December 13, 2019

The (Very) Part-Time Securities Lawyer

Our own Susan Reilly notes: Before she gave birth to her second son, Liz blogged about her experience balancing pregnancy, parenthood & lawyering. In that vein, I thought I’d share a little about my life as a part-time, work-from-home securities lawyer and mom of three boisterous little boys. I’ve had this job for nearly 6 years now – and here are 5 things I’ve learned:

1. Set deadlines for yourself – The work I do now is dangerously flexible – most of my writing projects don’t have concrete deadlines, which is both a blessing (not having partners or clients breathing down my neck is amazingly liberating!) and a curse (it’s easy to let something that should take just a few hours drag on in drips and drabs for weeks).

While I’m grateful for the flexibility, I need a little structure in order to flourish, and setting deadlines for myself helps. Sometimes going a step further and communicating those expectations to your boss or client will really light a fire – that nagging law firm associate in me still cowers in fear of missing a deadline.

2. Establish office hours – A flexible job schedule has a sneaky way of making you think you can get your work done anytime. But there are always other tasks that jump to the top of the list if you let them – errands to run, appointments to schedule, laundry to fold – the list is endless. Scheduling specific working hours during the day, and being disciplined in keeping them, can keep that other non-urgent “life” stuff from chipping away at your productivity.

3. Enlist help – When my older two children made it to school age, I convinced myself that I didn’t need help with the baby – because I would just get my work done while he napped or after everyone was in bed (ha! – see #2). But I was completely at the mercy of this tiny human who demanded my full attention during his waking hours, whose sleeping hours were far too few.

Eventually I realized that I needed help, and my little guy now spends some time with a sitter a few days a week. When he’s there, I’m able to fully focus on the task at hand without constant interruptions. And when he’s home, I’m able to be a more attentive and less distracted parent.

4. It’s normal to feel disconnected – Because I only work part-time and from home, I can sometimes feel disconnected from my peers. It’s hard to fully relate to the stay-at-home moms or the full-time working moms – because I don’t fit neatly into either category. It’s a weird feeling, having one foot in each camp, but it’s one I’m slowly getting used to.

5. Never take it for granted – When Broc suggested I write a blog post about working part-time, I was both really excited to share my experience – but also a little nervous. I realize that I’m in a somewhat rare position of being able to continue pursuing my legal career while also having the flexibility to be home with my young children.

It’s not lost on me that the challenges I’ve faced with working part-time are ones I would have given my right arm for when I was working brutal hours at a firm – always on call, all the while learning how to be a new parent. Every once in a while, it’s important to take a step back and appreciate that meaningful and rewarding part-time work isn’t easy to come by – and to know a good thing when it comes your way.

Direct Listings: NYSE Files Revised Proposal!

That was fast. Earlier this week, I blogged that the SEC had rejected the NYSE’s proposed rule change to permit companies to sell newly issued primary shares via a direct listing – only 10 days after the exchange had submitted it. The SEC hasn’t made any public statements about why it rejected the proposal, so we still don’t know for sure whether it was because the Commission is fundamentally opposed to direct listings, believes that rulemaking is required, or if there was just something it wanted the NYSE to tweak. But the NYSE signaled that it would continue working on this initiative, and it’s now submitted this revised proposal. As this Davis Polk memo explains, it’s pretty similar to the original:

The new rule change proposal is substantially similar to the proposal the NYSE filed in November, except that issuers can meet the NYSE’s market value requirement by selling $100 million of shares (rather than $250 million under the initial proposal). Consistent with the initial proposal, the revised rule change proposal would provide the same flexibility for an issuer to sell newly issued primary shares into the opening auction in a direct listing, and would also delay the requirement that an issuer have 400 round lot holders at the time of listing until 90 trading days after the direct listing (subject to meeting certain conditions).

Stay tuned as to whether this revision addresses the SEC’s concerns. As Broc blogged when the original proposal was submitted, some are worried about investor protection issues for listings that occur outside of the traditional IPO process – but others note that there are a number of misconceptions about direct listings, including that a direct listing is even a “capital-raising” activity (see more from this Fenwick & West piece). We’re continuing to post memos in our “Direct Listings” Practice Area.

