Corporate Securities Law Blog

On January 18, 2008, the Federal Trade Commission announced new jurisdictional and filing fee thresholds under the Hart-Scott-Rodino Antitrust Improvements Act of 1976, Section 7A of the Clayton Act, 15 U.S.C. § 18a, et seq. (the “HSR Act”).  The new HSR thresholds will apply to transactions that close on or after February 28, 2008.  The new minimum HSR threshold for a reportable transaction is $63.1 million. The amount of the filing fees are not changed, although the thresholds that determine the amount of the filing fee are increased.

No MAE Occurred Based on Merger Agreement Carve-Out

On December 27, 2007 the Tennessee Chancery Court ordered sportswear retailer Finish Line, Inc. (FINL.O), to complete its purchase of Tennessee-based shoe and hat retailer Genesco, Inc. (GCO.N), as contemplated by a merger agreement offering $54.50 per share for a total purchase price of $1.5 billion.

Amendments to the best price rule applicable to tender offers for securities registered under the Securities Exchange Act of 1934 became effective in December 2006.  The best price rule requires that the consideration paid to any security holder in a tender offer be the highest consideration paid to any other security holder in the tender offer with the result that all shareholders are to be treated equally.

Employers must furnish employees who exercised incentive stock options ("ISOs") or sold or otherwise transferred shares acquired under an employee stock purchase plan ("ESPP") during 2007 with a detailed information statement by January 31, 2008.

A requirement that corporations additionally file such information in a return with the Internal Revenue Service ("IRS") was added in 2006.  However, because regulations providing guidance on this new reporting requirement have yet to be issued, the obligation to file an information return with the IRS has been temporarily waived.  The IRS still plans to issue regulations regarding the reporting requirement and the regulations may be effective retroactively to January 1, 2007.  Note, however, that employers must continue to supply employees with the required information statements.

For further information and sample information statements, please contact Dawn Moehn at (213) 617-4246

In Stoneridge Investment Partners, LLC v. Scientific-Atlanta, Inc., 2008 WL 123801 (U.S. Jan. 15, 2008) (Kennedy, J.), the Supreme Court rejected an attempt by a class action plaintiff to assert securities fraud claims against suppliers and customers of an issuer in whose stock the plaintiff invested.  Those suppliers and customers, it was alleged, knowingly agreed to sham contracts with the issuer that the issuer improperly accounted for in its financial statements.  Because the suppliers and customers (as distinct from the issuer) made no public statements and owed no disclosure duties to the issuer’s investors, the investors could not state a claim against them on the ground that the plaintiff could not plead or prove reliance on the secondary actors’ conduct.  This decision reflects the Supreme Court’s intent to limit exposure to private securities fraud class action litigation to those who are directly responsible for making false or misleading statements to the investing public.

On December 19, 2007, the SEC adopted amendments to its disclosure and reporting requirements under the Securities Act of 1933 and Securities Exchange Act of 1934 to expand the number of companies that qualify for the SEC's "scaled" (i.e., significantly less burdensome) disclosure requirements for smaller reporting companies.  Eligible issuers have the option to use the new scaled disclosure requirements when filing their next registration statement or periodic report after the effective date of the amendments.

In Miller v. Thane Int’l, Inc., 2007 WL 4147327 (9th Cir. Nov. 26, 2007), the Ninth Circuit held that even “literally true” statements in a prospectus may be actionable under Section 12(a) of the Securities Act of 1933 and, for the first time in the Ninth Circuit, held that a representation by a company that it would be listed on NASDAQ is material to investors.  This decision serves to remind counsel advising companies on their public disclosures to investors that they cannot rely entirely upon the literal truth of the disclosures to protect them from liability under the federal securities laws.