Broc Romanek is Editor of CorporateAffairs.tv, TheCorporateCounsel.net, CompensationStandards.com & DealLawyers.com. He also serves as Editor for these print newsletters: Deal Lawyers; Compensation Standards & the Corporate Governance Advisor. He is Commissioner of TheCorporateCounsel.net's "Blue Justice League" & curator of its "Deal Cube Museum."
Tune in tomorrow for the CompensationStandards.com webcast – “Clawbacks: What Now After the SEC’s Proposal” – to hear Compensia’s Mark Borges, Semler Brossy’s Blair Jones and Morrison & Foerster’s Dave Lynn discuss the SEC’s latest proposal…
P4P & Hedging Proposals: Comment Letters Submitted to the SEC
With the July 6th deadline behind us, roughly 60 comment letters have been submitted to the SEC on its pay-for-performance proposal. The commentators are from all walks of our community, including investors, issuers, comp consultants, law firms and others (like this one from the Aspen Institute, a broad-based nonpartisan group).
Meanwhile, the SEC’s hedging & pledging proposal drew about 20 comment letters.
Senate Panel Mulls Changes in Rules on Nonqualified Deferred Compensation
As part of a series of hearings on tax reform, the Senate Finance Committee recently held a hearing on the issue of fairness in the tax code. In connection with the hearing, the committee’s ranking Democrat, Sen. Ron Wyden (D-OR), released a report on tax avoidance strategies that outlines possible recommendations for reforming nonqualified deferred compensation (NQDC) as part of an expected tax reform proposal. In his opening statement, Sen. Wyden noted that the report is intended to “shed some light on some of the most egregious tax loopholes around.”
Internationally, there is real momentum for gender diversity on boards, as noted in this “30% Club” article. The companies in the UK are nearing the “25% women on boards” target set few years ago by Lord Davies. Meanwhile, the 10% level here in the USA has been the plateau for quite some time. That may soon change as shareholders take action to vote against a board’s slate of nominees if the board wasn’t sufficiently diverse. For example, the Massachusetts Pension Board recently decided it would no longer vote in favor of slates unless women and minorities make up at least a quarter of the slate.
This Chicago Tribune article notes how the State of Illinois passed a resolution recommending that Illinois corporations have a minimum level of diversity – something that California did two years ago (both of these “resolutions” don’t have the effect of a real state law). This is an issue that is not going away…
We have posted the transcript for our recent webcast: “Escheatment Soup to Nuts: Handling Unclaimed Property Audits & More.”
Last week, the FASB reaffirmed its decision back in April to defer the effective date of the new revenue standard (ASU 2014-09) for one year (and allow early adoption as of the original effective date)…
It’s time to vote! Thanks to the many who submitted nominations – it was hard to pare those down (& apologies to those that didn’t get their candidates onto our final slate). I tried to limit the number of nominees to three for each category – but sometimes that was challenging because we had so many candidates submitted for certain categories. Folks are proud of their executive summaries!
In this blog, Steve Quinlivan points to a CrowdCheck blog that claims that 5 of the 6 initial Form 1-As have been “withdrawn.” As Steve notes, Corp Fin is gonna have it’s hands full with defective filings since the form is so new – and many of these forms are filed by do-it-yourseflers.
As to what “withdrawn” means, I haven’t a clue. A quick scan of the table of contents of the SEC’s EDGAR Filer Manual doesn’t address this topic. And I know it’s pretty hard to get the SEC to remove things from EDGAR. My guess is that perhaps they weren’t really deleted from EDGAR – but I doubt there was a “withdrawn” notation of some sort either. Any ideas?
My favorite Form 1-A so far was filed by Weed Real Estate, which proposes to lease property to companies engaged in the marijuana business. In a few months, we’ll be conducting a webcast on emerging Reg A practices…
The SEC’s Investor Advocate’s Latest Objectives
Here’s a new 52-page report of the SEC’s Office of Investor Advocate’s objectives for ’16. Pages 29-35 summarize the activity of the Investor Advisory Committee…
Yesterday, the SEC voted to approve – by the now-norm 3-2 vote – this 198-page proposing release to direct the stock exchanges to adopt clawback listing standards, as required by Section 954 of Dodd-Frank. Comments are due 60 days from publication in the Federal Register – so the beginning of September. We’re posting memos in our “Clawbacks” Practice Area (see this Gibson Dunn blog). All five SEC Commissioners issued a written statement.
