On October 31, 2023, the Fifth Circuit ruled in Chamber of Commerce v. SEC that the SEC acted arbitrarily and capricious, in violation of the Administrative Procedure Act, when it adopted the new share repurchase disclosure...more
11/6/2023
/ Administrative Procedure Act ,
Chamber of Commerce ,
Compliance ,
Compliance Dates ,
Corporate Governance ,
Disclosure Requirements ,
First Amendment ,
Foreign Private Issuers ,
Form 10-K ,
Form 10-Q ,
Form 20-F ,
Repurchases ,
Securities and Exchange Commission (SEC) ,
Stock Repurchases
On October 30, 2023, the SEC filed charges against SolarWinds Corp. and its chief information security officer (CISO), alleging:
..Failures to disclose known cybersecurity vulnerabilities affecting the company’s “crown...more
11/2/2023
/ Chief Information Security Officer (CISO) ,
Cyber Attacks ,
Cybersecurity ,
Disclosure Requirements ,
Enforcement Actions ,
Form 8-K ,
Fraud ,
Internal Controls ,
Misleading Statements ,
Popular ,
Risk Management ,
Securities and Exchange Commission (SEC) ,
Securities Exchange Act
As companies prepare for next proxy season, they should review SEC staff guidance on the pay vs. performance table. In addition to recent staff interpretations, as discussed in our October 2, 2023 post and February 22, 2023...more
10/17/2023
/ Corporate Governance ,
Disclosure Requirements ,
EBITDA ,
Executive Compensation ,
Financial Reporting ,
GAAP ,
Pay Ratio ,
Pay-for-Performance ,
Proxy Season ,
Proxy Statements ,
Publicly-Traded Companies ,
Regulation S-K ,
Securities and Exchange Commission (SEC) ,
Total Shareholder Return (TSR)
On October 10, 2023, the SEC adopted final amendments to Section 13(d) reporting obligations, including:
..Significantly accelerating filing deadlines
..Extending the filing cut-off from 5:30 pm ET to 10 pm ET...more
As companies look ahead to the upcoming proxy and annual report season, the SEC has generated a number of new items to add to your compliance checklist – in addition to those covered in last year's list. Those items, along...more
10/3/2023
/ Annual Reports ,
Artificial Intelligence ,
CDIs ,
Clawbacks ,
Climate Change ,
Coronavirus/COVID-19 ,
Corporate Governance ,
Disclosure Requirements ,
Diversity and Inclusion Standards (D&I) ,
Environmental Social & Governance (ESG) ,
Equity Compensation ,
Financial Restatements ,
GAAP ,
Insider Trading ,
Non-GAAP Financial Measures ,
Performance Incentives ,
Proxy Season ,
Publicly-Traded Companies ,
Related Parties ,
Reporting Requirements ,
Securities and Exchange Commission (SEC) ,
Shareholders ,
Ukraine ,
XBRL Filing Requirements
In New England Carpenters Guaranteed Annuity and Pension Funds v. DeCarlo (Aug. 2023), the Second Circuit held, among other things, that CEO/CFO certifications mandated by SOX Section 302 constitute non-actionable statements...more
9/6/2023
/ Audit Committee ,
CEOs ,
Certification Requirements ,
CFOs ,
Corporate Governance ,
Deferred Compensation ,
Dismissals ,
Enforcement Actions ,
Financial Reporting ,
GAAP ,
Internal Controls ,
Rule 10b-5 ,
Sarbanes-Oxley ,
Section 11 ,
Securities Act of 1933 ,
Securities and Exchange Commission (SEC) ,
Securities Exchange Act ,
Shareholder Litigation ,
Statement of Opinion
As discussed in our December 15, 2022 post, significant amendments to Rule 10b5-1 plan requirements took effect earlier this year. With the Justice Department announcing its first criminal prosecution challenging a Rule...more
8/31/2023
/ 10b5-1 Plans ,
401k ,
Amended Rules ,
CDIs ,
Corporate Issuers ,
Criminal Prosecution ,
Department of Justice (DOJ) ,
Insider Trading ,
Plan Administrators ,
Regulation S-K ,
Securities and Exchange Commission (SEC) ,
Securities Violations
On August 24, 2023, the Second Circuit prevented turmoil in the commercial lending market, ruling in Kirschner v. JP Morgan Chase Bank, N.A. (JPM), et al. that syndicated secured term loan notes were not securities for...more
A recent court case highlights the potential pitfalls for public companies engaging in informal communications with analysts. The court found that paraphrased statements attributed to an officer in an analyst’s report can be...more
A flurry of recent lawsuits in the wake of the Supreme Court’s June decision on affirmative action have further muddied the waters for public companies trying to thread their way through competing interests....more
8/16/2023
/ Affirmative Action ,
Annual Reports ,
Civil Rights Act ,
College Admissions ,
Corporate Counsel ,
Corporate Governance ,
Disclosure ,
Disclosure Requirements ,
Discrimination ,
Diversity ,
Diversity and Inclusion Standards (D&I) ,
Equal Employment Opportunity Commission (EEOC) ,
Kellogg Company ,
Publicly-Traded Companies ,
Reverse Discrimination ,
Risk Mitigation ,
SCOTUS ,
Shareholder Activism ,
Shareholders ,
Target
What happened -
A public company and its CEO lost motions to dismiss securities fraud claims based on:
..Statements in 10-Qs and 10-Ks that a competitor’s trade secrets lawsuit was “without merit”
..Assurances in...more
What happened?
