On October 10, 2023, the SEC adopted amendments to the rules governing beneficial ownership reporting on Schedules 13D and 13G. While compliance with the amendments to the rules governing beneficial ownership reporting on Schedule 13D went into effect on February 5, 2024, compliance with the revised Schedule 13G filing deadlines set forth below are effective on September 30, 2024.Continue Reading Revised Schedule 13g Filing Deadlines Effective as of September 30, 2024 – What You Need to Know
More than two years after announcing the first round of settlements in the ongoing “off-channel communications” probe, the SEC recently announced another round of settlements with 26 financial firms, totaling $390 million in fines. These most recent settlements are notable for two reasons: (1) they include the SEC’s second settlement with an entity operating solely as a registered investment adviser (“RIA”) with no associated broker-dealer, and (2) the SEC has again explicitly noted that companies that self-reported obtained lower fines.Continue Reading Latest Round of SEC “Off-Channel” Communications Settlements Highlights Risks for Investment Advisers and Benefits of Self-Reporting
Over the last several years, the Securities and Exchange Commission (“SEC”) has been laser-focused on the use of so-called “off-channel communications” in the financial services industry. On the theory that employees’ use of personal devices and platforms (such as WhatsApp) to communicate about business violates the “books and records” requirements applicable to financial institutions, the regulator has conducted intrusive and extensive investigations. To respond to the SEC, many companies have required employees to have their personal cell phones copied and reviewed. Continue Reading What Private Equity Firms Need to Know About the Ongoing SEC Investigation of “Off-Channel” Communications
In Securities & Exchange Commission v. Govil, No. 22-1658, 2023 WL 7137291 (2d Cir. Oct. 31, 2023), the United States Court of Appeals for the Second Circuit dealt a setback to the enforcement agenda of the Securities and Exchange Commission (“SEC”) by limiting its ability to seek disgorgement under 15 U.S.C. § 78u(d)(5) and (7) to situations in which the regulator can demonstrate investors have suffered pecuniary harm.Continue Reading Second Circuit Reins in SEC Disgorgement Powers
On September 27, 2023, the Securities and Exchange Commission (the “SEC”) announced charges against six officers, directors, and major shareholders of public companies (“insiders”) for failing to timely report and file disclosures related to (i) their holdings in public company stock and (ii) transactions they undertook involving public company stock. Five public companies were also charged in connection with timely reporting failures by their insiders. Without admitting or denying the charges, the six insiders and five public companies agreed to cease and desist from violating the charged provisions and agreed to pay civil penalties ranging from $66,000 to $200,000.Continue Reading SEC Announces Charges Against Insiders for Reporting Failures and Adopts Amendments to Schedule 13D and 13G Report Filing Timelines
The Securities Exchange Commission (“SEC” or “Commission”) has taken action against Genesis Global Capital, LLC (“Genesis”) and Gemini Trust Company, LLC (“Gemini”) (collectively, “Defendants”) in a recently-filed complaint alleging that the crypto companies violated federal securities laws by engaging in the unregistered offer and sale of securities in the form of their “Gemini Earn Agreements.” In doing so, the Commission not only relied upon the mainstay Howey Test for determining whether an agreement is a security, but also summoned Howey’s lesser-known cousin, the Reves Test, notably leading with the latter in its complaint.Continue Reading SEC Showcases Lesser-Known Legal Theory in Crypto Lending Suit
On December 14, 2022, the Securities and Exchange Commission (the “SEC”) adopted amendments to modernize Rule 10b5-1 under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), and add new disclosure requirements to enhance investor protections against insider trading. Rule 10b5-1, which was adopted in 2000, provides a safe harbor for corporate insiders such as officers and directors to buy or sell company stock without violating insider trading regulations under Section 10(b) of the Exchange Act, and Rule 10b-5, if trades are made pursuant to pre-determined trading plans, also known as Rule 10b5-1 plans, entered into at a time when such parties are not privy to any material nonpublic information.Continue Reading SEC Adopts Amendments Regarding Insider Trading Plans and Related Disclosures
On December 13, 2022, the Staff of the Division of Corporation Finance of the U.S. Securities and Exchange Commission updated its Non-GAAP Financial Measures Compliance & Disclosure Interpretations (“C&DIs”). The C&DIs are generally consistent with prior Staff guidance and companies should consider them in future filings and press releases that contain non-GAAP financial measures.Continue Reading SEC Updates Non-GAAP Financial Measures Guidance
Over the last year, the U.S. Securities and Exchange Commission (“SEC”) has been laser-focused on the use of personal devices by employees of the large Wall Street banks to conduct company business. The SEC’s investigations have focused on whether the banks complied with the “books and records” requirement that they preserve all communications that relate to Company business. The SEC has asserted that certain “off-channel” business communications not captured in company systems run afoul of this basic record keeping requirement. Not surprisingly, during the pandemic and with the increase in remote work, the SEC has determined that violations have been widespread. Continue Reading SEC Shifts Focus on Employees’ Off-Channel Business Communications to Investment Advisers
The U.S. Securities and Exchange Commission (“SEC”) voted on Wednesday to adopt a new rule requiring companies listed on a national securities exchange to claw back incentive-based executive compensation that was erroneously awarded on the basis of materially misreported financial information that requires an accounting restatement. Continue Reading SEC Adopts New Executive Compensation Clawback and Disclosure Rule
On August 25, 2022, the Securities and Exchange Commission adopted a pay versus performance rule in accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act. The rule requires a registrant to disclose, in a proxy statement or an information statement in which executive compensation disclosure is required to be included, how executive compensation actually paid by the registrant to its named executive officers is related to the financial performance of the registrant. The new rule is intended to “provide investors with important and decision-useful information for comparison purposes in one place when they evaluate a registrant’s executive compensation practices and policies, including for purposes of the shareholder advisory vote on executive compensation, votes on other compensation matters, director elections, or when making investment decisions.”Continue Reading SEC Releases Pay Versus Performance Disclosure Requirements For Public Companies