Today is the “Say-on-Pay Workshop: 10th Annual Executive Compensation Conference”; yesterday was the “Annual Proxy Disclosure Conference” – and the video archive of that Conference is already posted. Note you can still register to watch online by using your credit card and getting an ID/pw kicked out automatically to you without having to interface with our staff. Both Conferences are paired together; two Conferences for the price of one.
– How to Attend by Video Webcast: If you are registered to attend online, just go to the home page of TheCorporateCounsel.net or CompensationStandards.com to watch it live or by archive (note that it will take about a day to post the video archives after it’s shown live). A prominent link called “Enter the Conference Here” – on the home pages of those sites – will take you directly to today’s Conference (and on the top of that Conference page, you will select a link matching the video player on your computer: Windows Media or Flash Player). Here are the “Course Materials,” filled with talking points and practice pointers.
Remember to use the ID and password that you received for the Conferences (which may not be your normal ID/password for TheCorporateCounsel.net or CompensationStandards.com). If you are experiencing technical problems, follow these webcast troubleshooting tips. Here is today’s conference agenda; times are Eastern.
– How to Earn CLE Online: Please read these FAQs about Earning CLE carefully to see if that is possible for you to earn CLE for watching online – and if so, how to accomplish that. Remember you will first need to input your bar number(s) and that you will need to click on the periodic “prompts” all throughout each Conference to earn credit. Both Conferences will be available for CLE credit in all states except for a few – but hours for each state vary; see the CLE list for each Conference in the FAQs.
SEC’s Portal: Voluntary Submission of General Solicitation Materials Used in Rule 506(c) Offerings
Yesterday, the SEC created this “voluntary submission” portal for general solicitation materials used in Rule 506(c) offerings. There is also a bold-faced paragraph for folks to submit tips & complaints to report possible violations of the federal securities laws…
SEC’s Office of Investor Education Issues Two Reg D Alerts
Yesterday, the SEC’s Office of Investor Education issued these two Reg D alerts:
A while back, I tweeted about how I wish we could all bet on the weather. I was quickly schooled by a member who pointed out that there is a huge weather derivatives industry. Maybe this is why we have global warming? Someone is manipulating the weather with ray guns…
More on what is wrong with some parts of the legal profession. See this order regarding a “baby continuance”…
Today is the “Tackling Your 2014 Compensation Disclosures: The Annual Proxy Disclosure Conference”; tomorrow is the “Say-on-Pay Workshop: 10th Annual Executive Compensation Conference.” Note you can still register to watch online by using your credit card and getting an ID/pw kicked out automatically to you without having to interface with our staff. Both Conferences are paired together; two Conferences for the price of one.
– How to Attend by Video Webcast: If you are registered to attend online, just go to the home page of TheCorporateCounsel.net or CompensationStandards.com to watch it live or by archive (note that it will take about a day to post the video archives after it’s shown live). A prominent link called “Enter the Conference Here” – on the home pages of those sites – will take you directly to today’s Conference (and on the top of that Conference page, you will select a link matching the video player on your computer: Windows Media or Flash Player). Here are the “Course Materials,” filled with talking points and practice pointers.
Remember to use the ID and password that you received for the Conferences (which may not be your normal ID/password for TheCorporateCounsel.net or CompensationStandards.com). If you are experiencing technical problems, follow these webcast troubleshooting tips. Here is today’s conference agenda; times are Eastern.
– How to Earn CLE Online: Please read these FAQs about Earning CLE carefully to see if that is possible for you to earn CLE for watching online – and if so, how to accomplish that. Remember you will first need to input your bar number(s) and that you will need to click on the periodic “prompts” all throughout each Conference to earn credit. Both Conferences will be available for CLE credit in all states except for a few – but hours for each state vary; see the CLE list for each Conference in the FAQs.
How Do “Bad Actor” Disqualifying Events Fit With FINRA Forms U4 & U5?
