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Jay Knight is head of the firm’s Capital Markets Subgroup. His practice focuses on securities offerings, mergers and acquisitions, real estate capital markets, structured finance, and the general representation of public companies and underwriters. Since his return to private practice in 2012 after having served five years in the Securities and Exchange Commission’s (SEC) Division of Corporation Finance, Jay has represented both issuers and underwriters in connection with initial public offerings (IPOs), follow-on and secondary offerings, at-the-market (ATM) programs, tender offers, SPACs, de-SPACs, and mergers and acquisitions, involving companies in a wide range of industries, including healthcare, real estate (REITs), retail, life sciences, defense and restaurant, among others.

We previously blogged here about the proposed Securities and Exchange Commission (SEC) amendments to Rule 10b5-1 trading plans. As the amendments have now been unanimously adopted, below are some answers to frequently asked questions on the new rules.

Continue Reading FAQs on the SEC’s Newly Adopted Amendments to Rule 10b5-1 Trading Plans and Related Disclosures

Subscribers to our blog know that we monitor EDGAR for new SEC comment letters and enjoy bringing attention to the more interesting ones.  In today’s blog post, we bring your attention to a recent SEC comment letter exchange where the registrant (a trust) was asked to provide a legal analysis that a specific digital asset (in this case, ZEN) was not a “security” under Section 2(a)(1) of the Securities Act.  In response to the comment, the letter attached as an exhibit a memorandum of counsel analyzing ZEN under the federal securities laws.

Continue Reading Recent SEC Comment Letter of Interest Regarding Whether a Digital Currency is a Security Under Section 2(a)(1) of the Securities Act

Rule 15c2-11 under the Securities Exchange Act of 1934 (Exchange Act) governs when dealers can publish quotations for securities. In September 2020, the U.S. Securities and Exchange Commission (SEC) amended the rule prohibiting them from publishing quotes when current information about the issuer isn’t publicly available. In 2021, the Staff in the Division of Trading and Markets issued a no-action letter (the No-Action Letter) that clarified its position that Rule 15c2-11 applies to all securities, including fixed-income securities as well as equity securities, but provided limited-time relief for fixed income securities that were offered under Rule 144A. This limited relief will expire on January 3, 2023, which means market practice for private Rule 144A issuers will be significantly impacted.

Continue Reading ABA Committee Submits Letter to SEC Requesting 15c2-11 Relief for Fixed Income Securities

In March 2022, the Securities and Exchange Commission (SEC) proposed sweeping new rules to regulate the disclosures and liabilities associated special purpose acquisition companies (SPACs). The proposing release is available here. The proposals were aimed at enhancing disclosures and liabilities in connection with SPAC IPOs as well as the subsequent business combinations (De-SPAC Transactions) between SPACs and private operating companies.

Continue Reading Reverberations Felt from SEC’s SPAC Proposal Even Before Rules Are Adopted

I recently offered insight for a Wall Street Journal article on the recent request from the Securities and Exchange Commission (SEC) that companies disclose the financial impact of the Russian-Ukraine conflict. Following the sanctions issued against Russia following its invasion of Ukraine, many companies grappled with the direct and indirect impacts. The SEC staff recently sent targeted letters to specific companies asking for more disclosure about the reasonably likely impacts from the Russia/Ukraine conflict, including financial impacts.
Continue Reading SEC Comment Letters to Companies Related to the Financial Impact of Russia-Ukraine Conflict

Last week, the Securities and Exchange Commission (SEC) voted 3-2 to take the following actions:

  • Propose new amendments to Rule 14a-8, the shareholder proposal rule.
  • Adopt new amendments to the rules regarding proxy advisory firms, such as ISS and Glass Lewis.


Continue Reading SEC Proposes Amendment to the Shareholder Proposals Rule (14a-8) and Adopts Amendments to Rules Impacting Proxy Advisory Firms

On June 22, the Securities and Exchange Commission (SEC) released the latest edition of its Reg Flex Agenda, which is essentially the rulemaking calendar for the next year or so.  Perhaps the most surprising takeaway is the climate rule is scheduled to be adopted as early as October 2022.  While the schedules may likely shift during the internal rule drafting process, the agenda is helpful as it provides a sense of the SEC’s priorities and pipeline.
Continue Reading SEC Announces Spring 2022 Rulemaking Agenda

Along with equal prominence, probably one of the most often non-GAAP comments we see issued by the U.S. Securities and Exchange Commission (SEC) Staff involves its objection to adjustments that it believes substitute individually tailored measurement methods for those of GAAP.  Often, the SEC Staff comments will cite to Question 100.04 of the Non-GAAP Financial Measures Compliance & Disclosure Interpretations, as follows:

Question 100.04

Question: A registrant presents a non-GAAP performance measure that is adjusted to accelerate revenue recognized ratably over time in accordance with GAAP as though it earned revenue when customers are billed. Can this measure be presented in documents filed or furnished with the Commission or provided elsewhere, such as on company websites?

Answer: No. Non-GAAP measures that substitute individually tailored revenue recognition and measurement methods for those of GAAP could violate Rule 100(b) of Regulation G. Other measures that use individually tailored recognition and measurement methods for financial statement line items other than revenue may also violate Rule 100(b) of Regulation G.   [May 17, 2016] (emphasis added)

Continue Reading SEC Staff Pushes Back on Adjusting for Normal Recurring “Public Company Expenses”