Given that the rumor that the SEC would propose these clawback rules on July 1st held true – the rumor of the SEC adopting pay ratio rules on August 5th might also prove worthy…
Pay Ratio: SEC Posts More Economic Analysis
With the comment letter deadline for the SEC’s recent release of additional economic analysis looming – this Monday, July 6th – the SEC’s Division of Economic and Risk Analysis posted another memo on Tuesday about the potential effects on the accuracy of the proposed pay ratio rule calculation of excluding different percentages of certain categories of employees.
It sure looks like the rumor of August 5th being an adoption date might come true as the SEC seems to be getting its ducks in a row to minimize the risk of losing a court battle if rules do indeed become final…
It’s Huge! Our Big Week of “Executive Pay Conferences”
The SEC’s new clawback, pay-for-performance & hedging proposals – not to mention the coming pay ratio rules – are causing a stir – and you should prepare now. These rules will be among many topics that Corp Fin Director Keith Higgins & other experts will be talking about at our popular Conferences — “Tackling Your 2016 Compensation Disclosures” — to be held October 27-28th in San Diego and via Live Nationwide Video Webcast on TheCorporateCounsel.net. Act by August 7th for the phased-in rate to get 10% off.
You should make a hotel reservation now as our conference hotel always sells out – and registrations for this conference are running at an all-time high!
The full agendas for the Conferences are posted — and include the following panels:
– Keith Higgins Speaks: The Latest from the SEC
– The SEC’s Pay-for-Performance Proposal: What to Do Now
– Creating Effective Clawbacks (& Disclosures)
– Pledging & Hedging Disclosures
– Pay Ratio: What Now
– Proxy Access: Tackling the Challenges
– Disclosure Effectiveness: What Investors Really Want to See
– Peer Group Disclosures: The In-House Perspective
– The Executive Summary
– The Art of Communication
– Dave & Marty: Smashmouth
– Dealing with the Complexities of Perks
– The Big Kahuna: Your Burning Questions Answered
– The SEC All-Stars: The Bleeding Edge
– The Investors Speak
– Navigating ISS & Glass Lewis
– Hot Topics: 50 Practical Nuggets in 75 Minutes
Yesterday, the PCAOB issued a concept release about the content and possible uses of audit quality indicators, measures that may provide new insights into audit quality. Here’s the press release – and fact sheet.
Today, the SEC will be proposing its clawback rules finally. For those in law firms, get ready to rumble with your memo writing skills…
PCAOB: Re-Re-Proposal to Seek Engagement Partner Name in a New Form (Not the Audit Report)
Yesterday, the PCAOB also issued a supplemental request for comment on whether to require auditors to file a new PCAOB Form AP to identify the name of an audit engagement partner – a different approach than the original 2011 proposal (that was re-proposed in ’13) that would require name disclosure in the audit report itself. Comments are due by August 31st. Technically, I believe this is not a “re-re” proposal – rather, it’s a supplemental request to the re-proposal. Here’s the comments submitted to date…
Our July Eminders is Posted!
We have posted the July issue of our complimentary monthly email newsletter. Sign up today to receive it by simply inputting your email address!
Sights of the Society of Corporate Secretaries Conference
Saw many old friends & made some new ones at last week’s annual conference for the Society of Corporate Secretaries:
Norfolk Southern’s Ginny Fogg, Mondelēz’ Carol Ward & DuPont’s Erik Hoover
CT Corp’s Tim Rooney, Sarah Brunet & Lisa Mann
Awesome Georgeson/Computershare booth staffed by Donna Ackerly, Erik Schwendeman & Kerry Anderson
Here’s a blog from Adam Kanzer of Domini Social Investments based on his recent comment letter sent to the SEC:
According to a series of letters submitted on behalf of the issuer community, including a joint letter submitted by five prominent law firms, the original intent of Rule 14a-8(i)(9) and its successor formulations was to prohibit a very specific abuse of process by shareholders – the use of 14a-8 to solicit votes in opposition to management proposals (“counter proposals”). This would amount to a circumvention of the SEC’s solicitation rules. It is therefore clear that the exemption was based on the sequencing of proposals, and was intended to be used infrequently. The rule, however, is now applied where such abuses have not even been alleged. The issuer community is seeking an extremely broad and unreasonable reading of the subsection.
The law firms’ assertion that the sequencing of the proposals “is not a consideration encompassed by the text of the rule” ignores their own assertions about the history of the rule. The rule is grounded in a prohibition on counter proposals offered by shareholders, and a counter proposal must come second.