Today’s a big day as the SEC’s new Reg D rules kick in. Here’s something from MoFo’s Nilene Evans in this blog:
The new SEC “bad actor” provisions of Rule 506(d) become effective on September 23, 2013. Investment banks, which monitor FINRA compliance by their professionals, must ensure that their compliance systems capture all the potentially new requirements of Rule 506(d). The FINRA disclosure obligations of Forms U4 and U5 are more extensive than the Rule 506(d) provisions and for the most part, the texts are very different. But it is clear that most of the SEC “bad actor” disqualifying events are picked up by FINRA other than Rule 506(d)(1)(viii), which addresses violations of U.S. Postal regulations. For our readers’ convenience, here is a chart comparing the FINRA U4/U5 disclosure obligations to Rule 506(d).
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:
– FINRA Cracks Down on Private Placements
– U.K. Mulls Audit Reforms
– Delaware Enacts Benefit Corporation Legislation
– Fair Value Reporting: Active Markets Not a Sound Basis
– GAO Issues Report on Internal Control Audits for Small Companies
About a decade ago, I blogged – and even created a “Berlin-Bremen Stock Exchange” Practice Area on this site – about a stock exchange that listed the shares for a number of companies without their consent (which they then sought to delist to avoid naked shorting risks). Unfortunately, I hear that the Berlin-Bremen scam continues to live today.
Skadden’s Brian Breheny brings us this scary news about a new one:
We understand that a number of companies have received a letter from the St. Petersburg (Russia) Stock Exchange stating that it is in the process of unilaterally listing the company’s securities. These letters appear to be part of an exchange initiative to increase the number of companies it lists and may, in certain circumstances, trigger obligations on the part of the letter’s recipients — even if the company has not consented to the listing. The letters state that the securities will be listed 30 days after the date the notice was sent (generally, the end of September 2013).
Corp Fin’s Small Business Compliance Guide: “Disqualification of Felons & Other “Bad Actors”
Yesterday, Corp Fin posted this Small Business Compliance Guide entitled “Disqualification of Felons and Other “Bad Actors.”
Meanwhile, Keith Bishop blogs today about an interpretation issue with the Bad Actor amendments related to the “affiliated issuer” definition (or lack thereof)…
Course Materials Now Available: Many Sets of Talking Points!
For the many of you that have registered for our Conferences coming up on Monday, we have posted the Course Materials (attendees received a special ID/PW this week via email that will enable you to access them; note that copies will be available in DC). The Course Materials are better than ever before – with over 40 sets of talking points comprising 140 pages of practical guidance. We don’t serve typical conference fare (ie. regurgitated memos and rule releases); our conference materials consist of originally crafted practical bullets and examples. Our expert speakers certainly have gone the extra mile this year!
For those seeking CLE credit, here’s a list of states in which credit is available for watching the Conferences live in DC and by video webcast.
– How to Attend by Video Webcast: If you are registered to attend online, just go on Monday to the home page of TheCorporateCounsel.net or CompensationStandards.com to watch it live or by archive (note that it will take about a day to post the video archives after it’s shown live). A prominent link called “Enter the Conference Here” – that will be on the home pages of those sites – will take you directly to Conference. Remember to use the ID and password that you received for the Conferences (which may not be your normal ID/password for TheCorporateCounsel.net or CompensationStandards.com). Here is the conference agenda; times are Eastern.
– Register Now – There is still time to register for our upcoming pair of executive pay conferences – which starts on Monday, September 23rd – to hear what Keith Higgins, the Director for the Division of Corporation Finance, says about the proposed pay ratio rules, as well as catch a “how to implement pay disparity rules” workshop that is part of the last panel on Tuesday, September 24th. If you can’t make it to Washington DC to catch the program in person, you can still watch it by video webcast, either live or by archive. Register now.
– Registration for Attendance in DC – Walk-Ups Only: Going forward, you are no longer be able to register to attend in Washington through this site (however, you still will be capable of registering online to watch by video at any time). You can still register to attend in DC – you just need to bring payment with you to the conference and register in-person.
