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

SEC Provides Additional COVID-19 Relief

On March 26, 2020, the SEC announced that it is providing additional temporary relief to market participants in light of the COVID-19 pandemic. The relief covers (i) parties needing to file a Form ID to gain access to the EDGAR system and (ii) certain company filing obligations under Regulation A and Regulation Crowdfunding.

Temporary Relief from Form ID Notarization Requirement

To use the SEC’s EDGAR system to make required filings,… More

SEC Extends Conditional Relief for Exchange Act Filings to July 1, 2020

The SEC has extended the conditional relief it granted earlier this month to allow reporting companies and others to delay certain filings required by the Securities Exchange Act of 1934. The relief originally covered filings due between March 1, 2020 and April 30, 2020; the relief now extends to cover such filings due on or before July 1, 2020. See our original post here for more information about the scope of the relief.… More

SEC Provides Disclosure Guidance to Reporting Companies Coping with Fallout of COVID-19

On March 25, 2020, the SEC’s Division of Corporation Finance published CF Disclosure Guidance: Topic No. 9, which provides the Division’s views regarding public companies’ reporting and other obligations under the federal securities laws in light of the current COVID-19 outbreak.

While acknowledging the rapidly evolving and unpredictable nature of the COVID-19 outbreak and the targeted disclosure relief recently provided by the SEC,… More

It’s the little things.

The SEC is rapidly responding to the ongoing COVID-19 crisis in ways big and small. For persons who are entering the SEC reporting system for the first time, which could be because they have been newly appointed an executive officer or director of a public company or have recently acquired beneficial ownership of more than 5% of a public issuer, a Form ID must be submitted to request the codes necessary to submit filings via the SEC’s EDGAR (electronic data gathering,… More

COVID-19 and Termination Provisions in Underwriting Agreements

In light of the unprecedented changes to the economy as a result of COVID-19, many parties to contracts are carefully considering force majeure clauses, and whether such clauses permit them to void contractual obligations.  While most of the contracts considered are supply agreements or other commercial contracts, underwriting agreements in capital markets transactions include similar clauses which could allow underwriters to terminate an offering between pricing and closing.… More