TheCorporateCounsel.net

April 23, 2014

Glossy Annual Reports: Corp Fin Will No Longer Scan Them, So Why…

Last week, Corp Fin announced that it will no longer scan glossy annual reports into Edgar – thus, meaning they will no longer be available online through the SEC’s website. However, companies are still required to post glossy annual reports online via their own website. Although Rule 14a-3(c) requires that 7 paper copies of glossy annual reports get mailed to the SEC, Regulation S-T allows companies to file them on Edgar in lieu of sending the paper copies. Most companies choose to mail the seven paper copies rather than hassle with Edgar.

This is a confusing area – and we often get questions on our “Q&A Forum” by folks who don’t believe that the SEC still has this requirement to mail the copies to the SEC. I can understand the confusion as the logic underlying this new Corp Fin announcement applies equally to the Rule 14a-3(c). Why should companies be required to mail in 7 copies to the SEC when these documents are available on corporate websites anyways? Staffers can review a glossy annual report online – and they probably do so rather than rifle through a file cabinet looking for a paper copy. By eliminating the requirement, it will simplify costs for companies – and save the SEC Staff the burden of storing (or chucking) the paper copies as they are mailed in. Hopefully, Corp Fin will bake this into the vast disclosure reform project for which Keith Higgins laid out the first steps recently…

By the way, note this is an “announcement” posted by Corp Fin. It is not a “press release” nor a “public statement.” It is listed in “Division Announcements,” up in the top right corner of Corp Fin’s reconfigured home page (for which you can subscribe via RSS feed). Note that the items included on Corp Fin’s “What’s New” page are not necessarily included in these Announcements. For example, the new CDIs regarding social media that I blogged about yesterday were not placed in this Announcements box…

Confidential Treatment Requests: Corp Fin Won’t Directly Inform You If Granted CTRs Had “No Review”

Last week, Corp Fin also announced that it won’t bother with calling, emailing or mailing you an order if your confidential treatment request is granted and there is a “no review.” Instead, you will need to keep an eye on your company’s filing history on Edgar to look for an order indicating that the CTR was granted (if a few weeks goes by and you don’t see an order, you can call the general phone number of the Corp Fin Group that handles your company’s filings and check in). You still will get a call or letter if there are comments on your CTR or if your CTR is denied. Here’s the list of recently granted CTRs on Edgar…

Thanks for the Gumball Mickey – DLA Piper, Austin

While I was on spring break vaca last week, I popped in on my friends at DLA Piper in Austin – and they were kind enough to participate in this 30-second video:

- Broc Romanek

April 22, 2014

Why I Don’t Like Corp Fin’s New “Legend for Twitter” Guidance

Yesterday, Corp Fin issued 2 new Compliance & Disclosure Interpretations dealing with social media. The first CDI deals with how to affix legends to tweets & other social media communications. The second CDI deals with retweeting or otherwise repeating another social media communication (ie. company isn’t responsible for third-party retweets). These CDIs apply to the Rule 134 (ie. tombstone ad), Rule 165(c)(1)(ie. business combo) and Rule 433(c)(2)(i)(ie. FWP) contexts.

I sometimes get accused for being a “homer” for Corp Fin. It’s true that I love my alma mater and I wholeheartedly approve most of what the Division does. I particularly like the Office of Mergers & Acquisitions, which played a significant role in developing this guidance. But sometimes I do disagree.

I’m glad that the Staff is getting around to address these issues, but I don’t like the conditions imposed on the first CDI, which blesses the practice of not including a full legend in a tweet (which was an impossible task). In particular, I don’t like that a company must use up valuable Twitter real estate to say a link to a disclaimer is “important.” I don’t agree with the Staff’s concern that someone on Twitter won’t know or appreciate the significance of a hyperlink. Bearing in mind that a tweet is limited to 140 characters – and that the link itself will take up to 10 characters itself (even when shortened) – that doesn’t leave a whole lot of space. Adding a statement that a link is important might use up 10% of your available space. Plus, this is akin to requiring companies – in the paper world – to add a big statement before a disclaimer that says “The following disclaimer is important.” This just doesn’t jibe in an era where folks are talking about minimizing duplicative disclosure.

