SEC Adopts Amendments to Rule 14a-8 Eligibility Standards for Submission of Shareholder Proposals

The Securities and Exchange Commission (SEC) adopted amendments to Exchange Act Rule 14a-8, effective January 4, 2021 increasing the economic interest of the shareholder/proponent for eligibility to submit a shareholder proposal for inclusion in an issuer’s proxy statement for its shareholders’ meetings. A link to the adopting release as published in the Federal Register on November 4, 2020 is available here.

These are the first significant amendments to Rule 14a-8 in over 35 years.… More

SEC Targets Issuers and Officers for Disclosure Violations Through Data Analytics

Just before the close of its fiscal year, the Securities and Exchange Commission (SEC) brought three noteworthy financial reporting cases against issuers that resulted from the agency’s increasingly sophisticated use of risk-based data analytics to detect disclosure violations.  On September 28, 2020, the SEC filed settled actions against two issuers, as well as two officers of one of them, for falsifying their reported earnings per share (EPS).  These actions,… More

SEC Amends Whistleblower Rules

On September 23, 2020, the Securities and Exchange Commission (SEC), in a 3-2 vote, approved several significant amendments to, and interpretive guidance on, the rules governing its whistleblower program.  Most controversially, the SEC adopted the position that it has discretion to reduce the largest whistleblower awards based upon their size.  The amendments, first proposed in 2018, have generated substantial opposition from the Are Whistleblowers in Legal Danger?plaintiffs’ bar and within the Commission,… More

2020: The Year of the SPAC

2020 has been a banner year for IPOs by special purpose acquisition companies, or SPACs. Over 100 SPAC IPOs have closed so far in 2020, with aggregate gross proceeds of approximately $42.1 billion and an average IPO size of $382.4 million.[1] This represents a dramatic increase from 2019, in which 59 SPAC IPOs closed, with aggregate gross proceeds of approximately $13.6 billion and an average IPO size of $230.5 million.… More

SEC Amends “Accredited Investor” Definition

On August 26, 2020, the Securities and Exchange Commission (“SEC”) amended the definition of “accredited investor,” one of the principal tests for determining eligibility for participation in private placements of securities. The amendments are designed to identify more effectively the institutional and individual investors that have the knowledge and expertise to participate in private placements, not only based on measures of income or net worth, but also based on defined measures of professional knowledge,… More

SEC Focus on Executive Perk Disclosure Continues

In June 2020, the Securities and Exchange Commission settled charges with insurance company Argo Group International Holdings, Ltd. for failing to disclose perks and benefits received by its former chief executive officer.  Per the SEC order, Argo failed to report over $5.3 million in perks that its CEO received between 2014 and 2018 in violation of federal securities law. These benefits included personal use of corporate aircraft, helicopter trips,… More

SEC Revises Financial Statement Disclosure Requirements for Acquisitions and Dispositions

The SEC recently amended its disclosure requirements for historical and pro forma financial statements arising from acquisitions and dispositions.[1] While the revisions are fairly technical, overall they should reduce disclosure burdens and make it easier for public companies to pursue these transactions. The revisions also provide a useful reminder that public companies must sometimes disclose financial information even for very small acquisitions and should therefore strive to obtain reliable financial statements in every acquisition.… More

SEC Issues Guidance on Interplay Between Form S-3 and Relief Under COVID-19 Order

As many companies consider the need to raise capital, the SEC has provided FAQs that address how taking advantage of the relief provided under the COVID-19 Order may impact offerings of securities using Form S‑3.  As described in our prior posts, the SEC has granted conditional relief to allow reporting companies to delay filings required by the Securities Exchange Act of 1934 due on or before July 1,… More

Nasdaq Provides Limited Relief to Facilitate Near-Term Capital Raising

The Nasdaq Stock Market has adopted a new rule, Rule 5635T, intended to provide limited, temporary relief from the requirement to obtain stockholder approval for certain capital-raising transactions during the COVID-19 pandemic. Although the rule will be effective only until June 30, 2020, it should provide welcome relief to Nasdaq-listed companies eager to raise funds as quickly as possible to maintain operations during the pandemic.

Ordinarily, a public company seeking to issue more than 20% of its outstanding shares at a below-market price (other than in an underwritten public offering for cash) would have to obtain stockholder approval for the issuance.… More

COVID-19 Related Due Diligence for Life Sciences Companies

Equity Capital Markets are quiet right now given the COVID-19 pandemic. Less than a handful of IPOs priced last week and IPO activity is down almost 20% on a year over year basis. Life sciences initial public offerings have been a rare bright spot in an otherwise dim market.

The investment banks underwriting these transactions have had to expand their due diligence questions in light of the COVID-19 pandemic and the way it has transformed the economy,… More