As I roll into my 15th year of writing for the CCRcorp publications, I am reflecting back on some of my favorite blogs, podcasts and publications over the years. When I joined the organization back in 2007 after leaving the SEC, I had never written a public blog, so I really had no idea what to expect. Under Broc’s tutelage, I learned that it was important to lighten up once in a while and to not always focus on the securities and governance content. That wise advice made me realize that a blog is much more like a conversation than a newsletter or a treatise, so you have to show your personal side from time to time.
One of the most amazing things about writing the blog is the incredible feedback that you get from our members. To me, that is one of the most rewarding aspects of the job. Over the years, I have found that the more personal blogs tend to generate the most feedback, because they are often relatable to the experiences of our members. I will never forget the blog which generated the most member feedback, which was my discussion of presenting at my child’s Career Day. Anyone who is a parent of elementary school-age children can relate to the trepidation that a lawyer feels when you have to compete with the firemen, policemen, air force pilots, etc. at Career Day. Members enjoyed my approach on the presentation and some asked whether they could use my materials for their own presentations, including a prospectus for 4th graders!
A member recently asked in our Q&A Forum where things stand with the SEC’s review of filings for climate change disclosure. This focused review effort by the Division of Corporation Finance was initiated by then-acting Chair Allison Herren Lee, who directed the Staff to review the extent to which issuers address the topics identified in the SEC’s 2010 climate change guidance. In September 2021, the Staff released a sample comment letter regarding climate change disclosure, which echoed the comments that issuers had been receiving from the Staff around that time. When we last checked in on this topic in November, issuers found themselves on the receiving end of a second round of comments, with the Staff asking more questions around the determination of materiality with respect to climate change information.
To date, we have not seen any correspondence from completed climate change reviews posted on EDGAR (other than situations where the comments have been raised on registration statements). This suggests that the reviews are ongoing, and anecdotally it seems that issuers have been receiving multiple rounds of comments from the Staff concerning their climate change disclosure (or lack thereof). From our understanding, the comments continue to focus on the determination as to materiality of the climate change information, and in some cases issuers are getting more comments in the subsequent rounds than they did in the first round. Given this trajectory, it does not seem likely that the comment process will wrap up any time soon, which makes things difficult for the subject issuers who are now in the process of preparing their Form 10-Ks.
For issuers who are not on the receiving end of the Staff’s comments, the Sample Letter remains a good resource for considering the applicability of the 2010 guidance to the issuer’s disclosure for the upcoming reporting season.
The National Venture Capital Association (NVCA) recently published a new Model Questionnaire for Directors and Executive Officers and a new Questionnaire for 5% Holders in Connection with Public Offerings. These documents are designed to be comprehensive and to be used as companies go public. Check them out today in our D&O Questionnaires Practice Area.
Webcast Week closes out strong tomorrow with our webcast “ISS Forecast for the 2022 Proxy Season.” Marc Goldstein, Head of US Research at ISS, will be joined by Ning Chiu from Davis Polk and Bob Lamm from Gunster. They will review what happened in the 2021 proxy season, the changes that ISS is making to its policies in 2022 and a variety of hot topics for the upcoming proxy season.
If you attend the live version of this 60-minute program, CLE credit will be available. You just need to submit your state and license number and complete the prompts during the program.
Members of TheCorporateCounsel.net are able to attend this critical webcast at no charge. The webcast cost for non-members is $595. If you’re not yet a member, subscribe now by emailing sales@ccrcorp.com – or call us at 800.737.1271.
In yesterday’s blog, I mentioned how the relatively short comment periods contemplated for the SEC’s recent rulemaking proposals have drawn some attention, even though delays in publishing the proposing releases may ultimately frustrate plans to rush those rulemakings through the process. Interestingly enough, Patrick McHenry (R-NC), the Ranking Member of the House Committee on Financial Services, and Pat Toomey (R-PA), the Ranking Member of the Senate Committee on Banking, Housing, and Urban Affairs, also took notice of the SEC’s comment periods, sending a letter yesterday to Chair Gensler expressing concern that “rulemakings under your tenure have consistently provided unreasonably short comment periods, which will harm the quality of public comment and may run afoul of the Administrative Procedures Act.” The letter notes that the Administrative Conference of the United States, an independent federal agency charged with recommending improvements to administrative process and procedure, endorses a comment period of at least 60 days for significant regulatory actions.
Congressman McHenry and Senator Toomey urge Chair Gensler to immediately extend all comment periods for the SEC’s proposed “rules of significance” to at least 60 days, including “reopening the comment filing for those rulemakings with shorter comment periods that have closed prematurely.” They request a response by January 24, 2022.