This CDI does leave open some issues, such as “is affixing an image to a tweet that includes the disclaimer sufficient?” Probably not under this guidance – so Carl Icahn may have to change his tweeting ways (see his March 26th tweet). Another issue is “can the first tweet in a series include the disclaimer rather than including the disclaimer in every single tweet?” This is important to know for live tweeting during earnings calls. Some companies currently have a practice of the first tweet – amidst a series of tweets during an earning call – including a link to the forward-looking safe harbor rather than including the link in each tweet that might have forward-looking information.

At the recent Tulane conference, Michele Anderson, head of Corp Fin’s Office of M&A, noted that the Staff will be watching M&A parties who use social media to see if they are filing with the SEC. She also said that you can’t be cute – if a social media channel allows enough characters to include a full legend – then you must include the full legend and not rely on this guidance to just link to a legend. In other words, you can’t max out a Facebook post with other content to avoid including a legend.

In his blog, Steve Quinlivan jokingly notes that maybe “TIIIITH” (meaning “there is important information in the hyperlink”) will become a well-known acronym as a way to save space…

Who Reads Disclaimers Anyways? The Case to Can Them All

My big beef is with disclaimers in general. To me, this is low-hanging fruit for the SEC’s disclosure reform project. The SEC should change its rules to make all legends and disclaimers optional. I imagine a survey of investors would reveal that no one reads them. And even if a typical investor tried, many are written in a way that makes them hard to understand. In fact, a few of them are required to be in all caps – a style that the SEC’s plain English initiative proved to be difficult to read decades ago. It’s the kind of legalese that is a turn-off for retail investors and is apt to make them decide to chuck their disclosure document in the trash can…

Speaking of fine print, some pretty crazy stuff going on with forced arbitration if a consumer just uses a coupon or “likes” a brand on Facebook. Here’s a list of companies with forced arbitration in their terms of service. Also note that the SEC is not the only federal agency coming to grips with social media – read this alert about the FTC and sweepstakes…

Transcript: “Conflict Minerals: Tackling Your 1st Form SD”

We have posted the transcript for our popular webcast: “Conflict Minerals: Tackling Your 1st Form SD.” The guidance is still valid despite last week’s court case…

- Broc Romanek

April 21, 2014

18 Cool Things About Spectra Energy’s ’14 Proxy Statement

In this 2-minute video, there are 18 great ways that Spectra Energy enhances the usability of its 2014 proxy statement (compare to last year’s proxy):

Say-on-Pay: 3rd & 4th Failures

Over the last week, Cogent Communications Group became a three-time loser with 46% support in ’14 (Form 8-K) as the company also failed in ’11 (39%) and ’13 (34%). And FirstMerit (Form 8-K) also failed with 41% support – that company also failed in ’12 (47%). Hat tip to Karla Bos for the news!

More on our “Proxy Season Blog”

We continue to post new items regularly on our “Proxy Season Blog” for TheCorporateCounsel.net members. Members can sign up to get that blog pushed out to them via email whenever there is a new entry by simply inputting their email address on the left side of that blog. Here are some of the latest entries:

- Shareholder Proposals: A Uniform Voting Calculus
- SEC Asking Companies More about Overseas Taxes
- Shareholder Proposals: Banks Asked to Identify Risk-Takers & Their Comp
- Updated “Sample Time & Responsibility Proxy Season Schedule”
- Corp Fin Comment Letter Trends: Stock Compensation
- AICPA’s New Conflict Minerals Audit Guidance

- Broc Romanek

April 18, 2014

More on the Conflict Minerals Ruling: What is En Banc Review?

As I noted when the U.S. Court of Appeals decision came out earlier this week in National Association of Manufacturers, et al. v. Securities and Exchange Commission, one of the options for the SEC in light of the court’s adverse First Amendment ruling is to seek en banc review of the decision of the three-judge panel. That inevitably leads to the question, what is en banc review and how long does it take? Obviously, everyone in the issuer community is very anxious to understand whether this litigation could be resolved in time before the June 2 deadline for the first Form SD, or, alternatively, whether the SEC acts on its own to delay the deadline in light of the uncertainty created by the current state of the litigation.

