TheCorporateCounsel.net

April 27, 2020

Careful Opening the Window

As many companies are releasing first quarter earnings and dealing with challenges related to earnings guidance, the next question to tackle might be whether to reopen the trading window.  Most companies typically reopen the trading window within a day or two after issuing the earnings release.  But, as this Bryan Cave blog points out, this time around some companies might want to think twice about that.

It might be fine for a lot of companies to go ahead as usual and open the window but with continued uncertainty and rapid change, the blog says some companies may want to pause.  Here’s the crux of the blog’s message:

Insiders who have access to daily information about demand, the supply chain, pricing and other information may be better able to assess the trend of the business, and may therefore be better able to predict how well the company will be able to withstand and bounce back from the pandemic.  Although this daily information might not ordinarily be deemed material nonpublic information for insider trading purposes, in the current environment and with the benefit of hindsight, the SEC could take a different position.

SEC Covid-19 Market Monitoring Group

In a press release last Friday, the SEC announced that it formed an internal, cross-divisional Covid-19 Market Monitoring Group.  The announcement says the group is temporary and the purpose is to assist the Commission, including its various divisions and offices, in actions related to the effects of Covid-19 on markets, issuers and investors as well as responding to requests for information, analysis and assistance from other regulators and public sector partners.

The group will be chaired by S.P. Kothari, the SEC’s Chief Economist and Director of the Division of Economic and Risk Analysis and assisted by Jeffrey Dinwoodie, Chief Counsel and Senior Policy Advisor for Market and Activities-Based Risk in the Office of the Chairman.  The announcement also includes a list representatives from across the SEC that will participate in the efforts of the Market Monitoring Group.

SEC Goes Remote & Virtual Like the Rest of Us

If you’re wondering how the SEC is getting all of its work done these days, they’re working remote like a lot of people and seem to be adapting.  A while ago, the SEC set up a webpage that gives general information about its operations during Covid-19.

The SEC’s recent open meeting, during which it approved offering rules for business development companies, was held virtually, although it’s not clear when they might do this again.  For that meeting, the audio was played live through access on the SEC website (here’s the audio archive) and Bloomberg Law reported that apparently Chairman Clayton participated in the meeting from his office at SEC headquarters while Commissioner Allison Lee participated from her home kitchen.  The SEC reportedly held “several dry runs” to prepare – an all too familiar exercise for many of us.

Meanwhile, this Notice for an upcoming meeting of the Small Business Capital Formation Advisory Committee says that it will be conducted via videoconference following the same format used for an ad-hoc meeting held earlier this month.  The Committee has an archived webcast from the April ad-hoc meeting available on the SEC’s website.

– Lynn Jokela