Earlier this week, the House passed two bills that have now moved to the Senate:
– “Disclosure Modernization and Simplification Act” (HR 4569, sponsored by Rep. Garrett) – directs the SEC to study ways to simplify financial reporting for small and emerging growth companies & would permit public companies to include a summary page of all material information in 10-Ks.
– “SBIC Advisers Relief Act” (HR 4200, sponsored by Rep. Luetkemeyer) – amends ’40 Act to reduce regulation of advisers to Small Business Investment Companies, which are professionally-managed investment funds that finance small businesses.
Stats: Small Business Liquidity, Reg D & Accredited Investors
These interesting presentations from the recent “SEC’s Small Business Capital Formation Forum” have been posted:
This MoFo blog by Stephanie Uhrig notes that the Forum considered adding qualitative requirements to the “accredited investor” definition. And here’s a blog from the “Crowdfunding Insider” entitled “SEC Government – Small Business Forum: A Tale of Two Gatherings.”
Transcript: “Reg D Offerings: What Is Happening Now”
We have posted the transcript for our recent webcast: “Reg D Offerings: What Is Happening Now.”
Crowdfunding: Some States Have Opened the Doors
In this column, Professor Davidoff Solomon posits how the SEC’s delay in adopting crowdfunding rules has allowed individual states to do so, permitting a smaller scale test of whether it works. At the ABA meeting, I happened to talk to a few folks in states where crowdfunding is legal and people really are using the sites to invest. Here’s a few (& here’s a list of all the crowdfunding sites I am aware of):
Here’s a note from Bob Dow of Arnall Golden Gregory:
This is an interesting social experiment on several levels, but one area to focus on will be the effect on the incidence of fraud. Those who believe crowdfunding is a train wreck would say that there will be rampant fraud. Those who believe in crowdfunding would say this will revolutionize fundraising and lead to an explosion in entrepreneurship. If these web site get some traction, we can see the two hypotheses play out.
I see the questions as much more subtle. I assume there will be more fundraising and probably some additional incidences of fraud. Is the benefit to the economy of the additional fundraising worth the cost to society of the incremental fraud? Are there other ways to prevent the fraud (focused enforcement, etc.) so as to avoid the need to shut down crowdfunding, or make it so restrictive as to effectively eliminate it?
A few weeks ago, I blogged about “Proxy Access: Will the Whole Foods No-Action Request Maim Private Ordering?” As most people expected, Corp Fin did indeed grant Whole Foods no-action request yesterday – meaning that the company can exclude a 3%/3-year shareholder proposal – and instead place the company’s own 9%/5-year proposal on the ballot. In allowing exclusion, Corp Fin relied on the Rule 14a-8(i)(9) counter-proposal basis.
As I noted in my prior blog, it’s highly unlikely that the company’s 9%/5-year would ever be triggered given that the company’s largest shareholder owns 5.4% and a 5-year holding period is quite long. This leads to a few musings including:
– How will shareholders react to this type of move by a company? The investors I have heard speak on this topic aren’t happy that companies might respond with their own counterproposals.
– Will shareholders even vote in favor of management’s threshold if they feel the bar is too high? My guess is that management’s proposal won’t even muster majority support as shareholders place pressure on Whole Foods to adopt what they think is a more reasonable threshold in ’16.
– Would Corp Fin let any counterproposal knock out a shareholder proposal? What about a counterproposal with a 20%/10-year threshold?
