This week, I have been celebrating 50 years of The Corporate Counsel and all of the related publications by showcasing some of my favorite contributions to the newsletter over the years.
When I started working for Executive Press after leaving the SEC in May 2007, I was very excited to join the editorial staff of The Corporate Counsel newsletter, given my long history with the publication that I described in the blog this week. Up until this point in my career, I had never really had the unique experience of writing for a blog or a newsletter, having instead cut my teeth on writing legal memoranda and disclosure in SEC filings. The thing that I soon learned about blogs and newsletters is that they very much have a “voice,” and if you are writing for them, you need to adapt your writing style to that voice. While this may sound straightforward, I found it hard to adapt my writing style to the more casual, conversational approach that is associated with these publications. I greatly appreciate the patience and understanding of Mike Gettelman, Broc Romanek and Julie Hoffman, who successfully guided me to the “voice” of our publications that carries through to this day.
For today’s featured article from The Corporate Counsel, I highlight one that is less practical and more personal. Even though this piece does not really include any practical guidance, I definitely find myself referring back to it from time to time. In the July-August 2020 issue of The Corporate Counsel, I penned a tribute to my late friend Marty Dunn, who had been a big part of The Corporate Counsel family for almost a decade. I still have a very distinct memory of when I asked Marty to join me as an editor of The Corporate Counsel, and he was so excited to get a chance to collaborate with me and contribute to an iconic publication that he had also relied on for many years. We announced Marty’s arrival in the May-June 2011 issue of The Corporate Counsel, and over the course of his tenure Marty and I had a very healthy competition trying to come up with the most practical guidance in our contributions, and I have to say looking back that Marty usually won on that front! My tribute to Marty is as follows:
In Memoriam: Marty Dunn
We lost a securities law legend when Marty Dunn passed away on June 15, 2020. Marty was the most recognizable person in the securities bar, having spoken at so many conferences and events for so long that it is impossible to count them all. Marty was also a key contributor to our publications, serving as an Editor of The Corporate Counsel for the past nine years, as a co-host of “The Dave & Marty Radio Show” on TheCorporateCounsel.net and as a panelist, comedian and puppeteer at the annual Proxy Disclosure Conference. Marty loved the securities laws and spent his life sharing that love with others, always seeking to teach us something new, while at the same time making sure that we did not take it all too seriously.
Marty’s wit and good humor was legendary. He always had a funny story or witty retort when speaking on an otherwise dry panel, and audiences loved him for that. For many years, Marty and I would travel around the country, like a pair of securities law troubadours, bringing the Dave and Marty show to conferences and events. Although, I must admit, it was mostly the Marty show. We had such a great time on those trips. I will treasure those memories forever.
Marty had spent nearly 20 years at the SEC, where he was responsible for many of the SEC’s most significant initiatives on disclosure, governance and capital-raising, including, among many others, reforming the securities offering process, implementing the Sarbanes-Oxley Act, adopting plain English requirements, implementing electronic proxy delivery and easing capital formation for small businesses. Marty spent his entire government career in his beloved Division of Corporation Finance, where he held several key positions, including Associate Director, Chief Counsel, Deputy Director and Acting Director.
Marty truly loved the SEC and Corp Fin. I can distinctly recall sitting in his office, drafting some new rule, interpretation or regulatory relief, and Marty would say, with a mix of amazement and admiration, “We just made that up!” Marty was the best at taking something complex and making it understandable, as well as taking on the most difficult problem and finding a practical solution for it. These skills made him the great teacher, mentor, regulator and counselor that he was.
After leaving the government, Marty was in private practice at O’Melveny & Myers and Morrison & Foerster. Clients and colleagues sought Marty out for his wise counsel and his aforementioned ability to solve difficult problems with practical solutions. I had the pleasure of working with Marty again for the past seven years, and we were able to accomplish so much together, but yet we had so much more that we wanted to do. I am going to miss him as a valued friend, mentor and colleague.
Above all else, Marty was a family man. He loved his family so much, and he talked about them all the time. Marty is survived by his wife Linda and daughters Emily, Molly and Maggie, as well as many other family members, friends, colleagues and clients who loved him.
I hope you have enjoyed my celebration of 50 years of The Corporate Counsel, and if you are not a subscriber to The Corporate Counsel and The Corporate Executive newsletters, be sure to sign up today. Please email info@ccrcorp.com or call 1.800.737.1271 to subscribe.