In addition to sequencing, public notice is also critical. Unless management has publicly announced its intention to submit a particular proposal to a vote before the proposal filing deadline—including the terms of that proposal—a shareholder proposal cannot be considered a solicitation “opposing a proposal supported by management.” This is largely a hypothetical abuse of process that is generally not available to shareholders, except, perhaps, on rare occasions (Northern States Power Company (July 25, 1995)(Shareholder proposal requesting that the board of directors require management to negotiate a more equitable merger agreement excludable as ‘counter to a proposal to be submitted by management.’) This subsection was presumably crafted to deal with those rare occasions. So rare, in fact, that they were deemed to be an “abuse” of process.
In reality, the shareholder proposal either accidentally coincides with a management proposal on the same topic, or management responds to the shareholder proposal with a proposal of its own. Neither situation can be considered an “abuse” by shareholders, as suggested by the 1982 Release.
Issuers are asking Staff to interpret (i)(9), a rule designed to address counter proposals by shareholders, to permit the exclusion of shareholder proposals any time a counter proposal has been offered by management. Not only does this reverse the intent of the subsection, as explained by the law firm letter, it eliminates the concept of a ‘direct conflict’ from the rule and converts what was intended to be a narrow exemption to deal with a rare abuse of process into a trump card to be used at management’s discretion.
Establishing a clear, bright line approach to 14a-8(i)(9), consistent with the wording of the rule, would dramatically reduce the opportunity for gamesmanship and avoid the need for SEC Staff to delve into those perilous waters. Our recommended approach, first suggested by the Council of Institutional Investors and endorsed by CalPERS and CalSTRS – non-binding proposals cannot “conflict” with management proposals – would satisfy issuers’ and proponents’ need for clarity and would eliminate any meaningful legal conflicts that “conflicting” proposals may create. Our proposal to permit conflicting binding proposals to be re-characterized as non-binding proposals would eliminate the need for any investigation into issuer or shareholder motives, while preserving both shareholder democracy and management’s right to submit alternative proposals to a vote.
Proxy Access Proposals: The Latest Stats
This Skadden memo is the first memo – of what likely will be many – with comprehensive coverage of the voting results for proxy access shareholder proposals this proxy season. We’ll be posting all of them in our “Proxy Access” Practice Area. Check it out!
Delaware Bans “Loser Pays” Bylaws & Authorizes Exclusive Forum Bylaws
The Delaware Governor has signed the latest Delaware amendments into law, taking effect on August 1st. On DealLawyers.com, we’re posting memos in our “Exclusive Forum Bylaws” Practice Area (also see this blog about whether the new law impacts federal class actions). And here’s the intro from this Cooley blog:
On June 24, 2015, the Governor of Delaware signed into law amendments to the Delaware General Corporation Law proposed by the Delaware Bar’s Corporation Law Council and overwhelmingly passed by the Legislature regarding fee-shifting and forum selection provisions in Delaware governing documents. (See this post and this post.) More specifically, the amendments invalidate, in Delaware charters and bylaws, fee-shifting provisions in connection with internal corporate claims. “Internal corporate claims” are claims, including derivative claims, that are based on a violation of a duty by a current or former director or officer or stockholder or as to which the corporation law confers jurisdiction on the Court of Chancery. These claims include claims arising under the DGCL and claims of breach of fiduciary duty by current or former directors or officers or controlling stockholders of the corporation, or persons who aid and abet those breaches. However, as discussed in this post, federal securities class actions are not included. In addition, the new provision is not intended to prevent these types of provisions in a stockholders agreement or other writing signed by the stockholder against whom the provision is to be enforced.
The amendments also expressly authorize the adoption of exclusive forum provisions for internal corporate claims, as long as the exclusive forum is in Delaware. Although the amendment does not address the validity of a provision that selects, as an additional forum, a forum other than Delaware, the synopsis indicates that it “invalidates such a provision selecting the courts in a different State, or an arbitral forum, if it would preclude litigating such claims in the Delaware courts.” A different result is possible where there is a provision in a stockholders’ agreement or other writing signed by the stockholder against whom the provision is to be enforced. In addition, an exclusive forum may not be “enforceable if the Delaware courts lack jurisdiction over indispensable parties or core elements of the subject matter of the litigation,” and the amendment in not intended to preclude evaluation of whether the terms or manner of adoption of the exclusive forum provisions “comport with any relevant fiduciary obligation or operate reasonably in the circumstances presented.” Deputy Secretary of State Richard J. Geisenberger said 99.6% of companies that have a forum-selection bylaw choose Delaware as the preferred venue. And, no surprise, Delaware wants cases involving Delaware corporations to be tried in Delaware.
