Category: Securities

New disclosure guidance on confidential treatment and disclosure of international IP risks

Corp Fin has posted two new CF Disclosure Guidance Topics. Topic No. 7,  Confidential Treatment Applications Submitted Pursuant to Rules 406 and 24b-2, supersedes SLBs 1 and 1A and relates to the process for submission of requests for confidential treatment, not under the new streamlined approach adopted earlier this year (although the Topic does take up the new process for extensions), but rather under the old alternative approach that still lives but is now rarely used. Topic No. 8, which relates to Intellectual Property and Technology Risks Associated with International Business Operations, provides helpful guidance regarding disclosures that Corp Fin believes companies should consider with respect to intellectual property and technology risks that could arise in connection with international operations, especially in locations where protection of intellectual property may be a bit dicey.  The new topics make clear that they are just that—staff guidance—and have no legal force or effect nor do they alter or amend applicable law or create new or additional obligations. Nevertheless, the new guidance, especially Topic No. 8 regarding IP risk disclosure, provides useful checklists of issues to consider and is definitely worth a look.

Happy holidays everyone!

How will companies and CEOs meet the challenges of corporate social responsibility?

This PubCo post discussing the Business Roundtable’s adoption of a new Statement on the Purpose of a Corporation  concluded by observing (rhetorically) that the question teed up by the new BRT Statement was what all of the signatories would actually do to fulfill the commitments in the Statement. Apparently, some NGOs are now asking that question for real, and, ironically, one of the first recipients is a well-known leader of the pack on commitments to all stakeholders. 

EDGAR closed Christmas Eve and Christmas Day

In case you missed it, the SEC’s EDGAR system will be closed on both Tuesday and Wednesday, Christmas Eve and Christmas Day, because the federal government will be closed on both days.

SEC proposes new accredited investor definition and new rules for disclosure of payments by resource extraction issuers

At an open meeting this morning, the SEC proposed changes to the definition of “accredited investor,” as well as new rules relating to disclosure of payments by resource extraction issuers. As discussed below, Commissioners Robert Jackson and Allison Lee dissented on both of these proposals. Notably, the responses of all the Commissioners to these proposals highlighted their sharply divergent views on the role of government and the fundamental purposes of the securities laws.  Both proposals will be open for comment for 60 days.

It’s baaack—NYSE refiles (and then amends) proposal for primary direct listings

In late November, the NYSE filed with the SEC a proposed rule change that would have allowed companies going public to raise capital through a primary direct listing. Under current NYSE rules, only secondary sales are permitted in a direct listing.  As a result, thus far, companies that have embarked on direct listings have been more of the unicorn variety, where the company was not necessarily in need of additional capital.  The new proposal looked like it could be a game changer for the traditional underwritten IPO. (See this PubCo post.)  But then, as reported by CNBC and Reuters, a little over a week later, the SEC rejected the NYSE’s proposal, and it was removed from the NYSE website, causing a lot of speculation about the nature of the SEC’s objection and whether the proposal could be resurrected. At the time, an NYSE spokesperson confirmed to CNBC that the proposal had been rejected, but said that the NYSE remained “‘committed to evolving the direct listing product…This sort of action is not unusual in the filing process and we will continue to work with the SEC on this initiative.’” (See this PubCo post.) Apparently, the NYSE meant what it said: the proposal was just refiled with some clarifications and corrections, and then, on Friday afternoon, the NYSE filed an amendment to the refiled proposal, which supersedes the earlier filing in its entirety. So now we’re back at the starting gate.

Nasdaq proposes new rule to address liquidity issues for listed shares

Earlier this year, the SEC approved a Nasdaq proposal to revise its initial listing standards to improve liquidity in the market. (See this PubCo post.) As amended, the initial criteria for listing on any Nasdaq tier were revised to exclude “restricted securities” from the calculations of the required minimum number of publicly held shares, market value of publicly held shares and round lot holders, given that restricted securities are not freely transferable and are generally illiquid. Nasdaq also added new definitions for “restricted securities,” “unrestricted publicly held shares” and “unrestricted securities.” As a result of these changes, only securities that are “freely transferable” are included as publicly held shares for purposes of satisfying the initial listing criteria.  No changes were proposed to the continued listing requirements at that time.  Now, however, Nasdaq has proposed to address the comparable liquidity issue for listed companies.

What’s on the SEC’s new fall 2019 agenda?

SEC Chair Jay Clayton has streamlined the Regulatory Flexibility Act Agenda to limit it to the rulemakings that the SEC actually expects to take up in the subsequent period. Clayton has previously said that the short-term agenda signifies rulemakings that the SEC actually plans to pursue in the following 12 months. (See this PubCo post and this PubCo post.)  The SEC’s Fall 2019 short-term and long-term agendas have now been posted, reflecting priorities as of August 7,  the date on which the SEC’s staff completed compilation of the data. Items on the short- and long-term agendas are discussed below.