Overnight, the House passed a measure restoring federal government funding, and the President signed that legislation soon thereafter, making 43 days the new high water mark for federal government shutdowns. As of early this morning, the SEC’s website was updated to remove a notice indicating that the agency was shut down due to a lapse in appropriations, but no guidance has been provided as of yet regarding the agency’s reopening. As of my writing of this blog, it is unclear whether the furloughed SEC Staff will be returning to work today or tomorrow.
UPDATE: Since I wrote the blog very early this morning, NBC4 Washington has reported that the Office of Personal Management sent the following notice last night to federal workers in the Washington, DC area: “Employees are expected to begin the workday on time. Normal operating procedures are in effect.”
As the political parties crank their spin machines up to full blast to try to convince us who “won” this government shutdown, the one thing for certain is that we the U.S. taxpayers all lost. Holding the federal government hostage for a month and a half in the end appeared to accomplish very little, but yet it disrupted the lives of many Americans who are just trying to go about their lives with little regard for political machinations in Washington, DC. I am afraid that we have become too numb to these government shutdown shenanigans, and that does not bode well for our future – particularly given that we could face the same fate as soon as the end of January!
For the SEC, the shutdown could not have come at a worse time. The SEC Staff, already demoralized as a result of DOGE cuts, early retirements and a return-to-office directive, was forced to sit on the sidelines with no paychecks for nearly a month and a half. As a result of the shutdown, critical rulemaking initiatives that have been outlined by Chairman Atkins ground to a halt and momentum was lost. Now that the government has reopened, the Staff will have to dedicate scarce resources to working through a backlog of filings and requests. I know that the Staff is up for the challenge, but it is unfortunate that they have to face this challenge at all.
Yesterday, the WSJ reported that the proxy advisory firms Institutional Shareholder Services and Glass Lewis are being investigated by the FTC for potential violations of antitrust laws. The article notes:
The probe, which is in its early stages, is focused on the firms’ competitive practices and how they steer clients on hot-button issues such as climate- and social-related shareholder proposals, people familiar with the matter said. The FTC told Glass Lewis it was investigating whether it and others may have engaged in “unfair methods of competition,” according to a letter sent in late September that was reviewed by The Wall Street Journal.
The FTC probe follows an antitrust review launched by the Republican-led House Judiciary Committee this spring.
“This non-public investigation does not mean the Commission is suggesting Glass Lewis has acted unlawfully. With complete confidence in our longstanding commitment to high ethical standards, Glass Lewis is fully cooperating with the FTC’s document request,” a Glass Lewis spokeswoman said in a statement.
An ISS spokesman declined to comment.
Earlier this week, the WSJ reported that the White House is considering an executive order that would seek to restrict certain activities of ISS, Glass Lewis and the largest institutional investors. That article notes:
Trump administration officials are discussing at least one executive order that would restrict proxy-advisory firms such as Institutional Shareholder Services and Glass Lewis, people familiar with the matter said. That could include a broad ban on shareholder recommendations or an order blocking recommendations on companies that have engaged proxy advisers for consulting work, the people said.
Officials also are exploring limits on how index-fund managers are allowed to vote, seeking to curtail the power of such behemoths as BlackRock, Vanguard Group and State Street, the people said. These three together own on behalf of clients roughly 30% or more of many of the biggest U.S. publicly traded companies. One measure being discussed would require these index-fund managers to mirror their votes in line with clients who choose to vote.
We will be monitoring to see where all of this goes, because these measures could radically change the landscape for public companies.
My ongoing tribute to 50 years of practical guidance from The Corporate Counsel continues this week with yet another article that I contributed to the publication that I find particularly useful and go back to time and time again in my practice. But first, yet another reflection on my interactions with The Corporate Counsel over the years.
When I served as Chief Counsel of the Division of Corporation Finance back in the 2000s, I would occasionally receive calls from Jesse Brill about topics that he was covering in The Corporate Counsel or The Corporate Executive. Even though some in Corp Fin told me not to talk to Jesse, I found it useful to discuss topics with him and understand his point of view, while of course trying to say as little as possible that he could attribute to me! Jesse was well known by the Corp Fin Staff, because over the years he was always willing to engage with the Staff in pursuit of providing the readers of The Corporate Counsel with the most practical, up-to-date guidance.
