May 10, 2017

Corp Fin’s New Director! Bill Hinman

Yesterday, the SEC announced that Bill Hinman will serve as Corp Fin’s next Director. Bill previously was a partner in Simpson Thacher’s Silicon Valley office, having recently retired. He’s probably best known for his work on some of the most prominent tech & e-commerce IPOs of all time – including Alibaba, Facebook, Google & eBay.

Not positive, but we think Bill is the first Director hailing from the Valley – we’ve updated our “List of Corp Fin Directors.” In fact, Broc can’t recall any Staffers in Corp Fin moving to DC from the Valley.

CAQ’s Updated “Auditor Assessment” Tool

The Center for Audit Quality recently published a new version of its “External Auditor Assessment Tool.” The tool – which was introduced in 2012 – is intended to provide a framework for audit committees to assess the performance of a company’s external auditor and to make retention recommendations to the board.

This excerpt from the intro reviews the audit committee’s oversight role with respect to the external auditor & identifies specific areas that should be addressed in the evaluation of the auditor’s performance:

Audit committees should regularly (at least annually) evaluate the external auditor in fulfilling their duty to make an informed recommendation to the board whether to retain the external auditor. Further,providing constructive feedback to the external auditor may improve audit quality and enhance the relationship between the audit committee and the external auditor. The evaluation should encompass an assessment of the qualifications and performance of the external auditor; the quality and candor of the external auditor’s communications with the audit committee and the company; and the external auditor’s independence, objectivity, and professional skepticism.

The tool includes sample question sets covering each of the areas upon which the auditor will be evaluated, as well as materials to be used in obtaining input from management and a summary of applicable standards.

Update – Here’s an interesting observation from one of our readers:

Don’t you think it’s a bit odd that the CAQ, the audit industry lobbying arm of the AICPA, a trade association, is putting out a guide for issuers on how to select and monitor auditors?  Seems a bit self-serving, bordering on conflicted.

Who Needs an IPO? NYSE Proposes to Facilitate Direct Listing

Broc recently blogged about Spotify’s reported plans for a “direct listing” – which involves bypassing an IPO, and simply registering common stock under the Exchange Act & listing on an exchange. This MoFo blog reports that the NYSE has proposed a rule change to facilitate this kind of process (which is already possible under existing rules). While Spotify is the highest profile direct listing candidate, this excerpt notes that this alternative may appeal to a variety of companies:

This approach could be of significant interest for issuers that have completed 144A equity offerings, which are still popular among REITs, for issuers that have completed numerous private placements and have VC or PE investors that need liquidity, and for issuers, including foreign issuers, that are well-funded and do not need a capital raise through an IPO, but would still like to have their securities listed or quoted on a securities exchange.

John Jenkins