Category Archives: Securities and Exchange Commission

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Despite Challenges, It’s Full Steam Ahead For SEC’s Enforcement Division

On September 17, 2020, Stephanie Avakian, Director of the SEC’s Division of Enforcement, spoke at the Institute for Law and Economics, University of Pennsylvania Carey Law School Virtual Program.  Ms. Avakian used her time to highlight the Division’s enforcement priorities, operations, and challenges in the years since Jay Clayton became the director of the SEC … Continue Reading

Ninth Circuit Reverses SEC Disgorgement Award and Remands in First Decision Post-Liu

For the first time outside of the originating case itself, a federal appeals court was called upon to apply the principles governing disgorgement in SEC enforcement actions established by the United States Supreme Court’s high-profile decision in Liu v. Securities & Exchange Comm’n, No. 18-1501, 2020 WL 3405845 (U.S. June 22, 2020) (blog article here).  … Continue Reading

SEC Issues New MD&A Guidance Regarding COVID-19

Public companies with a December 31 fiscal year end are now in the process of preparing their Form 10-Q reports for the quarter ended June 30, 2020. When preparing the MD&A section of the Form 10-Q, management should be mindful of the recently released SEC Division of Corporation Finance guidance, “Coronavirus (COVID-10 – Disclosure Considerations … Continue Reading

Supreme Court Preserves But Limits SEC Disgorgement Power

In Liu v. Securities & Exchange Comm’n, No. 18-1501, 2020 WL 3405845 (U.S. June 22, 2020), the United States Supreme Court upheld the authority of the Securities and Exchange Commission (“SEC”) to seek disgorgement as an equitable remedy under 15 U.S.C. § 78u(d)(5), so long as it “does not exceed a wrongdoer’s net profits and is … Continue Reading

DC Circuit Repudiates SEC Program for Testing Exchange Fee Structures

In New York Stock Exchange LLC v. Securities & Exch. Comm., 2020 WL 3248902 (D.C. Cir. June 16, 2020), the United States Court of Appeals for the District of Columbia Circuit invalidated the Securities and Exchange Commission’s (“SEC”) experimental transaction fee pilot program to study the market effects of broker-dealer incentive programs used by domestic … Continue Reading

SEC Adopts Comprehensive Changes to “Significance” Tests and Financial Disclosure Requirements of Acquired and Disposed Businesses

*This post has been updated as of August 4, 2020. On May 20, 2020, the Securities and Exchange Commission formally adopted amendments to financial disclosure regulations regarding the acquisition and disposition of certain businesses. The final rules – which are intended to update disclosure requirements for the benefit of registrants and investors – represent the … Continue Reading

Virtual and Hybrid Shareholder Meetings in the Era of COVID-19: What Public Companies Need to Know

With annual reports on Form 10-K publicly filed and first quarter earnings releases getting underway, proxy season – the annual practice of filing and distributing proxy statements, reserving meeting venues and courting shareholders – is now in full effect.… Continue Reading

Coronavirus and Guidance on SEC Disclosures

The coronavirus (COVID-19) outbreak has impacted publicly traded companies that provide information to trading markets, shareholders and to the Securities and Exchange Commission (SEC). Companies need to be mindful with respect to disclosures in annual and quarterly reports, earnings releases, current reports, and public and private securities offering documents.… Continue Reading

SEC Amends Definitions of “Accelerated Filer” and “Large Accelerated Filer” and Provides Relief to Small Issuers from Auditor Attestation Requirements

On March 12, 2020, the U.S. Securities and Exchange Commission (the “SEC”) adopted amendments to the definition of “accelerated filer” and “large accelerated filer” definitions in Exchange Act Rule 12b-2, which amendments will be effective 30 days after publication in the Federal Register and will apply to annual report filings due on or after such … Continue Reading

SEC Proposal to Modernize Financial Disclosure Requirements in Regulation S-K

The Securities and Exchange Commission (the “SEC”) recently proposed amendments to modernize and simplify specific financial disclosure requirements in Regulation S-K as part of the SEC’s Disclosure Effectiveness Initiative. The proposed amendments are designed to eliminate duplicative disclosures and modernize, in particular, Management’s Discussion and Analysis of Financial Condition and Results of Operations (“MD&A”).… Continue Reading

Coronavirus and Considerations for Publicly Traded Companies

The coronavirus (COVID-19) outbreak has impacted publicly traded companies that have to provide information to trading markets, shareholders and to the Securities and Exchange Commission (SEC) in a number of ways. The SEC has been particularly active in acknowledging the challenges that the outbreak poses to such companies and has provided conditional relief and has … Continue Reading