Every U.S. Circuit Court of Appeals has the ability to review cases en banc. Hearing cases en banc allows the full circuit court to overturn a decision reached by a three-judge panel. Because very few cases are granted review by the U.S. Supreme Court (given the discretionary nature of the writ of certiorari), the Courts of Appeals are the courts of last resort for the vast majority of cases. Notwithstanding this status, it is very difficult to actually obtain en banc review by the Court. Most lawyers petition for en banc review as a matter of course, even though the procedure is generally disfavored. In this regard, Federal Rule of Appellate Procedure 35, which governs all of the circuits’ en banc hearing and rehearing procedures, states that an en banc hearing or rehearing “is not favored and ordinarily will not be ordered unless: (1) en banc consideration is necessary to secure or maintain uniformity of the court’s decisions; or (2) the proceeding involves a question of exceptional importance.”

Rule 35 indicates that “[a] majority of the circuit judges who are in regular active service may order that an appeal or other proceeding be heard or reheard by the court of appeals in banc,” and sets time limits and certain procedures for a party petitioning for a hearing or rehearing en banc, and provides that the court is not required to file a response to a suggestion for a hearing or rehearing en banc. The various circuits have implemented their procedures in the form of local rules. In general, a case will be heard en banc only if three conditions are met: (1) a litigant files a petition or a judge asks for a hearing or rehearing en banc; (2) a judge in active service on the circuit requests that the entire court be polled on the suggestion, and (3) a majority of the judges in active service vote to grant the petition.

In the conflict minerals case, the possibility for en banc review may be heightened given that the appropriate level of scrutiny for deciding the First Amendment question is at issue in the American Meat Institute case that is already subject to en banc review. Therefore it is possible that the SEC could argue that this case meets the “uniformity” test contemplated by Rule 35. If en banc review is granted, it can be a lengthy process, because the case has to be re-argued in front of the entire en banc court and the opinions must be circulated and considered among the much larger en banc court, resulting in the interval between oral argument and en banc disposition being five times greater, on average, as compared to a three-judge panel disposition.

Given all of this, the bottom line appears to be that we are unlikely to see anything with respect to conflict minerals litigation resolved anytime soon. Even in the best case, en banc rehearing of the case could take us into 2015 before any decision is reached, and if the three-judge panel’s decision is upheld, then the case would still be remanded back to the District Court for further proceedings consistent with the appellate decision. If review of the three-judge panel’s decision is not sought by the government, then the case would presumably go back to the District Court on remand, which in and of itself could take some significant additional time.

Section 1502 and the Museum of Unintended Consequences

One of my favorite lines from former Chairman Chris Cox (did I just write that?) was when, in the course of testimony about options backdating, he noted that while he had supported the enactment of Section 162(m) of the Internal Revenue Code as a means for controlling the rate of growth of CEO pay, everyone could now agree with the benefit of hindsight that “this tax law change deserves pride of place in the Museum of Unintended Consequences.” I have often thought about what ends up in the Museum of Unintended Consequences, and one thing that has always bugged me about Section 1502 of the Dodd-Frank Act is that given how it is such a blunt instrument, a trip to the Museum of Unintended Consequences is almost inevitable when you realize that the requirements could potentially make things worse for the DRC and its adjoining countries, rather than better.

Some of these concerns were highlighted in this Squire Sanders blog, which points to some of the briefs filed in the conflict minerals case, along with some other communications, which highlight how the law could tend to lead to an all out embargo on conflict minerals from the DRC region, which of course would end up being a classic “throwing the baby out with the bathwater” scenario.

As companies consider what they will be doing going forward, they should at least consider responsible sourcing alternatives, rather than avoiding the DRC region entirely. As time goes on and hopefully transparency increases, the ability to continue to responsibly source minerals from the region may improve, which could ultimately help continue to provide economic benefits for those engaged in the legitimate mining, smelting and refining activities.

