Large Firm Service. Small Firm Attention.

Corporate & Securities

Corporate & Securities

SEC Suggests Cybersecurity Disclosures

A new guidance document from the Securities and Exchange Commission may cause some companies to rethink their approach when disclosing cybersecurity risks.

The SEC’s Division of Corporate Finance issued the guidance document, which is not a new regulation, to offer guidance on how existing disclosure obligations apply to cybersecurity risks. Since many companies are relying heavily on digital technology to conduct business, the guidance document could prove to play a key role in the future of disclosures.

Corporate & Securities

SEC Proxy Access Rule Vacated by D.C. Court of Appeals

The Washington, D.C. Circuit Court of Appeals ruled that the Securities and Exchange Commission’s (SEC) new proxy access rule 14a-11 is “arbitrary and capricious” and thus invalidated the rule. The DC Circuit Courts decided in Business Roundtable v. SEC that the SEC’s rule had unsupported assertions and arguments.

The SEC proxy access rule states that public companies need to provide shareholders with information regarding shareholder-backed candidates when board of directors are going to be voted on. The Business Roundtable and U.S. Chamber of Commerce said this rule violates the Administrative Procedure Act…

Corporate & Securities

SEC Finalizes New Whistleblower Rules

The United States Securities and Exchange Commission recently updated its whistleblower program to provide monetary incentives to employees who report misconduct within their companies directly to the government. The Dodd–Frank Wall Street Reform and Consumer Protection Act, passed last July, required the SEC to pay 10 to 30 percent of any monetary sanctions over $1 million levied after company misconduct to the whistleblower who reported it.  Congress hopes the law will encourage employees to alert the government to fraud and mismanagement.

Corporate & Securities

Rogue Brokers – Your Past is Showing

On May 16, 2011, the Financial Industry Regulatory Authority (“FINRA”) launched the  FINRA Disciplinary Actions Online database, a new free database system that makes its disciplinary actions available to the public via its website.  The database allows users to search for FINRA actions by several criteria, including case number, document text, document type, action date, and…

Corporate & Securities

Qualified Small Business Stock Remains Eligible For 100 Percent Gain Exclusion

A tax incentive associated with qualified small business stock (QSBS) was extended for 12 more months as stipulated in the Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 signed by President Barack Obama into law on Dec. 17.

The act contains a temporary exclusion for 100 percent of the gain accepted by non-corporate investors from the sale of qualified small business stock that was acquired after Sept. 27, 2010 and before Jan. 1, 2011 for QSBS held for beyond five years.

Corporate & Securities

Investment Banks Under Fire For Reneging Employee Compensation

In two separate incidents, FINRA recently punished two firms for reneging compensation from their employees. Arbitration found that both Barclays and Merrill Lynch had unfairly decided not to pay employees in the midst of recent mergers and collapses.

Barclays was forced to pay one investment banker $715,000, plus a 4 percent interest change and trial fees, after Lehman Brothers collapsed. The banker had a compensation agreement when he worked for Lehman Brothers, which Barclays attempted to renege upon their acquisition of the firm.

Corporate & Securities

FINRA Asks For Details When Broker-Dealers Fire Employees

Experts believe that disputes over U-5 termination forms will increase due to a new set of FINRA directives. FINRA’s Regulatory Notice 10-39 warns member firms to be more detailed when completing U-5 forms after firing employees. The notice focuses on a section of the form that asks why an employee is being fired and says…

Corporate & Securities

Congress Revamps Whistleblower Incentive Program

The U.S. Congress has greatly expanded incentives for whistle-blowers in the financial industry by creating a $451 million fund for reward payments. Prior to the new plan, regulators decided how much to pay insiders for evidence of wrongdoing, which led to only $160,000 in payouts over the last two decades. Despite this, over 90 percent…

Corporate & Securities

Summary of the SEC’s Request for Comment to the Proposed Changes to the “Accredited Investor” Standard Under the Securities Act of 1933

On Tuesday, January 25, 2011, the Securities and Exchange Commission (the “SEC”) issued a release announcing the proposed new language of the net worth standard for “accredited investors” under the Securities Act of 1933 (the “1933 Act”).  The proposed amendments will align the standards for determining whether an investor is an “accredited investor” under the…

Corporate & Securities

Goldman/Facebook – New Media Invokes Old Laws

Media reports on January 18 indicate that Goldman Sachs has halted its private placement of Facebook stock due to ‘regulatory concerns’ with respect to the enormous publicity the transaction has received in both traditional press and new media. It is a cornerstone of the private placement exemption that no ‘publicity’ is utilized in the transaction…