Not surprisingly, I received quite a bit of member feedback on my recent blog about the Boston Globe article that found many companies incorrectly totaling the amounts in their Summary Compensation Tables. Others are blogging about this story too, such as this entry from Mark Borges in his “Proxy Disclosure Blog.”
Here is a useful response from Jim Brashear of Zix Corporation:
I copied the summary compensation table from one of the SEC filings cited in the recent Boston Globe article on math errors in proxy statements, and I pasted it into this Word document. I wondered if the addition errors could have been avoided by some simple changes to how the Word tables were formatted. Avoided at least while the issuer and its counsel are working on the document in Word, before it gets handed off to the printer and is reformatted.
A lot of lawyers don’t know that you can use Word tables very much like Excel spreadsheets. It’s particularly easy to sum columns and rows of adjacent cells that all contain numbers. If there are intervening cells that are empty or have non-number characters, it’s a bit more complicated to sum the cells, but it can still be done.
In my Word document, the top table is straight from the SEC filing (only names redacted). The bottom table shows how I cleaned up the table to remove the cell “padding”, replaced the dashes with zeros and, most importantly, inserted into the far right column a formula that calculates automatically the sum of the columns to the left. (I left one blank column between Year and Salary so that the formula would not add the year date to the compensation amount.
Inserting a formula is done in Word from the Table menu by selecting Formula. Word will even suggest the correct formula – in this case “=SUM(LEFT)”. Then, the author selects the Number Format to display $ and the commas (delete the cents if you don’t want them). Voila, no more simple addition errors! If there are changes to numbers in the table, you may have to refresh the formula cells by selecting them and pressing F9 – but that refresh happens automatically when the document is printed.
And here is a follow-up from a member: While this would work, since most company’s external reporting departments already prepare the tables in Excel, all you need to do is copy the Excel table in Excel and then paste it into the Word document at the proper location. You can even re-open the table in the Word document while in Word and edit the Excel spreadsheet.
By the way, here is a follow-up article from the Boston Globe that includes some quotes from a SEC spokesperson. I agree with the thoughts in the article from Lynn Turner that it would be impossible for Corp Fin Staff to be involved in checking the math when conducting their disclosure reviews. For me, not only is it impossible, it is impractical. Who would ever think that the team of folks that draft disclosure documents wouldn’t bother to check the math…and is Corp Fin expected to foot every row and column of numbers in the financials too when a filing is selected for review?
The Wall Street Jargon iPhone App
In this podcast, Kirk Davenport of Latham & Watkins describes his firm’s new iPhone application, including:
– What is the Wall Street jargon app?
– How long did it take to create?
– Have there been any surprises since it was launched?
More on our “Proxy Season Blog”
With the proxy season gearing up once more, we are posting new items regularly on our “Proxy Season 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:
– Gadflies Get Press
– Proxy Plumbing: First Salvos
– Fortune Uses Proxy Democracy to Question Vanguard
– Corp Fin to Issue Rule 14a-8 Staff Legal Bulletin Before ’11 Season
– Proxy Season Review: Majority-Supported Proposals
Comments are due today on the SEC’s concept release regarding reform of the proxy processing system, although I’m sure the SEC will look at your comment letter if it’s only a few days late. Out of the 90 or so comment letters submitted so far, here already have been a number of interesting letters submitted, including these:
There often is a short lag between when comment letters are submitted and when they are posted on the SEC’s site – so I’m sure we will see many more posted in the days to come…
One topic that is being commented upon is whether the cost and burden of tagging proxy statement disclosures in XBRL outweigh the potential benefits. Personally, I don’t see tagging of that type of data being too useful – and I worry that it only feeds the reliance on peer group surveys when setting executive and director compensation (eg. use of datapoints from compensation tables without taking into account the nuances of the circumstances).
White Paper: Transfer Agents Target Broadridge
To provide input for the SEC’s proxy plumbing project, the Securities Transfer Association (known as the “STA”) released a White Paper last week on the differences in issuer costs between the current model and a proposed one in which proxy distribution services would be subject to more market competition. The White Paper compares actual invoices and the average pricing used by transfer agents in handling proxy processing services – and found that the average cost savings for different types of issuers ranged substantially (from 20-70%) under their proposed model.