How to Attract & Retain New Lawyers

Law firms lose about $1 billion annually because of attrition, according to Thomson West. Being a young lawyer is marginally better than being a young investment banker (I have only landed in the hospital 2 or 3 times for overworking – I assume it’s a much more regular occurrence with bankers). But practicing law is still a tough gig.

And while my eyes usually glaze over whenever I see anything with “Millennial” in the title, this article connects some dots for scenarios that I’ve seen play out repeatedly. In the span of a couple years, our firm lost a cadre of young lawyers – not to other firms or companies – but to become distillery owners, grant-writers, ultimate Frisbee managers, MFA students… the list goes on.

Here are some pointers worth thinking about:

– A Millennial lawyer will leave a job, not just when he or she is unhappy, but when he or she is not happy enough.

– Give associates time & space to integrate their personal & professional lives (“work-life balance” is so Gen-X).

– Figure out a real way to mentor new lawyers.

– Empower associates to contribute immediately.

– Focus on “doing well by doing good.” The days of asking an associate, “If you can use the hours, I could really use your help on a new deal,” are over. Instead, try this approach: “If you’re interested in helping an interesting client, I’ve got a great deal for us.”

That last one made me laugh because that quote is specifically mentioned in Broc & John’s “101 Pro Tips – Career Advice for the Ages” (but not quite in the way that you’d think). One of the most empowering things you can do for these new lawyers is to help them take control of their own careers – and recognize the benefits of sticking with it. “Pro Tips” delves into the topics above and is a great resource for young lawyers – order it today. Here’s the “Table of Contents” so you can see what’s covered.

Programming Note: Lynn Jokela’s Blogging Debut!

Last month, I announced that Lynn Jokela has joined us as an Associate Editor for our sites. She brings a wealth of experience – here’s her bio. I’m now excited to share that Lynn will be making her blogging debut next week. Lynn’s email uses the domain from our parent company – it’s – so keep an eye out for that in your inbox!

Liz Dunshee

December 12, 2019

SEC Calls Foul on “Earnings Management”

You likely saw this WSJ article last month, detailing an SEC investigation into one company’s end-of-quarter “earnings management” practices – e.g. leaning on customers to take early deliveries and rerouting products to book sales. The company says “everyone’s doing it” – and according to a McKinsey survey described in this Cleary blog, that’s not too much of an exaggeration:

Lest anyone think the SEC’s focus on “pulling in” revenues is an issue of limited relevance, note that approximately 27% of US public companies provide quarterly guidance, and evidence of widespread earnings management is not merely anecdotal. A broad survey by McKinsey reveals that, when facing a quarterly earnings miss, 61% of companies without a self-identified “long-term culture” would take some action to close the gap between guided and actual earnings, with 47% opting to “pull-in” sales. 71% of those companies would decrease discretionary spending (e.g., spending on R&D or advertising), 55% would delay starting a new project, even if some value would be sacrificed, and 34% would delay taking an accounting charge.

But the widespread nature of these practices doesn’t make the SEC more amenable to them – e.g. they imposed a $5.5 million fine and a cease-and-desist order in a recent enforcement action involving similar maneuvers. The blog notes:

The use of any of these techniques, if resulting in the obfuscation of a “known trend or uncertainty . . . that may have an unfavorable impact on net sales or revenues or income from continuing operations,” would presumably be equally objectionable to the SEC.

Accordingly, for those companies that are still providing earnings guidance, it would be prudent to make sure that your disclosure committee is having frank and frequent discussions with management about exactly what, if any, earnings management tools are being used, whether these tools fit squarely within the company’s revenue recognition policies, whether the company’s auditors are aware of the scope and persistence of these practices, and, most importantly, whether the use of the tools is, intentionally or not, masking a trend of declining sales, a declining market share, declining margins, or other significant uncertainties.

