On August 16, 2011, the PCAOB issued a concept release seeking comments on ways that auditor independence, objectivity, and professional skepticism could be enhanced. While the PCAOB seeks advice on any approach, the concept is focused on mandatory audit firm rotation. Consequently, the release could lead to companies having to change their auditors every few […]
SEC Adopts Amendments to Form S-3 Eligibility
On July 26, 2011, the SEC approved amendments to eligibility criteria for use of the short form registration statement on Form S-3. To use the short form registration statement, a proposed offering must meet both the issuer eligibility requirements and a transaction eligibility requirement. While there are several available transaction eligibility standards, a frequently relied […]
Will Dodd-Frank Mandated Executive Compensation Disclosures and Related Items Apply to the 2012 Proxy Season?
On August 2, 2011, the Securities and Exchange Commission (the “SEC”) released a revised Dodd-Frank rulemaking calendar. The new calendar indicates that rulemaking pertaining to the following sections of the Dodd-Frank Act will be delayed until the first half of 2012: §§953 and 955: Adopt rules regarding disclosure of pay-for-performance, CEO pay ratios, and hedging […]
Proxy Access Rules Struck Down by Court of Appeals
In a resounding victory for public companies Friday, the United States Court of Appeals for the District of Columbia Circuit struck down the Securities and Exchange Commission’s rule on proxy access. The controversial proxy access rule would have permitted shareholders to more easily and more cheaply nominate a minority slate of director candidates for election […]
Supreme Court Ends SEC’s Theory of “Implied Representation”
Recently, a 5-4 United States Supreme Court held, in Janus Capital Group Inc. et al. v. First Derivative Traders, No. 09-525, 2011 WL 2297762 (U.S. June 13, 2011), that an investment advisor was not liable for fraud in the prospectus of a sponsored mutual fund because the investment advisor was not the “maker” of the […]
IRS Clarifies 162(m) Deduction Requirement
The IRS recently issued proposed regulations under Internal Revenue Code Section 162(m) relating to the deduction limitation for certain employee remuneration in excess of $1,000,000, which if passed, will have a significant impact on the design of equity based compensation plans for existing public companies and privately-held companies that ultimately become publicly held. Under Code […]
Are the Say-on-Pay Votes “Advisory” After All?
When Congress passed the Say-on-Pay provision in Dodd-Frank, there was some concern whether the required vote, even though advisory, would increase the risk for Boards. As it turns out, the risk is real. Approximately 35 companies have received a vote of less than 50% in support of their executive compensation programs. Of these 35 failed […]
SEC Publishes Notice of Proposed Amendments to “Qualified Client” Test
Section 205(a)(1) of the Investment Advisers Act generally prohibits an investment adviser from collecting performance based compensation that is based on a share of capital gains on, or capital appreciation of, a client’s funds or assets under management. The Securities and Exchange Commission (“SEC”) adopted Rule 205-3 to provide exceptions to this prohibition if the […]
SEC Seeks Public Comments on Short Sale Disclosure
Pursuant to Section 417 of the Dodd-Frank Act, the SEC’s Division of Risk, Strategy and Financial Innovation is undertaking two current studies involving short selling. The first study focuses on the state of short selling on national securities exchanges and in the over-the-counter markets. The SEC is seeking comments to complete its second study involving […]
Financing Early Stage Companies–Dealing With the “New Normal”
We have recently experienced some of the worst financial and economic conditions that we (hopefully) will see in our lifetimes. Most of us have been touched personally by these conditions. It appears that economic and financial conditions will continue to get better, but these situations have created some ongoing challenges that will continue to face […]
