Remember Vinco Ventures, the company that was the subject of a hostile takeover attempt by means of allegedly swiped EDGAR codes? Well, believe it or not, things have gotten even stranger there. When last we visited with Vinco, a Nevada court had granted a temporary restraining order against Ted Farnsworth & certain of his associates prohibiting them from holding themselves out as being employed by Vinco or acting on its behalf and requiring them to turn over the company’s EDGAR codes.
That Nevada court has now inserted itself more deeply into the question of who should run the company, and ultimately decided that former Nevada Secretary of State Ross Miller should serve as one of its co-CEOs. I suppose that might raise some eyebrows on its own, but what’s really amazing is how the appointment came to pass. This excerpt from a recent post on Business Law Prof Blog explains:
How did Mr. Miller get picked for this role? A transcript of the relatively brief hearing reveals that the idea was pitched to the Court by one of Farnsworth’s attorneys. As the attorney explained it “my proposal is going to be that Mr. Colucci, Lisa King, and then, a third-party, who just happened to wander in the courtroom today, because he was a witness in the case next door, Mr. Ross Miller, be appointed as co-CEO.” The attorney then revealed that he had “vetted Mr. Miller. He said he’ll do it. He used to be the Secretary of State of Nevada. If you remember, his father was the governor for 10 years not even 8, but 10 years. And he does do corporate law. And he says he’s interested in it. So we’re going to propose him as the co-CEO.”
Yes, you read that correctly – a politician randomly walked into a Nevada courtroom & ended up co-CEO of a public company. But that’s not the end of the story. Apparently, Vinco settled the litigation with the Farnsworth Group last week. According to this Form 8-K filing, that settlement resulted in a board and management shakeup, and when the dust settled, Mr. Miller found himself the sole CEO of Vinco Ventures. I’ll grant you that this isn’t your run of the mill executive search process, but there doesn’t appear to be much about Vinco that’s run of the mill.
The September-October issue of “The Corporate Counsel” newsletter is in the mail (email sales@ccrcorp.com to subscribe to this essential resource). It’s also available now online to members of TheCorporateCounsel.net who subscribe to the electronic format – an option many people are taking advantage of in this “remote work” environment. The issue includes articles on:
– When and How to Update Your Shelf Registration Statement
– Officer Exculpation: Q&As on Delaware’s Recent Amendment
Dave & I also have been doing a series of “Deep Dive with Dave” podcasts addressing the topics we’ve covered in recent issues. We’ll be posting one for this issue soon. Be sure to check it out on our “Podcasts” page!
On Friday, the SEC announced that a “technological error” dating back to as early as June 2021 has prompted it to reopen the comment period on 11 rulemaking proposals and one request for comment. Here’s an excerpt from the SEC’s announcement listing the affected releases:
2. Prohibition Against Fraud, Manipulation, or Deception in Connection with Security-Based Swaps; Prohibition against Undue Influence over Chief Compliance Officers; Position Reporting of Large Security-Based Swap Positions, Release No. 34-93784 (Feb. 4, 2022)
5. Short Position and Short Activity Reporting by Institutional Investment Managers, Release No. 34-94313 (Mar. 16, 2022); see also Notice of the Text of the Proposed Amendments to the National Market System Plan Governing the Consolidated Audit Trail for Purposes of Short Sale-Related Data Collection, Release No. 34-94314 (Mar. 16, 2022)
11. Enhanced Disclosures by Certain Investment Advisers and Investment Companies About Environmental, Social, and Governance Investment Practices, Release Nos. 33-11068, 34-94985, IA-6034, IC-34594 (June 17, 2022)
12. Request for Comment on Certain Information Providers Acting as Investment Advisers, Release Nos. IA-6050, IC-34618 (June 22, 2022)
Wow, that’s quite a list! It looks like this glitch has thrown a bit of a monkey-wrench into most of the SEC’s regulatory agenda. Off the top of my head, it appears that the only major proposals that aren’t affected by this are the SEC’s clawbacks proposal and its Rule 10b5-1 proposal. According to the SEC’s order, the comment periods reopened beginning on October 7, 2022, and will close 14 days after the date of publication of the order in the Federal Register.
The SEC says that if you submitted comments on one of these proposals through the internet comment form between June 2021 and August 2022, you should check the relevant comment file on the SEC’s website to determine whether your comment was received and posted. If it hasn’t been posted, you should resubmit it.