“Climate Accounting”: Exxon Prevails in Martin Act Suit

A couple months back, I blogged that Exxon Mobil was defending itself in New York state court against allegations that it had misled investors by saying publicly that it estimated higher future costs of climate change regulations when it evaluated potential oil & gas projects – when it was actually basing those decisions on current costs, and assumptions that the regulatory environment wouldn’t change.

Among other things, the complaint by the New York Attorney General alleged violations of the state’s Martin Act, which turns on whether there’s a misrepresentation or omission of material facts. The alleged misrepresentations were made by Exxon in reports that were published back in 2014 in exchange for the withdrawal of two shareholder proposals – and were then repeated in other reports such as the company’s “Corporate Citizenship Report.”

Earlier this week, the judge on the case issued this 55-page opinion in Exxon’s favor. Basically, the decision came down to a finding that investors didn’t care about the info – there was no market impact and the info wasn’t “material” when considered with the total mix available in the company’s 10-K and other disclosures. The judge also accepted Exxon’s argument that the company’s internal practices didn’t impact its financials.

This was a big victory, but it’s pretty fact-specific (as detailed in this “D&O Diary” blog) – and you’ve gotta wonder whether the outcome would be the same if the allegations were based on more recent disclosures, since current-day investors keep claiming they care about this stuff. Exxon continues to face other “climate change” lawsuits – including a consumer protection case in Massachusetts. And they aren’t alone. This Davis Polk blog notes that at least one D&O insurer is observing a growing number of climate-related claims – and that it will consider that risk during underwriting. Here’s an excerpt:

Among 28 countries, 75% of climate-related cases brought to date were in the United States alone. The firm anticipates that the failure to disclose climate change risks may drive claims in upcoming years. Moreover, a company’s lack of responsiveness to overall environmental, social and governance (ESG) issues, including ethical topics, can cause brand values to plummet. The insurer warns that, when gauging a company’s reputation, underwriters of D&O insurance will consider the nature and tone of comments made on social media relating to the company.

November-December Issue of “The Corporate Counsel”

We recently mailed the November-December issue of “The Corporate Counsel” print newsletter (try a no-risk trial). The topics include:

1. Hedging Disclosure Is Here—Are You Ready?

– Background of Hedging Disclosure Requirement
– What Item 407(i) of Regulation S-K Requires
– Applicability & Effective Dates
– Interpreting the New Hedging Disclosure Requirement
– Rule Applies to Broad Categories of Transactions
– Elaborate Policy Not Required
– Drafting Proxy Disclosure

2. Non-GAAP: Staff Scrutinizes “Individually Tailored Accounting Principles”

– Evolution of the Staff’s Non-GAAP Comments
– What is “Tailored Accounting?”
– Where is the Staff Raising “Tailored Accounting” Comments?
– Comments On Acquisition-Related Adjustments
– Five Key Takeaways on Tailored Accounting

Liz Dunshee

December 11, 2019

Earnings Releases: Better Late Than Wrong

Here’s a cautionary tale from a recent SEC Enforcement settlement – as reported in this Stinson blog:

In response to investor pressure to issue an earnings release within the same time frame as prior years, the company announced its 2017 year-end financial results on March 8th and furnished its earnings release on Form 8-K. The company issued the earnings release despite the departure of senior finance and accounting managers, pervasive ERP implementation and internal control issues, and a seven-week delay in the filing of its third quarter 2017 Form 10-Q.

According to the SEC, the earnings release materially misstated, among other things, the company’s earnings for 2017.

On March 19th, the company filed a Form 8-K with the Commission disclosing that it expected its 2017 Financial Results to differ from what had been reported in the March 8th earnings release. The company’s shares declined over eight percent that day.

The company settled with the SEC for $250,000. The pain of dealing with an Enforcement action – and the loss of credibility – was likely an even greater punishment…

FCPA: DOJ Revises Policy to Encourage Self-Disclosures

A couple weeks ago, the DOJ revised its FCPA “Corporate Enforcement Policy” to encourage more self-disclosures to the Department. Here’s an excerpt from an O’Melveny memo that describes the change:

The DOJ eliminated language that appeared to require companies, in disclosing conduct, to characterize that conduct as a violation of criminal law. The DOJ also clarified that companies, when identifying information not in their possession, need only identify evidence actually known to the companies at the time. The changes respond to concerns raised by companies and the defense bar about language in the CEP, and reflect the current Administration’s push to make DOJ policy towards corporate enforcement more reasonable.

