Category Archives: Disclosure

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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 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

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

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

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

Compliance Deadline Looms for New Transparency in Supply Chains Act

On January 1, 2012, the California Transparency in Supply Chains Act of 2010 will become effective. This legislation will require every large retailer and manufacturer doing business in California to publicly disclose whether it has taken specified actions to eliminate slavery and human trafficking from its product supply chain. The Act does not require a … Continue Reading

Amendments to SEC Rule 14a-8 Allowing Shareholder Proposals for Proxy Access Regimes to Come into Effect

On September 6, 2011, the Securities and Exchange Commission confirmed that it would not seek rehearing or Supreme Court review of the decision by the U.S. Court of Appeals in Washington, D.C. partially vacating the SEC’s proxy access rules. (Click here for our blog reporting on the D.C. Circuit’s decision.) Chairman Mary L. Schapiro issued a … Continue Reading

Are You Ready For XBRL?

You may be saying to yourself . . . Xbox?  X Games?  X what?  XBRL is something altogether different: eXtensible Business Reporting Language.  The SEC is proposing to require public companies to use this new language to provide financial statements, financial statement footnotes and schedules in interactive data format.  The question is . . . … Continue Reading

SEC Issues Updated Guidance on the Use of Company Web Sites

The SEC has issued an interpretive release that provides guidance on the use of company web sites to disclose information to investors.  The release became effective upon publication in the Federal Register on August 7, 2008.  The SEC last provided comprehensive guidance regarding company web sites in 2000.  In its recent release, the SEC acknowledges … Continue Reading

Immediate Disclosure Relief For “Smaller Reporting Companies”

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 … Continue Reading

Delaware Chancery Court Criticizes Small-Cap Company’s Board For Failing To Fulfill Revlon Duties When Selling Company To Private Equity Firm

In In re Netsmart Technologies, Inc. Shareholders Litigation, C.A. No. 2536-VCS (Del. Ch. Mar. 14, 2007), Vice Chancellor Strine held that the shareholder plaintiffs demonstrated a probability of success on the merits of their claim that the Netsmart board of directors failed to fulfill their Revlon duties in considering and approving a cash sale of … Continue Reading

SEC Adopts Major Changes To Executive Compensation And Related Party Disclosure Requirements

On August 11, 2006, the SEC issued its adopting release for the new rules on executive compensation and related party disclosures. Beginning for fiscal years ending on or after December 15, 2006, companies will have to comply with the SEC’s new rules that will substantially revise the disclosure requirements for executive and director compensation and security … Continue Reading

SEC Proposes Amendments to Executive Compensation and Related Party Disclosure

On January 27, 2006, the SEC proposed amendments to the disclosure requirements for executive and director compensation, related party transactions, director independence and other corporate governance matters and security ownership of officers and directors. These amendments would apply to disclosure in proxy and information statements, periodic reports, current reports and other filings under the Securities … Continue Reading

SEC Demands Timely Disclosure of Relationships with Directors

In December 2004, the SEC and The Walt Disney Company settled charges that Disney had failed to disclose timely relationships between Disney and certain of its directors or their adult children or spouses. SEC rules require the disclosure of material relationships between the company and directors, officers, significant shareholders, or members of their immediate families. … Continue Reading

Titan Case Highlights Importance of FCPA Compliance and Accuracy of Representations and Warranties in Filed Contracts

Earlier this year, the SEC and DOJ settled parallel criminal and civil enforcement actions against Titan Corporation (“Titan”) under the Foreign Corrupt Practices Act (“FCPA”). Titan agreed to pay the largest FCPA penalty to date of $28.5 million. This case is a reminder that companies need to adopt and enforce FCPA compliance policies before the … Continue Reading

SEC Brings Action for Reaffirmation of Earnings Guidance

The SEC recently settled an enforcement action against Flowserve Corporation, its CEO and Director of Investor Relations for reaffirming the company’s previous earnings guidance in a private meeting with analysts, near the end of a reporting period. Companies should ensure that their Regulation FD policies are enforced and that their investor relations professional cautions analysts … Continue Reading

Companies Reduce Quarterly Earnings Guidance

A recent survey from the National Investor Relations Institute (“NIRI”), accessible at, shows that more companies now offer less guidance, and that companies are moving towards the practice of annual guidance rather than quarterly guidance. Some companies believe that providing guidance is important for maintaining analyst coverage, and that analyst coverage is important for … Continue Reading