In Case You Missed It - Interesting Items for Corporate Counsel - November 2015

by Stoel Rives LLP


  1. The SEC has finally adopted Regulation Crowdfunding, here, which was required by the Capital Raising Online While Deterring Fraud and Unethical Non-Disclosures Act of 2012 (. . . seriously). Its 686 pages belie the elegant simplicity of the rule and its combination of cheap, speedy equity raising and simultaneous guarantee that no investor ever will lose money. Or at least that’s what we assume would be disclosed by a more thorough reading than we are willing to give it. A summary of our speedy review:
    More summaries are here, here, here, here, here, and here. Our favorite law firm client alert on the topic is the following, largely because “Chiller” font really grabs the eye but also for its brazenly honesty assessment.
    • Annual investment limits. Annual capital raises are limited to $1 million, but offerings are not integrated with other exempt offerings. Depending on annual income and net worth, an investor may invest between 5% and 10% of annual income or net worth, with a minimum of $2,000 and a maximum of $100,000. The investor limit applies to all crowdfunding offerings in the 12-month period, not to a specific offering. The rule allows debt or equity issuances.
    • Intermediaries. Offerings must be made only on the Internet by a single registered funding portal or registered broker-dealer, and advertising is limited to information to draw potential investors to the intermediary’s offering page. The offering platform must have specified functionality, including the ability of potential investors with accounts to communicate with each other. Funding portals must register on a new Form Funding Portal. Intermediaries have obligations to watchdog issuers and offerings, including responsibility to monitor issuer and investor compliance with the rules and to ensure investors acknowledge investment risks. An intermediary also must make specified disclosures, including about its compensation and financial interest in an issuer, and its system must adhere to specifications about accepting, processing, confirming, and cancelling investments.
    • Excluded issuers. Some issuers can’t use the rule, including those subject to the public reporting requirements of the ’34 Act, investment companies, foreign issuers, “bad actors,” those who failed to maintain crowdfunding reporting requirements, and development stage companies with no defined business plan.
    • Issuer disclosures. Issuers must file a Form C, which includes disclosure of use of proceeds, targeted offering size, price, business, directors and officers, ownership, indebtedness, related party transactions, other exempt offers by the issuer, risk factors, transfer restrictions, financial statements (the requirements for which vary depending on the target size of the offering), and MD&A. Material changes must be reported on a Form C/A, and annual reports on a Form C-AR are required 120 days after the end of the issuer’s fiscal year. An issuer may terminate its C-AR reporting obligations in specified circumstances, including if it has filed one C-AR and has fewer than 300 holders of record or if it has filed three C-ARs and has $10 million or less in assets.
  2. The same day it published final crowdfunding rules, the SEC also proposed rules to modify Rule 147 and Rule 504 to facilitate small capital raises , here.
    SEC action could be viewed as acknowledgment that the SEC’s crowdfunding rules are too burdensome to be particularly useful, but as evidence that the SEC won’t stand in the way of state crowdfunding exemptions, and, by the way, that Regulation D is a much better exemption. Commentary is here and here.
    • Rule 147, which is a safe harbor for “intrastate” offerings exempt from federal registration, has been of limited value because adverting that leaks to neighboring states foils the exemption. The SEC’s proposed rule would allow general advertising and solicitation as long as sales are made only to intrastate residents and as long as no more than $5 million is raised in a 12-month period, and specified limits on individual investors apply.
    • The SEC also proposed to increase the maximum capital raise under Rule 504 from $1 million to $5 million and to prohibit “bad actors” from relying on the rule.
  3. To emphasize that Regulation D is a much better exemption than Regulation Crowdfunding, or any other exemption, the SEC also updated its report on unregistered securities offerings in the U.S., here.
  4. In the wake of the 2015 proxy season:
    • Some law firm resources on what happened and what might happen in 2016, with such dire titles as “ Is Proxy Access Inevitable,” are here, here, and here.
    • Shearman & Sterling released its 13th Annual Survey on Corporate Governance & Executive Compensation, a review of practices by the 100 largest U.S. public companies, here.
