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Yesterday, the SEC charged TherapeuticsMD Inc., a pharmaceutical company headquartered in Boca Raton, Florida, with violations of Regulation FD based on its sharing of material, nonpublic information with sell-side research analysts without also disclosing the same information to the public.  The SEC’s order finds that on two separate occasions in 2017, TherapeuticsMD selectively shared material information with analysts about the company’s interactions with the U.S. Food and Drug Administration (FDA).

As detailed in the SEC’s order, on June 15, 2017, one day after a publicly-announced meeting with the FDA about a new drug approval, TherapeuticsMD sent private messages to sell-side analysts describing the meeting as “very positive and productive.”  TherapeuticsMD’s stock price closed up 19.4% on heavy trading volume the next day.  At that time, the company had not issued a press release or made any other market-wide disclosure about the meeting.

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On August 20, 2019, the SEC staff published new interpretations in the form of Compliance and Disclosure Interpretations regarding Inline XBRL, which affirmed the guidance we previously posted about the new exhibit 104 cover page tagging requirements.

The new interpretations are numbered as Questions 101.01 through 101.09 at this link.

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Don't miss Jay Knight discussing the new SEC FAST Act requirements for cover page tagging in an upcoming webinar. Large Accelerated Filers are now beginning to comply with the SEC’s new FAST Act requirements for cover page tagging using Inline XBRL. During the implementation process, questions have arisen regarding exhibits, and other aspects of technical and rule compliance.

I am excited to be co-presenting in an upcoming free webinar on this topic titled, “SEC…

Note: We updated this post (originally posted last week) to add new frequently asked questions about when to reference Exhibit 104 in Form 8-Ks and about the phase-in schedule for all companies. 

Question:  In a Form 8-K, are you required to explicitly reference Exhibit 104 in the Exhibit Index?

Answer: In discussions with SEC Staff within the SEC’s Division of Corporation Finance, we received the following guidance related to a registrant’s Exhibit 104 reference obligation in 8-Ks:

  • If the 8-K does NOT otherwise have an exhibit being filed (or furnished) under Item 9.01(d), then the company does not need to include Item 9.01(d) in the 8-K solely for the Exhibit 104 reference. (The cover page tagging is still required in the background, but there is no standalone Exhibit 104 reference in an Item 9.01.)
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In an article for The D&O Diary published on July 16, 2019, Jay Knight unpacked some practical tips that outside parties may want to employ when responding to comments by the Securities and Exchange Commission (SEC) in connection with the standard filing review in the SEC’s Division of Corporation Finance. I was pleased to submit a guest post for The D&O Diary unpacking some practical tips that outside parties may want to employ when responding to comments by the Securities and Exchange Commission (SEC) in connection with the standard filing review in the SEC’s Division of Corporation Finance. These practice tips include:

  • Know which office in the SEC the comment came from to avoid making incorrect assumptions.
  • Read the comment letter in full to determine the type of review the Staff conducted – a full review or limited review.…
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On May 3, 2019, the SEC proposed amendments to its rules and forms which would revise the disclosure requirements for financial statements relating to acquisitions and dispositions of businesses. We believe that most aspects of the proposed amendments, if adopted in current form, are thoughtful revisions to existing rules and will be beneficial to public companies, although we believe that a couple of aspects of the proposed amendments noted below may bear reconsideration by the SEC.

Key aspects of the proposed amendments include the following:

  • Updating the significance tests by:
    • increasing the significance threshold for a disposed business (triggering the requirement to file pro forma financials) from 10% to 20% (mirroring the existing percentage threshold for acquired businesses).
    • revising the “income test” in the definition of “significant subsidiary” under Regulation S-X, particularly to include a revenue as well as (after-tax) income component to such test, which will eliminate anomalies existing under the current rules (which do not include a revenue component) when a registrant has net income close to zero and a filing may be triggered even where a registrant is much larger than an acquired or disposed company.
    • revising the “investment test” in the definition of “significant subsidiary” under Regulation S-X, including to provide that the purchase price in an acquisition or disposition (which is the numerator in such test) will be compared to the equity value of the registrant rather than (as under the current rules) to the book value of the total assets of the registrant.
    • expanding the use of pro forma financial information in measuring significance, which may provide added flexibility to registrants in determining significance under certain circumstances.

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The Staff of the Securities and Exchange Commission (the Staff) issued a Public Statement regarding the probable transition away from the London Inter-bank Offered Rate (LIBOR) after December 31, 2021, as a result of the expectation that a number of private-sector banks currently reporting information used to establish LIBOR will cease to do so after 2021 when their reporting commitment ends.

As a result, the publication of LIBOR may cease immediately following the end of 2021 or may result in LIBOR’s regulator determining that the quality of the LIBOR metric has diminished such that it is no longer representative of its underlying market.

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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:

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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…

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…