Poll: Reason for Not Submitted a Proxy Plumbing Comment Letter
Given how busy folks are – and how many Dodd-Frank proposals we will need to comment upon – I can understand why only 90 comment letters have been submitted so far on the SEC’s proxy plumbing concept release. Here is an anonymous poll to survey why you haven’t submitted a letter:
Note that these proposals weren’t a product of an open Commission meeting. The SEC smartly issued this set of proposals without the fanfare of an open meeting, which is not required if all of the Commissioners sign an order (ie. seriatim). Probably since these proposals are required by Dodd-Frank – and time is of the essence – the SEC went with what used to be the traditional route of getting a proposal out of the SEC (more recently, nearly all proposals are the product of open Commission meetings; it wasn’t that way a decade ago).
Say-on-Pay: What Should September 30th Fiscal Year End Companies Do?
You may recall that Dodd-Frank requires that say-on-pay must be included in proxy statements relating to a company’s first annual or other meeting of shareholders occurring on or after January 21, 2011 – regardless of whether the SEC has adopted final rules by then (that’s just for say-on-pay; the golden parachute provision is not self-executing and the SEC states that provision won’t apply to companies until it finalizes those rules). The comment deadline for both rulemakings is November 18th – so it will be a tight squeeze for the SEC to adopt final rules by January 21st (but it is doable).
I have been hearing from a number of companies with 9/30 fiscal year ends that were freaking out because they didn’t have SEC guidance on a number of issues. Now, they have some guidance – even though it isn’t final. One big issue for these companies related to their proxy preparation schedule because they didn’t have any relief from the preliminary proxy filing requirements yet. Fortunately, in the SEC’s proposing release, the SEC does provide some relief on page 65. Here is that excerpt:
Rule 14a-6 currently requires the filing of a preliminary proxy statement at least ten days before the proxy is sent or mailed to shareholders unless the meeting relates only to the matters specified by Rule 14a-6(a). Until we take final action to implement Exchange Act Section 14A, we will not object if issuers do not file proxy material in preliminary form if the only matters that would require a filing in preliminary form are the say-on-pay vote and frequency of say-on-pay vote required by Section 14A(a).
In the proposing release, the SEC also states that these companies are permitted to conduct the frequency vote on the basis of the proposed four choices – every year, every two years, every three years, or abstain.
The ‘Former’ Corp Fin Staff Speaks on Proxy Access & Dodd-Frank
This is a “biggie.” Tune in tomorrow for the 75-minute webcast – “The ‘Former’ Corp Fin Staff Speaks on Proxy Access & Dodd-Frank” – to hear former Senior Staffers Brian Breheny of Skadden Arps; Marty Dunn of O’Melveny & Myers; John Huber of Latham & Watkins; Brian Lane of Gibson Dunn and Dave Lynn of TheCorporateCounsel.net and Morrison & Foerster weigh in on what do now that the proxy access rules are stalled, plus analysis of all the latest from the SEC’s Corp Fin on Dodd-Frank related-matters – including say-on-pay and more. If you’re not yet a member of TheCorporateCounsel.net, try a no-risk trial for 2011 and gain access to this webcast for free.
In the wake of the SEC’s adoption of a rule change to Regulation FD that carries out the repeal of the rating agency exemption – as dictated by Dodd-Frank – I conducted a poll about how companies would try to handle rating agency communications going forward. The poll results showed that 53% would try to negotiate stand-alone agreements with the agencies – with 23% being comfortable relying on the internal confidentiality policies of the agencies (15% were too busy with access to know about the rule changes; 13% said “what me worry?”).
Initially after the repeal, the major rating agencies had differing approaches as to whether they would enter into confidentiality agreements (most would upon request; but some wouldn’t) – but during the past few days, it seems that they have all come around to routinely including uniform confidentiality agreements into their agreements with issuers going forward. It doesn’t appear that the rating agencies are willing to negotiate the terms of their uniform agreements – but I have heard that they may be willing to responded to questions with “interpretations” that may be helpful. (So for those keeping track of this fluid situation, these statements from Moody’s and Fitch appear to be old news already).
Does it matter that companies enter into a confidentiality agreement with a rating agency? I think so. I recently polled my advisory board about whether they have ever heard of circumstances where a rating agency has leaked confidential information – and I did hear of a few aberrations where it did happen. So getting some extra protection beyond an agency’s own code of conduct seems like a smart thing to do…
As noted in some of the memos posted in our “Regulation FD” Practice Area, some rating agencies have issued statements that say that they believe that Reg FD doesn’t apply to them notwithstanding the exemption repeal dictated by Dodd-Frank.
