No-Action Relief and Exemptive Orders

Yahoo! can rely on defined formula to decide final purchase price paid for shares of common stock tendered into planned issuer tender offer. Yahoo! Inc. and Verizon entered into a stock purchase agreement for a sale transaction which, once completed, will result in Yahoo! becoming an investment company registered under the Investment Company Act of 1940 and shares of its common stock being removed from the S&P 500 index. The Division of Corporation Finance’s Office of Mergers and Acquisitions determined that it will not recommend that the SEC take enforcement action if Yahoo! relies on a defined formula to decide the final purchase price paid for the shares of common stock tendered into, and the number of shares ultimately accepted in, its planned issuer tender offer. (5/12/2017)

Selected Enforcement Actions 

Fund manager and his firm settle insider trading charges. The New York Timesreported that hedge fund manager Leon G. Cooperman and his firm, Omega Advisors, Inc., have reached a settlement with the SEC over insider trading charges brought by the agency last September. Under the terms of the settlement, they will pay nearly US$5 million in disgorgement, interest and penalties, and will be required to retain an independent compliance consultant until 2022, who will monitor trading activity and report to the SEC. The Times noted that the settlement does not require any admission of wrongdoing nor does it impose an industry bar. (5/18/2017) 

Former SEC staff accountant charged with securities fraud. The SEC announced that it has charged a former SEC staff member with securities fraud in connection with his trading of options and other securities. The SEC alleged that a former staff accountant and branch chief in the SEC’s Division of Corporation Finance, violated SEC rules by engaging in transactions involving derivatives, failing to obtain pre-clearance before trading non-prohibited securities, and failing to hold securities for the required period. The staff member allegedly hid his trading activity from the SEC’s ethics office and misrepresented it to the Office of the Inspector General during an investigation. The staff member settled the charges by agreeing to a permanent practice suspension and paying over US$108,000 in disgorgement, prejudgment interest, and civil penalties. The staff member also pleaded guilty to charges in a parallel criminal proceeding. (5/9/2017) 

Speeches and Statements 

Clayton delivers first remarks as SEC Chairman to Small and Emerging Company Advisory Committee. At a public meeting of the SEC’s Advisory Committee on Small and Emerging Companies, Jay Clayton, in his first remarks as SEC Chairman, told the Committee that facilitating capital-raising opportunities for all companies, including small businesses, is among his priorities for the SEC. (5/10/2017) 

Piwowar speculates about regulatory causes of flagging IPO market. Speaking at the SEC-NYU Dialogue on Securities Market Regulation, SEC Commissioner Michael S. Piwowar discussed the possible regulatory causes of the decline in initial public offerings. (5/10/2017) Piwowar remarks. 

Piwowar, Stein address the NASAA conference. In opening remarks at the North American Securities Administrators Association Section 19(d) Conference, SEC Commissioner Michael S. Piwowar maintained that the SEC and NASAA must assess the effectiveness of new capital formation methods and address any concerns that may arise with these transactions, including fraud. Piwowar remarks. In closing remarks, SEC Commissioner Kara M. Stein said that regulators must be adaptable to changing markets, communicate and coordinate, and make use of high-quality data and data analytics. (5/9/2017) Stein remarks. 

Investor advocate emphasizes demand side of the IPO market. Addressing the NASAA 2017 Public Policy Conference, SEC Investor Advocate Rick A. Fleming examined the role of the investor and the demand for IPOs to identify “some important causes of the dwindling IPO market.” (5/9/2017) Fleming remarks. 

Other Developments 

OCIE issues Risk Alert following ransomware attack. The SEC’s Office of Compliance Inspections and Examinations advised broker-dealers, investment advisers, and investment companies to reassess their cybersecurity risks and response capabilities in light of the recent WannaCry ransomware attack. (5/17/2017) OCIE Risk Alert. 

Staff announcements. The SEC announced that David Peavler, the Associate Director of Enforcement in the Fort Worth Regional Office, will leave the agency by the end of May. (5/19/2017) The SEC announced that Sean Memon has been appointed to serve as the SEC’s deputy chief of staff, Robert B. Stebbins has been named General Counsel of the SEC and Jaime Klima will serve as Chief Counsel to SEC Chairman Jay Clayton. (5/15/2017) Lucas Moskowitz has been appointed to the role of SEC chief of staff. (5/11/2017) William H. Hinman will serve as the new Director of the Division of Corporation Finance. (5/9/2017) 

Small and Emerging Companies Advisory Committee issues recommendations. Following a public meeting on May 10, 2017, the SEC’s Advisory Committee on Small and Emerging Companies issued two recommendations on secondary market liquidity for Regulation A, Tier 2 securities and the treatment of “finders” that assist companies in capital raising activities.  (5/15/2017)