On July 18, 2024, District Court Judge Engelmayer of the Southern District of New York issued his 107-page opinion and order dismissing most – but not all – of the landmark allegations of the SEC against SolarWinds Corp. and...more
7/29/2024
/ Board of Directors ,
Chief Information Security Officer (CISO) ,
Corporate Governance ,
Cyber Attacks ,
Cybersecurity ,
Data Breach ,
Disclosure Requirements ,
Enforcement Actions ,
Fraud ,
Incident Response Plans ,
Misleading Statements ,
Popular ,
Publicly-Traded Companies ,
Securities and Exchange Commission (SEC) ,
Securities Fraud ,
SolarWinds
As discussed in our March 3, 2023 post, the DOJ and SEC brought an insider trading case against the founder and former CEO and Executive Chairman of Ontrak, Inc. based upon the former executive failing the “clean hands”...more
7/1/2024
/ 10b5-1 Plans ,
Corporate Executives ,
Criminal Convictions ,
Criminal Prosecution ,
Department of Justice (DOJ) ,
Enforcement Actions ,
Insider Information ,
Insider Trading ,
Material Nonpublic Information ,
Securities and Exchange Commission (SEC) ,
Securities Fraud
On June 24, 2024, the SEC’s Division of Corporation Finance published five additional interpretations (CDIs) addressing the effect of ransomware payments on the obligation of companies to report material cybersecurity...more
The SEC recently charged Ilit Raz, the CEO of Joonko Diversity Inc., a failed recruitment startup, with "AI washing" based on allegedly false claims that her company had developed an “automatic recruiting solution” to help...more
As discussed in our September 1, 2021 post, the SEC brought its first “shadow insider trading” case against Matthew Panuwat, a company employee who purchased options in a competitor’s shares shortly after learning his...more
6/14/2024
/ Confidential Information ,
Corporate Governance ,
Criminal Convictions ,
Criminal Prosecution ,
Enforcement Actions ,
Insider Trading ,
Material Nonpublic Information ,
Materiality ,
Misappropriation ,
Publicly-Traded Companies ,
Risk Mitigation ,
Securities and Exchange Commission (SEC) ,
Securities Fraud
New SEC disclosure requirements take effect soon. Together with recent accounting guidance, it’s timely for companies to review their equity grant practices and any vulnerabilities to criticism for “spring-loading” or...more
On May 21, 2024, the Director of the SEC’s Division of Corporation Finance issued a statement providing guidance on the use of Item 1.05 of Form 8-K to disclose cybersecurity incidents....more
On March 6, 2024, a divided SEC approved climate-related disclosure rules. The new rules will require disclosure of...more
3/8/2024
/ Climate Change ,
Corporate Governance ,
Disclosure Requirements ,
Foreign Private Issuers ,
Form 10-K ,
Form 10-Q ,
Greenhouse Gas Emissions ,
PLSRA ,
Public Comment ,
Publicly-Traded Companies ,
Regulation S-K ,
Regulation S-X ,
Securities and Exchange Commission (SEC) ,
Securities Exchange Act ,
XBRL Filing Requirements
A judge in the Southern District Court of New York recently denied a motion to dismiss filed by institutional investors in Augenbaum v. Anson Investments Master Fund LP, et al., finding that their coordinated behavior in a...more
Financial regulators in the UK have been interested for some years in the question of how personal behaviour can affect the risk profile of a financial institution. A recent SEC case suggests that US regulators may now be...more
2/14/2024
/ Consultation ,
Corporate Crimes ,
Corporate Officers ,
Criminal Justice Reform ,
Criminal Liability ,
Diversity and Inclusion Standards (D&I) ,
Financial Conduct Authority (FCA) ,
Financial Institutions ,
Financial Services Industry ,
Internal Controls ,
Proposed Legislation ,
Prudential Regulation Authority (PRA) ,
Respondeat Superior ,
Securities and Exchange Commission (SEC) ,
UK
On January 25, 2024, the SEC announced the settlement of cease-and-desist proceedings against Northern Star Investment Corp. II, a special purpose acquisition company (SPAC). The SEC alleged that the company failed to...more
On January 24, 2024, the SEC approved by a 3-2 vote new rules to substantially change the disclosure and liability regime governing SPACs, including de-SPAC transactions, or “SPAC target IPOs” as referred to by Chairman...more
2/1/2024
/ Corporate Governance ,
Disclosure Requirements ,
Investment Company Act of 1940 ,
New Rules ,
Non-GAAP Financial Measures ,
PSLRA ,
Regulation S-K ,
Section 145 ,
Securities and Exchange Commission (SEC) ,
Shell Corporations ,
Special Purpose Acquisition Companies (SPACs) ,
Target Company ,
Underwriting
As companies prepare for the upcoming proxy and annual report season, the following supplements the list of key items to consider contained in our October 2, 2023 post...more
In light of new disclosure rules as well as investor interest, companies may wish to modify their D&O Questionnaires for the 2024 proxy season to address certain hot topics...more
As readers may recall, on October 31, 2023 the Fifth Circuit Court of Appeals in Chamber of Commerce v. SEC ruled that the SEC acted arbitrarily and capriciously, in violation of the Administrative Procedure Act, when it...more
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
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 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