1. Senator Dodd’s anxiously awaited financial reform bill, here, went to the full Senate floor a few weeks ago. Among many, many (many) other things, the bill
  • Would qualify the Regulation D exemption, the most common exemption for angel and VC financings (for the perspective of those opposed to this change, see here).
  • Has no permanent SOX 404 exemption as in the House bill.
  • Includes even more potentially embarrassing executive compensations disclosure. (How unexpected.)
  • Mandates "Say on Pay."
  • Codifies, for some reason, the ban on discretionary broker votes for directors and adds a ban on discretionary votes on executive compensation matters.
  • Explicitly authorizes the SEC to adopt proxy access rules, but doesn’t require them.
  • Introduces a whistleblower bounty program.
  • Requires the SEC to adopt majority voting rules.

Word is, the Obama Administration is pushing for a bill before Memorial Day, with much to be done in the Senate and in the reconciliation process with the House.

  1. In a move surely not at all related to provisions of the Dodd bill, the SEC released a new Legal Bulletin, here, expressing its views on when issuers can suspend reporting obligations under Rule 12h-3.
  2. Possibly in an effort to pressure disclosure in upcoming proxy statements, RiskMetrics posted an oddly belated piece on the SEC’s guidance on climate change disclosure, here. Somewhat related, a recent report, here, notes that the number of S&P 100 companies reporting on internal “sustainability” programs rose to 93 in 2008 from 58 in 2004.
  3. And speaking of proxy statements, the SEC issued three new CDIs on executive compensation disclosure, here (still must report a rejected award if it was granted and earned), here (no need to disclose a grant that an executive would have received if the executive advises the board prior to grant that he or she will not accept the grant) and here (no limit on “additional services” by a compensation consultant that count toward the $120,000 threshold).
  4. The SEC also reminds us, here, that yes, it will enforce Regulation FD violations. (Recall the earlier post in the October 2009 issue of ICYMI here.)
  5. The SEC approved changes to Nasdaq’s press release rules, here, eliminating the need to file a press release for an item you disclose in a current report on Form 8-K.
  6. The SEC proposed rules, here, to modify the regulatory framework for asset-backed securities (ABS) that would create new registration forms and impose new disclosure requirements. (Recall that ABSs gone wild, in the guise of collateralized debt obligations and parallel credit default swaps, have been blamed for the collapse of the free world.) A summary of the release is here.
  7. In what might be a good sign for the economy, on the theory that no one would propose rules unless they might actually be applied, FINRA filed revised proposals, here, prohibiting abuses in underwriter share allocations in IPOs.
  8. In audit news, a few items of note:
  • Following the big rise in audit fees that followed the advent of SOX internal control requirements, auditors are now under the same pressure as the rest of us to reduce rates and increase services. See here.
  • The PCAOB issued an alert, here, reminding auditors of their obligations to narc out companies with significant unusual transactions.
  • The SEC issued a form of Dear CFO letter, here.
  • FASB released is exposure draft on its Conceptual Framework for Financial Reporting, here.
  1. The French Supreme Court determined that the SOX whistleblower provisions don’t pass (French) constitutional muster. See the analysis here and the December 2006 issue of ICYMI, here, for information on European-law-compliant whistleblower systems. Rather than appeal, one wonders whether the losers will simply wait for a new republic to form. Let’s face it, the French are about due. SOX whistleblower protection keeps going strong in the U.S., where it was applied to mutual funds for the first time, see here.
  2. The D&O Diary notes, here, a recent SEC enforcement action in which it went after a company’s audit committee chairman for bad disclosure and a remarkably bad (lack of) investigative process. Some lessons for audit committee chairs are here.
  3. PWC released its 2009 Securities Litigation Study, here. Not surprisingly, fallout from the financial crises dominated the securities litigation landscape, although the total number of suits in 2009 declined. Ever upbeat, PWC suggests 2009 may simply be the calm before the storm of litigation aimed at non-financial industries. Cornerstone Research’s 2009 securities class action retrospective is here.
  4. The U.S. Sentencing Commission modified the Federal Sentencing Guidelines for organizations (available here), including the provisions describing the attributes of an effective compliance and ethics program. The guidelines are effective November 1, 2010, leaving you with plenty of time to digest the changes and to consider changes to your compliance programs.
  5. The Institute for Legal Reform, an affiliate of the U.S. Chamber of Commerce, released its ranking of state court fairness, here. Delaware ranks at the top, West Virginia at the bottom. To see where your state ranks, view the interactive map. The survey is based on the views of a sampling of 1,482 attorneys, and all I can say is that the two guys who had cases in North Dakota must have really enjoyed them.