Archives: Compliance

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Insider Trading–An Update on Newman and Tippee Liability

You may recall that back in December 2014, the Second Circuit Court of Appeals, in United States v. Newman, et al., significantly limited the circumstances under which tippees of inside information may be held liable for insider trading. At the time, most prosecutors and some commentators bemoaned that decision as an ill-advised extension of protection … Continue Reading

The Profile of a Whistleblower

The SEC’s ongoing effort to strengthen its whistleblower program and broaden the universe of potential award recipients (see this Doug’s Note) has kept whistleblowing compliance at the forefront of most compliance and legal departments. Whistleblowers, however, may not be who you think they are. A recent report from The Network, a NAVEX Global Company provider … Continue Reading

NYSE Amends Its Notice and Trading Halt Rule

The New York Stock Exchange has amended Section 202.06 of the NYSE Listed Company Manual to: expand the pre-market hours during which NYSE-listed companies must provide prior notice of material news, expand the circumstances under which NYSE may halt trading, and provide guidance related to the release of material news after the close of trading. … Continue Reading

Recent DGCL Amendments of Note

The Delaware General Assembly recently amended Delaware’s corporate statutes in several respects of interest to public companies. Boards may delegate stock issuances to non-directors. Section 152 of the DGCL now expressly allows a board of directors to generally authorize future stock issuances and then delegate to non-directors the authority to determine the specific issuance times … Continue Reading

At Last–the SEC's Compensation Clawback Proposal

Some five years ago, Section 954 of the Dodd-Frank Act instructed the SEC to adopt rules mandating that national securities exchanges require listed companies to implement incentive compensation recovery (or clawback) policies. Last week, the SEC proposed the long-awaited new rules, which SEC Chair Mary Jo White described as “the last of the Dodd-Frank Act … Continue Reading

Expanded Audit Committee Responsibilities–New Auditing Standard No. 18

Last October, with relatively little fanfare, new PCAOB Auditing Standard No. 18 expanded Audit Committee oversight responsibilities. (See this Doug’s Note.) AS 18, which became effective for fiscal years beginning on or after December 15, 2014, focuses on three categories of transactions and relationships that, in the PCAOB’s view, provide increased risk of material financial … Continue Reading

Another Whistleblower Award Wrinkle

There is no longer any doubt that the SEC is serious about implementing its whistleblower program. According its most recent award announcement, the program has now paid more than $50 million to whistleblowers since its 2011 inception. Another award last week is noteworthy not only for its eye-catching amount (between $1.4 million and $1.6 million), … Continue Reading

Two Oft-Neglected Cybersecurity Protections

With each passing year, cybercrime moves further into the mainstream of public company existence. What until recently was mostly an annoying, abstract concern for a handful of companies is now a daily menace that impacts every company in every industry. Most companies now acknowledge the risks and have implemented plans to combat them. Time will … Continue Reading

The SEC Enforces Whistleblower Protection from Confidentiality Agreements

Earlier this week, the SEC announced in a first-of-its-kind enforcement action that certain KBR, Inc. confidentiality agreements violated the whistleblower protections of the Dodd-Frank Act. What happened… The SEC found that KBR, a global technology and engineering company, had required witnesses in certain internal investigations to sign confidentiality agreements containing language that threatened discipline or … Continue Reading

A Sea Change in Proxy Access?

Proxy access has suddenly leap-frogged to the top of seemingly everyone’s corporate governance list after various setbacks over the past few years. In fact, a March 17th Wall Street Journal article quoted Anne Simpson, head of corporate governance at Calpers, as describing recent developments as a “sea change” in favor of proxy access. Scott M. … Continue Reading

What's New with Insider Trading…and What's Not

Much has already been written about the Second Circuit Court of Appeals’ December 10th insider trading decision: in United States v. Newman, et al., the Court significantly trimmed back the circumstances in which tippees of inside information may be held liable for insider trading. The Newman decision… In Newman, the Second Circuit reversed the conviction … Continue Reading

Safeguarding a Whistleblower's Identity

Everyone knows that the Sarbanes-Oxley Act prohibits retaliation against whistleblowers. It may be less obvious, however, that merely disclosing a whistleblower’s identity can constitute prohibited retaliation. Nevertheless, the Fifth Circuit Court of Appeals recently held exactly that in Halliburton, Inc. v. Administrative Review Board, United States Department of Labor. In Halliburton, an employee submitted a … Continue Reading

Posting Non-GAAP Financial Measures on Social Media

It is well documented that companies now use social media for all kinds of communications, including “traditional” SEC disclosures. As the scope of the social media disclosures continues to expand, some companies are starting to post non-GAAP financial measures. It is important to remember that any such postings must comply with the SEC’s GAAP reconciliation … Continue Reading

What's Next for COSO's New Framework?

By now, most companies have begun to transition from The Committee of Sponsoring Organizations of the Treadway Commission (COSO) 1992 Internal Control—Integrated Framework to the updated COSO 2013 framework. In fact, many companies included a statement regarding their transition status under Controls and Procedures (Part I, Item 4) in their most recent Form 10-Qs. Now … Continue Reading

Don't Forget About Conflict Minerals

The first wave of Form SD filings has come and gone, leaving us with more insight into supply chains and manufacturing processes than most of us ever wanted, yet much uncertainty about the actual sources of the conflict minerals in question. Not surprisingly, most companies that filed a Form SD were unable to confirm whether … Continue Reading

An XBRL Prod from the SEC

The SEC has been noticeably quiet about XBRL compliance since those regulations were adopted in 2009. In July, however, the staff softly prodded this public company sore spot (think: conflicts mineral sore) with a letter addressed to certain filers and some general “observations” addressed to everyone.… Continue Reading

Why Lawyers Should Care about the New COSO Framework

The Committee of Sponsoring Organizations of the Treadway Commission (COSO) 1992 Internal Control—Integrated Framework has long been recognized as the starting point for designing, implementing and conducting internal control. As most of you now know, the Framework was updated for the first time in May 2013. (See this Doug’s Note.)… Continue Reading

The NYSE Updates Its Telephone Alert Rule

Back on March 7th, companies with stock listed on the New York Stock Exchange received the NYSE’s annual memorandum highlighting its most commonly applicable policies and rules. On May 21st, the NYSE sent an updated version of the earlier memorandum that corrects a glitch in its telephone alert requirements, which I highlighted in this Doug’s Note.… Continue Reading

An Insider Trading Reminder from the SEC

The SEC yesterday announced two separate cases against men who traded on confidential information they received from their wives about Silicon Valley technology companies. In one case, the husband overheard a call made by his wife, an Oracle finance manager, about plans to acquire another company. She also told him that Oracle was in a … Continue Reading

Proxy Statement Unbundling–New Guidance for an Old Rule

With the recent emphasis on proxy statement compensation disclosure, director independence and corporate governance, little attention has been paid to another issue that can delay your proxy statement mailing schedule and potentially even derail your annual shareholders meeting—the SEC’s poorly understood unbundling rule. Last week, however, the SEC staff issued three C&DIs that shed much … Continue Reading
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