January 27, 2015

Corp Fin: New CDI on Filing Non-Searchable Graphics & Images

One of the goals of Corp Fin’s “Disclosure Effectiveness” project is to modernize its filing framework, EDGAR. Not an easy thing to do, but it definitely could use a look. For example, use of multimedia in SEC filings poses challenges that requires a work-around when making a filing, as illustrated in this short video I have posted entitled “How to File Video on the SEC’s EDGAR.”

Last week, Corp Fin issued new CDI 118.01 of Regulation S-T, which addresses whether a filing can ever contain graphics or images that include non-searchable information. The answer essentially is: “yes, if the filer also presents the same information as searchable text or in a searchable table within the filing.” One small step forward for bar graphs, etc. But more relief will be needed as companies strive to make their filings more usable for investors…

Corp Fin also issued CDI 279.01 of Regulation S to address the relatively rare scenario about whether restricted securities acquired in a Rule 144 transaction (other than Rule 144(a)(3)(v)) from an issuer that was a foreign private issuer at the time of the acquisition – but is now a domestic issuer – may be resold in an offshore transaction under Rule 904 without regard Rule 905. Corp Fin’s answer is: “Yes. Rule 905 only applies to equity securities that, at the time of issuance, were those of a domestic issuer.”

First Multimedia Prospectus Ever Filed? 1985!

In response to my blog about my video regarding “how to file video on Edgar,” David Westenberg of WilmerHale informed me that in 1985, he was part of the team that handled an IPO that included the first use of multimedia. Due to its novelty at the time, it flummoxed the Corp Fin Staff and the company was told at the time by the Staff it would never again be allowed. Here’s the story from David’s IPO book:

In the 1985 IPO of Kurzweil Music Systems, the printed prospectus was polybagged with an audiocassette that contained a sound recording to demonstrate the ability of the company’s polyphonic digital synthesizer to replicate the sound quality and dynamic range of acoustic musical instruments. (In response, one state blue sky law administrator who was reviewing the offering submitted recorded comments on an audiocassette.)

Webcast: “Executive Compensation Litigation – Proxy Disclosures”

Tune in tomorrow for the webcast – “Executive Compensation Litigation: Proxy Disclosures” – to hear Pillsbury’s Sarah Good, Shearman & Sterling’s Doreen Lilienfeld and Winston & Strawn’s Mike Melbinger as they drill down on how proxy disclosure-related lawsuits are faring and what you can do to avoid them. Please print these two sets of course materials in advance:

Course Materials: Litigation Developments
Course Materials: Litigation Stats

– Broc Romanek