This Nixon Peabody memo cracked me up. It describes a criminal insider trading conviction based on one buddy sliding a napkin to his pal at a bar with the name of a company that was going to be acquired (ie. nonpublic material information – “MNPI”)). What cracks me up is the manner in which some folks share MNPI – as if sliding over a napkin solves the problem of his pal placing a huge order that is totally out of character for him!
Which reminds me of this “Cap’n Cashbags video” that parodies another real-life SEC enforcement action involving napkins & insider trading tips. What’s with the napkins!
I’m thinking of compiling a list of “Top 50 Funny Stories of Insider Trading.” Please send me your ideas. I won’t attribute to you unless you give me permission (as always)…
NYSE Turns 225!
Congrats to the NYSE! As noted in this article, the NYSE celebrated 225 years of trading stocks last week — back in 1792, 24 stockbrokers created the exchange when they signed an agreement to trade with each other…
Tom Conaghan on Doing Beer Deals
In this 27-minute podcast, McDermott Will’s Tom Conaghan discusses his career – including:
– How did you wind up becoming a lawyer?
– How did you wind up selecting securities laws?
– What was the most interesting/challenging thing you have worked on?
– How do you think the practice of securities law has changed over the years?
– How did you get into alcohol beverage deals?
This podcast is also posted as part of my “Big Legal Minds” podcast series. Remember that these podcasts are also available on iTunes or Google Play (use the “My Podcasts” app on your iPhone and search for “Big Legal Minds”; you can subscribe to the feed so that any new podcast automatically downloads…
If you’re a regular reader of this blog, you know that nothing excites me more than when someone fools the SEC’s Edgar & makes a fake filing! A little drool perhaps. Plug the term “fake” into the search box of this blog & you’ll see plenty of fake filings coverage.
The latest involves the filing of a fake Schedule TO-C, making it look like Fitbit was in play (here’s an article from back when that happened). The SEC brought a civil case; the DOJ brought a criminal one. And this dude went through all this trouble – and got into so much trouble – for a measly $3k in profit! Dummy.
According to the SEC’s complaint, Robert W. Murray purchased Fitbit call options just minutes before a fake tender offer that he orchestrated was filed on the SEC’s EDGAR system purporting that a company named ABM Capital LTD sought to acquire Fitbit’s outstanding shares at a substantial premium. Fitbit’s stock price temporarily spiked when the tender offer became publicly available on Nov. 10, 2016, and Murray sold all of his options for a profit of approximately $3,100.
The SEC alleges that Murray created an email account under the name of someone he found on the internet, and the email account was used to gain access to the EDGAR system. Murray then allegedly listed that person as the CFO of ABM Capital and used a business address associated with that person in the fake filing. The SEC also alleges that Murray attempted to conceal his identity and actual location at the time of the filing after conducting research into prior SEC cases that highlighted the IP addresses the false filers used to submit forms on EDGAR. According to the SEC’s complaint, it appeared as though the system was being accessed from a different state by using an IP address registered to a company located in Napa, California.
Shareholder Proposals: The Battle Over BRT’s Reform Proposal Begins
Raising the bar for proponents to get their shareholder proposals on the ballot is a theme in the “Financial Choice Act,” as well as the reform package offered by the Business Roundtable last year. The Choice Act’s reform would go beyond what the BRT seeks, as noted in this Bloomberg article. This article also notes how shareholders are asking questions about the BRT proposal this proxy season. Here’s an excerpt:
Anne Sheehan, director of corporate governance at the California State Teachers’ Retirement System (CalSTRS), and Tim Smith, who leads Walden Asset Management’s shareholder engagement, have also sent letters to the CEOs of nearly 50 companies that are members of the roundtable asking where they stand on shareholder proposals. “We do not believe that the Business Roundtable is reflecting the views of companies with a history of meaningful and constructive engagement with investors,” the letters say.
Another letter from Sheehan and other institutional investors with more than $4 trillion in combined assets was sent May 17 to all members of the House of Representatives as they gear up to vote on the bill soon.
I blogged this on our “Proxy Season Blog” on Friday, but it bears repeating: As noted in this Reuters article, a shareholder proposal at Occidental Petroleum – often referred to as “Oxy” – earned 67% support last week even though the company’s board recommended against. This was a “climate risk two-degree scenario analysis” proposal. As discussed in the Reuters article, BlackRock supported the Oxy proposal — its first support for a climate resolution, which bodes well for future climate proposals (but not all of them).
