TheCorporateCounsel.net

As noted in the memos posted in our “Rule 701” Practice Area, the SEC recently brought an enforcement case to enforce the $5 million limit in that rule. Here’s the intro from this Steve Quinlivan blog:

Subject to its limits, Rule 701 permits non-reporting companies to grant employees equity without registration under the Securities Act of 1933. One component of Rule 701 requires certain disclosure materials to be delivered to employees if the aggregate sales price or amount of securities sold during any consecutive 12-month period exceeds $5 million. Rule 701 provides that for options to purchase securities, the aggregate sales price is determined when an option grant is made (without regard to when the option becomes exercisable).

In a settled enforcement action, the SEC alleged Credit Karma, which the SEC describes as a “pre-IPO internet-based financial technology company headquartered in San Francisco, California”, blew through the $5 million disclosure limit. Specifically, the SEC alleged “From October 2014 to September 2015, Credit Karma issued approximately $13.8 million in stock options to its employees “ and “failed to comply with the disclosure requirements of Rule 701, even though senior executives were aware of Rule 701”.

Data Breach: SEC Brings “Plain Vanilla” Insider Trading Case

Last week, as noted in this press release, the SEC drove home the point that you have to be mindful of the SEC’s recent cybersecurity guidance – that includes a discussion of insider trading policies – as the agency brought an insider trading case against a former officer at Equifax in connection with their data breach. This was not a complex case. He was fired. The executives covered by the special committee review have not been charged.

Just read the SEC’s complaint and Googled the guy. Threw his career & reputation away for $100k – was literally offered the CIO position and had it yanked when they found out about the trading. A wife and two young kids. I’ll never understand how people think they’ll get away with this stuff…

Don’t forget our upcoming webcast: “Insider Trading Policies & Rule 10b5-1 Plans“…

Dodd-Frank’s Coming Rollback

Last week, as noted in this memo (also see this WSJ article), the Senate approved – by a vote of 67 to 31 – the “Economic Growth, Regulatory Relief, and Consumer Protection Act,” which includes certain limited amendments to Dodd-Frank and other targeted modifications to various post-crisis regulatory requirements. This WSJ article notes that the House might not rubber-stamp the Senate bill…

Due to her frequent scrapes with the law, this article says that Lindsay Lohan is the new face of legal directory Lawyer.com…

– Broc Romanek