Yesterday, the SEC – by a 3-2 vote – held an open Commission meeting in which it proposed pay ratio rules. The proposed rule doesn’t specify any required calculation methodologies for identifying the median employee in terms of total compensation for all employees – so companies would have flexibility (eg. can use statistical sampling) – and companies would then disclose their methodology. Have it your way!
The proposing release is fairly open-ended – so it’ll be interesting to see if that makes folks happier or uncomfortable. Flexibility is the name of the game since what you can do – which you can’t do with NEO comp – is use reasonable estimates to come up with the 402 number for the “median employee” (although there won’t be much to calculate for the median employee at most companies since they don’t get paid a dozen different ways like many CEOs). For the statistical sampling section, drop by your friendly statistician to understand it. But that should not be much of a challenge as companies conduct statistical sampling for a whole host of issues.
There’s a 60-day comment period. The proposing release specifically says there’s a transition period once final rules are adopted, allowing companies to “omit” the first year. So if the rules become effective in 2014 (which is the most realistic timeframe), then you are first required to comply in the 2016 proxy season with 2015 fiscal year information.
– What This Means – There is still time to register for our upcoming pair of executive pay conferences – which starts next Monday, September 23rd – to hear what Keith Higgins, the Director for the Division of Corporation Finance, says about these proposed rules, as well as catch a “how to implement pay disparity rules” workshop that is part of the last panel on Tuesday, September 24th. If you can’t make it to Washington DC to catch the program in person, you can still watch it by video webcast, either live or by archive. Register now.
Registration for Attendance in DC – Walk-Ups Only After 9/19: Starting at 8 pm eastern tonight, you will no longer be able to register to attend in Washington through this site (however, you still will be capable of registering online to watch by video at any time). After this cutoff, you can still register to attend in DC – you just need to bring payment with you to the conference and register in-person.
SEC Goes After 23 Firms for Reg M Short Selling Violations Before Offerings
A few days ago, the SEC issued this press release announcing enforcement actions against 23 firms for improperly participating in public stock offerings after selling short those same stocks – as noted in this Reuters article, 22 of the firms settled – one has not. At the same time, the SEC’s National Examination Program and OCIE simultaneously issued a risk alert to highlight risks to firms from non-compliance with Rule 105 of Regulation M, including highlighting that in 40 settled actions finding Rule 105 violations since ’10, the SEC has collected disgorgement, penalties and interest in excess of $42 million.
More Threats of a Government Shutdown? Egads…
In case you haven’t been following the national news, there is yet another threat of a federal government shutdown that would shut down the SEC, etc. There have been so many threats and close calls, I’ve started to treat them as “crying wolf” – see this blog from April 2011. Anyways, the new D-Day is October 1st…
A member sent on this Bloomberg article about how Washington DC really works…
As you may recall, when the say-on-pay rules were first implemented in 2011, a number of companies forgot to file the subsequent Form 8-K/A under Item 5.07 disclosing the company’s determination regarding say-on-frequency. (The 8-K/A is due no later than 150 days after the annual meeting, but in no event later than 60 days prior to the deadline for submission of shareholder proposals under Rule 14a-8.) This oversight resulted in, among other things, companies either losing S-3 eligibility for one year or seeking a waiver letter from the SEC Staff.
As this proxy season was the first that smaller reporting companies were required to include say-on-frequency in their proxy statements, here is your friendly reminder for those companies of this 8-K/A filing obligation so that they can avoid the negative consequences that come with missing this required filing. Here is an excerpt from the November-December 2012 issue of The Corporate Counsel:
Timely Reporting of the Issuer’s Ultimate Frequency Determination–S-3 Eligibility. As we have discussed (see, e.g., our March-April 2012 issue at pg 10), a number of issuers failed to timely report (under Form 8-K Item 5.07), within 150 days after the Say-on-Frequency vote, the issuer’s decision as to the frequency of future Say-on-Pay votes. The Staff ended up being relatively understanding when processing Form S-3 eligibility waivers arising from this situation, but that accommodating stance may not be repeated in 2013 for SRCs conducting their first Say-on-Frequency vote. Form S-3 eligibility may be especially important for SRCs, including the General Instruction I.B.6 limited primary shelf eligibility adopted in 2007 for issuers with a public float under $75 million.