Now, all eyes are on the ExxonMobil vote on this same issue, May 31st in Dallas (where interestingly, ISS also came out against Exxon CEO’s pay package)…
I worry that some companies might be relying on Congress to step in and delay the implementation of the pay ratio rule. That’s looking less likely by the day. So the time that you have to prepare is narrowing.
It’s also far from clear whether the SEC would take action to delay implementation of a rule required by Dodd-Frank. Then-Acting SEC Chair Piwowar’s re-opening of comments earlier this year did not result in an outpouring of complaints from companies. Beyond 13,000 form letters in favor of pay ratio disclosures, the SEC received about 180 comment letters – of which only about 15% were against the rule. In this blog a few months ago, I linked to some of the comment letters from specific companies. And Ning Chiu blogged yesterday about a specific comment letter.
Our upcoming “Proxy Disclosure/Say-on-Pay Conferences” will comprehensively cover what you need to be doing now to implement pay ratio – with 20 panels spread over two days. Many of the panels will be drilling down into pay ratio issues. Act by June 9th for a 20% early bird rate. You can attend in-person in Washington DC – or watch by video online.
I strongly believe that executive pay should be reformed. My own research demonstrates the substantial benefits to firms of treating their workers fairly. However, disclosure of pay ratios may have unintended consequences that actually end up hurting workers. A CEO wishing to improve the ratio may outsource low-paid jobs, hire more part-time than full-time workers, or invest in automation rather than labor. She may also raise workers’ salaries but slash other benefits; importantly, pay is only one dimension of what a firm provides. Research shows that, after salary reaches a (relatively low) level, workers value nonpecuniary factors more highly, such as on-the-job training, flexible working conditions, and opportunities for advancement. Indeed, a high pay ratio can indicate promotion opportunities, which motivates rather than demotivates workers. A snapshot measure of a worker’s current pay is a poor substitute for their career pay within the firm.
The pay ratio is also a misleading statistic because CEOs and workers operate in very different markets, so there is no reason for their pay to be linked — just as a solo singer’s pay bears no relation to a bassist’s pay. This consideration explains why CEO pay has risen much more than worker pay. As an analogy, baseball player Alex Rodriguez was not clearly more talented than Babe Ruth, but he was paid far more because baseball had become a much bigger, more global industry by the time he was playing. Even if the best player is only slightly better than the next-best player at that position, the slight difference can have a huge effect on the team’s fortunes and revenues.
I agree with some of what Alex says – but he also doesn’t understand that boards can take internal pay into consideration as just one factor in their decisionmaking. And instead of comparing pay ratios of different companies – a company should just be looking at its own pay ratio over an extended period (ie. decades).
In fact, one reason why a company should be doing this internal look is that comparing a CEO’s pay package to peers is a primary cause of how we got into this mess in the first place – peer group benchmarking where CEOs got paid in the top quartile for years & years…
Pay Ratio: From the ’77 Archives
Hat tip to Deloitte Consulting’s Mike Kesner for sharing this 1977 WSJ op-ed from Peter Drucker on the notion of pay ratios. Executive pay was considered excessive even back then!
The full House is expected to vote on – and pass – the “Financial Choice Act” as soon as next week. But as John blogged a few weeks ago, it’s not expected that the Senate will act on the Choice Act. As noted in this article from “The Hill” (and this Bloomberg article), Senator Mitch McConnell reiterated the view that Dodd-Frank reform faced long odds in an interview yesterday. And those remarks came before the Special Counsel Mueller bombshell. Events in DC may dramatically slow down legislation in all areas.
So for those expecting pay ratio to be repealed, you might want to still prepare since time is getting tight for reform…
Meanwhile, as noted in this press release, CII and 53 institutional investors with collectively more than $4 trillion in assets sent letters to all members of the House asking them to not vote for the Choice Act…
A Pet Peeve: Use of PR Firms
One of the “bennies” of this job is that I hear from PR firms all day long. Most of the pitches are completely unrelated to the topics covered on our sites. But some do fit – and sometimes I actually take up an offer to work with a client.
But what annoys me is when I get pitched to talk to someone that I already know. I just received an email to talk to three people that I used to work with! Why didn’t they just email me directly? All it takes is a one-sentence email: “Hey dude. How would you like to [blank].” In my opinion, you’re wasting money on PR – just sit down & bang out a dozen emails – should take about 10 minutes.