While the policy doesn’t apply to SEC Enforcement, the memo does note that the the DOJ’s Criminal Division has expanded the CEP beyond FCPA cases, and stated that it will act as non­-binding guidance in Criminal Division cases involving healthcare, financial fraud, and other violations.

This Nixon Peabody memo blacklines the revisions – and explains they could be interpreted to encourage companies to share more information at an earlier stage of internal investigations in order to get full cooperation credit. We’re posting memos in our “FCPA” Practice Area as they come in…

California Consumer Privacy Act: FAQs

Ready or not, the CCPA takes effect January 1st. This memo from Womble Bond Dickinson lays out some “frequently asked questions” for companies that are trying to navigate compliance issues. Here’s one that could require some effort:

Question: Does the CCPA require changes to existing contracts?

Answer: If you are a business subject to the CCPA and do not want to be a data seller under the CCPA, then yes, you will need to amend contracts to add appropriate “service provider” language to the contract. If you are a service provider serving businesses subject to the CCPA, you can expect to receive requests from your customers described under the immediately preceding sentence. Also, where you yourself wear both hats, you may find you need to make both downstream and upstream changes to your agreements to comply with the CCPA.

Liz Dunshee

December 10, 2019

Insider Trading Reform: Could 2020 Be the Year?

Last week, the House passed the “Insider Trading Prohibition Act” by a vote of 410-13. John blogged about the bill back in June when it passed out of the House Financial Services Committee – it would broadly describe “wrongful” trading or communication of material non-public information by tying it to:

(A) theft, bribery, misrepresentation, or espionage (through electronic or other means);

(B) a violation of any Federal law protecting computer data or the intellectual property or privacy of computer users;

(C) conversion, misappropriation, or other unauthorized and deceptive taking of such information; or

(D) a breach of any fiduciary duty, a breach of a confidentiality agreement, a breach of contract, or a breach of any other personal or other relationship of trust and confidence.

The legislation would also require only that a defendant was aware or recklessly disregarded that the inside information was wrongfully obtained – rather than specific knowledge of how it was obtained or whether there was a “personal benefit” involved. It also leaves open the possibility that 10b5-1 transactions could be exempt from insider trading prosecution. Mostly, though, it pretty closely tracks current case law.

So what are the odds that this bill will become law? It appears to have “bipartisan” support – but it’s also been floating around in some form since 2015 and hasn’t made it to the finish line yet. The repetition certainly makes it easier to come up with headlines – I copied today’s from a 2017 write-up by John.

SEC Enforcement: “Cooperation” Becomes More Common

Last month, Broc blogged about the Enforcement Division’s annual report on its activities. This annual study from Cornerstone Research & NYU takes a closer look at the results for public companies & subsidiaries. Here’s some takeaways (also check out this Orrick blog saying that crypto & blockchain issues still appear to be enforcement priorities):

– While the number of enforcement actions rose more than 30% over the previous fiscal year, more than half of the new actions targeted investment advisers/investment companies or broker-dealers

– In FY 2019, the SEC noted cooperation by 76% of defendants, a record-high percentage and substantially higher than the FY 2010–FY 2018 average of 51%

– In the first half of FY 2019, the SEC brought 100% of enforcement actions as administrative proceedings; in the second half, this dropped to 84%

– Challenges to the constitutionality of protections preventing removal of the SEC’s administrative law judges (ALJs) continued in FY 2019 with a new defendant filing challenges following the August 2019 dismissal of Lucia v. SEC

– The average monetary settlement amount for public & subsidiary actions during the period was $16 million

Enforcement Stats: GAO Says SEC Needs Better Documentation

When the SEC’s Enforcement Division released its annual stats last month, Broc blogged that some of the motivation behind the report might be for the SEC to show Congress that its money is going to good use. That hunch aligns with the recent recommendation by the Government Accountability Office that the SEC needs to do a better job of documenting its procedures for generating these reports – including procedures for compiling & verifying stats and documenting their implementation.

