Regulatory Orders

Only Unconstitutional Portion of Conflict Mineral Rule is Stayed

On May 2nd, the Securities and Exchange Commission (“SEC”) issued an order staying the portions of Exchange Act Rule 13p-1 and Form SD that require issuers to disclose the “conflict free” status of the materials used in their products. The Commission’s action implements the Division of Corporation’s April 29, 2014 guidance on the conflict mineral disclosure requirements which requires firms to file their first Form SDs by June 2, 2014. On May 5th, Reuters reported the industry groups challenging the conflict minerals disclosure rule have filed a petition with the D.C. Circuit seeking an emergency order prohibiting the SEC from enforcing the June 2nd deadline. Petition.

Other Developments

Commissioner Stein Discusses Disclosure Issues

On May 8th, SEC Commissioner Kara M. Stein discussed improvements which could be made to the SEC’s issuer disclosure requirements. She generally called for fuller, more useable, and more timely disclosure. More specifically Stein suggested requiring issuers to disclose their funding arrangements and mandating universal proxy ballots. Stein also asked whether it was time to reconsider the process for evaluating issuer no-action requests to exclude shareholder proposals. Stein Remarks.

FCPA Investigation

On May 7th, Market Watch reported the SEC, as part of its investigation into alleged violations of the Foreign Corrupt Practices Act, has asked five banks for information concerning their hiring practices in Asia. FCPA.

Virtual Warning

On May 7th, the SEC issued an investor alert on the potential risks involving virtual currencies.

OCIE Director Discusses Private Equity Compliance

On May 6th, Andrew J. Bowden, Director of the Office of Compliance Inspections and Examinations (“OCIE”), discussed private equity fund compliance. Among other things, OCIE staff examining private equity managers have identified violations of law or material weaknesses in controls for the allocation of fees and expenses over 50 percent of the time. Most of these deficiencies involve the use of operating partners. Bowden Remarks.

SEC Investigating Retail Brokerages

On May 6th, Reuters reported the SEC has subpoenaed brokerage houses seeking information on their execution and routing of retail orders. Routing.