Category Archives: Compliance

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Rule 504 Becomes Useful Tool for Smaller Capital Raising and M&A Transactions

On October 26, 2016, the SEC amended Rule 504 of Regulation D under the Securities Act of 1933 (the “Securities Act”) to increase the maximum amount of securities that may be sold thereunder in any 12-month period from $1 million to $5 million. Consequently, the rarely used Rule 504 may now prove useful to issuers … Continue Reading

How to Write Bad MD&A

There are plenty of articles about how to write good MD&A – referring of course to the “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section of your company’s Form 10-K, Form 10-Q or Securities Act registration statement. The purpose of this article is to give you concrete tips on how to … Continue Reading

SEC Approves Nasdaq’s Proposed Rule on Third Party Payments to Directors and Director-Nominees – The “Golden Leash” Disclosure

On July 1, 2016, the Securities and Exchange Commission (the “SEC”) approved, on an accelerated basis, proposed amendments to the listing rules of The Nasdaq Stock Market LLC (“Nasdaq”) to require Nasdaq-listed companies to disclose annually any “compensation” or “other payment” provided by third parties to directors or director-nominees in connection with their candidacy or … Continue Reading

SEC Steps Up Cybersecurity Enforcement with $1 Million Fine Against Morgan Stanley

The Securities and Exchange Commission’s (“SEC”) recent $1 million settlement with Morgan Stanley Smith Barney LLC (“MSSB”) marked a turning point in the agency’s focus on cybersecurity issues, an area that the agency has proclaimed a top enforcement priority in recent years.  The MSSB settlement addressed various cybersecurity deficiencies that led to the misappropriation of … Continue Reading

REGULATORS, QUANT UP! New Rules from FINRA, SEC and CFTC Target Automated Algorithmic Trading

On February 11, 2016, FINRA filed a proposed rule with the SEC that would require individuals who “design, develop or significantly modify algorithmic trading strategies” (or “ATS”) as well as individuals responsible for the “day-to-day supervision or direction of the development process,” to pass a qualification exam and register with FINRA as securities traders. During … Continue Reading

Appellate Court Issues Opinion on SEC’s Conflict Minerals Rule

Yesterday, the Court of Appeals for the D.C. Circuit issued its opinion in the challenge to the SEC’s Conflict Minerals Rule.  We have reviewed the D.C. Court of Appeals decision and find that it leaves much of the SEC’s rule intact.  It is specifically the requirement that companies describe products as not “DRC conflict free” … Continue Reading

California Court of Appeal Makes It Easier to Add Business Owners to a Judgment

Individuals form limited partnerships, limited liability companies and corporations to limit their personal liability.  These legal structures encourage entrepreneurs to take risks.  The California Court of Appeal, Second Appellate District, however, has made it easier to add a business owner to a judgment that initially was entered only against the corporate or limited partnership entity … Continue Reading

Client Alert – Considerations for 2014 Proxy Season and Beyond

2014 Proxy Season Following are some topics that public companies may want to consider in preparation for the 2014 proxy season. Shareholder Proposals The 2013 proxy season reflected a continued increase in the number of shareholder proposals submitted to public companies, while the SEC no-action relief process resulted in fewer successful efforts of public companies … Continue Reading

SEC Eliminates the Prohibition on General Solicitation for Rule 506 and Rule 144A Offerings

On July 10, 2013, the SEC adopted the amendments required under the JOBS Act to Rule 506 that would permit issuers to use general solicitation and general advertising to offer their securities, subject to certain limitations. In addition, the SEC amended Rule 506, as required by the Dodd-Frank Act, to disqualify felons and other bad … Continue Reading

Ninth Circuit Holds that Federal Securities Laws Preempt California Labor Code’s Ban on Forced Patronage at Brokerage Firms

In McDaniel v. Wells Fargo Investments, LLC, Nos. 11-17017, 11-55859, 11-55943, 11-55958, 2013 WL 1405949 (9th Cir. Apr. 9, 2013), the United States Court of Appeals for the Ninth Circuit affirmed the dismissal of four class action lawsuits filed by employees against brokerage firms Wells Fargo, Bank of America, and Morgan Stanley. In separate lawsuits, … Continue Reading

Technical Change by Broadridge May Impact Retail Voting at Upcoming Annual Meetings

Most public companies use Broadridge for shareholder voting tasks related to their annual meetings. Due to a new interpretive position being taken by the SEC, Broadridge recently informed its clients of a technical change in its online, mobile and telephonic voting platforms that may adversely affect obtaining favorable shareholder votes, particularly from retail investors.… Continue Reading