The U.S. District Court for D.C. recently rejected a motion to dismiss a lawsuit claiming fraud in an alleged “pump and dump scheme” arising out of...more
8/3/2023
/ Emoji ,
Failure To Disclose ,
Fraud ,
Material Adverse Effects ,
Misleading Statements ,
Misrepresentation ,
Pump and Dump ,
Schedule 13D ,
Social Networks ,
Stock Sale Agreements ,
Twitter
A divided SEC on July 26, 2023 approved new requirements for reporting of material cybersecurity incidents in real-time current reports on Form 8-K or 6-K and disclosure of cybersecurity risk management, strategy and...more
7/28/2023
/ Annual Reports ,
Compliance ,
Compliance Dates ,
Corporate Governance ,
Cyber Incident Reporting ,
Cybersecurity ,
Disclosure Requirements ,
Form 10-K ,
Form 20-F ,
Form 8-K ,
Publicly-Traded Companies ,
Securities and Exchange Commission (SEC) ,
Securities Regulation
Over the past few years, the SEC has renewed its focus on public company failures to disclose perquisites and related person transactions. As discussed under “Deeper Dive” below, most of the cases involve companies that...more
As we near June 30, 2023, companies are advised to get a jump start on disclosure changes and possible updates to upcoming Form 10-Qs (or Form 10-Ks in the case of non-calendar year companies). The SEC recently updated the...more
6/16/2023
/ Artificial Intelligence ,
Clawbacks ,
Corporate Governance ,
Corporate Officers ,
Directors ,
Disclosure Requirements ,
Executive Compensation ,
Form 10-K ,
Form 10-Q ,
Form 20-F ,
Form 8-K ,
Institutional Shareholder Services (ISS) ,
Market Conditions ,
Publicly-Traded Companies ,
Say-on-Pay ,
Securities and Exchange Commission (SEC) ,
Securities Regulation ,
Stock Repurchases ,
Stock Trades
While new forms of artificial intelligence and machine-learning systems, or AI, have garnered headlines in the mainstream press, many companies are evaluating its use in their businesses. Perhaps to a greater extent than with...more
5/25/2023
/ Algorithms ,
Artificial Intelligence ,
Best Practices ,
Corporate Governance ,
Cyber Attacks ,
Data Breach ,
DoorDash ,
Facebook ,
Form 10-K ,
Form 10-Q ,
Machine Learning ,
Popular ,
Public Disclosure ,
Risk Assessment ,
Risk Mitigation
What happened -
On May 3, 2023, a divided SEC adopted rule amendments that significantly increase company disclosures about their share repurchases. The changes will require companies to...more
5/5/2023
/ Amended Rules ,
Compliance ,
Compliance Dates ,
Disclosure Requirements ,
Foreign Private Issuers ,
Publicly-Traded Companies ,
Required Forms ,
Securities and Exchange Commission (SEC) ,
Securities Regulation ,
Stock Repurchases ,
Stock Trades
New NYSE and Nasdaq Rule Deadline -
As discussed in our February 27, 2023 post, the NYSE and Nasdaq previously issued their proposed listing rules (the “Proposed Listing Rules”) mandating that most companies with listed...more
A claim for breach of the duty of oversight is known as a Caremark claim, after the landmark Delaware Court of Chancery decision in In re Caremark International Inc. Derivative Litigation (1996). Since then, Delaware courts...more
4/26/2023
/ Bad Faith ,
Board of Directors ,
Breach of Duty ,
Caremark claim ,
Corporate Officers ,
Derivative Suit ,
Duty of Loyalty ,
Duty of Oversight ,
Exculpatory Clauses ,
Fiduciary Duty ,
Sexual Harassment
The Justice Department recently indicted the Executive Chairman of Ontrak, Inc. alleging that he failed the “clean hands” requirement because he had been aware of material nonpublic information relating to the potential loss...more
3/6/2023
/ Corporate Counsel ,
Corporate Executives ,
Criminal Convictions ,
Criminal Prosecution ,
Department of Justice (DOJ) ,
Disgorgement ,
Indictments ,
Insider Trading ,
Material Nonpublic Information ,
Permanent Injunctions ,
Securities and Exchange Commission (SEC) ,
Securities Fraud ,
Securities Violations ,
Unclean Hands
What happened -
On February 22, both the NYSE and Nasdaq posted their proposals for new listing rules in response to the SEC’s final clawback rules. The proposals would establish the following compliance schedule...more
What happened -
The SEC staff recently issued 15 interpretations (see Sections 128D and 228D) relating to its new Pay versus Performance (PvP) rules....more
New deadlines and obligations for insiders and corporate secretaries are coming up as result of rule changes, including the following:
February 27, 2023 - Form 4 reporting for gifts -
February 27, 2023 is the...more
What happened -
A recent Delaware chancery court decision has called into question consolidated voting on charter amendments by some companies with multiple classes of common stock. In Garfield v. Boxed, Inc., the court...more
What happened?
In a recent settlement order, the SEC charged Activision Blizzard with failing to maintain adequate disclosure controls and procedures. Notably, the SEC did not claim that the company’s SEC filings were...more
2/9/2023
/ Cease and Desist ,
Compliance ,
Corporate Governance ,
Disclosure Requirements ,
Dodd-Frank ,
Employer Liability Issues ,
Enforcement Actions ,
Internal Communications ,
Internal Controls ,
Material Disclosures ,
Policies and Procedures ,
Risk Assessment ,
Securities and Exchange Commission (SEC) ,
Settlement ,
Whistleblowers