Bear in mind that nearly half of the several dozen companies that rushed to adopt fee-shifting bylaws over the past few months have already pulled them in the face of shareholder anger. I understand the legitimate fears about short-term activists – but companies should engage with their long-term shareholders (and holding for three years is “long-term” in my book). Anyways, add these questions to the many others that will be analyzed on Monday’s webcast: “Proxy Access: A New World of Private Ordering.” Also don’t forget my podcast with Mike Garland of the Office of New York City Comptroller about the 75 access proposals that his office has sent to companies…
Not that it matters, but note that Corp Fin’s response to Whole Foods – dated December 1st – is not yet posted on the SEC’s site. We have the response only because the proponent, Jim McRitchie, has posted it on his CorpGov.net…
SCOTUS: Justice Scalia Questions Deference Given SEC
As noted by Akin Gump’s Joseph Boryshansky in this blog: A recent statement by Justice Antonin Scalia accompanying the Supreme Court’s denial of certiorari in a criminal insider trading case – Douglas F. Whitman v. United States – raises fundamental questions about how the courts interpret the federal securities laws and the degree of deference they give to the SEC in the context of criminal enforcement. The unusual “Statement” follows the denial. In it, Justice Scalia (with Justice Thomas concurring), questions whether an executive agency – such as the SEC – is entitled to deference when it interprets a law that “contemplates both criminal and administrative enforcement.” Harkening back to 1611, Justice Scalia says:
I doubt the Government’s pretensions to deference. They collide with the norm that legislatures, not executive officers, define crimes. When King James I tried to create new crimes by royal command, the judges responded that “the King cannot create any offence by his prohibition or proclamation, which was not an offence before.” Case of Proclamations, 12 Co. Rep. 74, 75, 77 Eng. Rep. 1352, 1353 (K. B. 1611). James I, however, did not have the benefit of Chevron deference. See Chevron U. S. A. Inc. v. Natural Resources Defense Council, Inc., 467 U. S. 837 (1984). With deference to agency interpretations of statutory provisions to which criminal prohibitions are attached, federal administrators can in effect create (and uncreate) new crimes at will, so long as they do not roam beyond ambiguities that the laws contain. Undoubtedly Congress may make it a crime to violate a regulation, . . . but it is quite a different matter for Congress to give agencies- let alone for us to presume that Congress gave agencies-power to resolve ambiguities in criminal legislation. . . .(some citations omitted).
The Justices agree to deny the petition, but note that “when a petition properly presenting the question [of deference] comes before us, [we] will be receptive to granting it.”
The Politics of the SEC
This article entitled “The SEC is Broken” notes how the SEC has become much more politicized over the past decade (and why). Here’s an excerpt quoting former SEC Chair Arthur Levitt:
“It’s much more difficult running the agency today than when I was there,” Levitt told IA. “By and large during my years at the commission, the environment was collegial. We were a fairly close-knit group; it was almost a family environment. We tended to know what each other thought about a particular issue and our counsels worked together to iron out differences.”
However, since he left the SEC, Levitt said the commission has become more politicized and “commissioners tend to represent an ideology, rather than what may benefit investors or what may be good for the markets.” The commissioners “look upon every decision in terms of whether it coincides or clashes with their political ideology, whatever that might be.”
The growing trend over the years of appointing former Capitol Hill staff members to SEC commissioner posts has contributed to a politically charged agency. “The commission is made of up largely of former [Hill] staffers, rather than as in the past [when it consisted of] distinguished lawyers and accountants,” Levitt said. These commissioners “tend to carry with them the biases of the people they’ve worked for” on the Hill.
Meanwhile, here’s an article entitled “GAO Report: SEC Is Bungling Collection and Accounting of Billions in Fines”…
Tune in on Monday, December 8th for the webcast – “Proxy Access: A New World of Private Ordering” – during which Morrow’s Tom Ball, Davis Polk’s Ning Chiu, Chevron’s Rick Hansen and Gibson Dunn’s Beth Ising will analyze how the new wave of proxy access shareholder proposals is impacting how companies approach this hot topic. They will also talk about the impact of Corp Fin’s shareholder proposal process – which faces a critical test in the wake of a request from Whole Foods, as I blogged about recently.
Podcast: NY Comptroller’s Mike Garland Speaks on Proxy Access Shareholder Proposals
In this podcast, Mike Garland of the Office of New York City Comptroller provides some insight into the “Boardroom Accountability Project” (which includes the submission of shareholder proposals seeking proxy access to 75 companies; here’s a list of the companies receiving the proposals – and here’s the NY Comptroller’s press release), including:
– What is the “Boardroom Accountability Project”?