We now think the best course for SRCs (and other issuers conducting their Say-on-Frequency vote for the first time) would be to determine up front that the frequency favored by shareholders will be adopted by the SRC as its Say-on-Pay frequency, so that the frequency that is adopted by the SRC can be disclosed in the Item 5.07 Form 8-K reporting the annual meeting voting results within four business days of the meeting. This approach obviously avoids the risk of neglecting to file the Form 8-K amendment within 150 days of the triggering event.
Miss the “More on Reg D Offerings Today” Spreecast? Catch It Now
The technology held up during yesterday’s spreecast on Regulation D – except I had feedback from my microphone this time but luckily I barely spoke. The archive is now available if you care to watch – nearly 400 views!
This September-October issue of the Deal Lawyers print newsletter was just sent to the printer and includes articles on:
– Forum Selection Bylaws: The New Frontier
– Checklist: Shareholder Outreach Following M&A Transaction Announcements
– Lock-Ups: When Can They Give Rise to “Affiliate” Status & Potentially Implicate Rule 13e-3?
– Delaware Law: Amended to Provide for Ratification & Validation of Defective Corporate Acts
– A Dozen Take-Aways: In Re: Trados
Come participate in the spreecast – “More on Reg D Offerings Today” – at 2 pm eastern today! During it, Leonard Street’s Stephen Quinlivan, Cohen Gresser’s Bonnie Roe & Davis Wright’s Joe Wallin will provide color commentary that supplements last week’s Reg D webcast – think of it as network analysis after a Presidential debate. To access the spreecast, go here at 2 pm eastern. [Note last week’s Alan Dye spreecast has had over 500 views; a new spreecast has been calendared for September 30th: “PCAOB’s Audit Report Proposals: A Big Sleeper?“]
Here are FAQs about how spreecasts work – but the upshot is you have to register for Spreecast first (although it’s possible to watch without registering if you close a prompt). Simply sign up by using an email address by clicking the “Or sign up via email” link in the upper right hand side of the site (it’s in small print under the “Connect with Facebook” logo).
Here is David Jenson’s analysis of comment letters on the latest Reg D proposals. And Keith Bishop wrote this blog yesterday entitled “Congress Wants To Ban Felons While California Doesn’t Want To Ask.” And this blog has funny lyrics for a song entitled “The 506(c) Seed Financing Blues.”
SEC to Focus on Private Fund Adviser Compliance Procedures in Rule 506(c) Offerings
Here’s an excerpt from this blog by Morrison & Foerster’s Jay Baris:
With general solicitation and general advertising on the horizon, private fund advisers should review their policies and procedures to determine whether they are reasonably designed to prevent the use of fraudulent or misleading advertisements, said Norm Champ, the Director of the SEC’s Division of Investment Management, in remarks today before the Practicing Law Institute in New York. This review is especially important, he said, if the funds intend to engage in general solicitation. Hedge fund sponsors should also confirm that their practices for verifying accredited investor status meet the new requirements that apply to Rule 506(c) offerings.
Hats Off to the “NACD Directorship 2020”!
I’m weary of those that profess to be governance experts but they simply complain about changes from the status quo and offer no solutions to the numerous problems that still plague us. That’s one reason why I would like to congratulate the NACD for putting together a real – and comprehensive – effort to make meaningful change. Learn more in this blog…
As long rumored, late on Friday, the SEC calendared an open Commission meeting for this Wednesday, September 18th to consider proposing the pay ratio rules as required by Section 953(b) of Dodd-Frank. We will be providing full coverage as always.
