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This Court’s Ruling Puts The Opinion In Auditor’s Internal Control Opinion

A brief ruling issued this week by U.S. District Court Judge James C. Mahan makes it clear that an auditor isn’t always liable even when a subsequent auditor uncovers fraud. In Oaktree Capital Mgmt., L.P. v. KPMG, 2014 U.S....more

8/6/2014 - Accounting Controls Auditors Fraud GAAP Internal Controls KPMG Professional Liability SEC

Facebook/Oculus VR Acquisition Raises Pseudo-Foreign Corporation Question

Yesterday, The Guardian reported that Facebook had acquired Oculus VR using a combination of cash and stock. Facebook avoided SEC registration by availing itself of a fairness hearing before the Department of Business...more

7/23/2014 - Department of Business Oversight Facebook Fairness Hearings Foreign Corporations Oculus VR SEC

Why Doesn’t The SEC Post SubCommittee Recommendations?

Last Thursday, the Investor Advisory Committee held another meeting. The agenda included this rather vague agenda description...more

7/14/2014 - SEC

If Fee-Shifting Bylaws Are Ever Put On Trial, This Case Should Be Exhibit A

Item 5.07(d) of Form 8-K requires issuers to disclose “the company’s decision in light of such vote as to how frequently the company will include a shareholder vote on the compensation of executives in its proxy materials...more

6/23/2014 - Board of Directors Bylaws Executive Compensation Form 8-K Proxy Statements Say-on-Pay SEC Shareholder Litigation Shareholders

Notes From The 2114 Securities Law Conference

Courtesy of Professor Emmett Brown, I recently attended the 2114 Securities Law Conference and I must say that I was heartened by what I heard there and then. Here are some of my notes from the conference...more

6/20/2014 - Dodd-Frank Form 8-K Insider Trading Reporting Requirements SCOTUS SEC Section 16

Commissioner Rings Pension Fund Tocsin

In a speech given late last month, SEC Commissioner Daniel M. Gallagher warned that “for years, state and local governments have used lax governmental accounting standards to hide the yawning chasm in their balance sheets.” ...more

6/16/2014 - Balance Sheets CalPERS Pensions SEC SEC Commissioner Securities

Do You Want Your Lawyer To Be Horatius Or Atticus Finch?

I was profoundly disheartened by these recent remarks by SEC Commissioner Kara M. Stein: Are we treating lawyers differently from other gatekeepers, such as accountants? I think we should carefully review the role...more

6/6/2014 - Ethics SEC

Is Nevada Free-Loading On The SEC?

Nevada’s corporate law continues to attract attention from the academic community. In a recent paper, three professors of accounting at West Chester University of Pennsylvania undertook a forensic examination of Nevada’s...more

5/6/2014 - Corporate Charters Enforcement Actions PCAOB SEC

Name And Shame No More?

The last few years has seen the rise of so-called “name and shame” laws. The aims of many these laws may be laudable, but yesterday’s decision by the Court of Appeals for the District of Columbia Circuit calls their...more

4/15/2014 - Administrative Procedure Act Conflict Mineral Rules Disclosure Requirements First Amendment SEC

American Icon Amends Stock Plan To Make It Section 25102(o) Eligible – Why?

Section 102 the National Securities Markets Improvement Act (which amended Section 18 of the Securities Act of 1933) deems securities listed (or authorized for listing) on the NYSE, the American Stock Exchange or the National...more

4/14/2014 - Employee Incentive Plans Exemptions Levi Strauss Nasdaq NSMIA NYSE SEC

Bill Aims To Exempt Venture Capital Company Equity Security Investments From Lenders Law

California requires persons who are engaged in the business of making loans to be licensed under the Finance Lenders Law. Cal. Fin. Code § 22000 et seq. This had been an issue for venture capital funds that extended bridge...more

4/8/2014 - Bridge Loans Commercial Loans Convertible Debt Equity Securities Finance Lenders Financing Lenders SEC Senate Banking Committee Venture Capital

Just How Binding Are SEC Statements In An Adopting Release?