– Why launch it this year?
– Why was the 3%/3-year threshold chosen?
– Have you heard from any companies that have received the 75 proposals – and if so, what sort of negotiating is going on?
CII’s Shareholder Proposal Roundtable
Interestingly, CII convened a shareholder proposal roundtable this summer to get investors and companies in the same room to see if they could reach common ground on their own (and published this 5-page summary about it). The roundtable consisted of about a dozen folks. Kudos for the effort!
There is probably no more difficult challenge than getting both “sides” to agree on changes to Rule 14a-8, borne out by the record number of comment letters when the SEC last reformed the rule in ’98. Over the years, I have attended similar types of meetings and they all got heated quickly. And if Corp Fin allows Whole Foods to exclude the 3%/3-year proxy access shareholder proposal because the company is proposing 9%/5-years – and these access counterproposals become a trend – I’m not sure you’ll get both sides in the same room ever again…
A few weeks ago, the SEC’s Office of the Whistleblower published its 3rd annual report for its activities of for the past year. The highlights include:
– 3620 whistleblower during the 2014 fiscal year, an increase of 382 (11.8%) over 2013
– Been a total of 10,193 whistleblower reports since the program commenced toward the end of 2011 fiscal year
– Relatively few whistleblower bounty awards authorized, although the number of awards is slowly increasing.
– Total of 14 whistleblower awards, 9 during the 2014 fiscal year;
– SEC made more awards in the 2014 fiscal year than in all the other years of the program combined.
– 29% of the 14 awards have gone to non-U.S. whistleblowers
– Denied a total of 19 claims, with 12 taking place during 2014 fiscal year
A few months ago, I blogged about the latest in the drama among the SEC Commissioners in approving “bad actor” waivers as the SEC Commissioners were stuck in a 2-to-2 deadlock over the ability of BofA to continue certain activities with Chair White recused. As noted in this Reuters article – and this article – the SEC Commissioners granted a partial waiver (here’s the incoming request) last week that waives the majority of sanctions that begin when the settlement with Bank of America is entered into court – but the one area that wasn’t waived is BofA’s ability to issue securities without getting the approval of the SEC every time. See this Reuters article entitled “SEC’s Stein says Bank of America waiver policy is ‘breakthrough'”…
Update on the St. Petersburg Stock Exchange Scam
Last year, I blogged about companies receiving letters from the St. Petersburg (Russia) Stock Exchange stating that it is in the process of unilaterally listing the company’s securities. Here’s an update from Brian Breheny of Skadden (also see this memo for a list if impacted companies):
A number of companies have recently received a letter from the St. Petersburg Stock Exchange (Exchange) in Russia stating that it has decided to admit the company’s securities to public trading on the Exchange. These letters do not request a response from the company and note that the Exchange’s decision does not impose any obligations on the company. Many companies received a similar letter from the Exchange in 2013. Companies generally responded to those letters and requested that their securities not be admitted to trading on the Exchange. It is our understanding that, as a result, the Exchange did not proceed with the admissions.
In July 2014, there were a number of changes to the Russian securities markets laws that regulate the procedures for listing of foreign securities in Russia. These changes further facilitate the listing of securities by Russian stock exchanges without the consent of the issuing company. and relieve the issuers from certain Russian reporting and disclosure obligations by shifting the burden of compliance onto the relevant exchange. Because of these changes, we expect that the Exchange will not be amenable to ceasing the admission of foreign securities to trading.