A topic that we frequently cover in The Corporate Counsel is insider trading policies, and for many years we have provided readers with a model insider trading policy and related materials. It has always been gratifying for me to see how many issuers follow The Corporate Counsel’s model policy, proving that it has been a great resource for companies seeking to implement effective insider trading compliance programs.
In the November-December 2018 issue of The Corporate Counsel, as part of our periodic update of the model insider trading policy, I wrote a piece that delved into the “why” of insider trading policies. I believe that understanding why companies adopt insider trading policies is very helpful when implementing an effective insider trading compliance program and dealing with compliance issues that come up over time. The article notes:
Often when we revisit an issuer’s insider trading policy and procedures, the question inevitably arises of “why do we need an insider trading policy?” As insider trading policies have become ingrained into issuers’ ever-expanding menu of controls & procedures, we fear that sometimes the importance of the policy and procedures (to both the issuer and the insiders/employees) is lost.
If insiders/employees are looking at the insider trading policy as yet another policy that they glance over in the employee handbook, unfortunate errors in judgment can prevail and an individual (and perhaps the issuer) could face an SEC enforcement action or private securities litigation. For these reasons, we do not think it hurts to review the legal basis for having the insider trading policy and whether the policy and the procedures that it contemplates operate in a manner consistent with that legal standard.
Enter ITSFEA and the Modern Insider Trading Policy. While insider trading policies have been a mainstay for regulated entities (e.g., broker-dealers, funds, banks) for many years, it was not until the enactment of the Insider Trading and Securities Fraud Enforcement Act of 1988 (ITSFEA) that the notion of having a detailed insider trading policy and implementing procedures for other types of issuers began to take hold. Prior to the middle of the 1980s, the insider trading enforcement tools at the SEC’s disposal were relatively weak, limited to seeking injunctions against future violations and disgorgements of profits or losses avoided.
With insider trading scandals running rampant at the time, Congress was prompted to act, first enacting the Insider Trading Sanctions Act of 1984 (which gave the SEC the authority to seek treble civil monetary penalties) and then ITSFEA. The changes to the securities laws in ITSFEA included: (i) mandating that regulated entities such as broker-dealers and investment advisers must adopt, maintain and enforce policies and procedures designed to prevent insider trading; (ii) providing that entities (including issuers) could be subject to insider trading violations by persons who the entities directly or indirectly control; and (iii) expanding the definition of
“controlling person.”
The concept of controlling person liability as contemplated in ITSFEA changed the dynamic between the issuer and its insiders/employees. Under the ITSFEA provisions, controlling person liability would not apply in situations where the controlling person has “acted in good faith and did not directly induce the violation;” however, if the controlling person allows access to material nonpublic information (either about itself or about other entities) without implementing procedures to prevent the improper disclosure of the information or insider trading, then the controlling person could be subject to liability based on the controlled person’s actions.
The hits just keep on coming, folks! Stay tuned for my final 50th Anniversary blog tomorrow! If these celebratory blog posts give you the irresistible urge to subscribe to The Corporate Counsel newsletter, please email info@ccrcorp.com or call 1.800.737.1271 to get signed up.
Last night, we came one step closer to an end to the federal government shutdown, with the Rules Committee of the House of Representatives voting to advance the Senate-passed bill that I mentioned in the blog on Monday. The House is scheduled to reconvene at noon today, and votes on the bill could begin as early as 4:00 pm this afternoon. While one should never count one’s chickens before they hatch, the Speaker of the House appears confident that he has the votes to pass the bill. Once the House passes the bill, it is off to the President for his signature. If all of this goes according to plan, we could see appropriations restored by tonight or tomorrow.
This leads us to the inevitable question: How soon could the SEC be back up and running once an appropriations bill has been enacted? For an answer to this question, we look to the SEC’s Operations Plan Under a Lapse in Appropriations and Government Shutdown, which was last updated in August 2025. With regard to the resumption of operations following an end to the government shutdown, the Operations Plan states:
Resumption of Duties
Non-excepted employees should monitor the news for information on an additional appropriations bill and, unless told otherwise, should report back to duty on their next scheduled workday once a continuing resolution or an appropriations bill is enacted (passed by the House and the Senate and signed by the President).