    • The SEC published Staff Legal Bulletin 14H, here, to address when shareholder proposals may be excluded from a proxy statement under 14a-8(i)(7) and 14a-8(i)(9) following the turmoil from the Third Circuit’s decision in Trinity Wall Street v. Wal-Mart Stores, Inc. and the SEC's own earlier refusal to take a position on Whole Foods’ request to omit a shareholder proxy access proposal in favor of its own proposal. On the former, the SEC stated that it agreed with the concurring judge’s views regarding the “significant policy exception” to the ordinary business exclusion in Trinity and not with the new two-part test adopted by the majority. According to the SEC, “a proposal may transcend a company’s ordinary business operations even if the significant policy issue relates to the ‘nitty-gritty of its core business.’” On the latter, the SEC said it will only allow exclusion “if a reasonable shareholder could not logically vote in favor of both proposals.” In other words, proposals won’t be found conflicting unless they “directly conflict,” for example if the proposal by the company is to vote “yes” and the shareholder proposal is to vote “no.” Basically, the SEC changed is analytical framework so that very little will be excludable under 14a-8(i)(9). Commentary is here.
    • The SEC published two new CDIs on “unbundling” under Rule 14a-3(a)(3) in the M&A context, here.
  5. The D.C. Circuit Court of Appeals denied, here, the SEC’s and Amnesty International’s petitions, here and here, for an en banc rehearing of the Court’s earlier affirmation that requiring a company to disclose that its products were “not found to be DRC conflict free” is compelled speech that violates the First Amendment. The SEC also reacted to the U.S. District Court for the District of Massachusetts requiring the SEC to file an expedited process for resource extraction rule-making but doing just that, here. The SEC says it will adopt rules within 270 days, but emphasized that it is going to be super hard, in part because it is silly for Congress to push these types of rules onto the SEC to implement in the first place. (Fine, it didn’t actually say that, but we sense that’s what it meant.)
  6. In accounting news:
    • The Center for Audit Quality published its transparency barometer, here, noting that companies are increasingly disclosing more about the selection and oversight of their independent auditors.
    • PWC published its 2015 annual director survey, here.
    • The PCAOB’s Division of Registration and Inspections issued a “Staff Inspection Brief,” here, noting it will focus on three big areas of deficiency: internal control over financial reporting; assessing and responding to risks of material misstatement; and accounting estimates, including fair value measurements. It will also focus on areas affected by risk factors like issuer and industry characteristics, likely accounting issues encountered by the issuer (revenue recognition, you software companies), location of operations (like in shady areas of the world), considerations related to particular audit firms (what did we call PWC out on last time), and other relevant information (whatever else they like).
    • FASB issued proposed updated guidance on “materiality” in financial statement reporting. In an attempt to draw interest, it has titled one release “Qualitative Characteristics of Useful Financial Information,” here, and the other “Assessing Whether Disclosures Are Material,” here.
  7. Issuers have only until 8 p.m. EST November 13, 2015 to review and correct any erroneous data that ISS uses to calculate their Governance QuickScore, see here. Some commentary on QuickScore updates is here and here. ISS released its draft voting policies, available here, regarding board actions without shareholder approval, “overboarding,” and compensation at externally managed issuers. ISS previously released its policy survey results, available here. Notably the draft voting policies do not capture policy survey results on proxy access. A summary of the policy survey is here. Other commentary on ISS’s policy survey is here, here, and here.
  8. The U.S. Court of Appeals for the Second Circuit ruled, here, that an employee is protected under SEC whistleblower rules if fired after internally reporting a whistleblower claim. That diverges from the Fifth Circuit’s view that a report to the SEC is required before the protections apply. It also highlights that it’s a pretty good idea for the SEC to issue interpretive guidance to correct Circuit Court rulings: “We conclude that the pertinent provisions of Dodd-Frank create a sufficient ambiguity to warrant our deference to the SEC’s interpretive rule, which supports [former employees’] view of the statute.” Note too that a California District Court, here, followed the earlier Fifth Circuit holding in Asadi, here.
  9. The Network, which provides compliance software and services, released a White Paper, here, about whistleblowers, suggesting that you give them a hug. (And noting that 92% first report misconduct inside the company, only 20% report outside the company, and only 9% report to the government, and then mostly when they feel the company has retaliated against them.) The best thing about the report is, of course, the cover, because, we assume, being a whistleblower is quite like perching on a sun-dappled rock in the Scottish Highlands.
  10. Finally, and because when you’re important enough even the things you don’t do are a big deal, we note that the U.S. Supreme Court declined to hear the appeal of United States v. Newman, here, an insider trading case that held that the government must prove that a tippee knew or should have known of the personal benefit received by the tipper and that the benefits were sufficiently “consequential.” Some analysis of Newman and developments since it was decided is here. And just for the heck of it, an explanation of the classical theory of insider trading is here.

