Corporate & Securities Blog

On March 7, 2018, the Securities and Exchange Commission (SEC) issued a public statement regarding the risk posed by online platforms that allow trading in digital assets to violate federal securities laws. This statement indicates that the SEC is increasing its focus on platforms that offer such trading and their compliance with applicable securities laws.

On February 20, 2018, the Securities and Exchange Commission (SEC) issued interpretive guidance to assist public companies in preparing disclosures about cybersecurity risks and incidents. This guidance indicates that the SEC is expecting more robust cybersecurity-related disclosures in the filings of public companies and encourages companies to implement comprehensive cybersecurity policies and procedures.

On September 21, 2017, the Securities and Exchange Commission (SEC) issued interpretive guidance on the CEO pay ratio rule. Simultaneously, the SEC’s Division of Corporation Finance issued guidance on calculation of the pay ratio and updated C&DIs related to the new guidance. Together, these issuances strongly suggest that the SEC is not modifying or deferring the effectiveness of the rule and that it will be in place for the upcoming 2018 proxy season.

Beginning on July 10, 2017, the Securities and Exchange Commission’s (“SEC”) Division of Corporation Finance will accept nonpublic draft registration statements from all issuers relating to IPOs and initial registrations under Section 12(b) of the Securities Exchange Act of 1934 (“Exchange Act”).

On April 3, 2017, the D.C. District Court affirmed the 2014 decision by the U.S. Court of Appeals for the D.C. Circuit, striking down part of the U.S. Securities and Exchange Commission’s (“SEC”) conflict minerals rules that require publicly-traded companies to disclose whether their products contain certain minerals from certain central African countries.

The U.S. Securities and Exchange Commission (“SEC”) has adopted new rules making it easier for investors to find exhibits to an issuer’s public filings. Currently, issuers submit electronic filings to the SEC using the Electronic Data Gathering, Analysis, and Retrieval system (“EDGAR”), which include exhibits that are incorporated by reference to earlier filings. Investors are therefore required to search through earlier filings in order to find these exhibits, such as material contracts, articles of incorporation, and other material documents.

Protecting and encouraging whistleblowers has been a priority for the U.S. Securities and Exchange Commission (“SEC”) and its enforcement division. The SEC recently announced enforcement actions against two companies for their use of restrictive language in severance agreements that required departing employees to waive their rights to any monetary recovery under Rule 21F-17 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). The rule, promulgated under the Dodd-Frank Act, is part of the SEC’s whistleblower program and is intended to prohibit employers from interfering with an employee’s right to report potential securities law violations to the SEC.

Many calendar year-end companies are beginning to prepare for annual meetings and related proxy soliciting activities. As part of that preparation, companies are turning to recent SEC rules, regulations, and policy updates. This advisory provides some reminders and updates for companies as they prepare for the 2017 proxy season.

On July 1, 2016, the Securities and Exchange Commission (“SEC”) approved changes to Nasdaq Listing Rules 5250 and 5615 requiring Nasdaq-listed companies to publicly disclose compensation or other arrangements by third parties to directors or nominees for director. The new requirements take effect July 31, 2016.

On June 1, 2016, the Securities and Exchange Commission published an interim final amendment to implement Section 72001 of the Fixing America’s Surface Transportation Act (the “FAST Act”), permitting an issuer to submit a summary page on Form 10-K filings. The amendment adds new Item 16, which expressly allows an issuer, at its option, to include a summary in its Form 10-K filings, provided that each item on the summary page must include cross-references to related, more detailed information disclosed in the issuer’s Form 10-K.