Gauging Interest: SEC Votes to Approve Proposal to Expand “Test-the-Waters” Rules

The Securities and Exchange Commission (“SEC”) announced on September 26, 2019 that it voted to adopt the application of “testing-the-waters” rules to all issuers who engage in raising capital in the public markets. This represents a significant expansion of that accommodation, as those rules were previously only available to certain issuers classified as emerging growth … Continue Reading

SEC Looks to Modernize Disclosure Approach

On August 8, 2019, the Securities and Exchange Commission (the “SEC”) announced that it voted to propose rule amendments to modernize the description of business, legal proceedings, and risk factor disclosures that public companies are required to make pursuant to Regulation S-K under the Securities Act of 1933 and the Securities Exchange Act of 1934.… Continue Reading

New Bill Seeks to Bring Clarity to Insider Trading Law

On May 7, 2019, Representative James Himes (D-Conn) introduced the “Insider Trading Prohibition Act” (H.R. 2534). The proposed legislation would amend the Securities Exchange Act of 1934, 15 U.S.C § 78a et seq. (the “Act”) by inserting a new section that defines the elements of criminal insider trading. The bill’s objective is to eliminate the ambiguity … Continue Reading

New Effort to Exempt Crypto Currency from Certain SEC, Tax and Other Regulatory Burdens

A new bill, the Token Taxonomy Act was introduced to congress to amend the Securities Act of 1933 and the Securities Exchange Act of 1934 to exclude digital tokens from the definition of a security, to direct the Securities and Exchange Commission to enact certain regulatory changes regarding digital units secured through public key cryptography, … Continue Reading

United States Supreme Court Holds That Knowing Dissemination of False Statements Made by Others Can Constitute Primary “Scheme Liability” In Violation of Rule 10b-5(a) and (c)

In Lorenzo v. Securities & Exchange Comm., No. 17-1077, 2019 WL 1369839 (U.S. Mar. 27, 2019), the Supreme Court of the United States (Breyer, J.) held that an individual who did not “make” a false or misleading statement within the meaning of Janus Capital Group, Inc. v. First Derivative Traders, 564 U.S. 135 (2011) (blog article … Continue Reading

With the SEC, Cooperation is Key

As an expensive “slap on the wrist,” the Securities and Exchange Commission (“SEC” or the “Commission”) recently concluded that approximately $12.7 million worth of funds raised in a 2017 Initial Coin Offering (“ICO”) by Gladius Network LLC (“Gladius”) were part of an unregistered securities offering, and all proceeds must be returned to investors. However, the … Continue Reading

SEC Issues New Guidance on Diversity Disclosure Requirements

On February 6, 2019, the Securities and Exchange Commission released two Compliance and Disclosure Interpretations (CDIs) discussing disclosure requirements in instances where a director or board nominee self-identifies specific diversity characteristics, such as race, gender, ethnicity, religion, nationality, disability, sexual orientation and cultural background.… Continue Reading

Expansion of Regulation A to Reporting Companies: Increased Alternatives Now Available to Public Companies Seeking to Raise Capital or for Mergers and Acquisitions

On December 19, 2018, the SEC announced that it had adopted final rules that allow reporting companies to rely on the Regulation A exemption from registration for their securities offerings.[1] Until recently, the only way that companies subject to the reporting requirements of Section 13 or Section 15(d) of the Securities Exchange Act of 1934 … Continue Reading

The Effects of the SEC Shutdown on the Capital Markets

Although EDGAR continues to accept filings, the government shutdown has now eclipsed its 28th day and the SEC continues to operate with limited staff which is having a crippling effect on the ability of many companies to raise money in the public markets. This is particularly due to the fact that the SEC is unable … Continue Reading

Regulation A May Prove Useful Alternative to Form S-4 Registration for Public Companies Doing Smaller M&A Deals

Last month, the U.S. Securities and Exchange Commission (“SEC”) announced it had adopted final rules to amend certain parts of Regulation A[1] promulgated under the Securities Act of 1933 (“Securities Act”). These new rules implement changes as directed by the Economic Growth, Regulatory Relief, and Consumer Protection Act[2] signed into law on May 24, 2018 … Continue Reading

Airdrop of Crypto Tokens Hits Regulatory Flak

On August 14, 2018, the U.S Securities and Exchange Commission (“SEC”) issued a cease and desist order (the “Tomahawk Order”) against Tomahawk Exploration LLC (“Tomahawk”) and David Thompson Laurance (“Laurance”) for their actions in connection with an initial coin offering of digital assets called “Tomahawkcoins” or “TOM” (the “Tomahawk ICO”). Tomahawk and Laurance’s actions were … Continue Reading
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