Written by:

Stoel Rives LLP

Stoel Rives LLP on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide

JD Supra Privacy Policy

Updated: May 25, 2018:

JD Supra is a legal publishing service that connects experts and their content with broader audiences of professionals, journalists and associations.

This Privacy Policy describes how JD Supra, LLC ("JD Supra" or "we," "us," or "our") collects, uses and shares personal data collected from visitors to our website (located at (our "Website") who view only publicly-available content as well as subscribers to our services (such as our email digests or author tools)(our "Services"). By using our Website and registering for one of our Services, you are agreeing to the terms of this Privacy Policy.

Please note that if you subscribe to one of our Services, you can make choices about how we collect, use and share your information through our Privacy Center under the "My Account" dashboard (available if you are logged into your JD Supra account).

Collection of Information

Registration Information. When you register with JD Supra for our Website and Services, either as an author or as a subscriber, you will be asked to provide identifying information to create your JD Supra account ("Registration Data"), such as your:

  • Email
  • First Name
  • Last Name
  • Company Name
  • Company Industry
  • Title
  • Country

Other Information: We also collect other information you may voluntarily provide. This may include content you provide for publication. We may also receive your communications with others through our Website and Services (such as contacting an author through our Website) or communications directly with us (such as through email, feedback or other forms or social media). If you are a subscribed user, we will also collect your user preferences, such as the types of articles you would like to read.

Information from third parties (such as, from your employer or LinkedIn): We may also receive information about you from third party sources. For example, your employer may provide your information to us, such as in connection with an article submitted by your employer for publication. If you choose to use LinkedIn to subscribe to our Website and Services, we also collect information related to your LinkedIn account and profile.

Your interactions with our Website and Services: As is true of most websites, we gather certain information automatically. This information includes IP addresses, browser type, Internet service provider (ISP), referring/exit pages, operating system, date/time stamp and clickstream data. We use this information to analyze trends, to administer the Website and our Services, to improve the content and performance of our Website and Services, and to track users' movements around the site. We may also link this automatically-collected data to personal information, for example, to inform authors about who has read their articles. Some of this data is collected through information sent by your web browser. We also use cookies and other tracking technologies to collect this information. To learn more about cookies and other tracking technologies that JD Supra may use on our Website and Services please see our "Cookies Guide" page.

How do we use this information?

We use the information and data we collect principally in order to provide our Website and Services. More specifically, we may use your personal information to:

  • Operate our Website and Services and publish content;
  • Distribute content to you in accordance with your preferences as well as to provide other notifications to you (for example, updates about our policies and terms);
  • Measure readership and usage of the Website and Services;
  • Communicate with you regarding your questions and requests;
  • Authenticate users and to provide for the safety and security of our Website and Services;
  • Conduct research and similar activities to improve our Website and Services; and
  • Comply with our legal and regulatory responsibilities and to enforce our rights.

How is your information shared?

  • Content and other public information (such as an author profile) is shared on our Website and Services, including via email digests and social media feeds, and is accessible to the general public.
  • If you choose to use our Website and Services to communicate directly with a company or individual, such communication may be shared accordingly.
  • Readership information is provided to publishing law firms and authors of content to give them insight into their readership and to help them to improve their content.
  • Our Website may offer you the opportunity to share information through our Website, such as through Facebook's "Like" or Twitter's "Tweet" button. We offer this functionality to help generate interest in our Website and content and to permit you to recommend content to your contacts. You should be aware that sharing through such functionality may result in information being collected by the applicable social media network and possibly being made publicly available (for example, through a search engine). Any such information collection would be subject to such third party social media network's privacy policy.
  • Your information may also be shared to parties who support our business, such as professional advisors as well as web-hosting providers, analytics providers and other information technology providers.
  • Any court, governmental authority, law enforcement agency or other third party where we believe disclosure is necessary to comply with a legal or regulatory obligation, or otherwise to protect our rights, the rights of any third party or individuals' personal safety, or to detect, prevent, or otherwise address fraud, security or safety issues.
  • To our affiliated entities and in connection with the sale, assignment or other transfer of our company or our business.

How We Protect Your Information

JD Supra takes reasonable and appropriate precautions to insure that user information is protected from loss, misuse and unauthorized access, disclosure, alteration and destruction. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. You should keep in mind that no Internet transmission is ever 100% secure or error-free. Where you use log-in credentials (usernames, passwords) on our Website, please remember that it is your responsibility to safeguard them. If you believe that your log-in credentials have been compromised, please contact us at

Children's Information

Our Website and Services are not directed at children under the age of 16 and we do not knowingly collect personal information from children under the age of 16 through our Website and/or Services. If you have reason to believe that a child under the age of 16 has provided personal information to us, please contact us, and we will endeavor to delete that information from our databases.