Here’s something I blogged about last Monday on CompensationStandards.com: As I have blogged many times (here’s the latest one), the SEC’s Reg Flex Agendas tend to be “aspirational” – and experience bears that out as the SEC often misses its “targeted” deadlines. So no sooner than I blogged about Corp Fin’s silence about the timing of the Four Horsemen rulemakings at the ABA Fall meeting on Friday, the SEC issued its latest Reg Flex Agenda. This Reg Flex Agenda notes that the pay ratio rules would be adopted by October 2015 (same with investment managers disclosing their say-on-pay votes) – and that the clawback, pay-for-performance and hedging rules would be proposed by October 2015 as well. We’ll see if that really happens. Don’t hold your breath…
As noted in this WSJ article (and discussed in this Cooley blog), three Republican members of Congress have asked the SEC to slow down on its pay ratio rulemaking.
ISS & Glass Lewis: December Deadlines For Your Peer Group Updates
For those that want to make changes to the peer groups used by ISS and Glass Lewis, the proxy advisors have kicked off their semi-annual update processes, allowing companies to inform them of any peer group changes that will be disclosed in their next proxy statements. The deadlines are:
Regardless of staffing or other resources, companies are increasingly feeling pressured to separate their legal and compliance functions as a result of regulatory actions and commentary. However, recent comments by DOJ Senior Deputy Chief James Koukios provide some welcome assurance that a separation of the functions isn’t critical from a regulatory standpoint – provided the compliance function remains independent and autonomous.
According to this article, Koukios recently indicated that the DOJ will look to see: (i) if the compliance function is well-designed, (ii) whether it’s applied in good faith, and (iii) whether it works. In addition, regardless of the organizational structure, the DOJ will expect compliance leadership to have a direct line of communication to the board and the audit committee.
We have heaps of helpful compliance resources in our “Compliance Programs” Practice Area – including this podcast, where Kaplan & Walker’s Jeff Kaplan discusses his take on the compliance officer & GC independence issues and reporting relationships.
Regulatory Compliance Concerns Rank High for GCs & Boards
According to this new Law in the Boardroom survey, both GCs and directors ranked regulatory compliance as among their chief concerns that keep them up at night.
What Keeps You Up At Night?
Directors say:
Data security
Succession planning
Operational efficiency
Regulatory compliance
(TIE) Corporate reputation and crisis preparedness
GCs say:
Regulatory compliance
Data security
Corporate reputation
Crisis preparedness
FCPA
Regulatory compliance also ranked 2nd – just behind Enterprise Risk Management – in terms of areas that GCs indicate they need better information and processess on. Not surprisingly, IT strategy & risk made both directors’ and GCs’ Top 5 list:
In Which Areas Do You Need Better Information & Processes?
Directors say:
Strategic planning 56%
IT strategy & risk 52%
Competitive environment 44%
Succession planning 41%
M&A strategy 36%
GCs say:
ERM 48%
Regulatory compliance 46%
IT strategy & risk 44%
Social media risk management 38%
Legal & consultant fees 33%
The survey also reveals a much greater level of anticipated M&A activity than in prior survey years, with over 50% of both GCs and directors indicating an expectation to devote considerable time to M&A – compared to 36% and 42%, respectively, reported last year.
Podcast: Independent Board Leadership Trends
In this podcast, Jamie Carroll Smith discusses board leadership trends based on EY’s review of S&P 1500 companies, including:
Based on EY’s study, is there a predominant independent board leadership structure?
Which types of independent board leadership structures have increased/decreased over the past several years?
What types of companies are more apt to have independent chairs vs. lead directors?
What are the trends in shareholder proposals for independent chairs in terms of frequency & level of shareholder support?
Can you share any insights on board leadership structure disclosure practices?
On Friday, I attended the annual ABA Fall Meeting for the Business Law Section. For the “Corp Fin Director’s Dialogue,” Director Keith Higgins brought a handful of other Staffers to join him. Not surprisingly, nary a word was said about the timing of any rulemakings. Given a new GOP Senate, I think it’s hard to predict when things will happen – even if you’re working inside the agency. I’m sure that is frustrating to those working on the rules.
Disclosure effectiveness continues to move inside the Division and comment letters are rolling in (see this nice recap of the ABA’s comment letter by Morgan Lewis). Keith made a plug for folks to voluntarily step up and improve their disclosure on their own, noting the memos issued by audit firms in recent months (they’re posted in our “Disclosure Effectiveness” Practice Area).