– The Agency will use the SECAlerts system to notify employees regarding changes in Agency status. Plans for restarting Information Technology (IT) systems and avoiding any data loss or interruption may include requiring that some IT personnel report to work earlier than their normal work schedule to ensure that IT systems are up and running as soon as possible.
– Procedures for resuming program activities, particularly related to contracts, may include steps to ensure appropriate oversight and disbursement of funds. Office of Financial Management staff will make sure all financial transactions that occurred during the lapse in appropriations are processed and recorded accurately in the agency’s financial system.
Under this guidance, the SEC could be back up and running as soon as tomorrow if the appropriations legislation is enacted today. In trying to glean how the SEC – and in particular Corp Fin – will resume its operations, we can look back to how things played out at the end of the 2018-2019 government shutdown during the first Trump Administration.
The 2018-2019 government shutdown ended on a Friday, so the SEC had some time over the weekend to get ready for the onslaught when its doors reopened on Monday. The Corp Fin Staff posted transition guidance on Sunday, January 27 noting the “first come, first served” approach that I mentioned in the blog on Monday, but also indicating that that the Staff would consider requests to accelerate the effective date of registration statements that were filed without delaying amendments or amended to remove delaying amendments if the issuer amended the registration statement to include a delaying amendment prior to the end of the 20-day period. The transition guidance also noted that response times for things such as comment response letters, financial statement waiver requests, and no-action and interpretive requests would be longer than normal. We will be on the lookout to see if the Staff issues similar transition guidance when the current government shutdown ends.
My blog on Monday and the sudden prospect of an end to the government shutdown has prompted a flurry of questions, and I attempt to answer some of them below. I qualify all of this by noting that any Staff guidance that is forthcoming following an end to the government shutdown will supersede any of the guidance that I am going out on a limb here to provide.
Will the Corp Fin Staff apply the same screening criteria when determining whether to review registration statements and proxy statements that were filed during the course of the government shutdown?
While it is entirely within Corp Fin’s discretion to review a registration statement or a proxy statement, we know that following the 2018-2019 government shutdown, the Staff was generally trying to “clear the decks” of pending filings as quickly as possible. Practically speaking, it would be very difficult for the Staff to go back and review pending filings, and the current leadership at the SEC has indicated that it does not want to stand in the way of capital formation. For these reasons, it seems likely that the Staff will not undertake reviews of a significant number of pending filings and will work with issuers to get registration statements effective as quickly as possible.
If the SEC reopens during the 10-day waiting period for my preliminary proxy statement, should I wait to hear from the Staff for some time following the expiration of the 10-day waiting period before I mail and file definitive materials?
In my view, the Staff has always consistently held the view that, whether the agency is open or not, if you do not hear from the Staff during the 10-day period, then you are free to mail and file your definitive materials. For the same reasons that I mentioned above, I don’t think that the Staff will be particularly interested in reviewing preliminary proxy statements given the backlog.
An issuer removed the delaying amendment from its registration statement, and as a result the registration statement will go effective on the same day that the SEC reopens following the government shutdown. What should that issuer do?
Subject to further general guidance from the Staff, if this issuer does not hear directly from the Staff upon reopening, I think that it would be reasonable to allow the registration statement to go effective under Section 8(a) of the Securities Act and proceed with the offering. Following the 2018-2019 shutdown, the Staff took a case-by-case approach to registration statements without delaying amendments. As in prior shutdown situations, I suspect that the Staff has been monitoring those registration statements that do not have delaying amendments so they will be ready to contact issuers once agency operations resume.
How will the NYSE and Nasdaq approach the SEC’s reopening following the government shutdown?
I expect that the exchanges will revert back to their pre-shutdown approach to IPO issuers seeking to list on the exchanges, in that they will expect issuers to resolve all staff comments before approving a listing. The exchanges do not face a backlog situation, because they were open during the shutdown.
Let’s keep our collective fingers crossed that this government shutdown nightmare will soon be over!