Links to Other Websites

Our Website and Services may contain links to other websites. The operators of such other websites may collect information about you, including through cookies or other technologies. If you are using our Website or Services and click a link to another site, you will leave our Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We are not responsible for the data collection and use practices of such other sites. This Policy applies solely to the information collected in connection with your use of our Website and Services and does not apply to any practices conducted offline or in connection with any other websites.

Information for EU and Swiss Residents

JD Supra's principal place of business is in the United States. By subscribing to our website, you expressly consent to your information being processed in the United States.

  • Our Legal Basis for Processing: Generally, we rely on our legitimate interests in order to process your personal information. For example, we rely on this legal ground if we use your personal information to manage your Registration Data and administer our relationship with you; to deliver our Website and Services; understand and improve our Website and Services; report reader analytics to our authors; to personalize your experience on our Website and Services; and where necessary to protect or defend our or another's rights or property, or to detect, prevent, or otherwise address fraud, security, safety or privacy issues. Please see Article 6(1)(f) of the E.U. General Data Protection Regulation ("GDPR") In addition, there may be other situations where other grounds for processing may exist, such as where processing is a result of legal requirements (GDPR Article 6(1)(c)) or for reasons of public interest (GDPR Article 6(1)(e)). Please see the "Your Rights" section of this Privacy Policy immediately below for more information about how you may request that we limit or refrain from processing your personal information.
  • Your Rights
    • Right of Access/Portability: You can ask to review details about the information we hold about you and how that information has been used and disclosed. Note that we may request to verify your identification before fulfilling your request. You can also request that your personal information is provided to you in a commonly used electronic format so that you can share it with other organizations.
    • Right to Correct Information: You may ask that we make corrections to any information we hold, if you believe such correction to be necessary.
    • Right to Restrict Our Processing or Erasure of Information: You also have the right in certain circumstances to ask us to restrict processing of your personal information or to erase your personal information. Where you have consented to our use of your personal information, you can withdraw your consent at any time.

You can make a request to exercise any of these rights by emailing us at or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

You can also manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard.

We will make all practical efforts to respect your wishes. There may be times, however, where we are not able to fulfill your request, for example, if applicable law prohibits our compliance. Please note that JD Supra does not use "automatic decision making" or "profiling" as those terms are defined in the GDPR.

  • Timeframe for retaining your personal information: We will retain your personal information in a form that identifies you only for as long as it serves the purpose(s) for which it was initially collected as stated in this Privacy Policy, or subsequently authorized. We may continue processing your personal information for longer periods, but only for the time and to the extent such processing reasonably serves the purposes of archiving in the public interest, journalism, literature and art, scientific or historical research and statistical analysis, and subject to the protection of this Privacy Policy. For example, if you are an author, your personal information may continue to be published in connection with your article indefinitely. When we have no ongoing legitimate business need to process your personal information, we will either delete or anonymize it, or, if this is not possible (for example, because your personal information has been stored in backup archives), then we will securely store your personal information and isolate it from any further processing until deletion is possible.
  • Onward Transfer to Third Parties: As noted in the "How We Share Your Data" Section above, JD Supra may share your information with third parties. When JD Supra discloses your personal information to third parties, we have ensured that such third parties have either certified under the EU-U.S. or Swiss Privacy Shield Framework and will process all personal data received from EU member states/Switzerland in reliance on the applicable Privacy Shield Framework or that they have been subjected to strict contractual provisions in their contract with us to guarantee an adequate level of data protection for your data.

California Privacy Rights

Pursuant to Section 1798.83 of the California Civil Code, our customers who are California residents have the right to request certain information regarding our disclosure of personal information to third parties for their direct marketing purposes.

You can make a request for this information by emailing us at or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

Some browsers have incorporated a Do Not Track (DNT) feature. These features, when turned on, send a signal that you prefer that the website you are visiting not collect and use data regarding your online searching and browsing activities. As there is not yet a common understanding on how to interpret the DNT signal, we currently do not respond to DNT signals on our site.