I pride myself on being one of the more approachable people in our community. That’s the philosophy upon which I built our sites. It just feels odd. Just south of “I’ll have my assistant call your assistant – and we’ll do lunch.” But maybe I’m overreacting. Let me know what you think…
“Deal Tales”: Our New 3-Volume Series
Education by entertainment. This series of three paperback books – “Deal Tales” – teaches the kind of things that you won’t learn at conferences, nor in treatises or firm memos. With the set containing over 600 pages, John Jenkins – a 30-year vet of the deal world – brings his humorous M&A stories to bear.
This series is perfect to help train those fairly new to deals. And it’s also perfect for more experienced practitioners interested in what another vet has to share. John’s wit will keep you coming back for more. Check it out!
Occasionally, we get asked about how someone who’s in-house can make the case to their bosses to obtain more staff for their department. In our “Hiring More Staff” Practice Area, I have posted a six-page PowerPoint that you can modify to make your own business case.
I’ve talked to some in-house members about this – and here are some responses:
– Aggregate the outside legal bills for the subject matter at hand and then estimate the savings (and remember to argue the benefits of internal expertise).
– If trying to add a lawyer, one hard part is how to quantify the intangible benefits of having counsel pro-actively involved in matters, and how to quantify the opportunity cost of having someone else in the company (typically a controller, accountant or even the CFO) tackle the things a lawyer should do – minutes, coordinating meeting materials, Section 16 filings, etc. One general counsel I spoke with also placed value in having less volatile cost fluctuations, which she viewed as flattening out slightly with in-house counsel.
– In my experience, companies bring a lawyer in-house when outside counsel bills get so high that it just makes sense. Outside counsel can often recommend someone to the company – or even one of their lawyers decides to go in-house.
– The typical justification is based on the difference between (a) the avoided cost of outside counsel, usually based on hourly rates, versus (b) the fully-loaded cost (i.e. including benefits and other overhead) of in-house counsel performing the same functions. This does not assume that in-house counsel fully displaces the need for outside counsel – which is not practical for a lot of reasons. For some, there is about a 3-to-1 cost advantage. That doesn’t take into account enterprise risk management, efficiencies and other benefits that might be gained from using in-house counsel who may be more proactively focused broadly on the business than outside counsel who are typically engaged for more narrowly-defined purposes (e.g. a particular transaction or litigation matter).
– ACC has an info-pak titled “Establishing the In-House Law Department: A Guide for an Organization’s First General Counsel.” One relevant discussion in that publication says: “The simplest metric that a first GC can use to demonstrate the law department’s value involves calculating the hourly cost of performing work in-house in order to compare this cost to outside counsel hourly billing rates. ACC’s Value Challenge Tool Kit Resource, “Demonstrating the Law Department’s Value: Calculating In-house Counsel Costs,” provides a template to use and a description of the required calculations necessary for determining this metric. In general, this metric calculates total law department employee expenses (including adjustments for the costs of salaries, benefits, and facilities expenses) and divides by the total number of law department hours worked. The resulting metric will provide a number for the hourly cost of performing work inhouse, which can be compared to the hourly rates charged by outside counsel. This comparison can demonstrate to company management the amount of money that is saved by performing work in-house.”
Nasdaq’s “Regulation Reform” Proposal
Recently, Nasdaq published its own version of a blueprint to modernize the equity markets & streamline regulations. Like other reform proposals, its comprehensive – covering the “Big 3” of: restructuring the regulatory framework; modernizing market structure; and promoting long-termism.
Also see this op-ed published in the WSJ by Nasdaq’s CEO Adena Freidman…
Two Competing Visions of GOP Regulation
As we continue to post memos in our “Regulatory Reform” Practice Area about the Choice Act & other reform efforts, this WSJ article by Ryan Tracy & Andrew Ackerman is interesting. Here’s the intro:
The 2008 financial crisis was a global economic catastrophe that triggered years of new regulations designed to prevent another meltdown. Now that tide of rules is cresting, with officials across the globe talking about pulling back regulations instead of adding new ones. The defenders of the current regime are fighting to save it.
At the heart of the debate are opposing philosophies about free markets, regulation and the role of government. After 2008, the Obama administration in the U.S. pursued an aggressive rule-making path, injecting the government further into bank boardrooms, loan-underwriting decisions and conversations about retirement advice—all in the name of protecting citizens from a financial crisis and risky financial products.
