I recently blogged about potential disclosure issues surrounding a corporate executive’s Covid-19 diagnosis. Regrettably, this is no longer a hypothetical issue. For example, Altria Group recently filed a Form 8-K announcing that its Chairman & CEO had contracted the virus and was taking a leave of absence, and Baxter International recently filed a Form 8-K disclosing that the company’s CFO & a member of its board of directors had tested positive for the virus.
We don’t know what prompted Altria and Baxter’s decisions to make public disclosure, but this recent Sullivan & Cromwell memo lays out a number of reasons why companies may opt to go public with this kind of information in the context of the Covid-19 crisis. As discussed in this excerpt, one reason to voluntarily make this disclosure is the high risk of a leak due to the public health response to the pandemic:
Due to the nature of COVID-19, including the recommended public health measures for containing its spread, there is a significant likelihood that a senior executive’s actual or presumed positive COVID-19 diagnosis will leak. Under the current public health recommendations, and pursuant to the COVID-19 related policies adopted by many companies, if an individual tests positive for the virus (or is presenting serious symptoms or has been in contact with someone who is diagnosed), the number of people both within and outside the company who will be aware of an executive’s actual or suspected illness is likely to be much higher than for another type of illness. Combined with the current public interest relating to COVID19 infections, the likelihood of public dissemination is meaningfully increased.
The memo points out that voluntary disclosure when a leak is likely will give the company an opportunity “to present its assessment of the impact of an executive’s illness and plans in place for mitigating such impact, including implementation of any interim officer roles or succession planning and the potential impact on the rest of the company’s executive team and its board of directors.”
Reg S-T: SEC Staff Cuts Signatories Some Slack
If you read the headline of this blog and were hoping to read that the SEC finally joined the rest of the world and permitted electronic signatures for filings, I’m afraid you’re going to be disappointed. No, the agency has just cut people some slack on the document retention requirement contained in Rule 302(b) of S-T. That rule requires every signatory to an electronic filing to manually sign the filing or an authenticating document, and requires the filer to retain it for five years and produce it upon request to the SEC.
In light of the Covid-19 crisis, the Staff of Corp Fin, IM and Trading & Markets issued a statement yesterday to the effect that, while they continue to expect everyone subject to Rule 302(b) to comply with it to the fullest extent practicable, they will not recommend enforcement action if:
– a signatory retains a manually signed signature page or other document authenticating, acknowledging, or otherwise adopting his or her signature that appears in typed form within the electronic filing and provides such document, as promptly as reasonably practicable, to the filer for retention in the ordinary course pursuant to Rule 302(b);
– such document indicates the date and time when the signature was executed; and
– the filer establishes and maintains policies and procedures governing this process.
The statement also says that a signatory may also provide to the filer an electronic record (such as a photograph or pdf) of such document when it is signed. I know it isn’t what you were hoping for, but take what you can get. Check out this Cydney Posner blog for more details.
The 3rd Annual “Cute Dog” Contest is Decadent & Depraved
Well, it’s pretty apparent that most of you are unlikely to be short-listed for any judging vacancies that may arise at the Westminster Kennel Club. Under what bizarre alignment of planets is my dog Shadow currently in last place in the cute dog contest? Obviously, she should be winning in a landslide – and for your information, Andrea Reed’s dog “Peaches” is actually a bunny rabbit. As my mother – and probably yours – would say, “I do and I do and I do for you – and THIS is how you thank me?”
– John Jenkins