The Public Company Accounting Oversight Board (PCAOB) recently closed the comment period for its proposal (the Proposal) to significantly increase the responsibility of audit firms to evaluate and disclose a subject public company’s noncompliance with laws and regulations (commonly referred to as NOCLAR).Continue Reading The PCAOB Closes Comment Period on Controversial Proposal to Expand Auditor Responsibility for Legal Compliance
Practical Considerations for Adopting a Clawback Policy in Advance of Effective Date of NYSE and Nasdaq Listing Standards
On June 9, 2023, the Securities and Exchange Commission (SEC) approved proposed amendments of the New York Stock Exchange (NYSE) and the Nasdaq Stock Market LLC (Nasdaq) to their respective listing standards to implement the SEC’s previously adopted recoupment rules. These listing standard amendments extended the effective date for the new clawback listing standards to October 2, 2023, meaning that companies listed on either exchange will need to adopt a compliant clawback policy no later than December 1, 2023.Continue Reading Practical Considerations for Adopting a Clawback Policy in Advance of Effective Date of NYSE and Nasdaq Listing Standards
Virtual Broadcast: 4th Annual Corporate & Securities Counsel Public Company Forum
Please join us for a virtual broadcast and replay of our 4th Annual Corporate & Securities Counsel Public Company Forum.
This half-day complimentary program will be broadcast virtually on February 2 and features timely and practical guidance on the latest developments in corporate and securities matters impacting public company in-house counsel.Continue Reading Virtual Broadcast: 4th Annual Corporate & Securities Counsel Public Company Forum
Watch On-Demand | Effective Strategies in Preparing SEC’s Pay versus Performance Disclosure
Watch the recording of our latest webinar, Effective Strategies in Preparing SEC’s Pay versus Performance Disclosure. To gain access, please click here.Continue Reading Watch On-Demand | Effective Strategies in Preparing SEC’s Pay versus Performance Disclosure
SEC Proposes Amendment to the Shareholder Proposals Rule (14a-8) and Adopts Amendments to Rules Impacting Proxy Advisory Firms
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.
The SEC’s Proposed Climate Change Rules Are Out: Making Sense of 500+ Pages
After months of anticipation, on March 21, 2022, the U.S. Securities and Exchange Commission (SEC) voted 3:1 to propose climate change-related disclosure rules that would impact a company’s annual reports and registration statements. As indicated previously by the Staff, the proposed climate-related disclosure framework is modeled partially on the Task Force on Climate-related Financial Disclosure’s (TCFD) recommendations and draws upon the Greenhouse Gas (GHG) Protocol. (See our previous blog post discussing the Staff’s consideration of TCFD). The proposed rules, seemingly unprecedented in nature, are significantly more prescriptive rather than “principles-based” disclosure rooted in materiality, and intended to provide stakeholders with “consistent and comparable data.”
Continue Reading The SEC’s Proposed Climate Change Rules Are Out: Making Sense of 500+ Pages
[WEBINAR] SEC’s New Universal Proxy Rules: Key Considerations & Next Steps to Prepare
Please join the Bass, Berry & Sims Corporate & Securities Practice Group for a series of complimentary webinars exploring various public company-related securities law issues. These CLE programs will be an extension of our Securities Law Exchange Blog and will feature timely and practical guidance for SEC disclosure counsel on key topics of interest.
Continue Reading [WEBINAR] SEC’s New Universal Proxy Rules: Key Considerations & Next Steps to Prepare
A Survey of Recent SEC Comment Letters on Human Capital Disclosures
Late last year, the Securities and Exchange Commission (SEC) adopted amendments to modernize the description of business, legal proceedings, and risk factor disclosures that registrants are required to make according to Regulation S-K. An important component of these updates was the new requirement in Item 101 (Description of Business) of Regulation S-K to require registrants to make certain human capital disclosures to the extent material to an understanding of its business as a whole.
The new rule amended Item 101(c) to require registrants to provide “a description of the registrant’s human capital resources, including the number of persons employed by the registrant, and any human capital measures or objectives that the registrant focuses on in managing the business.” The disclosure is only required to the extent such information is material to the registrant’s business as a whole, and the SEC in the adopting release stated that each registrant’s disclosure “must be tailored to its unique business, workforce, and facts and circumstances.”
As a result of these amendments, along with disclosing the number of employees, companies must also consider how to comply with the new principle-based rule. The SEC intentionally did not define “human capital,” reasoning that the term “may evolve over time and may be defined by different companies in ways that are industry specific.” The adopted rule states that the required disclosures may include “measures or objectives that address the development, attraction and retention of personnel.” But the SEC made clear that these are just “examples of potentially relevant subjects, not mandates.” Thus, companies have broad discretion in deciding which human capital measures to disclose.Continue Reading A Survey of Recent SEC Comment Letters on Human Capital Disclosures
Preparing for the Upcoming Proxy Season: Public Company Reporting & Disclosure Considerations
Bass, Berry & Sims attorneys Kevin Douglas, Eric Knox and Sehrish Siddiqui were co-presenters alongside Stephanie Bignon, Assistant General Counsel, Delta Air Lines and Priya Galante, Vice President, Assistant General Counsel & Assistant Secretary, AutoZone at the Society for Corporate Governance’s Southeastern Chapter webinar earlier this month.
This program, titled, “Preparing for the Upcoming Proxy
SEC Commissioners Square Off Over Enforcement Settlement Process
In one of her first official actions as Acting Chair of the Securities and Exchange Commission (SEC or Commission), Allison Herren Lee reversed a major policy implemented by recently departed SEC Chairman Jay Clayton involving the SEC enforcement settlement process. This decision could significantly impact the SEC settlement process by causing uncertainty for settling entities as to the business consequences of a settlement. In a rare rebuke, two fellow SEC Commissioners promptly issued a statement decrying the Acting Chair’s decision.
Collateral Consequences of SEC Settlements
The federal securities laws contain provisions that impose restrictions on entities found to have violated certain statutes or regulations or that become subject to certain court-imposed injunctions or administrative orders. These restrictions, commonly referred to as “collateral consequences,” range from prohibiting a settling entity (and possibly its affiliates) from taking advantage of certain exemptions under the federal securities laws to disqualifying an entity from engaging in specific business activities. SEC settlements regularly trigger collateral consequences against settling SEC-regulated entities, like broker-dealers, hedge funds, investment advisers, and public companies. For example, a public company issuer that settles with the SEC could be automatically disqualified from being considered a Well-Known Seasoned Issuer under Rule 405 of Regulation C. Alternatively, a settlement could prohibit a settling investment adviser from providing advisory services to an investment company or from receiving cash fees for solicitations.
Given the serious collateral consequences an SEC settlement can trigger, and the fact that such consequences often are unrelated to the misconduct at issue in the corresponding SEC settlement, the SEC is authorized to grant disqualification waivers. The SEC routinely grants waivers to prevent disproportionate and unintended consequences resulting from a settlement.Continue Reading SEC Commissioners Square Off Over Enforcement Settlement Process