In this 31-minute episode of the “Mentorship Matters with Dave & Liz” podcast, Dave and I were delighted to continue our conversation about Hollywood portrayals of securities law issues and securities lawyers – again featuring enthusiastic color commentary from Charles Lee, who serves at the SEC as Senior Advisor, Office of the Chairman, and Ted Yu, who serves at the SEC as Associate Director of Specialized Policy & Disclosure in the Division of Corporation Finance. In this episode, we discussed:
1. Board and compliance dynamics in “Billions.”
2. Schedule 13D anarchy in “Other People’s Money.”
3. Hollywood’s take on shareholder meetings.
4. Why IPOs are an underutilized securities law plot.
5. Honorable mentions for favorite securities law movies and tv shows.
6. SEC Historical Society’s list of securities law in film, radio, and television.
7. Wrap-up thoughts on securities law in Hollywood.
If you missed Part 1 of this conversation, you can check out Dave’s recent blog about it – and all of our prior episodes are available in our podcast archive.
In both episodes, Charles and Ted were speaking with us in their individual capacities – and as always, the SEC disclaims responsibility for any private publication or statement of any SEC employee or Commissioner, and this podcast expresses the speakers’ views and does not necessarily reflect those of the Commission, the Commissioners or other members of the SEC staff.
Thank you to everyone who has been listening to the podcast! If you have a topic that you think we should cover or guest who you think would be great for the podcast, feel free to contact Dave or me by LinkedIn or email.
While scholarship continues to discuss the historical affects of films on the American public, there is little exploration of the portrayal of U.S. financial markets in motion pictures. Financial markets are a large part of the American economy and culture. Moreover, movies have depicted markets, misdeeds, and regulation since the invention of silent film. By studying the various ways American movies have shown the image of the markets, nature of financial misdeeds, and the role of regulation over the past century, people can begin to consider how film may have reflected and shaped public perception of financial markets.
Dr. Miller calls on scholars to reflect on and synthesize how films about financial regulation reflect and shape public views. I can’t promise “scholarship,” but maybe we’ll do another podcast at some point! Also check out this page from the SEC Historical Society – with film, radio, and tv clips through the years of the SEC and financial markets in action.
In remarks last week at the US Chamber Capital Markets Summit, Corp Fin Director Jim Moloney recapped how the SEC’s recent proposals to reform registered offering rules and filer status thresholds would work together to simplify the hodge-podge of registration and reporting rules that seem to be a hurdle for companies looking to access the public companies – especially small- and mid-sized companies. Since we take a lot of cues from Corp Fin, Jim’s perspective is helpful for piecing things together (Jim gave the remarks in his official capacity, but as always they don’t necessarily reflect the views of the Commission, any Commissioner, or staff, etc. etc.). Here’s an excerpt:
While these Proposals may look like “new builds,” the design blueprints are time-tested. These Proposals, if adopted, would impact how public companies register securities and report to investors. I will point to just one example from each proposal to demonstrate how impactful these rules could be.
The Registered Offering Reform Proposal, if adopted, would give smaller public companies access to shelf registration for the first time in decades, increasing the number of eligible companies by more than 60 percent.[5] It would rewire the house to support the higher amperage of capital flows required today. Consider a small, pre-commercial biotech company that successfully completed an IPO within the past year, but that needs to conduct a follow-on offering to raise additional capital to further its clinical trials. The company cannot wait weeks or months for SEC review of its registration statement that repeats much of the same information already provided to investors in its IPO registration statement. But, under the current rules, that’s exactly what companies have to do.
Form S-3, the vehicle for shelf registration, currently requires a $75 million public float and a 12-month reporting history — thresholds set in the 1990s that today shut out companies that have earned their place in the public markets and need to raise capital on their own timelines. The Registered Offering Reform Proposal would replace these obsolete thresholds with two simple questions: (1) Is this company an “ineligible issuer”?[6] and (2) Is this company current and timely in its SEC reporting?[7]
The Filer Status Proposal would take the same approach to disclosure. Right now, SEC rules sort public companies into five different compliance buckets, some overlapping. The proposal, if adopted, would raise the Large Accelerated Filer threshold from $700 million to $2 billion in public float, reserving the most demanding disclosure rules and reporting deadlines for the largest corporations.[8] For everyone else – 81 percent of all public issuers, although only 6.5 percent of total market public float[9] – the amendments would likely result in reduced audit fees and other costs. The current system has a leaky roof and sagging floorboards, and this proposal would alleviate these signs of structural stress.