Here’s the highlights from the GAO’s 20-page report:

Since 2009, the Division of Enforcement (Enforcement) in the Securities and Exchange Commission (SEC) has made modifications to its reporting of enforcement statistics, including by releasing a stand-alone annual report beginning in fiscal year 2017. The Enforcement Annual Report included additional data on enforcement statistics not previously reported and narratives about enforcement priorities and cases. Enforcement staff told us the annual report was created to increase transparency and provide more information and deeper context than previous reporting had provided.

Enforcement has written procedures for recording and verifying enforcement-related data (including on investigations and enforcement actions) in its central database. However, Enforcement does not have written procedures for generating its public reports (currently, the annual report), including for compiling and verifying the enforcement statistics used in the report. To produce the report, Enforcement staff told GAO that staff and officials hold meetings in which they determine which areas and accomplishments to highlight (see figure). Enforcement was not able to provide documentation demonstrating that the process it currently uses to prepare and review the report was implemented as intended.

Developing written procedures for generating Enforcement’s public reports and documenting their implementation would provide greater assurance that reported information is reliable and accurate, which is important to maintaining the Division’s credibility and public confidence in its efforts.

Liz Dunshee

December 9, 2019

Direct Listings: SEC Rejects NYSE’s “IPO” Proposal

That was fast. On Friday, Reuters and other sources reported that the SEC rejected the NYSE’s proposed rule change that would have permitted companies to sell newly issued primary shares via a direct listing – which had been submitted the week before.

Broc just blogged last week about the proposal being somewhat controversial. We aren’t sure what aspect of it prompted the rejection – but it’s not uncommon for these types of things to go through a few iterations and this Wilson Sonsini memo speculates that perhaps additional SEC rulemaking is necessary to make primary listings possible. The NYSE says it’s continuing to work with the SEC on a “direct listing product” – so it’s probably not the last we’ll hear of this path to going public.

Direct Listings: Nasdaq’s “Resale” Rule Extended to Its Global & Capital Markets

Last week, the SEC approved this recent Nasdaq proposal that will allow “resale” direct listings on the Nasdaq Global Market and the Nasdaq Capital Market – an extension of an already-existing rule that allows these types of direct listings on the Nasdaq Global Select Market.

This Wilson Sonsini memo summarizes the final rule – and explains how the valuation parameters for companies listing shares on Nasdaq’s Global and Capital Markets differ slightly from what applies to the Nasdaq Global Select Market.

Nasdaq Proposal: Excluding Restricted Shares from “Publicly Held” Calculation

The exchanges have been busy. A couple weeks ago, Nasdaq filed this rule proposal that would require listed companies to provide Nasdaq with info about the number of their non-affiliate shares that are subject to trading restrictions – e.g. due to lockups or standstills, private offering restrictions, etc. – if the exchange observes unusual trading activity that implies limited liquidity.

Under the proposed rule, Nasdaq could also halt trading in connection with the request and could require companies with inadequate “unrestricted public float” to adopt a plan to increase the number of unrestricted shares. Nasdaq already has a similar rule for initial listings, but this would extend the concept to continued listing rules.

The SEC posted the rule for comment last week, so we likely won’t know for at least a couple of months whether this rule will be approved in current form or at all.

Liz Dunshee

December 6, 2019

Direct Listings: NYSE’s “IPO” Proposal – Controversial?

Last week, the NYSE proposed a rule change to allow listed companies to sell newly issued primary shares on its own behalf directly into the opening trade. As noted in this Davis Polk memo, this change could make the direct listing route more attractive to companies that need to raise capital, although it is an open question whether companies will be able to achieve the desired pricing & distribution of shares in a way comparable to that done in a traditional underwritten IPO.

