope of the auditor independence rules, cautioning auditors that they’re not permitted to loan their staff to audit clients in a manner that results in the staff acting as employees of those companies. This reflects the fact pattern of the KPMG case.

Webcast: “Exclusive Forum Bylaws: What Now?”

Lot of caselaw developments in the exclusive forum bylaws arena! Now what should you do? Tune in tomorrow for the 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.

– Broc Romanek