Some companies become subject to auditor attestation of internal controls[10] before generating a single dollar of revenue, simply because the companies’ market value crosses the accelerated filer threshold at one specific testing date. One biotech company in particular reported spending around $11 million on that compliance obligation alone since it crossed the $700 million public float threshold in 2021, roughly the cost of running a large Phase 2 clinical trial.[11] Under the thresholds in the proposal, many companies would be able to instead deploy that capital to further their business operations.[12]
Jim noted that all of the recent proposals are currently open for comment. Additionally, as Meredith shared a couple weeks ago, SEC Chair Paul Atkins has opened a new comment portal specifically for IPO modernization. Jim’s remarks call out that the SEC is looking for companies as well as investors. Building on another recent blog from Meredith, here are all the upcoming comment deadlines:
Earlier this month – June 6th – the SEC celebrated its 92nd birthday. That was the date the Securities Exchange Act, which created the Commission, was signed into law. In a speech last week, Commissioner Hester Peirce paid tribute to where the SEC has been and where it’s going. That got me thinking that it would be fun to pull together a few of the blogs we’ve shared through the years to mark the SEC’s existence. Here are a few highlights:
Speaking of milestones, Commissioner Peirce also noted in this speech – titled “Peirce Out” – that she’s moving to the beach in the not-too-distant future. I’m not exactly sure when Commissioner Peirce’s last day is at the SEC, but as Meredith shared, she’s starting a new gig at Regent University School of Law this fall. It will be the end of an era!
Looking ahead to what’s on the horizon for the SEC during these exciting times, the agency announced last week that John Moses has been appointed Director of the Office of Investor Education and Assistance, which provides services and resources to help investors build their financial futures and protect against investment fraud. John has been at the SEC since 2016 and has been serving as Acting Director of this Office prior to his permanent appointment. His background before joining the SEC was in real estate, operations, and the US Navy.
The latest issue of The Corporate Counsel newsletter has been sent to the printer. It is also available now online to members of TheCorporateCounsel.net who subscribe to the electronic format. The issue includes the following articles:
– ‘Form 10-Q for Thee, But Not for Me?’ SEC Proposes Optional Semiannual Reporting
– ‘Everybody into the Pool!’ SEC Proposes to Overhaul Rules for Registered Offerings
– The Great Filer Reset: SEC Proposes to Streamline Filer Status Categories
Email info@ccrcorp.com or call 1.800.737.1271 to subscribe to this essential resource!
Monday is Memorial Day. This year, I’d like to pause our typical blog topics to honor the U.S. service members and families whose names became part of our national story by way of the current war.
This NYT article profiles the 13 U.S. individuals who had been killed or wounded as of April 8th. On top of all of the lives lost in this conflict, my heart goes out to these individuals’ families and friends, who will be carrying grief this weekend and always. Obviously, each person was unique and irreplaceable. I have been particularly drawn in by the stories of these three:
– Sergeant Noah L. Tietjens, 42 – survived by his wife, Shelly, and teenage son, Dylan, in Bellevue, Nebraska. They had all taken up martial arts together and Noah dreamed of opening his own studio one day. The NYT says: “Sergeant Tietjens was also a doting father, making sure to cheer on Dylan at his black belt ceremony. When Dylan accepted a special award that night, he asked his father to come onstage so he could dedicate it to him.”
– Sergeant Declan J. Coady, 20 – survived by his parents, three siblings, grandparents and extended family, he would have turned 21 on May 5th. As an Eagle Scout, Declan was deeply committed to serving his community. He earned 56 merit badges! He was a college sophomore at Drake University in Iowa – studying cybersecurity and computer science – and while he could have avoided deploying under an ROTC contract, he chose to stay with his unit. I’ve been thinking a lot about Declan as I watch my own sons work toward their merit badges and imagine all of the possibilities that lie ahead.
– Sergeant First Class Nicole M. Amor, 39 – survived by her husband, Joey, and her 18-year-old son and 9-year-old daughter. This one is especially close to home for me: Nicole lived in a nearby Minnesota town, had a child close in age to mine, and resembles my cousin, who is also a service member and mom. Nicole’s eldest is graduating high school this spring. He had Senior Night earlier this month, and it sure looks like she would have been proud. Her husband continues to share personal tributes to her as well. This excerpt from a recent remembrance has lingered with me:
Every second we don’t get her
for that moment.
Another piece gone.
And no one feels that but us.
We take a day to remember them.
Flags. Beer. Words. Vacations. Silence.
Then everyone goes back to living like nothing is still breaking somewhere.
As if no one is still buried in the lost family that can never be again.
Joey’s words offer a reminder that behind each name are loved ones still living with a profound absence every single day. If you find yourself moved this weekend, you might consider taking a quiet moment to hold these families in your thoughts or looking into one of the many organizations that offer ongoing support to Gold Star families.
Have a safe and enjoyable holiday weekend. Our blogs will be back on Tuesday.
