“Finders” Operating in Massachusetts Should Beware the SEC’s Proposed Relief

  • The SEC recently proposed to exempt certain finders from federal requirements to register as a broker
  • Massachusetts regulators are opposed to the relief and retain state remedies for unregistered broker activity

The SEC recently proposed to grant an exemption to certain “finders” who would otherwise be required to register as brokers under the Securities Exchange Act of 1934.… More

Primary Direct Listings

What you need to know about this IPO alternative

On December 22, 2020, the Securities and Exchange Commission (SEC) approved a NYSE rule that permits an issuer, at the time of an initial listing on the NYSE, to conduct a primary offering as part of a direct listing without conducting a firm commitment underwritten offering.  On the same date, Nasdaq submitted a substantially similar rule proposal that would,… More

New law aimed at US-listed Chinese companies may impact other public companies with Chinese operations

  • Law intended to force China to permit PCAOB inspection of accounting offices located in China
  • Clients of audit firms not adequately inspected may have to document ownership or control by foreign governmental entities
  • Ongoing audit inspection problems may lead to US trading ban

On December 18, 2020, the Holding Foreign Companies Accountable Act became law. … More

SEC Brings First Enforcement Action Against Issuer for Disclosures About Financial Effects of COVID-19

On December 4, 2020, the SEC brought its first case charging a public company, The Cheesecake Factory, with making misleading disclosures about the effects of COVID-19 on its business operations and financial condition.  The agency has made explicit since January that it is closely focused on this issue, and its settled action against The Cheesecake Factory, which agreed to pay a $125,000 penalty, signals that it will target issuers for failing to provide fulsome disclosure about the negative impacts of the pandemic.… More

Mandating Standard ESG Risk Disclosures – Is The Tide Turning At The SEC?

Over the past decade, there has been an unprecedented shift in investor focus toward the analysis use of Environmental, Social and Corporate Governance (ESG) risks and impacts in investment decision-making.  While the Securities & Exchange Commission has acknowledged this shift, it has to date resisted calls for the adoption of standards governing issuers’ disclosure of ESG risks.

Outgoing SEC Commissioner Jay Clayton has repeatedly offered his view that the SEC already requires companies to disclose material risks,… More

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