SEC Seeks Comment Ahead of Internal Controls Study
Last Thursday, the SEC posted this request for comment ahead of a study mandated by Section 989G(b) of Dodd-Frank regarding how the SEC could reduce the burden of complying with Section 404(b) of Sarbanes-Oxley for companies with a public float between $75 million and $250 million. The study seeks to determine whether Dodd-Frank’s exemption for companies with a float under $75 million should be extended to more companies – and it must be completed within nine months of Dodd-Frank’s passage.
The SEC’s request identifies 23 specific items for comment. This new study was mandated notwithstanding the SEC’s Office of Economic Analysis publishing a 139-page study on the same topic last October…
More on “The Mentor Blog”
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:
– RealNetworks’ Rule 10b5-1 Trading Plan Disclosure
– Diversity in the Boardroom is Important and, Unfortunately, Still Rare
– Insider Trading and Suspicious Trading, Not the Same
– Marty Lipton’s “The Spotlight on Boards”
– SEC Approves PCAOB Disciplinary Order
Mike Melbinger noted yesterday on his CompensationStandards.com blog that the disclosure of the relationship between compensation and risk will be an important element of consideration for ISS and investors in the upcoming proxy season, so now is the time to start thinking about how to “do it right.” One thing that I have found helpful in benchmarking risk assessments has been the plethora of data points that can be gleaned from the hundreds of comments letter responses that have been submitted on EDGAR in response to the Staff’s comment asking companies to explain what they did to reach their conclusions as to whether disclosure was required under Item 402(s) of Regulation S-K (which effectively resulted in disclosure that was not otherwise required). In most cases, these responses talk about a process whereby:
– compensation programs were reviewed, particularly focusing on incentive compensation programs;
– program features were identified which could potentially encourage excessive or imprudent risk taking;
– the specific business risks that related to such features were identified;
– mitigating factors (if any) were identified;
– an analysis was undertaken to determine the potential effects of the risks and the impact of the mitigating factors; and
– an analysis was undertaken of the particular situations described in Item 402(s) as they apply to the company.
The findings that companies often reached were similar, focusing on:
– the mix of compensation, which tended to be balanced with an emphasis toward rewarding long term performance;
– the use of multiple performance metrics that are closely aligned with strategic business goals;
– the use of discretion as a means to adjust compensation downward to reflect performance or other factors;
– caps on incentive compensation arrangements;
– the lack of highly leveraged payout curves;
– multi-year time vesting on equity awards which requires long term commitment on the part of employees;
– the governance, code of conduct, internal control and other measures implemented by the company;
– the role of the compensation committee in its oversight of pay programs;
– frequent business reviews;
– the existence of compensation recovery (clawback) policies;
– the implementation of stock ownership or stock holding requirements;
– the use of benchmarking to ensure the compensation programs are consistent with industry practice;
– the uniformity of compensation programs across business units and geographic regions, or alternatively, the differences employed to reflect specific business unit or geographic considerations; and
– the immaterial nature of some plans.
In terms of employee plans, there was a lot of discussion in the comment responses regarding sales incentive plans, often focusing on controls in place on those plans such as caps, negative discretion, prepayment review, and recovery in the event of error or fraud, etc. The responses often note that the analysis was conducted by management with the concurrence or consultation of the compensation committee, and they also frequently referenced the use of compensation consultants in performing the analysis, with that consultant in many cases being the same compensation consultant that the compensation committee used for other compensation matters.
Our Quick Survey on Clawback Policies
As noted above, one of the items cited often in response to the evaluation of compensation and risk is the existence of a clawback policy. Based on a number of requests from members, we have posted a “Quick Survey on Clawback Policies.” It’s anonymous and just takes a few seconds to complete. Once you participate, you will see a link to the running results.
Broc blogged a couple of weeks ago about the SEC’s short term borrowings rule proposal and related MD&A interpretive release. One thing to keep in mind about the interpretive release is that is was no doubt timed to provide some guidance in advance of third quarter 10-Qs, so that companies could evaluate their liquidity disclosure in their interim period MD&A and make adjustments accordingly. One good thing about this approach is that you can “ease” into these disclosures by trying them out in the 10-Q, rather than incorporating potential changes for the first time in the 10-K. A few of the key points to keep in mind from the interpretive release as you are drafting or reviewing the 10-Q are:
1. Revisit whether more disclosure is necessary in the MD&A about cash management and risk management policies that are relevant to an evaluation of financial condition. The short-term borrowings disclosure concerns that the SEC has, in particular (but not limited to) the use of repurchase agreements, share-lending transactions and off-balance sheet arrangements or contractual repurchase obligations that may be accounted for as sales, all get back to one simple notion: cash is king. There is a concern, expressed in this release and also in comments on MD&A that the Staff has been issuing over the last couple of years, that the liquidity discussion in MD&A too often gives short shrift to the availability of cash, what companies are doing with their cash, where short-term cash is coming from and how risks related to liquidity are managed. This notion has manifested itself outside of the context of short-term borrowings, for example, in frequent Staff comments seeking more disclosure about the availability of cash balances held overseas.