One noticeable thing glancing at the senior Corp Fin Staffers on the panel – they’re younger on average than they used to be given a number of high profile retirements this year (and certainly younger than most of the crowd at the ABA event)…
At lunch, Enforcement Director Andrew Ceresney gave this speech about the state of his Division.
Disclosure Effectiveness Initiative: Let The Games Begin!
Last month, Corp Fin Director Keith Higgins delivered this speech regarding the SEC’s disclosure effectiveness project. It provides a good overview of how the initiative is shaping up.
Meanwhile, George Washington University School of Business has wrapped up its own “Initiative on Rethinking Financial Disclosure” for which teams of graduate students were challenged to improve 10-K disclosure – with the winning team’s proposal submitted to the SEC as part of the disclosure effectiveness project. A lot of big names in our field were involved including former SEC Chair Harvey Pitt on the advisory committee – and former Chair Mary Schapiro as one of the judges. This CFO.com article notes some of the recommendations – which included more summaries and hyperlinks.
To me, this is still all about better usability, as best drawn out by this quote from a student:
“The sections we focused on look like complete legalese. They look like someone is trying to cover their butt,” she says. “We made a key assumption about the 10-K: it is for investors’ needs, not a document that lawyers need to write in order to protect management from being sued.”
Just How Binding Are SEC Statements In An Adopting Release?
Check out this blog by Keith Bishop entitled “Just How Binding Are SEC Statements In An Adopting Release?”…
In addition, check out this blog by Keith Bishop entitled “Will The Courts Stop Deferring To SEC Interpretations?”…
The largest studies of CEOs and investors to date on sustainability reveal consensus on the value of sustainability generally, but a huge disconnect in CEOs’ and investors’ views on certain fundamental aspects of sustainability – particularly how well companies are (or aren’t) communicating their sustainability story.
These results reflect some of the major gaps:
80% of CEOs believe that their company is approaching sustainability as a route to competitive advantage. Only 14% of investors believe that the companies they invest in are doing so.
74% of CEOs believe that their company is measuring both positive & negative impacts of activities on sustainability outcomes. Only 17% of investors believe that the companies they invest in are doing this.
57% of CEOs believe that their company is able to set out in detail a strategy for seizing opportunities presented by sustainability. Just 8% of investors believe that the companies they invest in are able to do this.
38% of CEOs believe that their company is able to accurately quantify the business value of sustainability initiatives. Only 7% of investors believe that the companies they invest in can do so.
Notably, investors identified certain shortcomings in their own approach to sustainability as being part of the problem. They acknowledged viewing sustainability as merely a risk management/mitigation issue rather than an opportunity for company growth, differentiation and competitive advantage. Additionally, they noted a need to strengthen their knowledge and capabilities in order to ask the right questions on sustainability, and challenges in identifying which issues have a material effect on their investments.
Investors also identified certain financial market structural challenges – such as a short-term investment focus and quarterly reporting requirements – that contribute to the disconnect. Among the factors they identified to help bridge the communications gap and better integrate sustainability into the global markets are longer term investment strategies and the use of common, industry-wide sustainability metrics – on par with financial performance measures – to enable more accurate identification and comparison of industry leaders.
See the suggested concrete company and investor action steps on page 18 of the investor report, and this PRI release discussing the survey results.
How to React to SASB
The Sustainability Accounting Standards Board (SASB) is self-described as an independent non-profit whose mission is to develop and disseminate sustainability accounting standards that help publicly-listed companies disclose material factors in compliance with SEC requirements. This recent Baker & McKenzie memo does a fine job of succinctly describing how SASB works – as well as the legal and practical implications resulting from SASB’s work and its increasing visibility and influence.
See also this article where SASB directors Aulana Peters and Elisse Walter discuss the basis for SASB and its sustainability disclosure scheme – including a good explanation of how its standards are designed merely to help companies meet their existing disclosure obligations under Regulation S-K.