More on our “Proxy Season Blog”

We continue to post new items regularly on our “Proxy Season Blog” for TheCorporateCounsel.net members. Members can sign up to get that blog pushed out to them via email whenever there is a new entry by simply inputting their email address on the left side of that blog. Here are some of the latest entries:

- Climate Change Issues for This Proxy Season
- Universal Proxy Cards: CII Petitions the SEC
- Shareholder Proposals: “Enhanced” Confidential Voting Policies & Interim Vote Tallies
- 2013 Foxhole of the Year Winner
- Shareholder Proposals: DTC Changes Its Participant List

- Dave Lynn

April 17, 2014

Business Groups File Shareholder Proposal Rulemaking Petition

Broc recently noted the ongoing dialogue about revisiting Rule 14a-8, including SEC Commissioner Gallagher’s recent speech, Ed Knight’s WSJ op-ed and Ann Yerger’s WSJ op-ed responding to Ed Knight’s op-ed. Against this backdrop, last week the U.S. Chamber of Commerce and several other business groups filed a rulemaking petition with the SEC seeking SEC action on Rule 14a-8(i)(12), the provision governing the excludability from company proxy materials of shareholder proposals previously submitted to shareholders that did not elicit meaningful shareholder support. Specifically, the groups seek amendment of the resubmission rule to increase significantly the percentage of favorable votes required before the company is obligated to include in its proxy materials the substance of proposals shareholders previously rejected. This will likely find its way to the museum of rulemaking petitions that the SEC has no ability to act on given their pressing rulemaking demands handed down from Congress.

Transcript: “Rural/Metro and Claims for Aiding & Abetting Breaches of Fiduciary Duty”

We have posted the transcript for our popular DealLawyers.com webcast: “Rural/Metro and Claims for Aiding & Abetting Breaches of Fiduciary Duty.”

More on our “Proxy Season Blog”

We continue to post new items regularly on our “Proxy Season Blog” for TheCorporateCounsel.net members. Members can sign up to get that blog pushed out to them via email whenever there is a new entry by simply inputting their email address on the left side of that blog. Here are some of the latest entries:

- Recap: SEC’s Proxy Advisors Roundtable
- The Role of Shareholder Proposals: Ending Apartheid
- Icahn Tweets Intention to Submit Shareholder Proposal at Apple
- Majority Support Prompts Verizon Bylaw on Proxy Access
- How to Update D&O Questionnaires for “Bad Actors”
- New Defensive Tactic Leads to Negative Recommendations for Director Elections
- Group of 70 Investors Pressure Companies to Assess Climate Change
- Survey: Directors Split on Governance Engagement

- Dave Lynn

April 16, 2014

Was the Conflict Minerals Ruling a “Win” for SEC Rulemaking?

As I noted in yesterday’s blog, the opinion of the U.S. Court of Appeals for the District of Columbia Circuit in the appeal of National Association of Manufacturers, et al., v. Securities and Exchange Commission upheld the U.S. District Court’s judgment with respect to the Administrative Procedures Act and Exchange Act claims raised by the plaintiffs/appellants. This outcome was particularly notable given the hostility that this Court has shown to the SEC’s rulemaking efforts over the years, including in 2011 when the Court invalidated the SEC’s proxy access rule (Rule 14a-11).

As for the conflict minerals rulemaking, the Court could find no fault with the SEC’s process and with the cost-benefit analysis, and thus could not hold that the SEC’s action was “arbitrary, capricious, an abuse of discretion, or otherwise not in accordance with law[, or] in excess of statutory jurisdiction.” The Court analyzed the claims made by the plaintiffs/appellants regarding the lack of any de minimis exception, the due diligence threshold, the “persons described” provision with respect to persons who contract to manufacture, and the length of the “DRC conflict undeterminable” temporary phase-in period, and found that the SEC was not arbitrary and capricious in the judgments that were made in adopting the final rule.

With regard to the cost-benefit analysis, the Court noted that “the Commission exhaustively analyzed the final rule’s costs . . . [and] [i]t considered its own data as well and cost estimates submitted during the comment period . . . and arrived at a large bottom line figure that the Association does not challenge.” On the benefit side of the equation, the Court stated “we find it difficult to see what the Commission could have done better,” noting that the SEC determined that Congress intended the rule to achieve “compelling social benefits” which the agency was “unable to readily quantify” due to a lack of data about the rule’s effects. The Court noted that the SEC had to promulgate the rule based on the statute, and thus necessarily relied on Congress’s determination that the costs were necessary for achieving the goals.