Some are worried about the investor protection issues raised when the traditional IPO process is not utilized – but others note that there are a number of misconceptions about direct listings, including that a direct listing is even a “capital-raising” activity (see more from this Fenwick & West piece). We’re posting memos in our “Direct Listings” Practice Area – and here are some media pieces:

CNBC’s “NYSE proposes allowing companies to raise fresh capital in direct listings”
Financial Time’s “Exchanges pitch alternative to IPOs for corporate fundraising”
Reuter’s “NYSE seeks to let direct listings raise capital in IPO alternative”
WSJ’s “NYSE Wants to Let Companies Raise Capital Through Direct Listings”
Matt Levine’s “Soon Direct Listings Will Raise Money”

The Challenges of Being a Whistleblower!

This “Financial Times” article reveals how being a whistleblower can ruin your career. Here’s an excerpt:

These individuals worked for four of the most renowned names in the business world: EY, Deloitte,
KPMG and PwC. They are among 20 former employees from the Big Four accounting firms who
have spoken to the Financial Times about their experience of harassment, bullying and
discrimination in the workplace over the course of a year’s investigation into how these firms treat
whistleblowers within their ranks.

The FT identified a disturbingly common pattern in terms of how complainants were treated: most
initially felt ignored, then isolated and were eventually pushed out. Legal clauses aimed at silencing
them swiftly followed; nine of those interviewed said they were pressured into signing restrictive
non-disclosure agreements. Others were asked to sign but resisted.

Broc Romanek

December 5, 2019

The SEC Chair Touts ‘Fishy’ Comment Letters

Not too long after I blogged about how nothing much happens at open Commission meetings, an interesting thing happened – the SEC Chair cited “fishy” comment letters submitted by alleged retail investors ahead of the agency’s proxy advisor rulemaking. This Bloomberg article broke the story by contacting the purported authors of the comment letters. Here’s the intro of the article:

When Securities and Exchange Commission Chairman Jay Clayton handed a policy win to corporate executives this month, he pointed to a surprising source of support: a mailbag full of encouragement from ordinary Americans. To hear Clayton tell it, these folks are really focused on the intricacies of the corporate shareholder-voting process. “Some of the letters that struck me the most,” he said at a commission meeting in Washington, “came from long-term Main Street investors, including an Army veteran and a Marine veteran, a police officer, a retired teacher, a public servant, a single mom, a couple of retirees who saved for retirement.” Each bolstered Clayton’s case for limiting the power of dissenting shareholders.

But a close look at the seven letters Clayton highlighted, and about two dozen others submitted to the SEC by supposedly regular people, shows they are the product of a misleading — and laughably clumsy — public relations campaign by corporate interests.

The two Bloomberg reporters called up the folks listed as the authors of the letters – and the article details a number of responses indicating that the letters were not genuine. The submission of fake letters on rulemakings is more common than you would think (see this old WSJ article) – but it’s not typical that an agency head is touting them publicly (see this article)…

How Much Diligence Should the SEC Chair Conduct Before Touting a Comment Letter?

My answer is “at least some.” An inspection of these letters pretty quickly reveals clues that something is not right. Consider the excerpt from this Matt Levine column:

What is particularly bad here is that “at least 20” of the fake letters contain “an out-of-context phrase inserted into the SEC’s mailing address”: If you’re writing a letter to the SEC, you put the SEC’s address at the top just for old time’s sake (of course you don’t mail it, you just submit it online), and for some reason the person mass-writing these letters inserted the phrase “A Coalition of Growth Companies” into the address that he or she cut and pasted into all the fake letters. Oops!

“Fictional” Comment Letters: Creative Writing Project?

Matt’s suggested solution to this issue is noted in his column:

The obvious solution here is to explicitly allow fictional comment letters. Of course the SEC already allows fictional comment letters, in the sense that it doesn’t seem to do any identity checking, and we have talked before about how lots of comment letters are blatantly fictitious. Many fictitious comment letters seem to be submitted for the sake of numbers: It is nice to say “a hundred ordinary investors wrote in to support this,” or whatever, but that’s rarely true and should not be taken seriously. But other fictitious letters are like these letters; they are submitted for the sake of their argument, and for a certain ordinary-investor flavor that comes from a talented writer of fiction trying to channel what he thinks an ordinary investor would actually feel and say. Why not let those fiction writers practice openly?

