TheCorporateCounsel.net

The Corp Fin Staff’s CDIs are such an integral part of our practice today, but I realize that many practicing today may not really know where they came from. Well, come sit by the fire my friends and let your intrepid blogger tell you a little story about the birth of the CDIs.

Now, for the purpose of storytelling, our main character in this tale is yours truly, but in fact many, many folks from the Corp Fin Staff contributed to the birth of the CDIs. If you have been following my work for some time, you have no doubt gleaned that one of my credos is “share the knowledge,” and I developed that sensibility from my earliest days of practicing at the SEC, before the dawn of the Internet.

I noticed as a junior Corp Fin examiner sitting behind my metal desk and staring at my OS/2 powered PC with a giant tube monitor that a small cabal of practitioners seemed to hold all of the knowledge of what the Corp Fin Staff was thinking and what interpretations the Staff had taken over the years, so much so that they knew more than me about the Staff’s interpretive positions on important issues. Against this backdrop, I developed a keen appreciation for The Corporate Counsel newsletter, because Jesse Brill and Mike Gettelman did a fantastic job of chronicling (and sometimes extracting) the Staff’s important interpretive positions and communicating them to the world. In these formative years, I vowed to myself that I would one day try to improve this persistent information disparity, if for no better reason to prevent future Staffers from being schooled by knowledgeable practitioners that were hoarding the secrets of the temple.

Now, thankfully, the Office of Chief Counsel at the SEC kept quite good records of the interpretive positions that it had taken over time – I remember my awe when first discovering the wall of black binders that held records of interpretive positions taken by Office of Chief Counsel Staffers over decades of telephone calls. This was basically the securities law nerd’s equivalent of the Holy Grail. In a move that was very helpful to the Staff, a compilation of key interpretations was created and called the telephone interpretations manual, and that was available internally so that everyone could see the grand mosaic of the Staff’s interpretive work and factor that into filing reviews. Over the years, copy of the telephone interpretations manual had found its way out into the world (as such things are wont to do), thus contributing to the overall information asymmetry problem.

Enter now my old friend and mentor Marty Dunn, as well as several others serving in senior Corp Fin positions at the time. It was decided that the compilation of telephone interpretations would be made public, based on the rationale that providing these interpretive positions might reduce the number of telephone calls that came into Corp Fin. As Marty would always say, the public release of the telephone interpretations had the exact opposite effect, with more calls flooding in to ask questions about the answers provided in the interpretations!

When I returned to the SEC from my stint in private practice in the early 2000s, one of the projects that the Office of Chief Counsel was tasked with was reimagining the publicly available telephone interpretations. The thought was to transform many of the telephone interpretations into a question-and-answer format, as well as make the interpretations easier to update over time. We came up with the new name as a more descriptive way of identifying the interpretations, after many proposed names were rejected by Marty because the acronym sounded stupid (Marty had a thing about acronyms). I am forever grateful for the Staff’s hard work in reimagining those old telephone interpretations, and I think we collectively came up with a great system for communicating the Staff’s views that has withstood the test of time!

– Dave Lynn