Monthly Archives: May 2018

May 2, 2018

A FOIA Request for 3-13 Correspondence With the SEC Staff?

As I recently blogged, the SEC Staff has long been able to modify – or – waive disclosure requirements in response to requests to modify what’s required for the financials in a SEC filing – but over the past few months, the Staff has announced that it’s now more amenable to grant Rule 3-13 requests than it was before. This is part of SEC Chair Clayton’s goal of removing unnecessary barriers to going public, etc.

Rumor has it that the Wall Street Journal has made a FOIA request for all 3-13 correspondence with the SEC Staff. That’s pretty wild if true! I hope this doesn’t lead to an article that distorts the purpose of these requests. It will be interesting to see how this plays out…

How Companies Grow Their In-House Teams

One of our more popular “sample documents” is our deck that in-house folks can use to argue for more resources in their department. Along these lines, a long while back, Splunk’s Scott Morgan sent me this note about how different industries might experience varying levels of growth in their in-house teams:

Over the past decade, I have seen a significant increase in the size and sophistication of in-house teams at technology companies. My experience is that companies are increasingly bringing specialty practices such as privacy/data security, M&A, securities/governance, benefits, technology transactions/products and IP/patents in-house. These experts are typically from big firms – so it’s the same expertise at a fraction of the cost. And there the work is closer to the business so the amount of firm-to-practice translation is significantly reduced in these areas. We still have a big need for firms (big and small) in certain subject matters, in larger projects and litigation, for benchmarking across companies and in foreign jurisdictions.

May-June Issue: Deal Lawyers Print Newsletter

This May-June Issue of the Deal Lawyers print newsletter includes (try a no-risk trial):

– A Small World After All: R&W Insurance in Cross-Border M&A
– Maximizing Value & Minimizing Risks in Carve-Outs: Seller’s Pre-Sale Preparation
– Director’s Abstention on Merger Vote Deemed Material to Shareholders
– LLCs: The Limits of the Implied Covenant of Good Faith

Remember that – as a “thank you” to those that subscribe to both & our Deal Lawyers print newsletter – we are making all issues of the Deal Lawyers print newsletter available online. There is a big blue tab called “Back Issues” near the top of – 2nd from the end of the row of tabs. This tab leads to all of our issues, including the most recent one.

And a bonus is that even if only one person in your firm is a subscriber to the Deal Lawyers print newsletter, anyone who has access to will be able to gain access to the Deal Lawyers print newsletter. For example, if your firm has a firmwide license to – and only one person subscribes to the print newsletter – everybody in your firm will be able to access the online issues of the print newsletter. That is real value. Here are FAQs about the Deal Lawyers print newsletter including how to access the issues online.

Broc Romanek

May 1, 2018

DOL’s New Guidance May Impact E&S Shareholder Engagement

In recent years, as SEC rulemaking has stalled on topics like proxy access and political spending disclosure, “private ordering” has become the catalyst for ESG changes (see Broc’s earlier blog about how that’s faring). This may have been due partly to Department of Labor interpretive bulletins from 2015 and 2016 which assured ERISA fiduciaries – i.e. pension plans – that they could consider ESG factors in making investment decisions.

But now, the DOL has issued a new “field assistance bulletin” that revises its earlier interpretations by stating that ERISA fiduciaries must always put the economic interests of the plan first. This Sullivan & Cromwell memo summarizes the key instructions (also see these memos in our “ESG” Practice Area):

1. Fiduciaries must avoid too readily treating ESG issues as being economically relevant to any particular investment choice

2. Fiduciaries may not incur significant plan expenses to (i) pay for the costs of shareholder resolutions or special shareholder meetings, or (ii) initiate or actively sponsor proxy fights on environmental or social issues

As noted in a CII alert, the most significant impact of the guidance likely will be on shareholder engagement. Earlier guidance – the bulletin says – didn’t suggest that it’s always appropriate for plans to engage with the board or management of companies in their portfolios. The guidance “was not meant to imply that plan fiduciaries, including appointed investment managers, should routinely incur significant plan expenses” to fund advocacy or campaigns on shareholder resolutions or proxy fights on environmental or social issues at portfolio companies. It appears that this new field assistance bulletin shifts the burden to pension funds to prove there are tangible activism benefits in every case. This creates a negative presumption that most ESG factors are not economically significant.

The change in tone will undoubtedly elicit angst among governance & sustainability advocates. It’s the latest in a long history of back-and-forth: the DOL’s 2015 & 2016 bulletins were issued in response to a 2008 bulletin, which walked back 1994 guidance. Also see this Davis Polk blog entitled “Are the Reports that the DOL Guidance Will Lead to the Demise of ESG-Focused Plans Greatly Exaggerated?”…

Sustainalytics’ ESG Ratings Now on Yahoo! Finance

Here’s the intro from this blog by Davis Polk’s Ning Chiu:

Some companies may not be aware that since February, their Yahoo Finance web page includes a separate tab with the ESG scores from Sustainalytics. The Sustainalytics quote page shows a company’s numerical rating for three categories, environment, social and governance, along with the overall ESG score. Scores range from 1 to 100.

There is also a graphic representation of the score that, according to the Sustainalytics press release, will be tracked against the average in each category and plotted over time. The graph, currently reflecting data from 2014 to now, is intended to display trends of how a company ranks against industry peers.

Our May Eminders is Posted!

We’ve posted the May issue of our complimentary monthly email newsletter. Sign up today to receive it by simply inputting your email address!

Liz Dunshee