– How to Attend: We have emailed a direct access link for the Conference to all registered attendees, from info@ccrcorp.com. Use that link to go to the Conference platform. Once you log in to the Conference Platform, follow the “Practical ESG Agenda” tab to enter sessions and add them to your calendar. All sessions are shown in Eastern Time – so you will need to adjust accordingly if you’re in a different time zone.
If you are experiencing a technical issue on our conference platform and need assistance, please email Evan Blake (eblake@markeys.com) with our Event Manager Victoria Newton (vnewton@ccrcorp.com) on copy, and they will reply to you asap. If you have any other questions about accessing the conference, please email our Event Manager, Victoria Newton (vnewton@ccrcorp.com).
– How to View Archives & Transcripts: Conference attendees will be able to access the archives of the “1st Annual Practical ESG Conference” on PracticalESG.com via a special link that we will email to conference attendees about a week after the event. Unedited transcripts also will be available via that link, beginning about 2-3 weeks after the event.
– Thanks To Our Sponsors! Our sponsors have helped make this event possible, and we are proud and grateful to have their support. Our Platinum Sponsors for the 1st Annual Practical ESG Conference are Aon and Orrick. Our Silver Sponsors are Argyle, who is also sponsoring our Proxy Disclosure & Executive Compensation Conferences, and Ecolumix. Our Bronze Sponsor is Elm Consulting. Please check them all out!
It is not too late to register for our Conferences today. You can sign up for today’s “1st Annual Practical ESG Conference” by emailing sales@ccrcorp.com or by calling 1-800-737-1271, Option 1. You can still sign up online for our “2022 Proxy Disclosure Conference” & “19th Annual Executive Compensation Disclosure Conference” (with the “Conference” drop-down, and the “PDEC” options) – or you can register via email or phone. Remember, you can also still bundle the conferences together to get a discounted rate!
If you’re working on your Form 10-Q, be sure to check out this Goodwin blog with an updated 10-Q Form Check Table. In addition to providing a tabular check of required disclosures, the form check document also highlights some potential disclosure topics that companies should consider addressing in their next 10-Q filing. Here’s an excerpt:
In addition to topics that may be particularly relevant to a specific company, industry or market, the following topics (among others) may be generally relevant to many companies:
– Inflation and rising interest rates,
– Financial market volatility and declines in financial market prices of equity securities;
– Liquidity and/or capital resources changes and the impact of any changes or limitations, including, without limitation, ability to borrow funds and/or renew or roll over existing indebtedness;
– Ongoing or new supply chain and product distribution/logistics issues; and
– Ongoing impacts of the war in Ukraine and the Russian sanctions.
Less common topics may include:
– Expenses related to climate-related events and expenses related to preparation for expected climate risk disclosure;
– Material risks or uncertainties, or recent income statement impacts, related to health care developments; and
– European energy market issues that, in addition to inflation and rising interest rate impacts, may also affect some companies, especially those that have business operations or significant markets in Europe.
The blog notes that although the risk of a recession has received a lot of media attention, as of September 27, 2022, there aren’t a lot of SEC filings that contain risk factor disclosure that’s company specific. Instead, most risk factor disclosure on this topic is pretty generic. It cautions companies that changes in general domestic or international economic conditions or those that affect specific industries or companies could make more targeted disclosure appropriate.
The SEC announced that its Small Business Capital Formation Advisory Committee will meet next Thursday to address entrepreneurship hubs and recent trends in taking a company public. The SEC released this agenda for the meeting, which the public can watch live via webcast on the SEC’s website. In the announcement of the meeting, the SEC notes:
The Committee, which provides advice and recommendations to the Commission on rules, regulations, and policy matters relating to small businesses, will start the morning session by exploring best practices deployed across the country to foster start-up creation and growth. The Committee will hear from experts and discuss various factors that make entrepreneurial communities work effectively, and consider ways to continue supporting small business growth across the country.
In the afternoon session, the Committee will examine how economic conditions, recent changes in IPO activity, and other factors may impact companies going public. Experts in the field will share market data and insights with the Committee, and address how pathways to going public, including traditional IPOs, reverse mergers, SPACs, and direct listings, have been impacted.
I am glad that the Small Business Capital Formation Advisory Committee is delving into the topic of small business capital raising across the country. Take a look at these handy maps that the SEC provides highlighting where capital is being raised in the U.S. under different exemptions, and it is striking how concentrated capital raising tends to be in specific regions. As someone who has spent his entire life in the mid-Atlantic region of the U.S., I often try to consider how the perspectives on various issues that I speak and write about may differ in other areas of the country, and small business capital-raising is definitely an area where this consideration comes to mind. I think it is worthwhile for the SEC to highlight efforts to create entrepreneurship hubs across the country that can support startups in their efforts to raise capital and grow.