The Financial Times recently reported that the New York Stock Exchange is turning an old vault into an invite-only social club. The launch resurrects a famous perk that existed from 1898 until 2006. Ironically, electronic trading contributed to the demise of the old club, while the vault being used for the new club was previously used to store stock certificates – electronic trading giveth, and electronic trading taketh away. This MSN article speculates on some of the motivations:
There is an interpretation in Wall Street that this strategy was devised to counter Nasdaq, which has been challenging the NYSE’s dominance. . . . The FT stated, “Although the NYSE claims the creation of the social club is unrelated to large IPOs, it involves a pride competition with Nasdaq and listing fees in the hundreds of thousands of dollars annually.” Nasdaq also has its headquarters in Manhattan, New York, alongside the NYSE. However, it operates electronically and does not have a separate trading floor where traders are stationed or events like opening bells are held, unlike the NYSE.
Additionally, the plan includes creating a networking hub within the building for industry giants to counter the Texas Stock Exchange, which is set to open this year and positions itself as a ‘rival to Wall Street.’ The Texas Stock Exchange, in which global financial giants like Goldman Sachs and JPMorgan are investors, has emerged as a rising power threatening the New York exchanges.
The FT article says that the NYSE Group president will have the final say on who makes the cut for this exclusive venue. If anyone reading this is on that list, more power to you (literally)! This sounds like the type of place where I would be anxious about using the wrong fork.
Most securities lawyers have experienced, at least a few times, the sinking feeling of realizing that a filing deadline may have been missed. The panic results not just from our inherent rule-following tendencies, but also because the error might cost the company its ability to use Form S-3, which (when available) affords a variety of useful accommodations that make it easier to access public capital in a rapidly shifting market.
Through the years, we’ve fielded desperate posts on our Q&A Forum about waiver requests and nightmare scenarios of missing filings by one minute for technical reasons. Now, a welcome solution may be in the works! Among the other proposed amendments that I highlighted earlier this week, the SEC’s proposal on registered offering reform includes this nugget on page 49:
Consistent with the Commission staff’s current practice of not objecting to use of Form S-3 when an untimely filing has been made under certain limited circumstances, we also propose to amend the form’s instructions to provide that an issuer would remain Form S-3 eligible notwithstanding an untimely filing having been made during the relevant lookback period so long as: (a) the filing was made within seven calendar days of the original due date (where 17 CFR 240.12b-25 (“Rule 12b-25”) applies, the seven calendar days would be calculated from the filing’s original due date and not from the end of the time period prescribed under Rule 12b-25) and (b) the issuer made only one untimely filing during the relevant lookback period. We want to encourage issuers to make their Exchange Act filings on a timely basis. At the same time, however, we believe loss of Form S-3 eligibility can be a disproportionately harsh consequence for a single untimely filing during a 12-month period. Accordingly, we propose to permit issuers to remain Form S-3 eligible when the conditions described herein are satisfied. We believe a seven-day period provides a reasonable amount of time to file the missed report or other material while helping ensure investors receive necessary information within a reasonable timeframe.
The footnotes to this excerpt explain that:
– If an issuer attempts to rely on Rule 12b-25 but is unable to comply with the requirements of that rule, the seven calendar days would be calculated from the filing’s original due date and not from the end of the period prescribed under Rule 12b-25. If, on the other hand, an issuer complies with Rule 12b-25 with respect to a report, such report is deemed to be filed on the prescribed due date and, therefore, the issuer would not need to rely on the seven-calendar-day grace period described in this section.
– If the seventh calendar day falls on a Saturday, Sunday, or holiday, the report or other material would need to have been filed no later than the first business day immediately following the Saturday, Sunday, or holiday. Under General Instruction G.(3) of Form 10-K, a reporting issuer subject to the proxy rules may omit Part III information from the Form 10-K if that information is included in the issuer’s proxy statement filed with the Commission within 120 calendar days after the fiscal year end. This instruction treats the omitted Part III information as timely filed on the Form 10-K due date. If the issuer fails to file this information with its proxy statement or fails to amend its Form 10-K within 120 calendar days, the Form 10-K is considered untimely. The proposed seven-day period would apply only to the original Form 10-K due date and not to the additional 120- day period provided by General Instruction G.(3).
Thanks to John and Weil’s Howard Dicker for flagging this Easter Egg!
We’ve recently posted another episode of our “Understanding Activism with John & J.T.” podcast. This time, J.T. and John were joined by Bill Fiske, who leads Georgeson’s M&A and Contested Situations Group, and David Farkas, who serves as Head of Investor Intelligence, North America for Computershare. Bill and David discussed some of the key findings in Georgeson’s Global Activism Report. Topics covered during this 23-minute podcast include:
– Factors driving the 2025 environment and activists’ response
– The changing mix of activist objectives in U.S. campaigns
– How activists are adapting their stake building strategies to the changing environment
– How the decline of ESG activism in the U.S. has shifted activist messaging
– The behavior of large index and quasi index investors in contested U.S. elections
– Common mistakes boards make when responding to early activist engagement
This podcast series is intended to share perspectives on key issues and developments in shareholder activism from representatives of both public companies and activists. We continue to record new podcasts, and they’re full of practical and engaging insights from true experts – so stay tuned!