With this outcome, the rule writers at the SEC are no doubt breathing a sigh of relief, as they still have a relatively full plate of Dodd-Frank Act and JOBS Act mandated rulemakings that continue to percolate. After a string of high profile losses in this Court and the U.S. District Court for the District of Columbia, this outcome is probably the best that the SEC and the Staff could have hoped for and may serve to pave the way for moving forward with the rest of the rulemaking agenda.

More on the SEC’s Disclosure Reform Project

At the ABA Spring Meeting last Friday, Corp Fin Director Keith Higgins broke the mold of the tried and true “Dialogue with the Director” program and took part of the time to deliver a speech outlining the SEC’s efforts on disclosure reform. In the speech, he noted that efforts to reduce the volume of disclosure is not the sole end game, particularly given that many investors have expressed an appetite for more information, not less. The SEC has now launched a spotlight page on sec.gov where the public can provide input on how the SEC can make disclosure more effective.

In terms of priorities, the Staff has started reviewing the business and financial disclosures in current and periodic reports and transactional filings, considering, among other things, whether disclosures should be scaled for certain types of issuers like smaller reporting companies and emerging growth companies. In a later phase of the project, the Staff will consider ways to update and modernize proxy disclosures.

As examples of potentially outdated disclosures that might be revisited, he noted the ratio of earnings to fixed charges and the table of historical stock prices. The Staff will also be looking for disclosure requirements that result in redundancy or duplicative disclosures, as well as looking at whether a more principles-based approach (such as in MD&A) would be better for certain disclosure items.

The Staff is also looking at Regulation S-X requirements, including requirements to include financial statements of entities other than the registrant, such as acquired businesses, equity method investees and guarantors. The Staff will also examine differences in disclosure requirements under the 1933 Act and 1934 Act, as well as potential areas of overlap between GAAP requirements for footnote disclosure and the SEC’s other disclosure requirements.

Also on the agenda will be efforts to improve the navigability of disclosure documents and whether the long-standing notions of “company disclosure” or “core disclosure” should be implemented.

Obviously this project is going to be a huge undertaking by the Division, and notably this effort has been started before, but always overtaken by events. We will see if this latest effort will actually yield any tangible results.

Engagement as a Household Word: The New IRRC Institute/ISS Study

A new study by the IRRC Institute and ISS finds that the level of engagement between investors and public companies is at an all time high, and that both investors and corporate officials surveyed believe that the increased level of engagement is successful. The study, which follows up on an initial study done on the topic in 2011, concludes that the most significant factor driving high levels of engagement is mandatory say-on-pay votes at U.S. public companies. The study is worth reviewing, because it provides some useful insights on how engagement is being initiated and conducted and what is being talked about in the course of engagements.

- Dave Lynn

April 15, 2014

Big News: Court of Appeals Rules in the Conflict Minerals Case

Yesterday, the U.S. Court of Appeals for the District of Columbia Circuit issued its opinion in the appeal of National Association of Manufacturers, et al., v. Securities and Exchange Commission. The National Association of Manufacturers had challenged the SEC’s conflict minerals disclosure rule, raising Administrative Procedures Act, Exchange Act and First Amendment claims. Last year, the U.S. District Court for the District of Columbia had rejected all of the Association’s claims and granted summary judgment for the SEC and intervenor Amnesty International.

On appeal, the Court of Appeals upheld most aspects of the rules and statute, but held that the statute and rule violate the First Amendment only “to the extent the statute and rule require regulated entities to report to the Commission and to state on their website that any of their products have ‘not been found to be “DRC conflict free.”‘” (In footnote 14 of the Opinion, the Court stated that to the extent that the requirement to use the particular descriptor “not been found to be ‘DRC conflict free’” arises solely as a result of the SEC’s rule rather than the statute, then only the rule and not the statute is unconstitutional.)

More specifically, the Court found that the rule violates the prohibition against compelled speech. The Court held that “[b]y compelling an issuer to confess blood on its hands, the statute interferes with that exercise of freedom of speech under the First Amendment.” This sort of disclosure, the Court reasoned, was similar to requiring issuers to “disclose the labor conditions of their factories abroad or the political ideologies of their board members” which would be “obviously repugnant to the First Amendment” and should not face a relaxed standard for review just because Congress used the “securities” label.