There is one phrase that frequently comes to mind when considering the regulatory environment that we have been living in for a while now: “life comes at you fast.” While we anxiously await the SEC’s next moves on its ambitious rulemaking agenda, it is easy to forget how active the SEC had been in the couple of years leading up to Biden administration. The Commission moved forward with some major changes to its rules regarding capital raising, perhaps most notably the exempt offering harmonization rulemaking that was adopted in November 2020.
If I had to pick one regulatory change from that no-so-distant era that still haunts me to this day, it is the ability for issuers to now broadly test the waters for an upcoming securities offering. Now, you might think that I would embrace such a modern approach to the regulation of capital-raising activities, but remember that I cut my teeth at the SEC where, at the time, we zealously defended the ramparts of Section 5 of the Securities Act, which specifies that any offer or sale of a security is registered with the SEC, exempt from registration or illegal.
My rampart-defending efforts took a pretty big blow with the JOBS Act in 2012, which amended my beloved Section 5 to permit testing the waters for emerging growth companies. Thereafter, the dominos began to fall, with the adoption of Securities Act Rule 163B in 2019, which enables all issuers to engage in testing-the-waters communications with qualified institutional buyers and institutional accredited investors regarding a contemplated registered securities offering prior to, or following, the filing of a registration statement related to such offering. In 2020, the Commission then rolled out an all-encompassing testing-the-waters provision for exempt offerings with the adoption of Securities Act Rule 241, which permits an issuer to use generic solicitation of interest materials to test the waters for an exempt offering of securities prior to determining which exemption it will use for the sale of the securities.
If I have piqued your interest in the testing-the-waters journey, I encourage you to check out the September-October 2021 issue of The Corporate Counsel, where I take you on a test drive of these still relatively new testing-the-waters provisions. Once you have had a chance to read the article, let me know if my grief over the demise of Section 5 as I knew it is misplaced. Please email sales@ccrcorp.com to subscribe to The Corporate Counsel newsletter if you do not not already have access to this important resource.
In the latest Deep Dive with Dave podcast, I am joined by Anna Pinedo, partner at Mayer Brown, for a discussion of current developments with exempt and hybrid securities offerings on the occasion of the publication of the Fourth Edition of Anna’s treatise, Exempt and Hybrid Securities Offerings. Topics include:
– The most significant regulatory developments in exempt and hybrid offerings
– How exempt and hybrid markets have evolved over the past few years
– Evaluating exempt offering alternatives in a post-JOBS Act world
– Current trends with the use of hybrid offering alternatives
– Utilizing the resources available with the treatise
Thanks for listening to the Deep Dive with Dave podcast!
Programming note: In observance of the federal holiday on Monday, we will not be publishing a blog. We will be back on Tuesday!
Over the course of this year, I have been taking a walk down memory lane and looking back on 15 years of contributing to CCRcorp publications and programs. To celebrate my 15th anniversary with the organization and to reminisce about the many accomplishments and developments throughout the years, CCRcorp Founder Jesse Brill recently joined me on the Deep Dive with Dave podcast. Topics include:
– The inspiration for founding The Corporate Counsel and The Corporate Executive
– A behind-the-scenes look at launching the newsletters
– How the publishing business branched out into so many other areas
– The main factors that set CCRCorp publications and websites apart from others
– The key areas that companies, executives and directors should be focused on now
– Jesse’s interests today: softball and early childhood education
Thanks for listening to the Deep Dive with Dave podcast! I am grateful for all of the ways in which I can communicate with our members, and Jesse is the reason we have all of these great resources available to us today.
I am honored that CCRcorp has commemorated my 15th Anniversary with the organization by launching my very own anniversary page on TheCorporateCounsel.net! In addition to my Deep Dive with Dave podcast with Jesse Brill, the anniversary page highlights my blogs from earlier this year recounting some of my favorite things about being a part of the CCRcorp publications and programs, a selection of videos (including one of my all-time favorites, “The Best of Dave & Marty”) and examples of my recent contributions to our newsletters. Thank you to everyone at CCRcorp for allowing me to be a part of the organization and for honoring me in this way.
By far the most touching feature on the anniversary page is a 32-minute Tribute video. I want to thank everyone who contributed to this Tribute – your messages meant so much to me and I greatly appreciate your friendship and support.