With Republicans in control of the White House and Congress, the U.S. is seeing a resurgence of a different philosophy, one that favors freer markets and is skeptical of Washington’s recent approach to overseeing Wall Street. The government, these critics say, has repeatedly overreached in trying to prevent another crisis. It should take stock of all the work that has been done since the crisis—and consider rolling back many rules that critics say aren’t working as intended or weren’t needed in the first place.
As the debate rages on, here’s a closer look at the two competing visions for financial regulation.
Rein In the Banks: The Need for Discipline
Advocates who support active financial oversight favor an approach that can be summed up this way: Let the markets work, but within significant regulatory constraints to protect society from excesses. Left to their own devices, financiers can cause a lot of trouble, advocates say. Big banks have incentives to seek short-term profits without regard for the long-term consequences of their actions—and the 2008 crisis provided an example of just how much damage they can do if they succumb to those incentives.
Financial firms and consumers lent or borrowed too much, and regulators failed to act on warning signs before this excessive risk-taking spiraled out of control. Worst of all, the government bailed out some firms because it determined they were “too big to fail” without the financial system imploding. The result was a panic so sweeping, it dried up credit for Main Street and threatened the entire economy.
Regulatory hawks concede that government housing policies may have played some role in inflating the housing bubble but say it wasn’t central to the meltdown. Lack of oversight was. So, they argue, the government has an obligation to protect the economy from risky behavior—by banning those behaviors entirely or adopting policies that act like a tax on it, making it less attractive in the short term. Financial firms and their customers may have less freedom under these rules, but these advocates say that the effects of those restrictions pale in comparison to the cost of a huge financial crisis.
The 2010 Dodd-Frank law, approved by a Democratic Congress and signed by Democratic President Barack Obama, expanded the government’s power to react to what it viewed as emerging risks in financial markets. Firms considered “systemically important” to the economy now face tougher rules and more intrusive oversight than smaller competitors. A new regulatory committee can designate any firm for these tougher rules.
The idea is that if these firms pose an outsize risk, they should pay for it though higher regulation, even if those rules are complex. Federal Reserve Chairwoman Janet Yellen has said huge banks must “bear the costs that their failure would impose on others.” If the firms don’t like the regulation, so be it, these policy makers say: They can shrink or split themselves apart.
Tougher rules have meant that regulators take a far more active role in the continuing management of large firms, and to some extent smaller ones as well. The pro-regulation advocates acknowledge that such involvement might be uncomfortable, but say it’s a lot better than burdening taxpayers in the event of future bailouts.
Take the case of dividends. Large banks can no longer decide on their own to raise the dividend they pay to shareholders. They must get permission from the Federal Reserve first as part of their annual stress tests. The Fed justified the restrictions by pointing out that in the lead-up to the 2008 crisis, big banks paid out capital via dividends, then months later needed capital from taxpayers to stay alive. These restrictions are just one example of the myriad extra rules firms must now keep in mind as they make day-to-day business decisions.
In another case, when financial firms started ramping up a practice bank examiners considered dangerous—“leveraged loans” to companies already deep in debt—regulators at the Fed and the Office of the Comptroller of the Currency responded with prescriptive lending standards that they relentlessly enforced. Critics say the regulators should have let firms make their own lending decisions, but the Fed and Office of the Comptroller say that when a type of lending poses a risk to the broader economy, they have an obligation to try to nip it in the bud.
In this 35-minute podcast, Ann Yerger discusses her career – including:
– How did you get into this field?
– What’s it like running an association?
– How did governance change during your decade running CII?
– How is your role running EY’s Center for Board Matters different than working at CII?
– What changes do you foresee in the governance arena going forward?
– What types of work tasks are your favorite to work on?
This podcast is also posted as part of my “Big Legal Minds” podcast series. Remember that these podcasts are also available on iTunes or Google Play (use the “My Podcasts” app on your iPhone and search for “Big Legal Minds”; you can subscribe to the feed so that any new podcast automatically downloads…
Bob Stebbins Named as SEC’s GC
Yesterday, the SEC announced that Bob Stebbins will become the next General Counsel for the agency. Hailing from Willkie Farr’s NYC office, Bob primarily has worked with M&A, private equity, VC and investment funds…
Perks: Other Shoe Drops in SEC’s Enforcement Case
As noted in this blog, the SEC brought an enforcement action against MDC Partners back in January for not disclosing perks for a former CEO adequately. At that time, the company agreed to pay a $1.5 million penalty.
Last week, the SEC announced it had settled with the former CEO himself – and that he paid $5.5 million ($1.85 million in disgorgement, $150k in interest and a $3.5 million penalty). That’s big money!
