September 2015

My favorite quote of the week seems to have gone largely unnoticed, despite the fact that I tweeted about it and told several people about it. The quote, attributed to former Congressman Barney Frank, was “people expect too much from boards”. If you don’t believe me, you can find it here – in the venerable New York Times, no less.

Am I the only one who thinks that the statement, particularly considering the source, is offensive? Am I the only one who thinks that the co-sponsor of the legislation that bears his name, and the author and/or instigator of many of its provisions that imposed extensive obligations on boards, saying that we expect too much from boards is similar to the child who kills his parents throwing himself on the mercy of the court because he is an orphan?

In fairness to Mr. (no longer Congressman) Frank (not that I feel compelled to be fair to him), he is also quoted to have said that the most important oversight of financial companies comes not from its directors but from regulators. If that’s the case, however, why does the eponymous legislation bother to impose so many burdens on boards? Why not leave it all to the regulators (or would that leave the plaintiffs’ bar in the lurch)? Alternatively, why not expand the concept of mandatory say on pay votes (which the Dodd-Frank Act imposes upon most publicly held companies) to everything a board does and do away with the board entirely? Need a new plant? Put it to a shareholder vote! Want to think about entering new line of business? How about a say on that?

Continue Reading Politician, heal thyself

Record retentionThose of us who have been around long enough to remember paper SEC filings may recall the requirement to file one manually signed copy of Exchange Act filings and, if memory serves me correctly, three manually signed copies of Securities Act registration statements.  When EDGAR was implemented, we hoped to be spared the often last-minute scramble to find an authorized officer to sign a filing, but our hopes were not rewarded; not only were we required to obtain manually signed copies, but we were admonished to retain them for five years.

Lest you think that the SEC doesn’t care about these requirements, a recent enforcement action clarifies that it does.  In the action, the SEC cited MusclePharm Corporation for a variety of serious disclosure and books and records violations.  However, one paragraph of the SEC Order notes that “MSLP failed to maintain signed signature pages for most of its filings with the Commission from 2010 through 2013 as required under Rule 302 of Regulation S-T.  MSLP failed to receive or maintain any manually signed signature pages prior to December 2012.  After December 2012, while MSLP had made over 23 Commission filings, MSLP only received or maintained original signature pages for all signatories on eight filings.”

So be sure to get those signature pages signed and make sure they are retained in your files for the required five-year period.