In April, the SEC took one of its first steps to revise the rules governing public company disclosures and transactions, when it issued an exemptive order permitting certain all-cash tender offers for equity securities to close in as few as 10 business days, rather than the minimum of 20 business days specified in the rules.
The SEC has indicated that it is fast-tracking President Trump’s “suggestion” that quarterly reporting be eliminated. While it is unclear how the elimination of quarterly reporting will be implemented, one thing seems clear: unless the SEC increases the number of items that trigger an 8-K filing (or something close to that), there will likely be
The new, improved SEC was just beginning to show its stuff when the federal government shut down on October 1. In the weeks before the shutdown, the SEC had, among other things, approved ExxonMobil’s innovative program enabling retail investors to provide standing voting instructions (see our E-Alert on the subject) and dropped its opposition to
There has been no lack of news since the President was re-inaugurated in January. However, until very recently, little of the news seemed to be coming from the SEC. Perhaps that is because the new SEC Chair, Paul Atkins, was not sworn in until April 21 (happy birthday to me) or for some other reason
It’s early days, but I’m pleased to report that the optimism I expressed about the SEC in the aftermath of the 2024 election may have been warranted. At a minimum, the actions taken by the SEC since January 20 demonstrate support for the issuer community, an interest in pursuing the traditional goals of the SEC, and a willingness to help those of us who advise clients with respect to SEC rules and the many interpretations of those rules.
What the Commissioners Are Saying
First, on January 27, Commissioner Hester Peirce spoke before the Northwestern Securities Regulation Institute. Her remarks were witty (as always) and, for the most part, spot on, to the point that I considered copying them here. (I haven’t, though I have copied some of her choice remarks below.) I do take issue with a few of her remarks (also as always), including her view that a corporation’s singular focus should be on building value for shareholders; it seems to me that it is not possible to build value without focusing on other constituencies such as customers, suppliers, and – yes – even the community at large. Those matters aside, Ms. Peirce made the following good points, among others:
Continue Reading So Far, So Good
For many years, I have urged companies to consider going beyond the bare minimum disclosures required by SEC rules – in appropriate circumstances, of course. In my experience, providing more disclosure than what is specified in the rules can generate positive feedback or even praise from investors and other stakeholders. And, in fact, many companies
One of the things I learned as young securities lawyer was that securities offerings can be made only by prospectus. Accordingly, one of the first things we did whenever we embarked on an IPO was to send a memo to our clients reminding them of the limitations imposed on communications under the securities laws and
Spoiler alert – despite the title and the creepy photo, this is not about zombies, vampires, or anything else of a spooky nature. Rather, it’s how we can hopefully make some of the deadwood in our proxy statements meaningful.
I realize that the upcoming
I have long thought that the SEC is among the best, if not the best, government agency. Over the years, I’ve worked with and gotten to know many folks on the SEC’s staff, who have consistently impressed me as bright, hard-working, serious about the SEC’s mission, and very nice people. I am sure that most people on the staff continue to possess these and other great attributes.
However.
As with most organizations, the tone at the top is critical. And, at least from outward appearances, the tone at the top of the SEC is at best dismissive, if not hostile, towards business, and disingenuous. I’m not saying that the SEC should bow to corporate America’s wishes and do its bidding. But it’s in the interest of our capital markets and the participants in those markets that the SEC consider a wide range of views and engage in thorough and thoughtful deliberation (part of what is known in the corporate world as the fiduciary duty of due care) before making decisions.
That does not seem to be the case. In the last year or so, the SEC has repeatedly demonstrated fealty to the institutional investor community by such things as announcing, early in Chair Gensler’s tenure, that the SEC would not enforce rules providing for a more level playing field between companies and proxy advisory firms, adopted by the SEC barely two years earlier, and then formally rescinding those rules (see here). I’m not saying those rules were perfect – far from it; in fact, they met the classic definition of compromise, in that all sides were dissatisfied with the outcome. However, they were a start, and instead of getting rid of them the SEC could and, IMHO, should have worked to improve them.
Continue Reading Rooting for the other guys?
Hating lawyers may not have started with Shakespeare, but he didn’t help things when he wrote “The first thing we do, let’s kill all the lawyers” in Henry VI. Any lawyer who’s been practicing law for more than a couple of weeks knows that part of the price of bar admission is having to endure lawyer jokes (most of which aren’t very good) and experiences like having a client say to you at the outset of your first meeting, “just so you know, I don’t like lawyers” or words to that effect.
It’s particularly painful, however, when an attack on our profession comes from one of our own, who also happens to be a member of the Securities and Exchange Commission. I refer to a March 4 speech by Commissioner Allison Herren Lee in which she notes her “deep regard for the ideals of public service that our profession represents” and that her “belief in the ideals of the profession – ideals I know you all share – has only grown stronger with time” but then goes on to castigate corporate lawyers for failing to fulfill our “role…as gatekeepers in the capital markets.” She distinguishes corporate lawyers from litigators – a dubious distinction that suggests we should be less zealous in representing our clients than our litigation colleagues – and says that in passing Section 307 of the Sarbanes-Oxley Act (more on that below) “Congress was concerned…that counsel often acted in the interests of the executives who hired them rather than the company and its shareholders to whom their duty and responsibility is [sic] owed.”
Continue Reading Who needs Shakespeare when you’ve got the SEC?