2. Revisiting leverage ratio disclosure. The interpretive release gives some very specific guidance about disclosure of leverage ratios and the conditions under which such ratios can be disclosed. Now is a good time to revisit any disclosure along these lines to see if it is consistent with the Staff’s views.
3. A focus on the Contractual Obligations Table. While not necessarily an item for the 10-Q, it is not too early to start thinking about potential changes to the Contractual Obligations Table required in MD&A, to determine if you need to add to or revise your disclosure – through footnotes, a revised presentation, or otherwise – to provide “a presentation method that is clear, understandable and appropriately reflects the categories of obligations that are meaningful in light of its capital structure and business.” It has been my experience that this table hasn’t received a whole lot of attention (other than updating the numbers, adding new obligations and taking out old obligations) since it was adopted in the wake of Sarbanes-Oxley, so now might be the best time to take a hard look at what is being captured in the table and how it is presented.
For more tips regarding the implementation of the latest MD&A interpretive release, check out our “MD&A” Practice Area.
The SEC announced this week that the Division of Corporation Finance has added two new Associate Directors in the Division’s Disclosure Operations group. Karen Garnett and Mark Kronforst were promoted from within Corp Fin to the Associate Director positions – Karen was Assistant Director of the Office of Real Estate and Business Services, and Mark was Corp Fin’s Deputy Chief Accountant. Karen and Mark join Paul Belvin, Jim Daly and Barry Summer in the senior management ranks of the Disclosure Operations group, which is led by Shelley Parratt. These new leadership slots are in recognition of the fact that Corp Fin’s responsibilities keep growing and are becoming ever more complex. Filling these slots will undoubtedly now open the way for hiring folks to run the three Corp Fin new offices that were announced back in the summer.
More Dodd-Frank Rulemaking Underway
Yesterday, the SEC proposed (and adopted) more rules under the Dodd-Frank Act. The SEC proposed yet another set of asset-backed securities disclosure rules, this time in accordance with Sections 932 and 945 of the Dodd-Frank Act. Under these proposals: (1) issuers of asset-backed securities that are registered with the SEC would need to perform a review of the assets underlying the asset-backed securities; (2) proposed amendments to Regulation AB would require an issuer of asset-backed securities to disclose the nature, findings and conclusions of this review; and (3) the issuer or underwriter for both registered and unregistered asset-backed securities offerings would be required to disclose the findings and conclusions of any review performed by a third party that was hired to conduct such a review. The Commission also adopted interim final rules to require that certain swaps dealers and other parties report any security-based swaps entered into prior to the July 21 passage of the Dodd-Frank Act, as well as proposed rules (a new Regulation MC) intended to mitigate conflicts of interest for security-based swap clearing agencies, security-based swap execution facilities, and national securities exchanges that post security-based swaps or make them available for trading.
Dave & Marty on Governance, Proxy Access and British Cars
We just posted another edition of the Dave & Marty Radio Show, where Marty and I talk about the latest developments with proxy access, some of the interesting observations from the Report of the NYSE Commission on Corporate Governance and, believe it or not, British sports cars that Marty and I admire.
One of the significant changes to the financial regulatory system that Dodd-Frank will bring about is the regulation of advisers to private funds, through the elimination (effective July 11, 2011) of the 15-client exemption contained in Section 203(b)(3) of the Investment Advisers Act. The intent was to bring regulation to the advisers of hedge funds and private equity funds, but Congress recognized (with the help of some lobbying, no doubt) that the definition of “private fund” in Dodd-Frank potentially has a very broad reach. Thus was born the need for an exemption for family offices, which are commonly thought of as those entities that run the money for well-off families, and are presumably unlikely to be significant contributors to the systemic risk concerns that have now rained down regulation on the advisers to private equity and hedge funds.
Yesterday, the SEC proposed rules to implement the Dodd-Frank exemption for family offices, giving commenters just a little over 30 days to weigh in. Next up will probably be proposed rules to implement the exemption for advisers to venture capital funds, which are sure to bring about a lot of commentary given the difficulties in defining what exactly is a venture capital fund (as compared to other private funds).