As much as I hate the government shutdown shenanigans, the closing of the SEC for extended periods of time is interesting for securities lawyers. This government shutdown was notable for the shift in the Staff’s position on the use of Rule 430A, which permitted IPOs to price during the course of the shutdown, which was something that was definitely not on my Bingo card for 2025. In retrospect, it will be useful to observe how things played out during the course of this shutdown once we get past the “hair on fire” phase. To that end, Cleary Gottlieb recently posted an interesting summary of the registration statement filings that omitted or removed the delaying amendment during the shutdown. The piece notes:
To assess how issuers are navigating the shutdown in light of this guidance, we reviewed registration statements on Forms S-1 and F-1 that removed the typical delaying effectiveness legend and affirmatively included the Rule 473(b) automatic-effectiveness legend and were filed between October 1 to November 6. This cohort represents issuers willing to move forward without formal SEC clearance, offering a practical glimpse into how the market is utilizing the auto-effectiveness pathway.
While the vast majority of S-1 and F-1 filings observed during this period continue to retain the standard delaying legend, our dataset identified 132 S-1 or F-1 registration statements including the exact wording of the automatic-effectiveness legend set forth under Rule 473(b) required for proceeding with this approach. Out of the total dataset, 71 were S-1/As and 33 were new S-1s, with 25 F-1/As and 3 new F-1s representing the remainder. The majority were amendments—approximately 73%. This finding suggests that many issuers originally on file with delaying legends prior to the shutdown elected to pivot to the automatic-effectiveness approach following the lapse in government funding (potentially having already addressed initial SEC staff comments).
* * * *
The number of companies relying on auto-effectiveness during this shutdown is significant compared to the last extended government shutdown (December 22, 2018 – January 25, 2019). Over that 34-day period, only 23 registration statements could be identified as including the Rule 473(b) automatic-effectiveness legend. This represents roughly one-sixth of the filings observed during the current shutdown (October 1 to November 6, 2025), and to our knowledge, none of the filings from 2018-2019 actually went effective.
I look forward to seeing more analytics along these lines once the shutdown is in the rear-view mirror, because the experience will be helpful the next time the federal government inevitably shuts down!
This week in the blog, I am taking some time to acknowledge and celebrate 50 years of The Corporate Counsel and all of the related publications. In response to feedback that I received on Monday’s blog, I shared with a reader my experience as a newly-minted lawyer working in the SEC’s Division of Corporation Finance who would anxiously await receipt of the dog-eared “circulation copy” of The Corporate Counsel, with my name always at the bottom of the circulation list! The practical guidance and discussion of unpublished Staff positions that differentiated The Corporate Counsel from other publications really served as my “window to the world” beyond the walls of Corp Fin, and helped me be a better regulator and securities lawyer.
As part of my tribute, I am looking back on some of my favorite articles that I contributed to The Corporate Counsel over the past 18 years. These articles are notable because they address very practical topics that frequently come up in any securities practice.
Today, I highlight an article from the March-April 2018 issue of The Corporate Counsel titled “Revisiting Form 8-K Filing Obligations under Item 5.02(e).” This article reflects my views that were formed as someone who was involved in the rulemaking process for Item 5.02(e) of Form 8-K at the SEC and then reinforced through years of advising clients on the disclosure issues that arise under this requirement. The article notes:
To this day, issuers grapple with the appropriate approach to disclosure required by Item 5.02(e) of Form 8-K, which generally requires current disclosure with respect to an issuer’s principal executive officer, principal financial officer or named executive officers (as such term is defined in Instruction 4 to Item 5.02 of Form 8-K), of any material new compensatory plan, contract or arrangement (or any material modification), including any material grant to award under such a plan, contracts or arrangement (or any material modification), except as discussed below. This disclosure is triggered upon entering into or commencing any of these types of plans, contracts or arrangements, rather than upon any of the other triggering events specified in Item 5.02 of Form 8-K. An instruction to Item 5.02(e) provides that grants or awards (or modifications) will not be required to be disclosed on Form 8-K if they are materially consistent with the previously disclosed terms of such plans, contracts or arrangements, and they are disclosed the next time the issuer is required to provide new disclosure under Item 402 of Reg S-K. The Staff has published several interpretations that have explained the disclosures that are expected to be provided under Item 5.02(e) of Form 8-K, recognizing that disclosure regarding a number of significant developments with respect to compensation arrangements with an issuer’s principal executive officer, principal financial officer and named executive officers is best suited in the executive compensation disclosure of the proxy statement, rather than in a Current Report on Form 8-K. Despite the Staff’s guidance, practice continues to vary in reporting material compensation developments under Item 5.02(e).