We’ve had false start rumors before about when the SEC will adopt pay ratio rules – but this time it feels different given the heightened political attacks against the SEC. The latest is this Bloomberg article indicating the rules will be adopted by August 5th, which the article notes was not confirmed by the SEC. It’s according to “two people familiar with the matter who asked not to be named.”
That’s right before our August 7th deadline for our last discounted rate for our big “Executive Pay Conference” in San Diego and by video webcast. Act now!
Clawbacks: SEC to Propose Rules on Wednesday!
Last Thursday, the SEC posted this Sunshine Act notice to announce that it will propose the clawback rules required by Dodd-Frank on Wednesday, July 1st!
Delaware Changes Law to Allow Restricted Stock Grants By Non-Directors!
Last week, Delaware enacted amendments to its corporation law – effective August 1st – that will permit grants of restricted stock to be made by a corporate officer who has been delegated that authority by the board (within parameters). Prior to this change, the granting of options could be delegated to officers pursuant to DGCL Section 157(c), but not so for stock. Under the old law, some companies worked around this limitation by creating a board committee of one person (typically, the CEO-director). The law change presents the opportunity for delegation without using a “committee of one,” allowing the CEO (in a non-director capacity) or other delegated officers to make grants of stock. Of course, accurate and timely records must be kept and plans also would need to permit such administration.
The 2015 legislation amends Section 152 of the DGCL to clarify that the board of directors may authorize stock to be issued in one or more transactions in such numbers and at such times as is determined by a person or body other than the board of directors or a committee of the board, so long as the resolution of the board or committee, as applicable, authorizing the issuance fixes the maximum number of shares that may be issued as well as the time frame during which such shares may be issued and establishes a minimum amount of consideration for which such shares may be issued.
The minimum amount of consideration cannot be less than the consideration required pursuant to Section 153 of the DGCL, which, as a general matter, means that shares with par value may not be issued for consideration having a value less than the par value of the shares. The legislation clarifies that a formula by which the consideration for stock is determined may include reference to or be made dependent upon the operation of extrinsic facts, thereby confirming that the consideration may be based on, among other things, market prices on one or more dates or averages of market prices on one or more dates.
Among other things, the legislation clarifies that the board (or duly empowered committee) may authorize stock to be issued pursuant to “at the market” programs without separately authorizing each individual stock issuance pursuant to the program. In addition, the legislation allows the board to delegate to officers the ability to issue restricted stock on the same basis that the board may delegate to officers the ability to issue rights or options under Section 157(c) of the DGCL.
Transcript: “Proxy Season Post-Mortem: The Latest Compensation Disclosures”
We have posted the transcript for our recent CompensationStandards.com webcast: “Proxy Season Post-Mortem: The Latest Compensation Disclosures.”
Since the new Regulation A/A+ took effect on Friday, June 19th – and the SEC denied Montana’s request to stay its implementation – the SEC has posted these 6 new/revised forms (& Form 2-A has been rescinded):
As we recover from Year Two of the conflict minerals disclosure push, we’ll continue to see plenty of reports and studies that focus on disclosure trends and statistics in Form SDs (they will be posted in our “Conflict Minerals” Practice Area as they become available). But this Stinson Leonard Street blog covers an article about the question of whether the conflict minerals rules are having a real world impact in the DRC. Here’s an excerpt:
Politico has an interesting article about a trip to the DRC in an attempt to answer that question. The author was told “not a single mine was tagging its output so that buyers could identify the mine at which it had originated.” “Tagging is very expensive, . . . We don’t have the partners to pay for it.” Of course, it’s only one person’s perspective.
More on our “Proxy Season Blog”
We continue to post new items regularly on our “Proxy Season Blog” for TheCorporateCounsel.net members. Members can sign up to get that blog pushed out to them via email whenever there is a new entry by simply inputting their email address on the left side of that blog. Here are some of the latest entries:
– Shareholder Proposals: Review of Proxy Voting on ESG Issues
– Proxy Access: Whole Foods Responds to Shareholder Proposal With Own Alternative
– An Interview with Fidelity Worldwide Investments
– Group Presses on Political Spending Disclosures
– 10-K Wrap Design: Five Tips to Do More with Less
People love the brain-teasers. I received many emails in response to my blog about a contract that tackles the “what day is it” query. Here are some of those responses:
– Whitney Holmes of Dorsey & Whitney notes: Oh dear, the problem of the infinitesimal…. I don’t advocate bringing back the stake, but after 400 years I wish this kind of question would go away.
