On Tuesday, the Securities Law Committee of the Society of Corporate Secretaries and Governance Professionals met with officials from the Divisions of Corporation Finance, Investment Management, and Trading and Markets and the Office of the Whistleblower.  While neither new Chair Mary Jo White (confirmed in April) nor new Director of Corporation Finance Keith Higgins (starts at the SEC in June) was present at the meeting, the Staff provided some important takeaways.  Although the two hour meeting covered a significant amount of issues, the most important discussions involved the following topics: 

• The Staff’s focus will be on Congressional mandates.  Although the Staff couldn’t give timelines, the remaining provisions from Dodd-Frank and the JOBS Act appear to be the focus of upcoming rulemaking activity.   Agenda items such as mandatory disclosure of political contributions, while constantly popping up in the news as imminent, would not fit into the stated focus.  The Staff noted that no one was working on rule making requiring the disclosure of political contributions, which is consistent with Chair White’s Congressional testimony last week. 
• Issuers continue to have problems with erroneous reports from the proxy advisory firms.  The Staff noted that they continue to receive complaints from issuers specifically regarding errors, difficulty speaking to the correct person at ISS and Glass Lewis, and overlooking key aspects such as an issuer changing its fiscal year.  The Staff has met with ISS and Glass Lewis over the past year and has requested that the advisory firms improve their transparency.  The Society repeated its concerns with the proxy advisory firms and noted that the issues are acute when dealing with smaller issuers.
• The Office of the Whistleblower is now adequately staffed and deep in implementation mode.  While only one award has been made under the program, no imminent changes are expected, despite the musings of a recent New York Times article. 
• The Staff did a terrific job in responding to no action requests regarding shareholder proposals.  All but 25 requests were responded to in less than 60 days.  The Staff is very cognizant of the costs of missing printing deadlines and therefore reminds issuers to alert the Staff of not only print deadlines, but also notice and access deadlines.
• The timeline for the four remaining controversial executive pay provisions of Dodd-Frank remains murky.  The four provisions, clawbacks, pay-for-performance ratio, CEO pay to median employee pay ratio, and hedging, do not have a timeline for rule proposals, but the Staff is considering comments and working on the rules. 
• Cybersecurity remains a hot issue.  The Staff reminds issuers to use a general materiality level to determine what must be disclosed to be sufficient as to what investors need to understand. 
• Expect some additional guidance for the conflict mineral rules.  Although the adopting release provides significant guidance, the Staff will be issuing further implementation guidance very shortly.  Similar guidance will be provided for resource extraction disclosure.
• Compensation committee independence standards will be broadly interpreted with respect to outside legal counsel.  The Staff reminds issuers that outside legal counsel that provides any advice, whether direct or indirect, may need to be assessed under the new independence standards.  Each instance will be facts and circumstances based.  If a general counsel merely acts as a “ventriloquist” for outside counsel, then it is likely that the outside counsel’s independence needs to be assessed.  On the other hand, if a seasoned general counsel takes into consideration four or five counsels’ opinions and makes his or her own legal judgment, then such outside counsels’ independence does not need to be assessed. 

The Southeastern Chapter of the Society of Corporate Secretaries and Governance Professionals expects to cover these topics in greater detail at its upcoming Florida event on June 6^th.