I particularly like this article because it focuses on how the regulatory history of the 2006 amendments to Form 8-K came about, as well as how the Staff’s subsequent interpretation of the disclosure requirement developed, and how all of that knowledge should influence one’s interpretation of the operation of a rule that is admittedly pretty hard to decipher on its face. This is why I often refer back to this piece whenever a tricky Item 5.02(e) interpretive question arises!
Overnight, we finally saw some movement in the Senate on the longest government shutdown in U.S. history. As this Axios article notes, last night the Senate voted 60-40 in an important procedural vote that signaled a bipartisan deal had been reached to fund federal departments and agencies for anywhere from a few months to the entire remaining fiscal year. The article states:
The final tally on the procedural vote was 60-40. Eight Democrats voted “yes” with Republicans, while Sen. Rand Paul (R-Ky.) was the lone GOP “no” vote. Sixty votes were required to advance the measure.
– Additional votes are needed before the package can be sent to the House where it also will need to pass before the government can reopen.
– It is not yet clear if Senate Democrats and Paul will allow the remaining voting process to be expedited or if they will force the multi-day process to play out in full.
While at this stage we have no certainty as to whether the measure will be successful or when a resolution could be achieved, much like the 2018-2019 shutdown, significant disruptions to air travel have prompted action by at least some in Congress. As we are now less than two and a half weeks away from the busy Thanksgiving travel window, there is a clock ticking on the ongoing negotiations.
What would an end to the government shutdown mean for the SEC? Once the agency’s appropriations are restored, the furloughed SEC Staff has historically been recalled to their jobs relatively quickly, and full-scale agency operations resume. Even when the agency is fully staffed, however, there is an inevitable delay caused by the backlog of work that has piled up during the time that the government was shut down, and navigating that delay creates uncertainty for issuers and market participants.
In the latest guidance that Corp Fin published on October 8, the Staff included the following two post-shutdown Q&As:
16. If I removed a delaying amendment from a registration statement or filed a new registration statement without a delaying amendment and the Division’s status changes to operational before the end of the 20-day period, may I request effectiveness of that registration statement on a date prior to the end of that period?
We will consider requests to accelerate the effective date of such registration statements if they are amended to include a delaying amendment prior to the end of the 20-day period and acceleration pursuant to Rule 461 is appropriate.
17. If I removed a delaying amendment or filed a new registration statement without a delaying amendment, do I need to add a delaying amendment when the Division’s operating status changes to operational?
In cases where we believe it would be appropriate for a registrant to amend to include a delaying amendment, we will notify that registrant.
As we noted in the blog after the 2018-2019 shutdown, Corp Fin issued a statement back then indicating:
The Division of Corporation Finance is returning to normal operations. In general, we anticipate addressing filings, submissions and requests for staff action based on when an item was submitted. In other words, absent compelling circumstances, we expect to address matters in the order in which they were received.
Our recollection is that, following the 2018-2019 shutdown, all of the issuers who filed registration statements without delaying amendments or amended registration statements to remove delaying amendments subsequently filed amendments to reinstate the delaying amendments once the SEC’s normal operations resumed, either as a result of the Staff’s prompting or out of a hope that the Staff would accelerate the effectiveness of the registration statement once the delaying amendment was restored. In general, the Staff who was still working during the course of that shutdown appeared to be monitoring the registration statements that did not have delaying amendments and acted quickly to reach out once the agency’s appropriations were restored.
The 2018-2019 shutdown also happened during the heart of the shareholder proposal no-action letter season, and the Staff had to dig its way out of a large number of requests. While our recollection is fuzzier on how this played out, we recall that issuer mailing deadlines were generally met by the Staff, despite the need to work through a considerable backlog. For more on the Rule 14a-8 experience during the last major shutdown, check out Meredith’s recent blog on The Proxy Season blog.
Based on our prior experience and the current guidance, here are my tips for navigating what will hopefully be a reopening scenario in the coming days:
1. If you have a registration statement outstanding, file an amendment to reinstate the delaying amendment once the SEC reopens. Absent further guidance from the Staff indicating that no such action is necessary (and anything is possible these days, folks!), it would be better to deal with the Staff with a delaying amendment in place than having to deal with the Staff under a potential stop order scenario.
2. For those situations where a review of a filing was ongoing prior to the shutdown, it is highly likely that the Staff will pick up where it left off on that review, prioritizing pending registration statements and proxy statements. It may take some time to hear from the Staff on the status of the review after reopening, so contact the Staff to let them know your timing considerations.