Why not submit a letter from like the Coalition of Giant Company CEOs saying “as CEOs, we like this rule, but we also think it’s in the interests of ordinary investors, and to give you a sense of that here’s what we imagine an 83-year-old Army veteran might hypothetically have to say about it.” And then you write the fake letter, and the SEC can say “we too can easily imagine that an elderly veteran might say ‘how disgusted I am that my financial investments are being used as a political pawn,’” etc. etc. etc., it loses almost none of its rhetorical effect for being fake. Just admit that it’s all fake!

For anyone out there who enjoys “creative writing,” maybe you could get into writing fictional comments to regulatory proposals. I doubt it’s a lucrative gig – but maybe it could be? Provide your anonymous input in this poll:

survey services

Broc Romanek

December 4, 2019

Reg Flex Agenda: Clawback Re-Proposal Coming Next Year?

Recently, the SEC published its latest Reg Flex Agenda – both the “Active” agenda and the “Long-Term Actions” agenda (combined, they are also known as the “Unified Agenda”). When it comes to rulemaking that might be proposed over the next year, it was interesting to see that clawbacks made the list! But pay-for-performance did not. The near-term agenda includes:

1. Auditor independence (April ’20)

2. Clawbacks (September ’20; this would be a second proposal – the first one was back in ’15)

3. Earnings releases/quarterly reports (September ’20; the SEC “requested comments” in January – the next step would be an actual rule proposal)

4. Accredited investor definition (September ’20…though Bloomberg reported that a proposal could be coming soon).

Two years ago, the Reg Flex Agenda was changed so that it came in two flavors: “Existing Proposed & Final Rule Stages” (together known as “Active”) – and “Long-Term Actions.” That has now been slightly changed so that there are three categories – “Pre-Rule Stage” (only one item in this category); “Proposed Rule Stage”; and “Final Rule Stage” – in the “Active” bucket.

Note that there have been a number of proposals issued by the SEC in recent months and those are listed under the “Proposed Rule Stage” rather than the “Final Rule Stage” like other proposed rulemakings – perhaps because the comment periods for those more recent proposals are still open…

SEC’s OCA Issues SAB 119 on Credit Losses

Recently, the SEC’s Office of Chief Accountant issued Staff Accounting Bulletin #119 about credit losses to update existing Staff guidance regarding methodologies and supporting documentation for measuring credit losses, in light of the recent FASB standard on credit losses (ASU 2016-13, codified at ASC Topic 326). Hat tip to Maynard Cooper’s Bob Dow for alerting us to this development…

Cap’n Cashbags: Wage Cuts Across the Board (Except Me)

A member recently said this about my “Cap’n Cashbags” videos: “I will say this for you – you have a singular cinematic style. The Cap’n Cashbags films are a unique combination of post-World War I German Expressionism & mid-1970s “Superfriends” cartoons.”

In this 25-second video, Cap’n Cashbags is just hanging out with his fellow CEO pals who serve on his board’s compensation committee – talking about wage cuts for all workers (except himself):

Broc Romanek

December 3, 2019

Transcript Now Available: “Shareholder Proposals – What Now”

We just posted the transcript for our recent webcast – “Shareholder Proposals: What Now” – that featured Corp Fin’s David Fredrickson, Davis Polk’s Ning Chiu, Morrison & Foerster’s Marty Dunn and Gibson Dunn’s Beth Ising. Check it out!

ISS Posts Preliminary Updates to Its Compensation Policies!

As noted in this Davis Polk blog, ISS recently released its “preliminary” updates to its compensation policies – which consists of 8 FAQs. Check out the Davis Polk blog for some analysis…

Our December Eminders is Posted!

We have posted the December issue of our complimentary monthly email newsletter. Sign up today to receive it by simply inputting your email address!

