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
For those of us who are unhappy or worse about the outcome of the 2024 presidential election, fearing (among other things) that we are about to enter a modern incarnation of the dark ages, I respectfully suggest that the time has come to light a candle rather than curse the darkness.
The candle is rather limited and simple: whatever else may happen during the next Trump administration, there’s a fair chance that those of us who practice securities law will find the SEC a lot more pleasant (or less unpleasant) to deal with.Continue Reading Lighting a Candle
You may have noticed that the SEC has been very quiet on the rulemaking front in recent weeks. It comes as no surprise, as action on a number of items on the SEC’s Regulatory Flexibility Agenda had been moved from late 2024 to early 2025. (The cynic in me wonders whether the scheduling changes resulted from concerns that accusations of over-regulation would impact the 2024 election cycle, but – for now, at least – I’ll leave that to others.)
However, the SEC has definitely not been idle. Quite the contrary. In fact, recent weeks have seen what strikes me as an inordinate number of announcements of enforcement actions. Some of these actions are relatively “standard” – insider trading, recordkeeping violations, securities fraud, whistleblower protection violations (discussed in our recent e-alert), and so on. But others are somewhat unusual. For example:Continue Reading Law and Order: SEC
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
The week of June 24, 2024 may be remembered as one of the worst in recent memory for the SEC, which – along with the “administrative state” generally – was beaten up by some very significant decisions handed down by the U.S. federal courts.
Securities Fraud Claims Seeking Civil Penalties Must Be Brought in Federal
Travel on corporate jets is alluring. I’ve had the pleasure, and it really is a pleasure. No TSA, nobody squishing you on both sides. No worry about checked bags not getting there, and so on. It’s no wonder that people love it so much.
However, there can be too much of a good thing. My experience
We’ve all heard the expression “hard cases make bad law.” But sometimes bad law is the result of bad cases – i.e., cases that should never have been brought in the first place. That’s the case with the SEC’s prosecution of Ray Dirks, who died on December 9 at age 89. I suspect that many
The SEC recently enacted a new exemption from registration for brokers who provide certain services in M&A transactions. The new exemption, which became effective on March 29, 2023, largely confirms and codifies prior SEC guidance that was provided in a January 31, 2014 No Action Letter and will provide some comfort and certainty to qualifying M&A brokers and their advisors who work in this arena. However, it may require some M&A brokers to register with the SEC despite the fact that they were not previously required to do so.
The new exemption from SEC registration, which is contained in new Section 15(b)(13) of the 1934 Act, incorporates much of the language of the 2014 No Action Letter, but it imposes size limitations that were not contained in the 2014 No Action Letter. The SEC withdrew the 2014 No Action Letter on March 29, 2023.
Section 15(a) of the Securities Exchange Act of 1934 generally requires any person engaged in the business of carrying out securities transactions for other parties to register with the SEC. Such registration can be costly, intrusive, and time consuming, and it probably does not create a high level of additional consumer protection or benefits in the M&A context. This has consistently been an area of concern, however, since unregistered brokers can be subject to severe penalties such as monetary fines and disgorgement of fees that they have received. As a result, most M&A brokers and their advisors have relied on the 2014 No Action Letter to justify not registering with the SEC. This has largely been a successful strategy absent other disqualifying factors, but because no action letters can be reversed or changed, participants were unable to get totally comfortable.Continue Reading New SEC Exemption from Registration for M&A Brokers: A Positive Step, but Not for All
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?
I suppose I should be getting tired of writing about enforcement actions involving nondisclosure of perquisites (for example, see here), and that you’re getting tired of reading about them. However, the topic is hard to resist, whether due to schadenfreude (look it up) or other factors.
The most recent such enforcement action, announced in late November, told a story similar to those told before – a CEO who used corporate aircraft for personal travel, used corporate credit cards for personal expenses, and so on, resulting in a failure to disclose more than $425,000 in “perks” over a two-year period. The CEO also pledged all of his company stock in violation of a shareholders agreement that required the prior written consent of the company, but that’s another story. Suffice it to say that the company and the CEO were hit with a variety of charges, including a failure to maintain accurate books and records.
If this elicits yawns or eye-rolling that we’ve seen this movie before, so be it. However, there is a twist. Specifically, the SEC’s report noted that the CEO did not disclose the relevant information in his questionnaires – and in some cases had not completed a questionnaire at all. I don’t recall the SEC focusing on the lowly D&O questionnaire in the past. Anyone who has pulled his or her hair out trying to get a director or officer to complete a questionnaire is now smiling and saying “Ha! It serves him right!” (The same goes for all those directors and officers who complete every questionnaire by saying “please fill it out for me” or “no change from last year” regardless of whether there are changes.)
Continue Reading Another perquisites enforcement action…with a twist or three