KMK Law Corporate & Securities Blog

On November 22, 2023, the SEC issued an order postponing the effective date of rules that would require issuers to include detailed disclosures in periodic reports related to their share repurchases (the “Repurchase Rule”). For a summary of the Repurchase Rules, including Regulation S-K Items 408(d) and 703, see our Securities Snapshot: 3^rd Quarter 2023 – Share Repurchase Rule Reminders.

On June 5, 2023, the New York Stock Exchange (NYSE) filed Amendment No. 1 to its proposed listing standard related to the Securities and Exchange Commission’s (SEC) Rule 10D-1 (the “Clawback Rule”), extending the effective date to October 2, 2023. On June 6, 2023, The Nasdaq Stock Market LLC (Nasdaq) also filed Amendment No. 1 to its proposed clawback listing standard, delaying the effective date until October 2, 2023.

On Friday, May 12, 2023, the U.S. Chamber of Commerce announced that it had filed a lawsuit against the SEC to prevent implementation of the SEC’s new Share Repurchase Disclosure Modernization rules, which KMK has recently discussed. The Chamber filed in the U.S. Court of Appeals for the Fifth Circuit, a conservative leaning court that has issued several high profile rulings adverse to the Biden administration. 

On April 24, 2023, the Securities and Exchange Commission extended the time period to take action on proposed listing standards to implement the Dodd-Frank “Clawback Rules.” As discussed in a previous blog post, the SEC adopted Rule 10D-1, which required U.S. stock exchanges to adopt listing standards that comply with the SEC’s Clawback Rules.

On February 22, 2023, the New York Stock Exchange (NYSE) and on February 24, 2023, Nasdaq filed proposed listing standards with the U.S. Securities and Exchange Commission (SEC) to adopt executive compensation recovery rules. These proposed listing standards implement SEC Rule 10D-1 (the “Clawback Rule”) mandated by Section 954 of the Dodd-Frank Act. The SEC’s final rule directed U.S. stock exchanges to adopt listing standards requiring all listed companies to develop, implement, comply with and disclose a written policy providing for the recovery of incentive-based compensation received by executive officers where that compensation is based on erroneously reported financial information. The stock exchanges will prohibit the initial or continued listing of any security of an issuer that is not in compliance.

On December 14, 2022, the Securities and Exchange Commission amended insider trading rules by adopting new trading restrictions and disclosures to address potential abuses by executives. According to SEC Chair Gary Gensler’s statements in the SEC’s press release these amendments are needed to fill “potential gaps” where insiders trade “opportunistically on the basis of material nonpublic information.” The new rules amend Rule 10b5-1’s affirmative defense provisions to insider trading liability, create new reporting requirements for issuers, and update beneficial ownership reporting requirements for insiders.

On October 7, 2022, the SEC reopened the public comment periods for eleven proposed rules including, among others, proposed rules relating to the following: the enhancement and standardization of climate-related disclosures for investors; enhanced ESG disclosures for investment funds and investment advisers; cybersecurity breach and risk disclosures; share buyback disclosures; and SPAC projections. The SEC reopened the comment periods after it discovered a technological error had prevented it from receiving certain comments.  While affected comments were largely submitted in August 2022, the error is reported to have occurred as early as June 2021.

On May 2, 2022 the SEC’s Division of Corporation Finance issued a sample comment letter addressing disclosures companies should consider regarding Russia’s invasion of Ukraine. The SEC Staff believes companies should provide detailed disclosures of their direct or indirect exposure to Russia, Belarus, and/or Ukraine including through operations, investments, and potential cybersecurity and supply chain risks. A link to the sample letter is here.

The sample comment letter lists several topics subject to disclosure consideration the SEC Staff will focus on:

• Companies ...

On March 9, 2022, the Securities and Exchange Commission (“SEC”) proposed amendments to rules to expand and standardize disclosures regarding cybersecurity risk management, strategy, governance, and incident reporting by public companies. The proposed rules respond to investor concerns related to the growing prevalence of cybersecurity incidents, the increasingly sophisticated methods of cyber criminals in executing their attacks, and the susceptibility of public companies of all sizes operating in all industries to cybersecurity incidents that can stem from ...

On November 29, 2021, the SEC updated accounting guidance for public companies issuing equity awards to executives ahead of market-moving information. Staff Accounting Bulletin (SAB) No. 120 cautions issuers to pay particular attention to non-routine spring-loaded awards.

Spring-loaded awards are a type of equity compensation granted by a public company shortly before the announcement of material non-public information such as an earnings release with positive results or the announcement of a material transaction.

The FASB rule known as Topic 718 generally requires that ...