We continue to post new items daily on our blog – “The Mentor Blog” – for TheCorporateCounsel.net members. Members can sign up to get that blog pushed out to them via email whenever there is a new entry by simply inputting their email address on the left side of that blog. Here are some of the latest entries:
– UK Regulators Assess & Reject US Whistleblower Bounty Scheme
– Survey: Boards’ Risk Concerns Warrant Focus on Crisis Planning
– General Counsels: Tips for Managing Governance Demands & Risks
– CAQ Field Testing of PCAOB’s Auditor Report Proposal: Implementation Challenges
– Survey: Earnings Call Practices
Proxy access is back to being red hot. So hot that I just calendared this webcast in a few weeks: “Proxy Access: A New World of Private Ordering.” Why is it hot? Some pension funds are frustrated because it’s been three years since the court struck down part of Rule 14a-11 and the SEC hasn’t acted further. In addition, they are angry that many boards are ignoring majority votes “against” individual directors – these boards are keeping directors on by declining to accept their resignations.
As a result, as I blogged a few weeks ago, the New York Comptroller has launched a “Boardroom Accountability Project” – through which 75 companies have received a 3%/3-year proxy access proposal (this is the formula that has received majority support so far). And other pension funds are weighing whether to submit similar proposals to other companies.
Meanwhile, as I blogged a few weeks ago on our “Proxy Season Blog,” Whole Foods has submitted a no-action request to Corp Fin arguing that a 3%/3-year proxy access proposal (submitted by retail holder Jim McRitchie) should be excluded because the company intends to have its own proxy access proposal on the ballot – with a 9%/5-year formula! So Whole Foods is seeking exclusion under Rule 14a-8(i)(9), arguing that the 3%/3-year shareholder proposal is an excludable counterproposal.
As the Whole Foods request argues, the Corp Fin Staff frequently permits companies to exclude shareholder proposals asking companies to provide shareholders with the right to call special meetings on the basis of Rule 14a-8(i)(9), when companies agree to ask shareholders to vote on management proposals at a different ownership threshold level than those sought in the shareholder proposals. But as noted in the proponent’s rebuttal (also noted in this blog), the company’s proposal includes a proxy access threshold that likely would never be triggered – Whole Foods’ largest shareholder owns just 5.4%.
Given that the date of the Whole Foods no-action request is October 23rd, Corp Fin should be making a decision in early-to-mid December. The ramifications of that could be quite important, as it could well end the private ordering movement just as it was really getting started…
Here’s a blog from “The Activist Investor” entitled “The Proxy Access Project We Need” – and here’s one entitled “How Activists Collaborate“…
How Proxy Access Fared During 2014
Here’s a recap from Subodh Mishra of ISS’ Governance Exchange: This year, shareholders have given majority backing to six of 14 resolutions that have thus far gone to a vote, with all but one–at Nabors Industries–passing under company vote requirements. Each of the six followed the 3-percent-over-three-years model, with those resolutions collectively netting roughly 55 percent support of votes cast “for” and “against.”
Shareholders at a number of companies this year, including Apple and Bank of America, voted on a variation of the proposal that called for the right at either a lower ownership threshold and/or over a shorter holding period. Those resolutions fared poorly, averaging just 4.5 percent support of votes cast, with the most recent–voted in September at FedEx–netting just 3.2 percent support.
ISS is currently tracking two more proposals–at Cisco and Microsoft–that will go to a vote in late November and early December, respectively. Meanwhile, at the Nov. 5 annual meeting of shareholders, Oracle voters gave roughly 45 percent backing to an access measure, according to a post-meeting statement from the California State Teachers’ Retirement System (CalSTRS).
