Current Posts


April 22, 2014 | Ning Chiu

In response to questions about the use of Twitter and certain other social media platforms under securities laws given the restrictions on the amount of information that can be conveyed, the SEC staff has provided guidance on the use of technology that limit the number of characters or amount of text when used in three types of communications:

  • Made in reliance under Rule 134 (communications not deemed a prospectus) to satisfy Rule 134(b) or Rule 134(d)
  • A legend under the exemption to satisfy Rule 165(c)(1) related to business combinations and also solicitations under Rule 14a-12 and pre-commencement written communications
  • A legend required by Rule 433(c)(2)(i) for free writing prospectuses
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April 22, 2014 | Ning Chiu

U.S. public companies concerned with pending governance changes are waiting and watching the SEC work on the remaining Dodd-Frank mandates and possibly take action on projects related to disclosure reform and proxy advisory firms. As if this is not enough for the SEC’s agenda, two new rulemaking petitions ask for further reforms.

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April 21, 2014 | Ning Chiu

Amid pressure to separate parts of its restaurant chain, Darden had decided to spin off Red Lobster. Two hedge funds, Barrington Capital and Starboard Value, previously proposed more drastic upheaval, such as splitting the restaurants into two groups representing mature businesses or faster growing lines. In December 2013, Starboard reported it held approximately 5.6% of the stock. Starboard is currently soliciting shareholder consents to call a special meeting to consider a non-binding proposal prior to the company’s September annual meeting, that urges the Darden board not to approve any agreement or proposed transaction involving a Red Lobster separation or spinoff unless the transaction would require shareholder approval. The consent period ends this week and would require a majority of outstanding shares to vote in favor under Florida law. Starboard also indicated that it may nominate candidates to replace existing directors at the company’s annual meeting.  

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April 14, 2014 | Joseph Hall

Today, the D.C. Circuit Court partially invalidated the SEC's conflict minerals rule.

Read our memo >

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April 14, 2014 | Betty Moy Huber
A group of investors representing over $13 trillion in assets and led by Ceres’s Investor Network on Climate Risk recently submitted recommendations to various global stock exchanges for a uniform mandatory stock exchange standard on corporate environmental, social and governance (ESG) reporting. These recommendations follow Ceres’s April 2013 consultation paper on this topic. Read more
April 10, 2014 | Ning Chiu

25% of companies are still in the early stages of compliance with the conflict mineral rules that require public disclosure on June 2, according to the latest PwC survey on where companies stand. These companies are finalizing scoping or planning and performing their reasonable country of origin inquiry, but have not yet started evaluating those responses, which is becoming the primary focus as the reporting deadline looms near. Overall, only 45% had sent an initial inquiry to more than three-quarters of their possible suppliers, and only 47% had received fully completed responses from more than half of those suppliers asked. The survey received 700 responses representing 15 industries.  

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April 8, 2014 | Ning Chiu

An SEC press release announced that a whistleblower who had already attained an award in 2012 received an additional $150,000, for a total of $200,000, after the SEC collected more money from one of the defendants in the case. The award represents 30% of the amount collected by SEC enforcement, the maximum allowed. The press release noted that the SEC is barred from providing information which could expose the identity of the whistleblower. 

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April 4, 2014 | Ning Chiu

The latest issue of ISS Board Practices reflect incremental but meaningful changes in several key governance areas. For the first time, just slightly more than half (51%) of S&P 1500 companies have two people serving as CEO and chairman. Stark differences divide companies depending on size, as 30% of mid-caps are led by independent chairs compared to only 22% of large-cap companies. The largest companies are more likely to have lead directors, however. As a reminder that ISS policies do not always coincide with company determinations, 17% of the chairmen that companies consider to be independent are deemed "affiliated" by ISS.

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April 1, 2014 | Ning Chiu
That is the title of a law review article by Delaware Supreme Court Justice Leo Strine. Chief Justice Strine wades into the debate taken up by Professor Lucian Bebchuk, who strongly advocates that managers who make investments be given increased shareholder power, against others who Professor Bebchuk has dubbed "insulation advocates," namely those who favor wide discretion for corporate managers in the form of boards and executives. The first part of the article presents the two starkly opposing views between the direct democracy pushed by Professor Bebchuk and those concerned that the consequences of being subject to majority shareholder whims will lead to an intense focus on the short-term that harms corporations. The article cites numerous dueling studies that attempt to prove either proposition, “[a]s may fit their shared experiences as Dungeons & Dragons aficionados, Bebchuk and his sparring partners share an affinity for exploring ‘myth’ and engaging in rhetorical jousts where no real world blood is shed.”  Read more
March 31, 2014 | Executive Compensation Group

On March 25, 2014, in United States v. Quality Stores, the Supreme Court held that severance payments to employees who are involuntarily terminated are taxable as wages for purposes of Social Security and Medicare taxation under the Federal Insurance Contributions Act (FICA).

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