Here’s an excerpt from the SEC’s press release:
According to the SEC’s order, shareholders were informed in annual filings that Miles S. Nadal received an annual perquisite allowance of $500,000 in addition to other benefits as the chairman and CEO of MDC Partners. But the SEC’s investigation found that without disclosing information to investors as required, MDC Partners paid for Nadal’s personal use of private airplanes as well as charitable donations in his name, yacht and sports car expenses, cosmetic surgery, and a wide range of other perks. All total, Nadal improperly obtained an additional $11.285 million in perks beyond his disclosed benefits and $500,000 annual allowances. He has since resigned and returned $11.285 million to the company.
Here’s one of the best pieces I’ve seen written about gender diversity on boards – and it’s written by an institutional investor! Board diversity is one of those topics that I find hard to blog about because its depressing. The data shows that there has been little progress over the past decade – for both gender & racial diversity. Bear in mind that it’s been a decade since this has been targeted as a major governance issue. Everyone seems to agree it’s a big problem – yet things don’t really don’t seem to be changing. At least in the US.
For gender diversity, one of the reasons why boards aren’t being diversified fast enough is the gap in perception between male & female directors regarding the magnitude of this problem. Another is the myth that there aren’t enough women at the top of the ladder who can serve as candidates. Meanwhile, boards that aren’t diversified are failing to reap the benefits that diversity produces.
Now I don’t believe that disclosure about diversity is going to fix the problem – but I do think that a regulatory push might be necessary because it seems quite clear that boards don’t seem willing to fix this problem on their own. Many countries in Europe have found success by requiring a minimum level of female directors on boards (30%). It might be time for such a drastic solution…
9 Board Diversity Notables…
Here are 9 other board diversity notable items:
1. In this blog, Bob Lamm waxes more on the topic – and so does Doug Chia in this blog.
2. Here’s Equilar’s new “Gender Diversity Index” – which is a chart that tracks the progress of women on Russell 3000 boards – currently at 15.1% as of 12/31/16. Based on an analysis of the growth rate over the past 4 years, the study projects that parity wouldn’t be reached until 2055.
4. Don’t forget we have posted the transcript for our recent webcast: “Board Refreshment & Recruitment” – which tackled board diversity disclosure & more.
6. In 2016, as noted in this new study, fewer than 15% of all board seats in the Fortune 500 were held by minorities.
7. This recent study by Board Governance Research/IRRCi shows there is scant age diversity on S&P 500 boards.
8. In celebration of “International Women’s Day” recently, 40 stock exchanges hosted a bell ringing ceremony to raise awareness of the pivotal role the private sector can play in advancing gender equality to achieve the UN’s SDG 5.
9. The state of Pennsylvania recently passed a resolution to “encourage” companies incorporated there to promote gender board diversity. Not worth much because it’s aspirational…
The Diverse Board…
This 1775 painting from Thomas Beach – entitled “The Hand That Was Not Called” – seems to capture today’s “diverse” board:
As noted in this press release, Lucas Moskowitz was named the SEC’s Chief of Staff yesterday. From the cover page of this Form F-1, it looks like new Corp Fin Director Bill Hinman worked with new SEC Chair Jay Clayton on Alibaba’s IPO. Yesterday was Bill’s first day on the job…
Former Corp Fin Accountant Busted for Ethics Violations
This SEC Enforcement announcement really caught my eye. I don’t recall a SEC Staffer ever being criminally charged over trades executed while they were working at the SEC. An accountant who worked in Corp Fin for 16 years – starting in ’98 – failed to accurately report trades he engaged in. And then lied about it when questioned. He also engaged in prohibited options trading. After rising to the level of branch chief, the dude was ultimately let go for other reasons – then this crazy situation was revealed. He disgorged $50k in profits – and paid another $50k in penalties. He also pled guilty to criminal charges brought by the DOJ.
As explained on the SEC’s complaint (pg. 3), the SEC has a host of ethics rules that require Staffers to pre-clear and report their trades – as well as hold any securities purchased for at least 6 months. In addition, certain types of trades are prohibited (eg. options & derivatives). When I was on the Staff, this was never an issue for me as I didn’t earn enough to be playing in the stock market…
Farewell to Rich Ferlauto: A Governance Pioneer
A sad farewell to Rich Ferlauto, a pioneer for shareholder rights – and someone who worked hard to better conditions for all investors. And all humans. I first met Rich when he launched the Office of Investments at the AFL-CIO. He then helped AFSCME become active in the area of corporate governance. Then he went to the SEC, where he served as Deputy Director of the Office of Investor Education.