“Independent shareholders overwhelmingly supported CalSTRS’ proposal opening the corporate proxy to shareholder candidate nominations for the Oracle Corporation Board of Directors,” said CalSTRS Director of Corporate Governance, Anne Sheehan. “While it received approximately 45 percent of the overall vote, it did not pass due to Larry Ellison’s large inside ownership. However, CalSTRS believes shareholders today sent a strong signal to the board of directors, and we expect more accountability from them, as a result.” CalSTRS said a history of governance shortcomings, along with the third successive year of failure to receive majority backing for its compensation plan, “should be a wake-up call to the board that greater responsiveness is required to address the concerns of long-term shareholders.”
Among S&P 500 companies targeted in the 2015 New York City Funds campaign over multiple “priority issues” are Mylan (pay and governance), Nabors Industries (diversity, pay, and governance), Urban Outfitters (diversity and governance), Cimarex Energy (diversity and fossil fuel), Cabot Oil & Gas(diversity and fossil fuel), and Regeneron Pharmaceuticals (diversity and pay).
XBRL: Anti-Fraud Exemption Has Expired for Most
Here’s a note that I recently got from a member:
One deadline that quietly passed that some may not be aware is the expiration of Rule 406T of Regulation S-T. While Interactive Data Files are subject to the anti-fraud provisions of the Securities Act and the Exchange Act, Rule 406T provided an exemption from the anti-fraud provision for issuers during the first 24 months that they became subject to the XBRL rules. The exemption was available if the issuer made a good faith attempt to comply with rule – and if the issuer promptly corrected, by filing an amended exhibit to fix any mistakes in the Interactive Data File promptly after they became aware of the error. Rule 406T expired on October 31st, so companies who are within the first two years of submitting XBRL exhibits will not be able to rely on this exemption anymore…
As noted by Cooley’s Cydney Posner in this blog, the DC Circuit Court of Appeals has granted the petitions of the SEC and Amnesty International for a panel rehearing (and the motion of Amnesty to file a supplemental brief) in connection with NAM v. SEC. (The Court also ordered that the petitions filed for rehearing en banc be deferred pending disposition of the petitions for panel rehearing.)
The per curiam order of the Circuit Court directs the parties to file supplemental briefs addressing the following specific questions related to the First Amendment:
(1) What effect, if any, does this court’s ruling in American Meat Institute v. U.S. Department of Agriculture, 760 F.3d 18 (D.C. Cir. 2014) (en banc), have on the First Amendment issue in this case regarding the conflict mineral disclosure requirement?
(2) What is the meaning of “purely factual and uncontroversial information” as used in Zauderer v. Office of Disciplinary Counsel, 471 U.S. 626 (1985), and American Meat Institute v. U.S. Department of Agriculture, 760 F.3d 18 (D.C. Cir. 2014) (en banc)?
(3) Is determination of what is “uncontroversial information” a question of fact?
Twist to Fee-Shifting Bylaws: Limit Suing Ability of Small Shareholders
As highlighted in this RacetotheBottom blog and Reuters article – and analyzed in this Cooley blog – Imperial Holdings, a Florida corporation, is trying out a permutation on fee-shifting bylaws: requiring plaintiffs to obtain consents to the litigation from shareholders holding shares in excess of a minimum threshold (3% of the outstanding). The problem the bylaw seeks to address is that shareholder litigation is frequently launched by counsel representing shareholders with only nominal stakes. Here’s the “consent by other shareholders” bylaw.
Meanwhile, in the fee-shifting bylaw lawsuit in Delaware, the defendants have opposed a limit on discovery…
SEC & FASB Issue Guidance on Pushdown Accounting
Yesterday, the SEC’s Office of the Chief Accountant & Corp Fin jointly released Staff Accounting Bulletin #15 to rescind portions of the interpretive guidance included in its SAB Series for what’s known as pushdown accounting. To reflect private sector developments in GAAP, the SAB #115 rescinds SAB Topic 5.J. entitled New Basis of Accounting Required in Certain Circumstances. The new bulletin brings existing guidance into conformity with FASB Update No. 2014-17 – Business Combinations (Topic 805): Pushdown Accounting, a consensus of the FASB Emerging Issues Task Force, which was ratified by the FASB last month and issued yesterday too…
