September 23, 2016

Corp Fin: New CDI on 401(k) Broker Windows

Yesterday, Corp Fin issued this new “CDI 139.33/126.41” under the Securities Act Section 5/Form S-8 areas – while withdrawing “CDI 239.16/226.15.”

The new CDI deals with whether a company-sponsored 401(k) plan that doesn’t have an employer securities fund alternative might still be deemed to be offering securities that require ’33 Act registration (when the plan permits contributions through a self-directed “brokerage window”). The CDI concludes that “it depends” – whether the securities need to be registered “depends on the extent of the employer company’s involvement.” And the CDI goes on to provide more gloss…

Whistleblowers: OSHA’s Interim Guidance

Here’s a note from Hunton & Williams’ Scott Kimpel about interim OSHA guidance that was issued last month:

Through a peculiar quirk of Sarbanes-Oxley, OSHA administers Section 806, which provides whistleblower protection for certain parties who report (1) federal mail, wire, bank, or securities fraud, (2) federal law relating to fraud against shareholders, and (3) any rule or regulation of the SEC. The interim OSHA guidance lays out various confidentiality and related provisions in employee settlement agreements that OSHA deems problematic.

Many of the points are derived from the three SEC enforcement cases brought over the past year on this issue. But the OSHA guidance goes a step further and deems problematic any provision that requires a complainant to waive a government whistleblower award. There has been some uncertainty as to the enforceability of such waiver provisions, and the SEC enforcement cases to date do not address the issue directly. While the OSHA guidance is not binding on the SEC, it is still instructive to parties seeking to comply with the SEC whistleblower rules in the absence of any formal guidance from the agency or its staff. Of course, if parties find themselves in a situation in which OSHA has the responsibility to review a settlement agreement, as detailed in the OSHA guidance, we fully expect each of its criteria to apply.

“How the SEC Enabled the Gross Under-Reporting of CEO Pay”

Here’s the intro from this blog entitled “How the SEC Enabled the Gross Under-Reporting of CEO Pay” by “truthout”:

Think it’s scandalous that the average 2014 pay of the CEOs of the 500 biggest companies was 373 times that of the typical worker, as the AFL-CIO reported? You aren’t scandalized enough. Their take home pay, which is reported in the bowels of SEC filings, as opposed to the Summary Compensation Table that the AFL-CIO, along with most analysts and reporters rely on, was a stunning 949 times that of the average worker in 2014.

How did this massive disparity come about, and why is the SEC on the side of such gross understatement?

An important new paper by William Lazonick and Matt Hopkins, which is recapped in detail in The Atlantic, explains this gaping disparity. The culprit is the differences in the approach used to measure stock-related compensation, which is the bulk of top executive pay.

Broc Romanek