NASDAQ Listed-Issuers Subject to New Rules Relating to Disclosure of Non-compliance with Listing Standards

Certain NASDAQ rules and interpretive material relating to the disclosure requirements surrounding a listed issuer’s non-compliance with the NASDAQ’s listing standards were amended effective December 3, 2012. Under the amended rules, an issuer that receives a notification of deficiency from the NASDAQ concerning non-compliance with continued listing standards must issue a more detailed public announcement. … Continue Reading

DoJ and SEC Issue Long-Awaited FCPA Guidance

At last!  We now have official guidance in one place from the United States Department of Justice and the Securities and Exchange Commission regarding the Foreign Corrupt Practices Act (“FCPA”).  A lengthy memorandum was released November 14, 2012, accompanied by a joint press conference.  Here is a link to the memo: http://www.sec.gov/spotlight/fcpa/fcpa-resource-guide.pdf… Continue Reading

Navigating the SEC’s Recent Conflict Minerals Rules: Threading the Needle Through Complex Controls and Procedures and Complying with New Disclosure Requirements

On August 22, 2012, the SEC adopted its final rule related to conflict minerals required by Congress under the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”), which will require all public companies to implement complex new controls and procedural mechanisms, and in certain cases, conduct supply chain due diligence that could lead to … Continue Reading

SEC Adopts Dodd-Frank Rules Regarding Conflict Minerals and Payments by Resource Extraction Issuers and Defers Rules for Implementation of JOBS Act Elimination of Ban on General Solicitation until August 29

On August 22, 2012, the SEC adopted disclosure rules required by Sections 1502 and 1504 of the Dodd-Frank Wall Street Reform and Consumer Protection Act related to conflict minerals and payments by issuers engaged in resource extraction. The new rules on conflicts minerals disclosures will apply to all SEC reporting companies for which the identified … Continue Reading

SEC Adopts New Rules Calling For Greater Independence Standards For Compensation Committees And Their Advisers

In accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Reform Act”) for adopting regulations required by section 952 of the Reform Act, the Securities and Exchange Commission (the “SEC”) on June 20, 2012 issued a press release and published final rules (Release No. 33-9330) (the “Final Rules”) for compensation committee and … Continue Reading

President Obama Signs JOBS Act: Landmark Reform for Small and Emerging Growth Companies Now Law

On April 5, 2012, President Obama signed the Jumpstart Our Business Startups (JOBS) Act, enacting it into law. The JOBS Act is intended to make it easier for smaller and earlier stage companies to raise capital and also to revitalize the U.S. market for initial public offerings, which has been in decline since the beginning … Continue Reading

Second Circuit Effectively Reverses Rejection of SEC’s Settlement with Citigroup

In Securities & Exchange Commission v. Citigroup Global Markets, Inc., 2012 WL 851807 (2d Cir. Mar. 15, 2012), the United States Court of Appeals for the Second Circuit essentially approved the terms of a settlement between the Securities and Exchange Commission (the “SEC”) and Citigroup Global Markets, Inc. (“Citigroup”) that had been notoriously rejected by … Continue Reading

House Passes Modified JOBS Act and sends to President Obama – Expected to Become Law this Week

On March 26, 2012, the House of Representatives passed the version of the Jumpstart Our Business Startups (JOBS) Act that was approved by the Senate on March 22, 2012. The House vote was 380-41. President Obama is expected to sign the bill this week. We discussed the JOBS Act and the Senate’s modifications to the … Continue Reading

Senate Passes Modified JOBS Act – Regulatory Reform for Small and Emerging Growth Companies Speeds Closer to Fruition

On March 22, 2012, the Senate passed the Jumpstart Our Business Startups (JOBS) Act by a vote of 73-26. The House of Representatives passed the JOBS Act on March 8, 2012 by a vote of 390-23. The Senate bypassed its typical committee process to rush the bill to a floor vote. Legislators in both parties … Continue Reading

The March Towards Meaningful Reform for Small and Emerging Growth Companies Moves Forward – House Passes Measures to Open Private Capital Raising and Facilitate an On-Ramp of New IPOs

Building on months of momentum in Congress, on March 8, 2012, the U.S. House of Representatives passed the Jumpstart Our Business Startups (JOBS) Act by a bi-partisan vote of 390-23. A similar bill, S. 1933, has been introduced in the Senate and may be voted on this month. The JOBS Act is intended to address … Continue Reading
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