While monitoring SEC comment letters, we recently came across the batch of SEC comment letters issued to Uber Technologies, Inc. in connection with its IPO registration statement that was declared effective on May 9, 2019.  The company’s response letters (with SEC comments repeated as is customary) are available below:

Presented below are five interesting takeaways from the letters that may have general application:

Continue Reading 5 Interesting Takeaways from Uber Technologies’ IPO SEC Comments

While developments with respect to the Management’s Discussion and Analysis of Financial Condition and Results of Operations (MD&A) section in SEC disclosure documents have garnered less attention in the legal press in recent years than certain other areas in the SEC disclosure arena, preparing and crafting MD&A disclosures remains a major area of focus for SEC disclosure lawyers.

The MD&A is the section of a periodic report or registration statement in which management provides its analysis of the registrant’s financial condition and results of operations, thereby providing critical insight into the views of management regarding the key drivers and trends impacting a public company’s financial performance.

Disclosure lawyers should note these key tips and observations when preparing or reviewing MD&A:

Continue Reading 12 Things You Need to Know About Drafting Management & Discussion Analysis (MD&A)

The Securities and Exchange Commission (SEC) recently awarded $3 million to joint whistleblowers despite concluding that the whistleblowers did not satisfy the technical eligibility requirements for receiving an award. See SEC Exchange Act Release No. 86010. The SEC Whistleblower Program has ramped up significantly the past few years, with record numbers of complaints being filed and awards being granted. In 2018, the SEC made two of its largest whistleblower awards: an $83 million award to three individuals; and an award of almost $54 million to two individuals. And the number of SEC whistleblower complaints filed has increased every year, culminating in over 5,200 complaints in fiscal year 2018 (ending September 30). To date, the SEC has awarded more than $284 million to 64 whistleblowers. While the amount of the recent $3 million whistleblower award may not be major news, the SEC’s determination to grant the award to ineligible whistleblowers warrants review.

Continue reading to learn more about about the SEC Whistleblower Program and the SEC’s rationale for waiving the eligibility requirements in the June 3 case.

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I am excited to be co-presenting a webcast titled, “Navigating Corp Fin’s Comment Process,” with Era Anagnosti, Partner, White & Case LLP and Karen Garnett, Partner, Proskauer Rose LLP. This panel of former Senior SEC Staffers will explain the process by which the SEC Staff issues comments – step-by-step – as well as provide their practical guidance about how to respond. This program will cover both the basics, as well as advanced issues for practitioners to consider. Additional topics include:

  • Latest trends of comments made by the SEC Staff in SEC filings
  • Factors that make it more likely that a filing will be selected for review by the SEC Staff
  • Steps a company should take when it receives comments from the Staff
  • The appropriate way to ask for an in-person conference with the SEC Staff

The webcast will be held on Wednesday, June 19, 2019, from 2:00 – 2:45 p.m. EST. For more information and registration, please go to TheCorporateCounsel.net.

If you missed our teleconference earlier this week related to the recent SEC rule changes (see here and here for prior blog posts about the rule changes effective today), we are pleased to provide an audio recording available for download.

Have more questions about the amendments that are effective today, May 2, 2019? Email Jay Knight or a member of our Corporate & Securities Practice.

Last month, the Securities and Exchange Commission (SEC) held its annual SEC Speaks Conference in Washington, D.C. We have summarized several significant insights conveyed by SEC Staff that are instructive for counsel handling investigations by the SEC’s Enforcement Division.

Continue reading to learn more about:

  • Herrera and Waiver of Work Product Protections
  • Further Insight on Cooperation Credit
  • Effective Advocacy before the Enforcement Staff
  • Litigation in a Post-Lorenzo World

Continue Reading on BassBerry.com

Note: We updated this post (originally posted last week) to add a new frequently asked question about expanded hyperlinking. 

The questions and answers below address certain interpretive issues on the SEC’s new hyperlink requirements effective May 2, 2019. For more on the SEC’s amendments, see our previous post that details the rule changes.

FAQ #1

Question:  The new rules will require registrants to include an active hyperlink to information incorporated by reference into a registration statement or report if such information is publicly available on EDGAR “at the time the registration statement or form is filed.”