Yesterday, the SEC proposed big changes to the rules and forms governing registered offerings. The amendments – as set forth in this 511-page proposing release – are intended to encourage public capital formation by increasing efficiency, flexibility, and cost savings for public companies – while making it easier for broker-dealers to provide research coverage for a broader universe of public companies and maintaining robust investor protections. These excerpts from the SEC’s fact sheet explain the key points:
Form S-3 eligibility:
– The proposed amendments would revise Form S-3’s eligibility requirements by, among other changes, removing the requirement that issuers be subject to the reporting requirements of the Securities Exchange Act of 1934 (Exchange Act) for 12 months before using the form and eliminating all of the form’s transaction requirements, including the instruction that requires issuers to have at least $75 million in public float to register an unlimited amount of securities on the form. Form S-3 would continue to require that issuers be current and timely in their Exchange Act reporting requirements and would prohibit certain “ineligible issuers” from using the form.
– Taken together, the proposed amendments are intended to allow a greater number of issuers flexibility to access the public securities markets quickly by using Form S-3 while also ensuring that investors remain appropriately protected. The release states that, under the proposed amendments, there could be an increase of over 60 percent in the number of issuers eligible to offer an unlimited amount of securities on Form S-3. These newly eligible issuers would benefit from the cost savings and capital raising efficiencies and flexibilities associated with the ability to use Form S-3 and conduct shelf offerings.
Enhanced Registration and Communication Benefits:
– Currently, certain registration and communication benefits are reserved for “well-known seasoned issuers” (WKSIs). In order to qualify as a WKSI, an issuer must have at least $700 million in public float or have issued at least $1 billion of debt securities in registered offerings. Under the proposed amendments, issuers would not be required to meet either of these metrics in order to qualify for the enhanced registration and communication benefits. Instead, under the proposed amendments, issuers would qualify for all of those benefits — other than the ability to use an automatic shelf registration statement — if they are eligible to use Form S-3 and have at least one class of common equity securities listed on a national securities exchange. Issuers would have to be subject to the Exchange Act’s reporting requirements for 12 months before being able to use an automatic shelf registration statement.
– These proposed amendments are intended to provide a greater number of issuers the flexibility to access the public securities markets on demand using automatic shelf registration statements and to benefit from other offering-related flexibilities while also ensuring that investors remain appropriately protected. The release states that, under the proposed amendments, there could be an increase of over 200 percent in the number of issuers eligible for all of the enhanced registration and communication benefits.
Preemption of State Securities Law Registration and Qualification Requirements:
– The proposed amendments would define “qualified purchaser” under Section 18(b)(3) of the Securities Act and preempt state securities law registration and qualification requirements with respect to any registered offering. Such preemption currently applies to registered offerings in which the securities being offered and sold are listed or approved for listing on a national securities exchange. Preemption currently does not, however, apply to registered offerings of unlisted securities.
– The proposed amendments, therefore, would eliminate the costs associated with complying with numerous states’ registration and qualification requirements for registered offerings of unlisted securities. The proposed amendments are intended to lower the cost of a registered offering of unlisted securities and, as a result, facilitate capital formation in a manner that is consistent with investor protection.
Incorporation by Reference on Form S-1:
– The ability to incorporate by reference information into Form S-1 filed before the effective date of the registration statement (backward incorporate) currently is limited to issuers that, among other things, have filed an annual report for their most recently completed fiscal year. Further, the ability to incorporate by reference information filed after the effective date of a Form S-1 (forward incorporate) currently is limited to issuers that are smaller reporting companies (SRCs). Under the proposed amendments, issuers would be able to backward incorporate regardless of whether they had filed an annual report for their most recently completed fiscal year and forward incorporate regardless of whether they are an SRC. The proposed amendments would, therefore, allow a greater number of issuers to enjoy the cost savings associated with incorporation by reference, with an estimated increase of up to 106 percent in the number of issuers eligible to forward incorporate on Form S-1.
The SEC’s press release touts the proposal as “the most significant modernization of the registered offering framework in more than 20 years.” If adopted, the amended rules would also maintain parity between certain Form N-2 filers and operating companies across registration, offering, and communication provisions, and expand access to broad-based advertising for certain non-variable annuity insurance products.
Comments are due 60 days after publication of the proposal in the Federal Register (which usually takes about 30 days). For more color on the proposal and its potential impact, members can check out the memos that we’ll be posting in our “Securities Act Reform” Practice Area.