Access/Correct/Update/Delete Personal Information

For non-EU/Swiss residents, if you would like to know what personal information we have about you, you can send an e-mail to We will be in contact with you (by mail or otherwise) to verify your identity and provide you the information you request. We will respond within 30 days to your request for access to your personal information. In some cases, we may not be able to remove your personal information, in which case we will let you know if we are unable to do so and why. If you would like to correct or update your personal information, you can manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard. If you would like to delete your account or remove your information from our Website and Services, send an e-mail to

Changes in Our Privacy Policy

We reserve the right to change this Privacy Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our Privacy Policy will become effective upon posting of the revised policy on the Website. By continuing to use our Website and Services following such changes, you will be deemed to have agreed to such changes.

Contacting JD Supra

If you have any questions about this Privacy Policy, the practices of this site, your dealings with our Website or Services, or if you would like to change any of the information you have provided to us, please contact us at:

JD Supra Cookie Guide

As with many websites, JD Supra's website (located at (our "Website") and our services (such as our email article digests)(our "Services") use a standard technology called a "cookie" and other similar technologies (such as, pixels and web beacons), which are small data files that are transferred to your computer when you use our Website and Services. These technologies automatically identify your browser whenever you interact with our Website and Services.

How We Use Cookies and Other Tracking Technologies

We use cookies and other tracking technologies to:

  1. Improve the user experience on our Website and Services;
  2. Store the authorization token that users receive when they login to the private areas of our Website. This token is specific to a user's login session and requires a valid username and password to obtain. It is required to access the user's profile information, subscriptions, and analytics;
  3. Track anonymous site usage; and
  4. Permit connectivity with social media networks to permit content sharing.

There are different types of cookies and other technologies used our Website, notably:

  • "Session cookies" - These cookies only last as long as your online session, and disappear from your computer or device when you close your browser (like Internet Explorer, Google Chrome or Safari).
  • "Persistent cookies" - These cookies stay on your computer or device after your browser has been closed and last for a time specified in the cookie. We use persistent cookies when we need to know who you are for more than one browsing session. For example, we use them to remember your preferences for the next time you visit.
  • "Web Beacons/Pixels" - Some of our web pages and emails may also contain small electronic images known as web beacons, clear GIFs or single-pixel GIFs. These images are placed on a web page or email and typically work in conjunction with cookies to collect data. We use these images to identify our users and user behavior, such as counting the number of users who have visited a web page or acted upon one of our email digests.

JD Supra Cookies. We place our own cookies on your computer to track certain information about you while you are using our Website and Services. For example, we place a session cookie on your computer each time you visit our Website. We use these cookies to allow you to log-in to your subscriber account. In addition, through these cookies we are able to collect information about how you use the Website, including what browser you may be using, your IP address, and the URL address you came from upon visiting our Website and the URL you next visit (even if those URLs are not on our Website). We also utilize email web beacons to monitor whether our emails are being delivered and read. We also use these tools to help deliver reader analytics to our authors to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

Analytics/Performance Cookies. JD Supra also uses the following analytic tools to help us analyze the performance of our Website and Services as well as how visitors use our Website and Services:

  • HubSpot - For more information about HubSpot cookies, please visit
  • New Relic - For more information on New Relic cookies, please visit
  • Google Analytics - For more information on Google Analytics cookies, visit To opt-out of being tracked by Google Analytics across all websites visit This will allow you to download and install a Google Analytics cookie-free web browser.

Facebook, Twitter and other Social Network Cookies. Our content pages allow you to share content appearing on our Website and Services to your social media accounts through the "Like," "Tweet," or similar buttons displayed on such pages. To accomplish this Service, we embed code that such third party social networks provide and that we do not control. These buttons know that you are logged in to your social network account and therefore such social networks could also know that you are viewing the JD Supra Website.

Controlling and Deleting Cookies

If you would like to change how a browser uses cookies, including blocking or deleting cookies from the JD Supra Website and Services you can do so by changing the settings in your web browser. To control cookies, most browsers allow you to either accept or reject all cookies, only accept certain types of cookies, or prompt you every time a site wishes to save a cookie. It's also easy to delete cookies that are already saved on your device by a browser.

The processes for controlling and deleting cookies vary depending on which browser you use. To find out how to do so with a particular browser, you can use your browser's "Help" function or alternatively, you can visit which explains, step-by-step, how to control and delete cookies in most browsers.

Updates to This Policy

We may update this cookie policy and our Privacy Policy from time-to-time, particularly as technology changes. You can always check this page for the latest version. We may also notify you of changes to our privacy policy by email.

Contacting JD Supra

If you have any questions about how we use cookies and other tracking technologies, please contact us at:

- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.