3. For those registration statements and proxy statements filed during the course of the shutdown that did not go effective or have the 10-day waiting period run, respectively, the Staff is likely going to screen those filings and make a review determination on a first come, first served basis. If a filing is selected for full review, in all likelihood you will still have to wait approximately 30 days for the first round of comments.
4. If you did have a registration statement go effective or mailed a definitive merger proxy during the government shutdown, you still may hear from the Staff about your disclosure, particularly in a situation where there is an offering or solicitation that is still ongoing and the Staff determines that the disclosure should be supplemented.
5. If you submitted a no-action request or interpretive question before or during the shutdown, the Staff will get back to you in the order that the request or question was received, but it may take a little while to hear from them once the SEC’s operations resume. The same timing considerations that apply with respect to the review of filings will continue to apply in the context of no-action requests.
I encourage everyone to be patient with the Staff if and when the SEC’s full operations resume. I am confident that they will do their best to address the backlog as expeditiously as possible and in a professional manner. Remember, it is not their fault that the government was shut down for well over a month and they were furloughed with no pay during that time – this government shutdown disaster was brought to you solely by the duly-elected politicians!
This week in the blog, I want to take some time to acknowledge and celebrate 50 years of The Corporate Counsel and the constellation of publications that were created in its wake. While I have been associated with CCRcorp (and its predecessor Executive Press) for the past 18 years, I have been an avid reader of the publications for all of the 30 years that I have been practicing law. We all owe a deep debt of gratitude to Jesse Brill and Mike Gettelman for their efforts in launching The Corporate Counsel newsletter 50 years ago, with Vol. I, No. 1 dated November 1975. We had a chance to celebrate this incredible milestone last month at the October Conferences, and it was great to hear from Jesse about his memories of those early days. If you would like to hear more, check out my “Deep Dive with Dave” podcast from back in 2022.
As part of my tribute, I am looking back on some of my favorite articles that I contributed to The Corporate Counsel over the past 18 years. I especially like these articles because they address practical topics that come up from time to time in my practice, and I go back and refer to them frequently.
For today, I highlight an article from the September-October 2010 issue of The Corporate Counsel titled “The Requirement to File Revised Financials Ahead of a Shelf Filing — A Trap for the Unwary.” The article addresses the now long-standing Staff position that an issuer may need to retroactively revise its audited financial statements due to a subsequent change in accounting principle, the occurrence of discontinued operations after year-end, or as a result of a change in segment reporting after year-end. The Staff has said that revised financial statements (as well as affected disclosures, such as MD&A) must be on file (for Form S-3 incorporation by reference purposes) prior to filing of the registration statement. For this purpose, issuers file an Item 8.01 Form 8-K that puts the updated audited financial statements into the Exchange Act filing stream. The article highlights some of the practical implications of this Staff position:
The Staff’s retrospective revision approach to dealing with a change in accounting principle (as well as discontinued operations and a change in segment reporting) creates a potentially significant new impediment to timely getting an S-3 on file in anticipation of going to market soon thereafter. The need to file the retrospectively revised audited annual financial statements in advance of filing a new registration statement means that the auditors have to now look at the new financials and provide a new report and consent, a time consuming exercise that needs to be factored into the filing/offering timeframe (these dynamics, of course, can be especially intense in the context of a pending 1933 Act filing). Moreover, if retrospectively revised financial statements involve financial statements that were audited by a prior auditor, then the issuer needs to go to that prior auditor to get an updated report and consent from the former auditor which, in addition to cost and timing issues, may be problematic if there are any independence, PCAOB-registration or auditor existence issues (in which case, a re-audit would be necessary by the new auditor). [There is no need to file SOX Section 302 or 906 certifications with the retrospectively revised financial statements, because the financial statements are being filed under cover of Form 8-K and not with a Form 10-K or Q or as an amendment to a 10-K or Q. Issuers subject to XBRL filing requirements, however, must include in the 8-K the interactive data files that are required to accompany the traditional format financial statements.]
Stay tuned this week for some more highlights from my time contributing to The Corporate Counsel!
– Dave Lynn
Please note that there will be no blog tomorrow in observance of Veteran’s Day. We wish to express our deepest gratitude to our veterans for their unwavering service to our country.