Broc Romanek

December 2, 2019

A Fond Farewell From Broc

This is the hardest blog I’ve written in my 17 years of blogging. My love letter to you. After pouring my heart & soul into our community for 17 years, I’m heeding the many signs that it’s time for a change. My last day in this job will be the end of this month.

So as hard as it is to leave y’all, I know in my ‘heart of hearts’ that it’s time to go. And that change starts with a nice, long break before I decide where my journey takes me next. The next few months are what I’m calling my “Epic Time of Yes.”

What will I miss the most? You. I will miss the daily dialogue – mainly by email – with so many of you. I cherish our friendship, our kinship, our love for securities law & corporate governance. I’m hesitant to name any names because there are many hundreds I would mention specifically. I hope we stay in touch. Either via LinkedIn or my gmail account (broc.romanek@).

I want to thank Jesse Brill for believing in me (his family owns the company; not me). Back in 2002, he hired someone who didn’t realize he had the skill set he apparently had. Until a year ago, I was responsible for our marketing, led our strategic direction, engaged in quiet sales efforts & participated in many other behind-the-scenes functions that helped make this job so enjoyable. Of course, the “in-front-of-the scenes” stuff was fabulously rewarding too. In this job, I have worn so many hats – journalist, event planner, publisher and of course, corporate lawyer – that whenever I filled out a form that asked for my occupation, I always paused before deciding which label to assign to myself.

I particularly like to cultivate creativity. I’m proactive in the way that I accomplish that – and I’m happy to share if you’re ever curious about how you can do so too. I recently received what I consider the kindest compliment – that I have a knack for building community. That’s the motto upon which I built the websites for this company from the first day I arrived. I’m proud of the innovations that I have brought to our events – I employed novel ways to make conferences not only bearable, but enjoyable. I think my “Blue Justice League” – a business casual game – is still ahead of its time. And I have heard nothing but rave reviews about the practical way I’ve put together our treatises, handbooks, checklists & paperbacks. Not to mention the sheer number of pages I’ve drafted for those things. Throw in the crazy total of blogs, podcasts, webcasts. The statistics are staggering.

Of course, I couldn’t have done it without the assistance & inspiration of our wonderful team. Dave Lynn and Alan Dye have been invaluable, both as colleagues and friends. Randi Morrison, Julie Hoffman, Linda DeMelis and Susan O’Reilly before they left us. The founder of course, Jesse Brill (and his son Nathan) – and his cohort Mike Gettelman. Barbara Baksa, Mark Borges and Mike Melbinger.

And in our HQ, too many to name – but I will give props to the ones that have been around the longest: Karen, Adam, Mike, Serge, Jacob, Denise, Sun Mi, Raychelle, Ron, Brian and Albert. I have sent more emails to Anne Triola than anyone in the world, our terrific webmaster – I’ll be visiting her in Seattle soon enough. And I will sorely miss the delightful Nona who does our typesetting.

Knowing that I am leaving Liz and John has been the hardest part of this difficult decision. They say good managers hire people that are smarter than they are. I certainly got that right. Working with them the past few years has been truly special. You are in good hands.

Anyway, after my extended holiday, I’m sure I will be wide-eyed & primed for a new adventure. I’m not sure yet whether that will be something that falls within our community – it might, it might not. Luckily, my wife & I recently cut our last tuition check so I’m in no rush to figure that out. I know that I bring passion and a yeoman’s effort to whatever I put my mind to – so hopefully I’ll find a situation that can help bring out the best in me.

In every end, there is a new beginning. Namaste.

“If Not For You”

I’m into all sorts of music. I like to think that I live through “theme songs” that I hear in my head each day. Today’s theme song is George Harrison’s “If Not For You” (written by Bob Dylan). Here’s an excerpt:

If not for you
Babe, I couldn’t even find the door
I couldn’t even see the floor
I’d be sad and blue, if not for you

If not for you
Babe, the night would see me wide awake
The day would surely have to break
It would not be new, if not for you

If not for you, my sky would fall
Rain would gather, too
Without your love I’d be nowhere at all
I’d be lost, if not for you

Broc Romanek