In a separate opinion concurring in part, Judge Srinivasan did not join the court’s opinion with respect to the First Amendment claim, noting that a central issue with regard to the standard for review in this type of case is awaiting an en banc decision of the Court in another case, American Meat Institute v. United States Department of Agriculture. Judge Srinivasan would have preferred to hold in abeyance the consideration of the First Amendment issue in the conflict minerals case, so as not to risk being undercut by the decision of the en banc court in the American Meat Institute case.

The fact that the Court of Appeals reversed the District Court decision on the First Amendment claim was a surprise to some, given that the First Amendment claim was always talked about as a bit of a long shot. The fact that the Court of Appeals did not invalidate the conflict minerals disclosure rule on the APA or Exchange Act grounds was a disappointment to many, because with this opinion the rule will live on, but perhaps in a slightly modified form.

In our “Conflict Minerals” Practice Area, we are posting the oodles of memos that are pouring in…

What’s Next for the Conflict Minerals Disclosure Rule?

Does yesterday’s decision mean “pencils down” for those preparing their first Form SD? Unfortunately, the answer to that seems to be “no.” The outcome of the opinion is that the Court remanded the case “for further proceedings consistent with this opinion,” so more work will now have to be done by the District Court once the appellate decision is final.

Further, while the Court issued its opinion and judgment today, that decision has no binding legal effect on the parties until the Court issues its “mandate.” In a separate order issued concurrently with the opinion, the Court ordered that issuance of the mandate be withheld until seven days after the Court disposes of any petition for rehearing. The government’s petition for rehearing is not due until 45 days after the Court’s decision, which is May 29. So, unless there is further action by the Court, the earliest that the mandate would issue and the decision could have binding legal effect would be sometime in June, after the June 2, 2014 deadline by which Form SDs are required to be filed. The Court could of course change its mind and decide to issue the mandate earlier–the separate order issued today specifically contemplates that a party may ask for the mandate to be issued earlier for good cause.

It is also possible that the SEC may take some sort of action with regard to the upcoming filing deadline in light of the legal limbo that the Court’s decision creates, although the SEC’s decision to take any such action would undoubtedly be wrapped up with its overall litigation strategy with respect to the case.

Will the SEC Seek Rehearing?

While it is always speculative to try to predict what the government will do, a petition for rehearing en banc seems likely in this case. The question of what level of scrutiny is to be used to decide the First Amendment question is already at issue in another case in which the Court has granted en banc review, as discussed above. In footnote 10 of the opinion, the Court as much as invited an en banc review, noting that “issuing an opinion now provides an opportunity for the parties in this case to participate in the court’s en banc consideration of this important First Amendment question.” At the very least, the government would likely file a petition for rehearing en banc asking the Court to vacate the panel’s opinion in the event that the en banc Court changes the applicable level of scrutiny in the American Meat Institute case.

- Dave Lynn

April 14, 2014

27 Cool Things About Intel’s ’14 Proxy Statement

Here’s a 2-minute video about the 27 great ways that Intel enhances the usability of its 2014 proxy statement (78 pages, with assistance from Addison):

Spring Break: What DC Tourism Looks Like

I’ve headed out on spring break vaca and Dave will run this blog for the remainder of the week. Here’s a 1-minute video that is my slide show of DC tourists enjoying the cherry blossoms & other popular landmarks:

- Broc Romanek

April 11, 2014

Corp Fin Issues 3 CDIs on Instrastate Offerings

Yesterday, Corp Fin issued 2 new CDIs – and one revised CDI – on instrastate offerings. As Joe Wallin blogged, they are important because they relate to state-level equity crowdfunding, and how to conduct a state-level equity crowdfunding offering without falling into federal law. Here they are:

- Revised Question 141.03
- New Question 141.04
- New Question 141.05

Meanwhile, SEC Commissioners Aguilar and Stein each delivered a speech at the NASAA’s annual conference this week…

Drafting Disclosure: Can a Robot Do Your Job?