R.I.P. TARP
With the expiration of the TARP program, it appears to be time to justify its existence and to explain how it really wasn’t as bad (or as costly) as everyone made it out to be. I don’t need much convincing on this one, just thinking back to how bad things were in the depths of the financial crisis and how I might have been selling apples on a street corner had it not been for some level of intervention. Nonetheless, we now have a full-scale retrospective on TARP, plus Treasury Secretary Timothy Geithner’s Washington Post opinion piece from last Sunday. In the op-ed piece, Secretary Geithner seeks to dispel the top five myths about TARP: that TARP cost taxpayers hundreds of billions of dollars; TARP was a gift for Wall Street that did not help Main Street; TARP was a quick fix for the market meltdown but left the financial system weak overall; TARP worsened concentration in the banking sector, leaving it more vulnerable to another crisis; and TARP was the centerpiece of a strategy by the administration to assert more government control over the economy. TARP also “lab tested” some of the “reforms” that have now been rolled out to public companies generally, such as the soon-to-be required Say-on-Pay resolution. Now that it is gone, let’s hope we never see it come to pass again.
Wall Street Pay
It is intriguing to juxtapose the TARP defense with the news earlier this week in the WSJ that Wall Street pay has hit a record level at $144 billion, up 4% from last year. This kind of news fans the flames of outrage of compensation levels, although it does appear that pay may be slowing down in the months ahead as some of the financial reforms and other regulatory actions kick in. It also seems that some of the compensation has been shifted to equity and deferred instruments, reflecting an effort toward mitigating risks of employees seeking only short term gains, which is hopefully some good news for these institutions in the long run.
Over the last few months, we have been so focused on Dodd-Frank Act and its regulatory aftermath, I think that now more than ever we should dedicate some continuing attention to what the Staff has been asking for in issuer disclosures through the review process, particularly given the Staff’s general view (notably expressed at last year’s Proxy Disclosure Conference) that we should all be cognizant of their positions as expressed through the comment process and act accordingly when drafting disclosures for any issuers. One area that was certainly ripe for Staff comments this year was the new corporate governance disclosures that were adopted at the end of 2009 as a part of the Proxy Disclosure Enhancements rulemaking.
Other than comments raising questions about disclosure items that were just missed entirely, the Staff’s comments on the governance disclosures tended to deal with a few common issues. On the disclosure requirement requiring a discussion of director qualifications, the Staff has raised comments asking for more details concerning how the qualifications were relevant to the determination that the person should be nominated as a director. The Staff seems to be very much looking for individualized disclosure with a fair amount of detail for each director. (And it wasn’t just the Staff commenting on the director qualifications disclosure – Chairman Schapiro incorporated a comparison of “good” disclosure and “bad” disclosure in a speech to the Stanford Directors’ College back in June 2010.)
With regard to the board leadership disclosure, it was usually the case that when a company has a combined Chairman and CEO, the company felt compelled to go in a lot of detail as to why that made sense for the company and this usually didn’t draw a Staff comment, unless the company failed to include an explanation of how the combined Chairman and CEO made particular sense for the company given its circumstances. By contrast, when companies had a split Chairman and CEO, there was a tendency toward providing less explanation, perhaps because that structure is perceived as the “good governance” structure. As a result, the Staff often raised a comment asking for more detail as to the rationale for the split Chairman/CEO leadership structure.
Another comment that the Staff has raised seeks disclosure of how the leadership structure affects the company’s risk oversight. Many companies seemed to have either overlooked this item or did not fully comprehend its meaning, and in fact it is perfectly fine to say that the leadership structure does not affect risk oversight — it is just that the Staff expects an affirmative obligation to say something about the relationship.
Lastly, if the staff saw the word “diversity” somewhere in a company’s disclosure regarding director qualifications, then it is likely that the Staff would ask for disclosure of the company’s diversity policy and how it is implemented and monitored.
The SEC Staff recently put out an Investor Alert warning of yet another Staff impersonator, using the name “Steven Cooper” and some purported correspondence to a fake SEC employee by the name of “Gordon Green.” His rap is kind of messed up, because he is telling people that he can provide assistance with settling federal tax obligations with the IRS. It is odd to me that this imposter picked the SEC as his fake employer, since when you say you are from the SEC in some parts of the country they think you mean the Southeast Conference.