Even when he became sick, Rich was very active, trying to save the planet despite his condition. He co-founded the 50/50 Climate Project. I met with Rich several times over the past year or so to discuss his latest endeavors. Always an optimist. Always looking to help others. He was a force – and will be missed.
Just coming back from a nice holiday in Japan & Hong Kong (see my pics on Instagram). Last Thursday marked my 15th anniversary – 15 years! – of my blither & bother on this blog (note the “DealLawyers.com Blog” is nearly 14 years old – not shabby!).
It’s the one time of year that I feel entitled to toot my own horn – as it takes stamina & boldness to blog for so long. A hearty “thanks” to all those that read this blog for putting up with my personality. As I was one of the first lawyers to blog, my track record is among the longest as a blogger – lawyer or otherwise…
Japan/Hong Kong: Crowdfunding & Fund Ads
When I travel overseas, I keep my eye out for unique things that pertain to our field. One of the wildest things that I saw was a Bridgewater Associates video on the plane as we were landing in Hong Kong. Unfortunately, I can’t find the video on the Internet – it shows a group of business people in a huge office realizing the value of crowdfunding – then, they all come together to push down the walls from the inside to collapse a huge Wall Street-looking building.
Even better was this poster ad that I saw in a Tokyo subway station. It promotes a Daiwa Securities fund – check out the dude’s face in the middle. A look of utter fear! And one of these persons is a famous Japanese actor (Ken Watanabe – Godzilla, Last Samurai). It’s like putting Tom Cruise’s face on a prospectus.
Cap’n Cashbags: 15 Years of Blogging
In this 20-second video, Cap’n Cashbags – a CEO – tries to convince his director friend that 15 years of blogging is worth celebrating…
Yesterday, the SEC announced that Bill Hinman will serve as Corp Fin’s next Director. Bill previously was a partner in Simpson Thacher’s Silicon Valley office, having recently retired. He’s probably best known for his work on some of the most prominent tech & e-commerce IPOs of all time – including Alibaba, Facebook, Google & eBay.
Not positive, but we think Bill is the first Director hailing from the Valley – we’ve updated our “List of Corp Fin Directors.” In fact, Broc can’t recall any Staffers in Corp Fin moving to DC from the Valley.
CAQ’s Updated “Auditor Assessment” Tool
The Center for Audit Quality recently published a new version of its “External Auditor Assessment Tool.” The tool – which was introduced in 2012 – is intended to provide a framework for audit committees to assess the performance of a company’s external auditor and to make retention recommendations to the board.
This excerpt from the intro reviews the audit committee’s oversight role with respect to the external auditor & identifies specific areas that should be addressed in the evaluation of the auditor’s performance:
Audit committees should regularly (at least annually) evaluate the external auditor in fulfilling their duty to make an informed recommendation to the board whether to retain the external auditor. Further,providing constructive feedback to the external auditor may improve audit quality and enhance the relationship between the audit committee and the external auditor. The evaluation should encompass an assessment of the qualifications and performance of the external auditor; the quality and candor of the external auditor’s communications with the audit committee and the company; and the external auditor’s independence, objectivity, and professional skepticism.
The tool includes sample question sets covering each of the areas upon which the auditor will be evaluated, as well as materials to be used in obtaining input from management and a summary of applicable standards.
Update – Here’s an interesting observation from one of our readers:
Don’t you think it’s a bit odd that the CAQ, the audit industry lobbying arm of the AICPA, a trade association, is putting out a guide for issuers on how to select and monitor auditors? Seems a bit self-serving, bordering on conflicted.
Who Needs an IPO? NYSE Proposes to Facilitate Direct Listing
Broc recently blogged about Spotify’s reported plans for a “direct listing” – which involves bypassing an IPO, and simply registering common stock under the Exchange Act & listing on an exchange. This MoFo blog reports that the NYSE has proposed a rule change to facilitate this kind of process (which is already possible under existing rules). While Spotify is the highest profile direct listing candidate, this excerpt notes that this alternative may appeal to a variety of companies:
This approach could be of significant interest for issuers that have completed 144A equity offerings, which are still popular among REITs, for issuers that have completed numerous private placements and have VC or PE investors that need liquidity, and for issuers, including foreign issuers, that are well-funded and do not need a capital raise through an IPO, but would still like to have their securities listed or quoted on a securities exchange.
