Corporate & Securities Blog

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 ...

In another victory for ESG proponents with the Securities and Exchange Commission, on November 3, 2021, the Securities and Exchange Commission’s Division of Corporation Finance issued Staff Legal Bulletin 14L which rescinds previously issued interpretive guidance related to a company’s ability to exclude ESG-related shareholder proposals from its proxy statement. Bulletin 14L effectively realigns the staff’s approach for determining whether a shareholder proposal relates to “ordinary business” which, under Rule 14a-8(i)(7) can serve as the basis for a company’s exclusion of a shareholder proposal.

On September 29, 2021, the Securities and Exchange Commission released a notice filed by the New York Stock Exchange (“NYSE”) of a proposed rule change. The NYSE seeks approval of a proposed amendment to the shareholder voting requirement set forth in Section 312.07 of the NYSE Listed Company Manual (the “Manual”).

Currently, Section 312.07 provides that, where shareholder approval is required for the listing of any new or additional securities, or where any matter requires shareholder approval, including for stock issuances pursuant to an equity compensation plan, the ...

On August 16, 2021, the Securities and Exchange Commission imposed a cease-and-desist order and a $1 million civil penalty on Pearson plc, finding violations of the negligence-based antifraud provisions of the Securities Act.

This is an update to KMK’s original blog post on December 4, 2020.

On December 1, 2020, Nasdaq filed a rule proposal with the U.S. Securities and Exchange Commission that would require listed companies to have, or explain why their boards do not include, diverse directors. In a response to comments from the SEC, Nasdaq filed an amendment to the rule proposal on February 26, 2021. The Nasdaq proposal needs SEC approval to take effect.

In a notice posted on its website on March 10, 2021, the SEC said it would take additional time to rule on the Nasdaq proposal, while also seeking further ...

On Dec. 1, 2020, Nasdaq filed a rule proposal with the U.S. Securities and Exchange Commission that would require listed companies to disclose board diversity statistics using Nasdaq’s Board Diversity Matrix. Nasdaq would require companies to provide this disclosure in proxy materials or on company websites within one year of the SEC’s approval of the rules. The rules also would require listed companies to have, or explain why their boards do not include, diverse directors as follows:

• All listed companies would be expected to have one diverse director within two years of the ...

On October 7, 2020, the SEC proposed a limited, conditional exemption from broker registration requirements for "finders" who assist issuers with raising capital in private markets from accredited investors. Finders identify and often solicit potential investors in order to connect issuers with investors in private placements of securities. The proposal responds to the lack of clarity regarding the regulatory status of finders which has developed through case law, no action letters and other SEC guidance.

On May 4, 2020, the Securities and Exchange Commission announced that it is providing temporary, conditional relief intended to expedite the offer and sale of securities to be issued by smaller companies affected by COVID-19 that are looking to meet their urgent funding needs through a Regulation Crowdfunding offering. The temporary rules are intended to expedite the offering process. The temporary rules apply to securities offerings initiated under Regulation Crowdfunding between May 4, 2020, and August 31, 2020.

SEC Provides Guidance on Earnings Disclosures & COVID-19 Impacts

On April 8, 2020, Jay Clayton, Chairman of the SEC, and William Hinman, Director of the SEC’s Division of Corporation Finance, issued a statement discussing the importance of disclosures related to the COVID-19 pandemic in anticipation of upcoming earnings releases and investor calls. In order to encourage more robust disclosures and shareholder engagement on this topic, the statement outlines, among others, several areas of observation and concern for companies:

• Disclosures should reflect the general ...

On March 25, 2020, the Securities and Exchange Commission (the “SEC”) extended its March 4, 2020 Order (the “Extended Order”) granting exemptions to reporting and proxy delivery requirements for public companies. The Extended Order (described in our advisory here) provides reporting relief for public companies with reports due on or before July 1, 2020.