1. The biggest news in the last month may have been the announcement of what isn’t going to happen. SEC Chair Schapiro stated, here, that the SEC will not seek a rehearing or Supreme Court review of the D.C. Court of Appeals decision to vacate SEC proxy access rules but that she remains “committed to finding a way to make it easier for shareholders to nominate candidates to corporate boards.” As noted in last month’s ICYMI, the SEC’s changes to Rule 14a-8 were not affected by the Court ruling. This means shareholders may require a company to include proxy access proposals in its proxy statement, paving the way for company-by-company proxy access standards. It’s not clear whether proxy access proposals will have the same type of broad appeal to shareholders as, say, majority voting, and one imagines it may be more difficult for, say, a labor union, to garner support for a self-interested proxy access proposal. Prepare yourself, though, for the onslaught of templates and discussions of purported “best practices” on the subject (coming soon to a law blog near you).
  2. A recent study, available here, suggests that public company directors need not be so fearful of ISS voting recommendations and analyzes factors that influence shareholder votes and director “withhold” votes.
  3. A post on the Harvard Law School Forum on Corporate Governance and Financial Regulation cautions brokers, dealers, accountants and lawyers, here, not to take too much comfort from the recent U.S. Supreme Court decision in Janus Capital Group v. First Derivative Traders, the latest in a series of cases affirming there is no aider and abettor liability in federal securities law. The post notes that Dodd-Frank additions to the ’34 Act, effective July 16, 2011, make it unlawful “to make . . . for the purpose of inducing the purchase or sale of such security, . . . any statement which was at the time and in the light of the circumstances under which it was made, false or misleading with respect to any material fact, and which that person knew or had reasonable ground to believe was so false or misleading.” Although the holding in Janus suggests only an issuer “makes” a statement in a typical offering document, Dodd-Frank also amended the ’34 Act to make liable any person who “willfully participates in any act or transaction in violation of” that provision. It may be that “willfully,” which is not defined, requires knowledge that a statement was false, but count on allegations that a participant knew or should have known about the statement to carry plaintiffs past the summary judgment phase of a lawsuit.
  4. The PCAOB published a concept release, here, soliciting comments on “ways that auditor independence, objectivity and professional skepticism could be enhanced,” including possible mandatory audit firm rotation.
  5. An article in CFO.com, here, notes the rise in compensation clawback policies in recent years. Recall that Dodd-Frank will ultimately require that stock exchanges require clawback policies as part of their listing standards (see here and here). Although the SEC hasn’t yet proposed rules, it did recently flex its SOX 304 muscle (see here) to claw back bonus compensation and stock sale profits from an executive, even though the executive was not directly charged with committing accounting fraud.
  6. A hodgepodge of other items:
  • The SEC adopted changes to Form ID, the form one completes to obtain the EDGAR codes that are a prerequisite to making filings with the SEC, here.
  • The SEC requested comments, here, on how it should go about its required retrospective review of SEC regulations. On a related note, we couldn’t agree more with the view of The Corporate Counsel’s Broc “my name sounds like a superhero’s” Romanek, here, on the “disturbing trend” of addressing social issues through public company disclosure requirements. Alas, don’t expect the SEC’s regulatory review to do anything about some of the more ridiculous requirements mandated by Congress, like conflict minerals disclosure, but who knows what the legislative future might bring (see, e.g., here).
  • Perhaps not surprisingly, last month saw the largest number of IPO withdrawals since 2008 and was the slowest IPO month since July 2009. See here. Also, the WSJ notes, here, that most 2011 IPO companies are trading below their IPO prices.