Midnight doesn’t really exist—it is only in the mind—because there is no indivisible unit of time. Midnight (in the sense of 12:00 o’clock at night) can be infinitely subdivided into seconds, tenths of seconds…nanoseconds, picoseconds and so on. What about 12:00:00.0000001 “midnight”? Still a.m. in my view and not heretical. See, Alexander Amir, Infinitesimal: How a Dangerous Mathematical Theory Shaped the Modern World, Scientific American / Farrar, Straus and Giroux (April 8, 2014). Because every unit can be subdivided into smaller units, any time that starts with a 12:00 has to be the beginning of the next cycle (the next day, in the case of midnight) or you would need an infinite string of zeros, which is impossible because infinity is also a concept that only exists in the mind. Therefore, nothing can happen “at midnight” unless midnight is understood to be 12:00 plus some minute increment of time. As a result, Midnight is 12:00 a.m. the next day. QED
Of course, that results in “12:00 noon” being “p.m.”, or “afternoon,” which is pleasantly paradoxical, not that anybody really cares. Id.
This is reminiscent of the argument that came up at the turn of the century regarding whether 2000 or 2001 was the first year of the new century. Ugh.
– Consecutive days simultaneously begin and end at midnight. It’s similar to the singularity principle with regard to black holes where relativistic equations break down because at the singularity, you reach a theoretical infinitesimal point where an infinite mass exists. The whole “boundary” concept proposed by others makes it seem like time, or more correctly space-time, is not continuous or that you could even discern exactly where the boundary lies. You could never measure the precise moment of midnight, it’s impossible because it’s a singularity. It’s not dissimilar from attempting to measure the length of an island’s coastline – as the size of your ruler decreases and approaches 0, the island’s coastline approaches infinity (there is an interesting book on fractals I read long ago that dives into this idea, which interestingly enough showed up on the LSAT exam I took – I guess that section did not truly test my reading comprehension because I know the answers to the questions based on prior substantive knowledge!).
The response that a day begins a “nanosecond” (10^-9 seconds) after midnight is not correct because that would mean that 1 picosecond (10^-12 seconds)after midnight would still be the prior day, which obviously doesn’t make sense. If you want to get really nerdy, one could analyze the impact of different inertial frames of reference on people’s perception of time under the special theory of relativity.
The practical solution is that if you want something to end at the end of a particular day, use 11:59:59, because it is unlikely that something could happen in the one second between this time and 12:00 that would cause a different result under a contract. For the same reason, I’d also use 12:00:01 for the same reason for something that must begin at the beginning of a certain date. If the one second is problematic for some reason, just carry the specified time out to more significant digits. At some point, we just need to accept an imperfect but practical solution to a problem that is impossible to solve perfectly.
– Pugh v. Duke of Leeds (1777) 2 Cowp. 714 per Lord Mansfield: “’Date’ does not mean the hour or the minute, but the day of delivery and in law there is no fraction of a day.” In Lester v. Garland (1808) 15 Ves. 248 Sir William Grant MR said “Our law rejects fractions of a day more generally than the civil law does. the effect is to render the day a sort of indivisible point.”
Thus a day begins at the instant of midnight passing, and ends at the following midnight. The parties can of course agree to define a day differently, and for banking reasons a day is often defined as ending at 1pm or 2pm (as money transmitted later may not reach the other party until the next day).
In English law, this holds good still – although there are some variations according to custom and circumstance. However, the starting point under US law is, presumably, Lord Mansfield in 1777, with whatever variations were determined by US courts or statutes since 1790 (or thereabouts).”
– There is no such thing as 12 am or pm. It is either 12 noon or 12 midnight.
Engaging on talent. Directors have long assumed responsibility for selecting and replacing CEOs, both in the normal course of business and in “hit by a bus” scenarios. Many also find it useful to track succession and promotion—for example, by holding annual reviews of a company’s top 30 to 50 key executives. But to raise the bar, some boards are moving from simply observing talent to actively cultivating it. Case in point: directors who tap their networks to source new hires. Donald Gogel, the chairman and CEO of Clayton, Dubilier & Rice, explains that “our board members can operate like a highly effective search firm. There’s nothing like recruiting an executive who worked for you for a long time, particularly in some functional areas where you know that he or she is both capable and a great fit.” Other boards actively mentor high-performing executives, which allows those executives to draw upon the directors’ experience and enables the board to evaluate in-house successors more fully.