One thing I would note in this context is that the SEC does not actually stop accepting comments when the “deadline” for comments has passed. The comment file remains open, and comments are accepted, up to the time that final rules are adopted. In fact, in my experience of both working on many comment letters over the years and working on rulemaking at the SEC, the Staff that is working on the rulemaking continues to consider any comments that come in after the deadline whenever it is possible to do so. The reality is that no matter how long you make the comment period for a proposed rulemaking, it is still going to be difficult to solicit meaningful comments from the public, and from the perspective of those preparing the comments for the SEC, it is always going to be difficult to prepare thoughtful comments in a timely manner unless you have people dedicated to doing so. So, in the end, the SEC Staff working on the rulemaking and the individuals and groups that provide the comments are just doing the best they can in the time allotted.
This recent Wall Street Journal article describes the efforts that the SEC is currently considering as a means to address the persistent “unicorn” phenomenon – private companies worth $1 billion or more. Unicorn’s have been vexing lawmakers and policymakers for decades now, as the availability of plentiful private capital, ever-increasing regulatory burdens and a persistent securities litigation threat have resulted in large companies not going public and subjecting themselves to SEC regulation, public scrutiny and plaintiffs’ lawyers. An inkling of the SEC’s plans recently emerged in the Reg Flex agenda, and now more details are emerging.
It appears that the SEC may reconsider the mandatory registration provisions of the Securities Exchange Act as a means of drawing the unicorns into the SEC’s public reporting system. The Section 12(g) thresholds that trigger mandatory registration were of course raised by the JOBS Act of 2012, but it now appears that the SEC may revisit those thresholds and/or the manner in which investors are counted for the purposes of those thresholds. In their statement following the release of the most recent Reg Flex agenda, Commissioners Peirce and Roisman noted that “[l]owering these thresholds may both contradict the express will of Congress and potentially undermine our mission to facilitate capital formation.”
Wow, it is webcast week this week! Join me tomorrow for what promises to be a very interesting discussion of the SEC’s recent proposals on our webcast “Rule 10b5-1 & Buybacks: Practical Impacts of SEC’s Proposals.” I am fortunate to be joined by Brian Breheny from Skadden, Ning Chiu from Davis Polk, Meredith Cross from WilmerHale and Keir Gumbs from Broadridge Financial Solutions, and we will discuss all aspects of these proposals and the steps that companies should be taking now.
If you attend the live version of this 60-minute program, CLE credit will be available. You just need to submit our state and license number and complete the prompts during the program.
Members of TheCorporateCounsel.net are able to attend this critical webcast at no charge. The webcast cost for non-members is $595. If you’re not yet a member, subscribe now by emailing sales@ccrcorp.com – or call us at 800.737.1271.
At around this time last year, we were all wondering when the SEC’s financial information and MD&A rulemaking (which had been adopted in November 2020) was going to get published in the Federal Register so that issuers could figure out whether they could rely on the early compliance provisions for their upcoming annual reports. It was observed that, similar to the delays that we were all experiencing in late 2020 with the U.S. Postal Service, the Federal Register was experiencing some delays in publishing SEC releases, perhaps due to a flood of government-wide 11th hour rulemaking on the eve of a change in the Administration.
Last month, when the SEC proposed rule changes to Rule 10b5-1 and related disclosure items and proposed to expand share repurchase disclosures, there was some attention given to the relatively short comment periods for both proposals – they contemplated a 45-day comment period, rather than the more typical 60-day comment period, in each case running from the date of publication in the Federal Register. Given the almost month-long delay in publishing the proposing releases, commenters have already received a pretty generous period for preparing their comments, which will be extended by 45 days once publication in the Federal Register occurs.
It is not clear why the Federal Register process is taking so long. After the flood of rulemaking during 2020, the SEC did not issue very many releases requiring publication in the Federal Register during 2021, so we were not monitoring the timing closely until these new proposals emerged.
The January 5, 2022 issue of the Society for Corporate Governance’s weekly “Society Alert” noted that the Operations Subcommittee of the End-to-End Vote Confirmation Working Group announced that it has agreed to provide vote confirmation this proxy season for Fortune 500 annual meetings that are tabulated by members of the Operations Subcommittee and to pilot an early stage vote entitlement reconciliation process for 20 Fortune 500 meetings.
End-to-end vote confirmation is the affirmation to a nominee from the tabulator (and to the nominee’s beneficial owner by the bank or broker) that the vote made was counted as cast. Vote entitlement refers to bank’s or broker’s voting entitlement on behalf of their clients.
Will the SEC’s recent adoption of rules mandating the use of universal proxies change the game for proxy contests? What should companies do now to prepare for the new regime? Join us tomorrow for the webcast – “Universal Proxy: Preparing for the New Regime” – to hear Goodwin Proctor’s Sean Donohue, Gibson Dunn & Crutcher’s Eduardo Gallardo, Sidley Austin’s Kai Liekefett and Hogan Lovells’ Tiffany Posil discuss these and other issues associated with the looming universal proxy requirement. We are making this DealLawyers.com webcast available on TheCorporateCounsel.net as a bonus to members – it will air on both sites.
If you attend the live version of this 60-minute program, CLE credit will be available. You just need to submit our state and license number and complete the prompts during the program.