I like the idea of Rosie from the Jetson’s banging out a prospectus. Except perhaps when it’s real. The consulting arm of Seyfarth Shaw has announced “Disclosure Dragon” software that “automates, expedites and standardizes the development of a private placement memorandum (or other required disclosure documents depending on the type of offering) and supporting exhibits.” The announcement notes that further legal review is required – but that it could save up to 80% of the costs involved.

I’m not convinced there is much in the way of costs for creating crowdfunding documents anyways. From what I hear, under many state crowdfunding statutes, out-of-pocket legal costs will be less expensive than a what a SCOR costs today. Thoughts?rosie

State Crowdfunding Laws: If You Build It…

Hat’s off to Davis Wright Tremaine’s Joe Wallin who drafted a crowdfunding bill on his own and blogged about it – and before you know it, Washington State’s Governor was signing it into law! Here are some FAQs on Washington’s new law – and Bill Carleton maintains this web page with many state laws on crowdfunding…

Meanwhile, here are other crowdfunding stories:

- David Seifer & Taylor White’s “Board Of Contributors: Oculus Sale Angers Crowdfunding Supporters”

- Time’s “When Crowdfunding Goes Corporate: Kickstarter Backers Vent Over Facebook’s Oculus Buy

- NY Times’ “Retail Businesses That Try Crowdfunding Face Some Skepticism”

- Broc Romanek

April 10, 2014

A SEC Staffer’s Retirement Speech Rant: 5 Things to Wonder

A lot of attention was paid to this Bloomberg article covering a long-time SEC trial lawyer’s speech at his retirement party (also see this American Lawyer story, which might have been the first). That article spawned others (here is one, another – and another) – which caused even my wife to ask me questions.

Here are five things I wondered when I read it:

1. Who is Jim Kidney? – I never heard of him nor did other old-time alumni that I spoke to. I know Stephen Crimmins is cited in the article, speaking highly of him – but the name still draws a blank.

2. How Did Bloomberg Get the Remarks? – The typical farewell party is a fun occasion – and often sad too if the person is well-liked. I have never seen an actual speech reduced to writing until I obtained Meredith Cross’ remarks delivered at Paula Dubberly’s farewell party that I blogged about a few months ago. I actually got my hands on the text of Jim’s speech too!

3. Why Did Bloomberg Bother With the Story? – In my opinion, these type of speeches never are newsworthy. Except perhaps in trade blogs like this. But I guess we live in a different era of journalism now (some of the reporting was over-the-top, reading much more into the speech than the Bloomberg piece). I note that the remarks are from someone who spent 30 years on the staff but was never promoted to a senior manager position. So it’s kinda funny that this is news on the scale of a speech by the SEC Chair.

4. Does the SEC Still Have a Reputation Problem? – The meat is what James said, not who he is. Clearly, more enforcement cases should have – and still should be – brought in the wake of the ’08 financial crisis. So I can see how this minor thing becomes big news. And many people are applauding James for being frank. But we don’t know all the facts, that’s for sure. There are reasons that cases aren’t brought aggressively, typically because of bad law. Here’s the latest interview with SEC Chair White about her new vision for Enforcement, including the news that she only sleep four hours per night…

5. How Come I Didn’t Get the Scoop? – I need to work harder…

Of course, the best farewell speech stories are the ones that don’t deal with any substance. Like the time the guy got so drunk he could hardly speak. That might happen occasionally when someone retires from a private sector job, but I’ve only seen it once at a SEC party (and I’ve been to over 100). They typically are a “low flow” affair…

NYSE Proposal: Relaxation of Director Independence for Spin-Offs

In this blog, Oliver Rust of Duane Morris explains how the NYSE has proposed to relax its bright line director independence tests in limited circumstances, so that “a director may be deemed independent of a company that has been the subject of a spin-off transaction regardless of the fact that such director or his employer had a relationship with the former parent of such spun-off company.”

European Commission Proposes Revised Shareholder Rights Directive

Yesterday, the European Commission proposed a revised shareholder rights directive. It’s a biggie that has something in there for everyone, including binding say-on-pay and proxy advisory firm reform. We’ll be posting memos in our “Europe” Practice Area.

This “Citizen’s Summary” is a unique concept – explaining the proposal for the masses. In particular, see the bottom of the page -they thought of everything except designating hashtags…

- Broc Romanek