Author Archives: Broc Romanek

The March Issue of TheCorporateCounsel.net’s Eminder is now available at
http://www.thecorporatecounsel.net/E-minders/.

Following up on issues identified in its January 24th report to Congress on the state of the credit rating industry, the SEC approved a 4th credit rating agency yesterday. Canada’s Dominion Bond Rating Service now joins Moody’s, S&P and Fitch to rate debt in the US.

As noted in the SEC’s January 24th report, a lack of competition might be hurting the ability of investors to get the most timely and accurate ratings from these agencies. In about a month, the SEC expects to issue a concept release on the possible restructuring of how the credit rating industry is regulated. The SEC’s Jan. 24th report is at http://www.sec.gov/news/studies/credratingreport0103.pdf.

For TheCorporateCounsel.net subscribers, we have posted sample disclosures regarding corporate goverance in the proxy statement and how companies disclose SEC enforcement actions in our “Disclosure” practice area at http://www.thecorporatecounsel.net/member/Disclosure/.

As will be covered more completely in the upcoming issue of E-Minders, a union proponent has filed an appeal with the Commission over the exclusion of a shareholder proposal.The proposal would require Citigroup to include board nominees on its proxy card if such persons were nominated by shareholders that owned at least 3% of the company’s stock. Unlike the typical shareholder proposal, the Citigroup proposal would be binding as it seeks to amend the company’s by-laws.

On Friday, the SEC posted the adopting release for Regulation AC (Analyst Certification) at http://www.sec.gov/rules/final/33-8193.htm.

For TheCorporateCounsel.net subscribers, we have posted an interview with Bruce Mendelsohn on MD&A – see http://www.thecorporatecounsel.net/member/InsideTrack/02_21_03_Mendelsohn.htm.

The NASPP just started conducting an online survey regarding cashless exercises after Section 402 of Sarbanes-Oxley. The early results are interesting…for example:

– Our company currently allows same-day-sale exercises by insiders.(Total responses: n=311)
n=183 (58.84%) Yes
n=121 (38.91%) No

– Does your company allow insiders to use the broker(s) designated by the company?(Total responses: n=238)
n=143 (60.08%) Yes
n=22 (9.24%) No
n=73 (30.67%) We don’t have a designated broker

– Did you discontinue cashless exercises after the adoption of Section 402 of Sarbanes-Oxley?(Total responses: n=189)
n=121 (64.02%) Yes
n=69 (36.51%) No

This survey runs until mid-March – please participate (it is not limited to NASPP members) by going to http://www.naspp.com/survey/2/doSurvey.asp?SurveyNo=4.

The SEC is open…and Chairman Donaldson is on the job. Yesterday, the SEC posted its final rules on definition of “dealer” whereby it excluded banks for certain de minimus transactions – see http://www.sec.gov/rules/final/34-47364.htm.

For TheCorporateCounsel.net subscribers, we have conducted informal surveys of recent disclosures regarding disclosure controls and procedures – and posting reports on corporate websites – and analyzed the results. These results are in the “Disclosure” section of our “Practice Areas” at http://www.thecorporatecounsel.net/member/CriticalAccounting/.

Adding pressure on companies to voluntarily expense options, late last week, Ernst & Young became the first major accounting firm to reverse its position on expensing options.

In a letter to the Financial Accounting Standards Board, Ernst & Young stated that it strongly supported efforts by both the FASB and the International Accounting Standards Board to develop a method to ensure that “stock-based compensation is reflected in the financial statements of issuing enterprises.” For more information about E&Y’s position, see the NY Times article – “Ernst & Young Changes Mind on Options” from February 14th.

The SEC remains closed today due to bad weather…

On TheCorporateCounsel.net, we have posted an interview with David Lynn of Wilmer Cutler on CEO/CFO certifications – see http://www.thecorporatecounsel.net/member/InsideTrack/02_14_03_Lynn.htm.

Later today, TheCorporateCounsel.net is hosting a webcast program on “Understanding the New ‘Audit Committee Financial Expert'” – see http://www.greatgovernance.com/Programs.html.

Yesterday, the SEC released a draft of the upcoming EDGAR Filer manual – which contains information about the Online Forms website that will be used to accept filings for Forms 3, 4, & 5. The manual describes the process a user would go through to create and submit a form via their website.

Section 3 of the Draft Manual contains screen shots of the new SEC website that will be devoted to Section 16 filings – and what steps you will need to take to create the form. The Manual has an address for the SEC’s new website – https://www.onlineforms.edgarfiling.sec.gov – but I was unable to connect to it, so I assume it is not ready yet.

As expected, yesterday the Senate confirmed William Donaldson as SEC chair – its official…

For TheCorporateCounsel.net subscribers, in addition to our own SOX Scorecard, we have posted 8 other scorecards – they all are very handy and located under “Special Features” when you click on “Sarbanes-Oxley Scorecards.”

I don’t think anyone doubts that the new 2-day filing framework for Form 4s has led to more delinquencies – and recent disclosures bear this out.

Thanks to Alan Dye, we just posted a horde of recent disclosures sorted out by 20 different topic areas on TheCorporateCounsel.net and Section16.net.

Yesterday, William Donaldson was confirmed by the Senate Banking Committee as next chair of the SEC – full Senate approval is expected shortly – and Mr. Donaldson should be in office by next tuesday…

From the Division of Corporation Finance, Dennis Garris will be leaving as head of the Office of Mergers & Acquisitions to join Alston & Bird – Associate Director Bill Tolbert is also leaving to go back to Ohio.

On GreatGovernance.com, we have posted a lengthy annotated corporate governance guidelines – graciously donated by Cynthia Krus of Sutherland, Asbill & Brennan.

As some board committees are exercising their soon-to-be “right” to hire advisors – or if the governance committee hires a new outside law firm to conduct a one-time governance “gut-check” – the question remains: who does the advisor/law firm work for?

This question must be resolved right away when a retainer letter is drafted. The best answer we have heard so far is “individual directors on behalf of the board.” If you have a different conclusion or a sample retainer letter for a board committee, contact broc.romanek@thecorporatecounsel.net.