Two years ago, I coined the term ““ARR Ratio”. The ARR Ratio (Adopting Release to Rule Ratio) is calculated by dividing the total number of words in the Adopting Release by the total number of words in the actual text of the...more

4/3/2014 - Administrative Procedure Act Preamble SEC

Another Modest Proposal – Risk Factors

This week, Broc Romanek launched CorporateAffairs.tv. No, it’s not a live video feed of boardroom dalliances. One of Broc’s first videos, Dramatic Risk Factors: We Face Competition (Vol. 1), inspired me to write about an...more

3/14/2014 - Disclosure Requirements Regulation S-K SEC

How Chadbourne & Parke, LLC v. Troice Threatens The Defense Of The Guilty And The Innocent

The U.S. Supreme Court’s recent decision in Chadbourne & Parke, LLC v. Troice, 571 U.S. ___ (2014) arose out of the a multibillion dollar Ponzi scheme perpetrated by Allen Stanford. The scheme involved the sale to investors...more

2/28/2014 - Fraud Mail Fraud Money Laundering Ponzi Scheme SEC Wire Fraud

Oops! CalPERS Reportedly Violates Insider Trading Policy Again

Jon Ortiz, who writes The State Worker blog for The Sacramento Bee, recently reported that the California Public Employees Retirement System has again violated its insider trading policy by purchasing shares in an initial...more

2/27/2014 - CalPERS Insider Trading SEC

Securities Regulator “Surprised and Offended” By SEC’s Regulation A+ Proposal

Section 401 of the JOBS Act directs the Securities and Exchange Commission to adopt rules exempting offerings of up to $50 million of securities annually from the registration requirements of the Securities Act of 1933, as...more

2/25/2014 - JOBS Act Registration Regulation A SEC Securities Securities Act of 1933

SEC Acknowledges Ethical Obligations May Preclude Voluntary Reporting Out By Attorneys

In 2003, the Securities and Exchange Commission adopted rules that purportedly immunized attorneys who, subject to specific conditions, reveal confidential information to the SEC. 17 C.F.R. § 205.3(d)(2) Technically, the...more

2/21/2014 - Attorney-Client Privilege Confidential Information Crime-Fraud Exception Reporting Requirements SEC

What’s The Matter With The SEC’s Unbundling Interpretation?

Rule 14a-4 requires, among other things, that a form of proxy “identify clearly and impartially each separate matter intended to be acted upon, whether or not related to or conditioned on the approval of other matters, and...more

2/20/2014 - Contract Drafting Proxy Statements SEC

Would Disclosure Improve If The SEC Used The “Magic Word” A Bit More Often?

Recently, I was working on a registration statement on Form S-3 and I happened to notice the following jarring juxtaposition in the instructions on the cover page...more

2/11/2014 - Disclosure Requirements SEC Securities Act of 1933

California Finders Bill Moves To Senate on 73-1 Vote

Yesterday, I wrote about a recent no-action letter issued by the SEC’s Division of Trading and Markets with respect to “M&A Brokers”. Here in California, the legislature is considering a bill, AB 713 (Wagner) that would...more

2/7/2014 - Accredited Investors Acquisitions Broker-Dealer Finders Mergers Notice Requirements Offering Documents SEC Securities

SEC No-Action Letter Addresses “M&A Brokers”

Martin A. Hewitt alerted me to this no-action letter issued on January 31, 2014 by the SEC’s Division of Trading and Markets. The letter was issued in response to a request by six lawyers, including Mr. Hewitt. ...more

2/6/2014 - Broker-Dealer Brokers No-Action Letters SEC Securities Exchange Act

Just Who Is Behind The Universal Proxy?

Recently, it was reported that the Council of Institutional Investors had submitted a petition for rule making to the Securities and Exchange Commission. Indeed, the CII did submit this petition on January 8, 2014. ...more

1/22/2014 - Ballots Board of Directors CII Directors Proxies SEC

CalPERS’ Offbeat Personal Trading Policy

Yesterday’s post discussed a news report of an SEC inquiry into insider trading by CalPERS. Rather than being abashed by this news, CalPERS responded by congratulating itself on having implemented a personal trading policy....more

12/31/2013 - CalPERS Exemptions Insider Trading SEC Securities

SEC Reportedly Investigating CalPERS’ Stock Trades

In October 12, 2012, I wrote about CalPERS’ proposed adoption of regulations governing personal trading by members of its Board of Administration and employees. Although I did offer a few technical comments on the proposed...more

12/30/2013 - Government Investigations Insider Trading Pensions Public Employees Retirement Plan SEC Securities

Does The SEC’s Regulation A Proposal Defy Congress’ Clear Intent?

This week’s announcement by the Securities and Exchange Commission that it is proposing amendments to update and expand Regulation A has attracted quite a bit of attention. David Lynn writing in Broc’s Blog took special note...more

12/20/2013 - Blue Sky Laws NASAA Offerings Qualified Purchaser Regulation A SEC Securities State Regulators

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