The 2012 Jumpstart Our Business Startups (JOBS) Act enacted a number of changes to national securities laws intended to make it easier for small companies to raise capital privately, before having to confront the possibilities of initial public offerings or acquisition. One important piece directed the Securities and Exchange Commission (SEC) to enact rules to allow “crowdfunding” of qualifying small capital issues without requiring registration of the securities or issuer with SEC itself. The JOBS Act directed SEC to issue its rules by January 2013, but SEC only completed the task in November 2015, with rules that will become effective in May 2016. (I blogged about the proposal here) SEC’s new Regulation Crowdfunding (codified as 17 Code of Federal Regulations (CFR) part 227) defines requirements for issuers, and a new category of registered entities called “intermediaries”, who must register with SEC as brokers (using pre-existing rules) or as a new category of party called “funding portals.”
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SEC Ponders Responsibilities For Board of Directors’ Audit Committees
Posted by Jon Elliott on Tue, Sep 15, 2015
Boards of directors are responsible for governing their corporations. Many boards divide their work among committees. Committees often include an “audit committee,” with responsibilities that may include:
Tags: Business & Legal, SEC, Accounting & Tax, Audit Standards
Supreme Court Tweaks “Fraud on the Market” in Securities Cases
Posted by Jon Elliott on Tue, Jul 08, 2014
Section 10(b) of the Securities Exchange Act of 1934 prohibits use of “any manipulative or deceptive device” in connection with purchases or sales of securities. Since its adoption, this provision has provided SEC with an important enforcement tool. Beginning in 1975, the US Supreme Court also empowered aggrieved shareholders to use this Section to support private lawsuits against alleged violators (Blue Chip Stamps v. Manor Drug Stores). The substantive and procedural contours of this private right have continued to evolve in the subsequent four decades, as courts address arguments by plaintiffs and defendants. In 1988, the Supreme Court ruled that plaintiffs who buy or sell shares through an “efficient market” are entitled to a presumption that they relied on that market’s price, not knowing that the market was tainted by manipulative or deceptive information (Basic, Inc. v. Levinson).
Tags: Corporate Governance, Business & Legal, SEC
Corporate directors and chief executive officers (CEOs) benefit from variety of legal rights, set forth in state corporation codes, company articles of incorporation and bylaws, and in their individual employment contracts. In addition, they may be able to access additional “equitable rights” to fair dealing, based on common law principals. But as a dethroned CEO just learned from the Delaware Supreme Court, these equitable rights can be limited by the equitable rights of other parties.
Tags: Corporate Governance, Business & Legal, SEC
News from The Bureau of Safety and Environmental Enforcement (BSEE) Press Release Issued April 3, 2014
Tags: Corporate Governance, Business & Legal, SEC, OSHA, Environmental risks, Environmental, EHS, Oil & Gas, climate change
SEC Announces Additional $150,000 Payment to Recipient of First Whistleblower Award
Posted by STP Editorial Team on Thu, Apr 24, 2014
Tags: Corporate Governance, Business & Legal, SEC, Employer Best Practices, Employee Rights
Tags: Corporate Governance, Business & Legal, SEC
Federal Court To Expand Insider Trading “Tippee” Potential Liability
Posted by Jon Elliott on Mon, Mar 17, 2014
Although the federal Securities Acts do not expressly outlaw stock trading that exploits preferential access to “insider” information, the Securities and Exchange Commission (SEC) and courts have applied general language in those Acts to cover these situations. A very recent decision by the federal Court of Appeals for the Second Circuit marks the latest such expansion, in a case holding the “tippee” of insider information liable for profits he helped third parties create by trading on that information (SEC v. Contorinis).
Tags: Corporate Governance, Business & Legal, SEC, SOX
Supreme Court: Whistleblowing Employees of Contractors to Public Companies Are Protected
Posted by Jon Elliott on Mon, Mar 10, 2014
Prosecutors rely on informants from time to time to identify wrongdoing and “make their cases.” But corporate fraud whistleblowers can face bleak futures: at best they may be ostracized from future promotions, at worst they may be terminated with no favorable recommendation. Section 806 of the Sarbanes-Oxley Act of 2002 (SOA) adds important protections for whistleblowers
Tags: Corporate Governance, Business & Legal, SEC, SOX
For the second year running, SEC activities during 2013 were dominated by its efforts to issue rules required by two major pieces of recent legislation:
Tags: Corporate Governance, Business & Legal, SEC, Employer Best Practices, Accounting & Tax, Accountants, JOBS Act