The SEC Proposes JOBS Act Registration Rules

On Thursday, December 18, 2014, the Securities and Exchange Commission (the “SEC”) proposed rule amendments to implement Title V and Title VI of the Jumpstart Our Business Startups Act (the “JOBS Act”). The proposed amendments would revise rules adopted under Section 12(g) of the Securities Exchange Act of 1934. The proposed amendments would:

• Amend the rules governing registration and termination of registration mechanics under Section 12(g) to reflect the 2,000 holders of record (500 unaccredited) thresholds established by the JOBS Act;
• Clarify which holders of record are “accredited investors” under the new Section 12(g) thresholds, and require companies to determine this status as of each fiscal year end;
• Exclude from the definition of “held of record” for purposes of the Section 12(g) thresholds all securities acquired under an “employee compensation plan” in a transaction exempt from registration under the Securities Act of 1933 (or that did not involve a “sale”); and
• Create a nonexclusive safe harbor under which a person will be deemed to have received securities pursuant to an “employee compensation plan” for purposes of Section 12(g) if the securities were received pursuant to a “compensatory benefit plan” transaction that satisfies the conditions of Rule 701(c) of the Securities Act of 1933.

For more information on these proposed rules, please see our client update. 

Read the SEC press release. 

The SEC Adopts and Proposes Swap Data Repository Rules

On Wednesday, January 14, 2015, the SEC adopted two sets of final rules and proposed certain additional rules, rule amendments, and guidance pursuant to Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”). The final rules require security-based swap data repositories (“SDRs”) to register with the SEC and prescribe reporting and public dissemination requirements for security-based swap transaction data. The proposed rules, amendments, and guidance relate to the reporting and public dissemination of security-based swap transaction data.

The final rules require an SDR to register with the SEC and set forth other requirements with which SDRs must comply. The rules also provide an exemption from registration for certain non-U.S. SDRs when specific conditions are met.

The final rules addressing security-based swap data reporting and public dissemination, known as Regulation SBSR, outline the information that must be reported and publicly disseminated for each security-based swap transaction. In addition, the rules assign reporting duties for many security-based swap transactions and require SDRs registered with the SEC to establish and maintain policies and procedures for carrying out their duties under Regulation SBSR. Under the rules, the Commission recognizes the Global Legal Entity Identifier System as the system from which security-based swap counterparties must obtain codes to identify themselves when reporting security-based swap data. The rules also address the application of Regulation SBSR to cross-border security-based swap activity and include provisions to permit market participants to satisfy their obligations under Regulation SBSR through compliance with the comparable regulation of a foreign jurisdiction.

The proposed rule amendments would assign reporting duties for certain security-based swaps not addressed by the adopted final rules, prohibit registered SDRs from imposing usage restrictions on or charging fees to the users of publicly disseminated security-based swap transaction data, and provide a compliance schedule for certain provisions of Regulation SBSR.

Read the SEC press release.

The SEC Proposes Hedging Disclosure Rules

On Monday, February 9, 2015, the SEC proposed rules to implement Section 955 of the Dodd-Frank Act. The proposed amendments would require disclosure of whether employees or members of the board of directors are permitted to engage in transactions to hedge or offset any decrease in the market value of equity securities granted to the employee or board member as compensation or held directly or indirectly by the employee or board member. The proposed disclosure would be required in all proxy or information statements relating to the election of directors, whether by vote of security holders at a meeting or an action authorized by written consent. The proposed disclosure would apply to companies subject to the federal proxy rules, including smaller reporting companies, emerging growth companies, business development companies, and registered closed-end investment companies with shares listed and registered on a national securities exchange.

Read the SEC press release.