September 4, 2014

Poll: Conflict Minerals Due Diligence Ahead of Next Year?

A member recently asked “Have companies started their due diligence on conflict minerals for 2014? If so, what kind of due diligence are they doing?” I thought it might be early for this (but this Elm Consulting note indicates otherwise) – but decided to run this poll to find out for sure:

survey solutions

Meanwhile, as noted in this Davis Polk blog, Amnesty International recently filed for a rehearing of the conflicts minerals case in the wake of the ruling in American Meat, the 1st Amendment ruling that Dave blogged about. And this blog by Steve Quinlivan states that NAM has been ordered to respond to the SEC’s petition for an en banc rehearing. Also check out these industry-specific recaps of conflict mineral reporting from Deloitte…

Debate: Safe Harbors v. Principles-Based Determinations

Here’s a guest blog by Stan Keller of Edwards Wildman:

Recently, Professor Jay Brown wrote an article criticizing Corp Fin for expanding and weakening the safe harbor for verifying accredited investor status based on income under Rule 506(c)(2)(ii)(A) when it issued CDI 260.35 in response to the situation where the relevant IRS forms are not yet available at the time of verification. He argues that the guidance dispenses with the need for an IRS form, fails to recognize that filing dates of tax returns can be manipulated, eliminates the need for a document filed under the penalties of perjury and fails to indicate what an examination of IRS documents for earlier years needs to show.

I responded with a comment to Professor Brown’s article but because it was unlikely to be seen I am repeating it here. In a nutshell, Professor Brown is reading the notes but not listening to the music. He is failing to distinguish between the safe harbor and the principles-based approach to verification, which still has to be reasonable based on all the facts and circumstances. Corp Fin in fact preserved the integrity of the safe harbor by requiring strict compliance with its requirements, but at the same time it helpfully recognized that it is appropriate to use the principles-based approach even when all the requirements for the safe harbor are not met. Rather than criticism, Corp Fin should be applauded for providing this guidance.

“Accredited Investor” Definition: One Associate’s View

Just got this note from a member about this article on CNBC:

I’ve always thought it was quite odd that as an associate attorney, I am hired by clients to do private placements for them, draft their offering documents, and keep them in compliance with Reg.D, but the SEC basically says that none of that matters, and that I shouldn’t be able to invest in a private company as easily as someone with a high net worth or annual income unless the company provides me with disclosure at a level that is cost-prohibitive to most companies.

– Broc Romanek