How does this new requirement apply to information incorporated by reference from one item to another within the same filing? 

Continue Reading Updated: FAQ on Expanded Hyperlinking

There have certainly been many developments in securities claims jurisdiction in the past several years, particularly in the area of “exclusive forum” provisions contained in charters or bylaws. Exclusive forum provisions typically provide that a certain court (e.g., the Delaware Court of Chancery) is the sole and exclusive forum for certain types of litigation involving the company. These provisions are often tested in the courts, especially when they seem to be in conflict with controlling precedent.  For example, in 2018 in Cyan v. Beaver Cty. Empls. Ret. Fund, the United States Supreme Court concluded that federal law did not bar state courts from adjudicating class actions alleging only claims under the 1933 Act, and it also prohibited the removal of such class actions from state to federal court.

Following Cyan, several Delaware companies attempted to avoid litigating 1933 Act class actions in state court by adopting charter-based federal forum provisions, which required stockholders to file any claim under the 1933 Act in federal court. Those efforts to circumvent the consequence of Cyan, however, failed when in a December 2018 case (Sciabacucchi v. Salzberg), the Delaware Court of Chancery rejected use of these federal forum provisions. The court reasoned that Delaware corporations could only adopt forum-selection provisions for “internal-affairs claims.” According to the Delaware Court of Chancery, “a 1933 Act claim is external to the corporation.” Therefore, because 1933 Act claims are external to Delaware corporations, charter provisions requiring a federal forum for 1933 Act class actions brought by corporation shareholders were invalid under Delaware law.

Notwithstanding the above related to the 1933 Act class actions, federal courts continue to have “exclusive jurisdiction” to hear claims brought under the 1934 Act as a result of Section 27(a) of that law.

Continue Reading Exclusive Forum Provisions in Charters and Bylaws: An Area of Frequent SEC Comment

On March 20, 2019, nearly a year and a half after proposing them, the SEC adopted amendments to disclosure requirements for reporting companies, as mandated by the 2015 Fixing America’s Surface Transportation Act (the “FAST Act”).  The amendments are a part of an ongoing effort by the SEC to simplify and modernize disclosure obligations.  According to the SEC’s press release, the amendments are expected “to benefit investors by eliminating outdated and unnecessary disclosure and making it easier for them to access and analyze material information.”

Among many other items, the amendments address the following topics:

  • Greater Flexibility When Filing Under Item 601 of Regulation S-K

    • Omission of Immaterial Schedules and Exhibits—The amendments revise Item 601 of Regulation S-K to expand the ability of registrants to omit immaterial schedules and similar attachments to required exhibits, which previously was only available to schedules and exhibits to acquisitions agreements being filed under Item 601(b)(2).

Continue Reading SEC Amendments Help Streamline Reporting for Public Companies

Usually this blog is reserved for matters involving corporate and securities law rather than updates in the accounting standards, but the email alert from the Financial Accounting Standards Board (FASB) that I received yesterday is definitely an exception. The FASB email alert first mentions that FASB yesterday issued Accounting Standards Update No. 2019-02, Entertainment—Films—Other Assets—Film Costs (Subtopic 926-20) and Entertainment—Broadcasters—Intangibles—Goodwill and Other (Subtopic 920-350): Improvements to Accounting for Costs of Films and License Agreements for Program Materials (a consensus of the FASB Emerging Issues Task Force). To read more about this update, see this news release. However, the best part of the update in my non-accountant opinion was the video explanation produced by FASB where it discussed the new accounting standard and the related effective dates.

As a former staffer in Corp Fin’s Office of Rulemaking, I’ve personally worked on SEC adopting releases, and I’ll proudly say that they are probably the most in-depth and user-friendly rule publications of all the financial agencies, and even include an economic analysis where some of the other agencies do not. However, I must admit that FASB’s video explanation idea may set a new bar! Should we expect to see SEC Commissioners and staff starring in the roll-out of new rules soon? I really hope so. It appears from this “SEC Videos” page that the agency already has great video production capabilities.

Click on the image to view the FASB video