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 and the President have adopted the JOBS Act as an election-year demonstration of their commitment to small businesses and entrepreneurialism, and they have paid little heed to strongly-worded opposition from SEC Chairman Mary Schapiro, state regulators and organizations ranging from the Council for Institutional Investors to the AARP.Continue Reading Senate Passes Modified JOBS Act – Regulatory Reform for Small and Emerging Growth Companies Speeds Closer to Fruition

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 company to make any effort to eliminate slavery or human trafficking, but only to disclose the extent, if any, to which it has taken the actions listed in the Act. The impact of the Act ultimately will depend on whether consumers, investors and activists use the required disclosure to pressure companies to monitor and eliminate abuses in their supply chains. California Civil Code Section 1714.43(a).
 Continue Reading Compliance Deadline Looms for New Transparency in Supply Chains Act

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 statement indicating her continuing interest in “finding a way to make it easier for shareholders to nominate candidates to corporate boards” but suggesting no immediate SEC plans to propose new proxy access rules.
 Continue Reading Amendments to SEC Rule 14a-8 Allowing Shareholder Proposals for Proxy Access Regimes to Come into Effect

Earlier today, in Business Roundtable v. Securities & Exchange Commission, No. 10-1305 (D.C. Cir. July 22, 2011), the United States Court of Appeals for the District of Columbia Circuit issued its decision invalidating the SEC’s proxy access rules adopted in August 2010 with the intention that they be effective for the 2011 proxy season (see our blog here). The Business Roundtable and U.S. Chamber of Commerce filed the lawsuit in September 2010 challenging the SEC’s adoption of proxy access rules and separately requesting for the SEC to stay implementation of the rules pending the outcome of the lawsuit. The SEC granted the request for stay in October 2010 and issuers were relieved of the burdens of proxy access for the 2011 proxy season. (See our blog posts here and here.)Continue Reading D.C. Circuit Invalidates SEC’s Proxy Access Rules

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 . . . are you ready?Continue Reading Are You Ready For XBRL?

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 that investors are increasingly relying on the Internet for information to aid their investment decisions, and that "where access is freely available to all, use of electronic media is at least equal to other methods of delivering information or making it available to investors and the markets."  In providing updated guidance, the SEC hopes to encourage companies to continue to develop their web sites in compliance with the federal securities laws so that they can serve as effective information and analytical tools for investors.  However, in light of the subjective nature of many of the factors set forth in the release, a company which is satisfied with its current practice of distributing press releases or filing Form 8-Ks to disclose developments in its business, or a smaller company whose web site is less frequently accessed, will likely maintain their current disclosure procedures while monitoring the response to the new guidance.Continue Reading SEC Issues Updated Guidance on the Use of Company Web Sites

A company can be liable for violating its employees’ privacy rights when it looks at the content of their text messages, even when the text-messaging devices were provided by the company, held the Ninth Circuit Court of Appeals.  Employers thus cannot be complacent about privacy rights just because they own the means by which their employees communicate.  Employers can, however, still access their employee’s electronic communications if they take appropriate and consistent measures to alert employees of the employer’s rights to these communications.Continue Reading Employer That Reviewed Text Messages Violated Employee’s Right To Privacy

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.Continue Reading Immediate Disclosure Relief For “Smaller Reporting Companies”

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 the company to two private equity firms.  The Court determined that the board’s decision not to conduct a broad market canvass for strategic acquirers, and instead focus the search for acquirers solely on private equity firms, did not appear to be reasonable under the circumstances.  The Court also held that the post-signing “market check” recommended by the company’s financial advisers was not appropriate for a small-cap company like Netsmart, thus was far too passive to have been effective in mitigating the narrowness of the pre-signing market canvass.  This decision provides guidance to boards when considering a sale to a private equity firm — an increasingly common situation affecting boards of directors of public companies throughout the country.Continue Reading Delaware Chancery Court Criticizes Small-Cap Company’s Board For Failing To Fulfill Revlon Duties When Selling Company To Private Equity Firm