More on our “Proxy Season Blog”
Even with the proxy season mostly done, we are still posting new items regularly on our “Proxy Season 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:
– It’s Time for Summary Proxy Statements
– Lawmakers Consider Shareholder Approval of Political Spending
– Some Thoughts on How to Overcome the Challenges of Disclosing Voting Percentages
– Retail Investors Filed Most of 2010’s Majority-Backed Proposals
– 6 Directors Receive Support from Less than One-Third of Shareholders
The PCAOB recently issued a report collecting findings from inspection reports concerning how audit firms may have failed to comply with PCAOB standards while conducting audits during the economic crisis. In looking back over the past three years of audits, the PCAOB noted a number of areas where audits were found lacking, including:
– fair value measurements
– impairment of goodwill
– indefinite-lived intangible assets and other long-lived assets
– allowance for loan losses
– off-balance sheet structures
– revenue recognition
– inventory
– income taxes
On a positive note, the PCAOB did find that firms had made an effort to respond to increased risks posed by the economic crisis. The PCAOB also noted that it will be evaluating whether efforts by firms to address deficiencies identified in PCAOB inspection reports have actually reduced or eliminated the subsequent occurrence of the same deficiencies.
The areas identified in the PCAOB report will no doubt be areas of increased diligence as we go into the audit cycle for the upcoming 10-K season.
The Dodd-Frank Rulemaking Train Keeps Rolling: Now, Asset-Backed Securities
In accordance with Section 943 of the Dodd-Frank Act, the SEC re-proposed a rule from the Regulation AB proposals issued earlier this year which would require that “securitizers” disclose fulfilled and unfulfilled repurchase requests across all transactions. Further, the SEC proposed a new rule which would require that credit rating agencies include, in any report accompanying an asset-backed securities credit rating (including a preliminary rating), disclosures about representations, warranties, and enforcement mechanisms available to investors (as well as how the representations, warranties and enforcement mechanisms differ from those in similar securities). The SEC must adopt these rules by January 14, 2011, so it has a very short comment period – comments are due on November 15, 2010.
The SEC is keeping this scorecard of the regulatory actions that it has taken to date under its Dodd-Frank Act mandates.
Last week the SEC approved new FINRA Rule 5131, which when effective will regulate the list of initial public offering abuses that were so prevalent during the dot-com bubble. (Has it really been almost a decade since that bubble burst?) Rule 5131, which started out life as a NASD rulemaking first submitted to the SEC in September 2003, prohibits a variety of practices in connection with a “new issue” of an equity security, including: (1) quid pro quo allocations, which involve making allocations of securities in return for services provided to the broker-dealer selling the new issue; (2) spinning, or the practice of allocating new issue securities to executive officers and directors of public or certain non-public companies to curry favor with those executives or directors (subject to certain exceptions); (3) imposing inequitable penalty bids; and (4) acceptance by broker-dealers of market orders for new issue shares before commencement of secondary market trading. The rule also imposes a number of additional restrictions on the offering process and the activities of broker-dealers participating in the offering of a new issue, including a requirement to establish walls between investment banking personnel and those making the new issue allocation decisions.
Many of these practices have already gone the way of the dinosaur thanks to all of the attention paid to them in the post-dot-com bubble fallout, including lots of litigation. Nonetheless, FINRA finally has some additional rules to keep them from happening again. FINRA will announce an effective date within 60 days of the SEC’s approval.
The FSOC Meets
As Dodd-Frank Act landmarks go, it seems like last week’s inaugural meeting of the Financial Stability Oversight Council was certainly a big one. The FSOC, comprised of all of the significant financial regulators, was created by Dodd-Frank to provide comprehensive monitoring of the overall financial system, hopefully so that emerging risks or issues won’t fall through the regulatory cracks. Much of the inaugural meeting was just housekeeping, including adopting bylaws and a transparency policy and setting in motion various tasks mandated under Dodd-Frank.
Mailed: September-October Issue of The Corporate Counsel
The September-October issue of The Corporate Counsel was just mailed and includes pieces on:
– The Requirement to File Revised Financials Ahead of a Shelf Filing–A Trap for the Unwary
– Identifying NEOs–Former CEO/CFO Can’t Also be One of Three Most Highly Compensated Executive Officers
– Form 8-K Requirement(s) upon Reassignment, Later Termination, of Principal Officer/NEO
– Risk Factor Updating in Form 10-Q–Repeat in Subsequent Qs?
– Former Affiliate’s Sale of Issuer Stock Within 90 Days After Termination–Chapter 2 (or 20?)
– Dodd-Frank–Whatever Happened to Principles-Based?
– Enforcement’s 1933 Act Batting Average Now .250
– Roth Conversion Follow-Up