3 Biggest XBRL Mistakes
For those responsible for XBRL filings, this article does a good job of explaining common errors (egs. DEI information; scale errors; auto-generated tags) – and tips on how to avoid them…
Here’s an excerpt from this blog by Cooley’s Cydney Posner:
Here’s an interesting report from Bloomberg on a soon-to-be-published study that concludes that stock analysts are actually worse at predicting corporate earnings now, after a number of regulatory actions to increase transparency and prevent research analyst conflicts of interest, than they were prior to these actions. In the wake of the dot-com crash and the Enron scandal, Congress, regulators and SROs enacted laws and adopted rules designed to increase transparency, improve corporate disclosure and prevent analyst conflicts, e.g., SOX (2002) and various conflict-of-interest rules adopted by the exchanges. While the study found an improvement in forecasting in the early 2000s right after adoption of these rules, the improvement was short-lived. The study showed that forecast accuracy significantly declined over the longer term despite the reduction in analyst conflicts of interest.
Also see this article entitled “9 ways companies fool you with earnings.” And don’t forget that Regulation A+ takes effect tomorrow, June 19th. As noted in this blog, the SEC has denied Montana’s request to stay it’s implementation…
Are Non-GAAP Disclosures Coming Under Renewed Scrutiny?
Here’s an excerpt from this blog by Cooley’s Cydney Posner:
A new study from the Associated Press, discussed in this AP article, shows a strong resurgence in the use of non-GAAP financial measures, most often reflecting numbers that are more favorable than GAAP numbers. The AP analyzed results from 500 major companies, based on data provided by S&P Capital IQ, a research firm, showed that the spread between GAAP and non-GAAP earnings has grown substantially over the past five years. For 21% of companies, non-GAAP profits reported in the first quarter were higher than net income by 50% or more, compared with 13% five years before. Although 72% of the companies had non-GAAP profits that were higher than net income in both the first quarter of this year and five years earlier, adjusted earnings were 16% higher this year compared with 9% five years ago. In the study, 15 companies “with adjusted profits actually had bottom-line losses over the five years.“ Moreover, the article contends, “the financial analysts who are supposed to fight corporate spin are often playing along. Instead of challenging the companies, they’re largely passing along the rosy numbers in reports recommending stocks to investors.”
Typically, the non-GAAP adjustments eliminated charges for layoffs, failed business operations or other restructuring charges, declines in the value of patents or other intangible assets, or charges related to employee equity comp. Whether or not these exclusions are fair, properly presented or even help investors see the financial results “through the eyes of management,” they are once again drawing the attention of critics. Indeed, former SEC chief accountant Lynn Turner is quoted in the article as contending that “companies are still touting ‘made-up, phony numbers’ as much as they did 15 years ago, perhaps more….” And one investor was quoted as finding the data “more confusing than it’s been in a long time, and the reason is all the junk they put in the numbers” and complaining of the time wasted “sifting through the same ‘nonsense’ figures…. confronted back in the dot-com days.”
In 2013, the head of the SEC’s Financial Reporting and Audit Task Force indicated at an AICPA conference, as reported by the WSJ, that the SEC was looking at the use of these non-GAAP measures “with an eye toward possible enforcement cases.” In particular, they were reportedly concerned about “mislabeling,…when companies use common, well-defined terms to refer to their own performance measures” and “trends and patterns that could indicate a risk of fraud, such as cases in which a company shows high reported earnings but has lower earnings for tax purposes, or when a company has a high proportion of transactions that are kept off its balance sheet.” While no big splashy cases have yet materialized as a result, frothy markets tend to invite the attention of concerned regulators, especially regarding issues that have attracted press scrutiny.
Political Spending Disclosure: House Bill Would Bar SEC From Adopting Rules
Yesterday, the House Appropriations Committee approved the “2016 Financial Services and General Government Appropriations” bill, which includes some items that don’t pertain to funding the SEC. [It’s a shocker that Congress would do that!] In addition to not giving the SEC an increase in funding (as I’ve blogged before), Section 625 of the bill prohibits the SEC from adopting a rule that would require public companies to disclose their political spending. We’ll see if that provision survives as this bill winds its way through the sausage machine..
Meanwhile, as noted in this article, over 20 advocates sent a letter to President Obama requesting that the upcoming SEC Commissioner be filled by folks who support corporate political spending disclosure rulemaking. And this article cites a new report – and petition – that supports the view that the next new Commissioner shouldn’t have ties to entities that the SEC regulates…