– What This Means – There will be a lot of last minute registrations for our upcoming pair of executive pay conferences – which are being held the following week in DC and by video webcast. The keynote on Monday, September 23rd is Keith Higgins, the Director for the Division of Corporation Finance – amid 20 panels on pay disclosures in a single day. And there is a “how to implement pay disparity rules” workshop that is part of the last panel on Tuesday, September 24th. Register now.
Although the conference hotel is sold out, occasionally there will be an opening if someone cancels – so try them first. Otherwise, we have a back-up hotel nearby. Mention the conference if you talk to either to obtain a discount.
Executive Officer Determinations: Who is Our “Chief Financial Bear”?
Can a company cook up unique titles for their officers? Sure. For example, see the titles of the Build-a-Bear officers on page 42 of the company’s Form 10-K (eg. Chief Bearrister = General Counsel).
Before I dive into Twitter’s “tweet-heard-around the world,” let me deal with this head-turner that came first. Last week, I was bemused by this Fox Business reporter’s take of a Twitter spokeperson’s response in an email of “…” (known as an “ellipsis”) as somehow confirming an IPO due to the logic that Twitter had previously refused to respond to questions about it. Here are four questions that came to mind:
1. What Does “…” Mean? – Since I use “…” at the end of my blog on a daily basis, you would think I know what it means. As it turns out, my use of it – in the context that I use it – seems to be spot on according to this blog. I asked a friend and he thought it means fill in the blanks with whatever forms the basis of your reality.
2. Is This Today’s Equivalent of “No Comment”? – As lauded in footnote 17 of the Basic case: “To be actionable, of course, a statement must also be misleading. Silence, absent a duty to disclose, is not misleading under Rule 10b-5. “No comment” statements are generally the functional equivalent of silence.” It may be the death of wit – but companies may want to stick to more traditional responses so as to avoid any perceived (whether justifiable or not) ambiguity or meaning in their responses.
3. Did the Journalist Ask the Proper Question? – As I read the article, the question wasn’t “Is Twitter doing an IPO in 2014?” – but rather if anyone at the company can chat about the IPO rumors? Thus, however the response may be interpreted, it wasn’t answering the question of whether there will be an IPO.
4. A Brilliant Law School Exam Question? – Definitely…
Some members asked if this tweet was permissible. As I blogged last year, a handful of companies relied on Rule 135 to announce a confidential IPO submission soon after the JOBS Act was enacted.
Although Rule 135 notices typically contain more content than the maximum of 140 characters that make up a single tweet, Rule 135 only requires a legend “to the effect that it does not constitute an offer of any securities for sale.”
The rest of Rule 135 simply lays out the type of information permitted in a Rule 135 notice – it doesn’t require all of that limited information. And I don’t find Twitter’s tweet to be misleading – it seems to provide all the facts that a Rule 135 notice would need to convey. Professor Davidoff analyzes this too in his DealBook column – and Professor Rodrigues also does so in the Conglomerate Blog. Any different opinions?
Miss the “Being Alan Dye” Spreecast? Catch It Now
The technology held up during yesterday’s spreecast with Alan Dye – except I had my microphone jacked up too high (lesson learned for next time). The archive is now available if you care to watch – already over 350 views!
Poll: Does Dot-Dot-Dot Mean “No Comment” to You?
Here is an anonymous poll on the topic of whether you think that a response of dot-dot-dot is the equivalent of no comment:
Come participate in the first spreecast in our field at 4 pm eastern today! During “Being Alan Dye,” Alan and I will be on video during which I will interview him (and you will have the chance to type in your input during the program). I expect the spreecast will last only 15 minutes – it should be fun! To access the spreecast, go here at 4 pm eastern.
Here are FAQs about how it works – but the upshot is you have to register for Spreecast first (although it’s possible to watch without registering if you close a prompt). Simply sign up by using an email address by clicking the “Or sign up via email” link in the upper right hand side of the site (it’s in small print under the “Connect with Facebook” logo).
