This blog post originally appeared as an article in Profiles In Diversity Journal.

On September 30, 2020, California Governor Gavin Newsom signed into law Assembly Bill 979 (AB 979), an act that promises to greatly increase the diversity of the board of directors of a number of California-based publicly-traded corporations.
Continue Reading CA Bill AB 979 Seeks to Increase Board Diversity

On December 1, 2020, the Commodities Futures Trading Commission (CFTC) Division of Enforcement published its annual report for Fiscal Year 2020.  According to the report, the Division filed a record number of enforcement actions in 2020 and achieved a number of firsts, despite the unprecedented challenges presented by the COVID-19 pandemic.  In addition, the report provides a number of key insights into the Division’s enforcement concerns in several key areas, including compliance, digital assets, anti-money laundering (AML), market surveillance and its whistleblower program.    
Continue Reading CFTC’s Enforcement Division Announces Record-Breaking 2020 and Outlines Priorities for 2021

On September 10, 2020, the Commodities Futures Trading Commission (CFTC) issued the latest in a series of circulars regarding corporate compliance released this summer by government agencies. In June, the Criminal Division of the Department of Justice (DOJ) issued updated guidance regarding its evaluation of corporate compliance programs (see our prior blog here). In July, DOJ and the Securities and Exchange Commission (SEC) jointly issued an updated Resource Guide to the U.S. Foreign Corrupt Practices Act, which includes a 12-part section covering the “hallmarks” of effective corporate compliance programs. The instant CFTC guidance is the first issued by CFTC on this topic. The guidance signals to commodities market participants that compliance programs that do not meet guideline standards are fair game for CFTC examination and enforcement staff.
Continue Reading CFTC Throws its Hat into the Corporate Compliance Arena

The United States Department of Justice (DOJ) released updated guidance regarding its evaluation of corporate compliance programs on June 1, 2020.  The release comes just over a year since the guidance was last updated in April 2019.  While these latest changes are less extensive than the most recent ones, there are some key differences that suggest the DOJ may be shifting some areas of focus when it comes to its approach to assessing the effectiveness of corporate compliance programs.
Continue Reading DOJ Updates Corporate Compliance Guidance

On May 26, 2020, the Financial Crimes Enforcement Network, (“FinCEN”) issued a notice in the Federal Register updating cost estimates related to compliance with filing suspicious activity reports (SARs).  Under the Bank Secrecy Act, 31 U.S.C. § 5311 et seq., certain businesses providing financial services are required to file SARs upon suspicion that a crime or violation was committed by, at, or through that financial institution (so long as certain dollar thresholds are met), or upon suspicion of insider abuse of any kind.
Continue Reading FinCEN Issues Notice on SARs Filing Figures

Public reporting companies that have material weaknesses in their internal control over financial reporting (“ICFR”) are required under Rule 308 of the Securities Exchange Act of 1934, as amended, to report such material weaknesses in their quarterly and annual reports along with proposed remedial measures. A material weakness is defined as a deficiency, or a combination of deficiencies, such that there is a reasonable possibility that a material misstatement of an issuer’s financial statements will not be prevented or detected on a timely basis.
Continue Reading SEC Administrative Proceedings Against Public Companies for Failure to Remediate Material Weaknesses in Internal Control Over Financial Reporting

On February 21, the Securities and Exchange Commission issued new Interpretive Guidance regarding disclosures of cybersecurity-related information by publicly traded companies. This guidance comes in the context of public pressure on the SEC to update its 2011 Division of Corporation Finance guidance regarding cybersecurity risks and incidents. According to SEC Chairman Jay Clayton’s statement, this new document serves to reinforce and expand the prior guidance. It lays out principles that companies should follow in determining when cybersecurity information should be disclosed, and what should be disclosed.
Continue Reading SEC Takes Baby Steps on Cyber, but Signals Greater Vigilance

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 of securities in smaller capital raising and M&A transactions.
Continue Reading Rule 504 Becomes Useful Tool for Smaller Capital Raising and M&A Transactions

So, fortune has smiled upon you. A partner has handed you a draft Form 10-K for a client and asked you to do a “rule check” or “form check” to confirm that no required disclosures are missing.

Most often, the Form 10-K template for a reporting company has evolved over a number of years, with significant input from the company’s accounting and legal professionals, and is generally in pretty good shape.

However, mistakes get made — and it’s your job to find them!

Here is a list of 12 items that even seasoned reporting clients frequently omit or prepare incorrectly when drafting the Form 10-K.


Continue Reading 12 Common 10-K Mistakes — And How To Find Them

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 write bad MD&A, section by section.


Continue Reading How to Write Bad MD&A

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 service on the company’s board of directors. These arrangements are referred to as “golden leash” arrangements and commonly occur when an activist stockholder compensates its nominee for service on the company’s board of directors based on achieving certain criteria that are important to the activist stockholder. The new rule, Nasdaq Rule 5250(b)(3) (the “Rule”), became effective July 31, 2016.
Continue Reading SEC Approves Nasdaq’s Proposed Rule on Third Party Payments to Directors and Director-Nominees – The “Golden Leash” Disclosure