Here’s the other spreecast that I have calendared: “More on Reg D Offerings Today.” It will be held this Tuesday, September 17th at 2 pm est – and it will include reactions to this week’s popular Reg D webcast, as well as cover topics that weren’t addressed…
More on “It’s Here: Crowdsourcing Offerings Through Mobile Phones & Tablets”
A few years ago, I blogged about a start-up named “Loyal3” which allows companies to create “Customer Stock Ownership Plans” through on an app. I hadn’t heard much since then so I wasn’t sure if the concept caught on – but the WSJ just ran an article identifying a Luxembourg company – Globant SA – as the first to use the platform for an IPO.
Someone was kind enough to dig around in Edgar to see if any customer stock ownership plans had been filed so far – and they came up with two (see Topic #6695 in our Q&A Forum). So it doesn’t look like a mad rush to use Loyal3 – but there is some movement…
Applying Forfeiture Estimates to Stock Plan Expense
We recently mailed the September-October Issue of The Corporate Executive and it includes pieces on:
– Applying Forfeiture Estimates to Stock Plan Expense
– Planning for FICA Obligations for Retirement-Eligible Employees
– Traps for the Unwary: Important Considerations and Common Mistakes in Estimating Future Forfeitures
– Plaintiffs Achieve Victories in Litigation Over Stock Plan Proposals
Act Now: Get the “rest of 2013 for free” when you try a 2014 No-Risk Trial today.
I keep hearing the theme song from the “Mary Tyler Moore” show in my head. “You can have a town, why don’t you take it, you’re gonna make it after all.”
Apparently, someone took the liberty of submitting this comment on the political contribution disclosure rulemaking petition using my name. Yes, me. Not Charlie Sheen or Ashton Kutcher (or someone from the SEC as I recently blogged about). My very own imposter (although I like to think of it as an impersonator)!
Actually, it’s surprising that this kind of thing doesn’t happen more often – or maybe it does? To submit a comment on a rulemaking, there is no real verification process – nor should there be in my opinion – since anyone can input false identification information easily enough. The closest thing to verification is that an e-mail address is required to be inputted – but there is no way for the SEC’s system to be able to distinguish e-mail addresses from persons claiming to be others.
And so, there you have it. My career highlight without me lifting a finger…
Not that I want to scare off my mysterious unknown friend – but one member sent in a note that perhaps this is a violation of 18 U.S.C. Section 1519:
“Whoever knowingly alters, destroys, mutilates, conceals, covers up, falsifies, or makes a false entry in any record, document, or tangible object with the intent to impede, obstruct, or influence the investigation or proper administration of any matter within the jurisdiction of any department or agency of the United States or any case filed under title 11, or in relation to or contemplation of any such matter or case, shall be fined under this title, imprisoned not more than 20 years, or both.”
Corp Fin Issues Rule 144 Interpretive Letter: Credit for Canadian Reporting!
Corp Fin doesn’t issue interpretive letters in the Rule 144 arena that often anymore. Yesterday, Corp Fin issued its first Rule 144 interpretive letter this year – this new one states the view that Rule 144 is available for the sale of securities of certain Canadian companies, notwithstanding the fact that those companies previously had been shells, within the meaning of Rule 144(i). Corp Fin gives credit to Canadian reporting!
Webcast: “The Use of Social Media in Deals”
Tune in tomorrow for the DealLawyers.com webcast – “The Use of Social Media in Deals” – to learn from K&L Gates’ Mary Korby; Kekst and Company’s Lissa Perlman and K&L Gates’ Cedric Powell about how social media is being used in deals and what that means for regulatory purposes, including:
– What are common examples of social media use in deals?
– How should social media communications be treated for SEC filing purposes? For Rule 425?
– What types of activities are permissible? Which are not?
– What is the best way to leverage social media in deals?
