Leslie N. Silverman

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On March 18, 2020, the Delaware Supreme Court issued an opinion in the closely watched appeal in Sciabacucchi v. Salzberg, a case involving a challenge to charter provisions of three Delaware corporations requiring stockholder plaintiffs to litigate claims under the Securities Act of 1933 (the “1933 Act”) in federal court. The en banc Supreme…

Monday’s Business Roundtable Statement on the Purpose of a Corporation is significant, mostly because it opens the door for more discussion of the idea of “corporate purpose”.  While there are many ways that conversation could go, there are good reasons to believe the discussion will lead to a shift in corporate governance towards more authority and responsibility for corporate boards.  Specifically, boards will be expected to lead on corporate social responsibility issues.
Continue Reading The Purposes of a Corporation and the Role of the Board

Last week, in SEC v. Scoville, the U.S. Court of Appeals for the Tenth Circuit held that Dodd-Frank allows the Securities and Exchange Commission to bring fraud claims based on sales of securities to foreign buyers where defendants engage in fraudulent conduct within the United States.

In so holding, the Court concluded that Dodd-Frank…

On December 19, 2018, the Delaware Court of Chancery issued an opinion holding that Delaware law does not permit corporations to use charter provisions to require stockholders to litigate certain claims brought under the federal securities laws in a specific forum.  In Sciabacucchi v. Salzberg, Vice Chancellor Laster determined that such forum-selection provisions are…

On December 26, 2018, the SEC announced settled charges against ADT Inc. after finding that ADT, in two earnings releases, gave undue emphasis to non-GAAP adjusted EBITDA figures because they identified the relevant GAAP measures only later and much less prominently.

Without admitting or denying the SEC’s factual or legal claims, ADT agreed to an…

In late December 2018, the Securities and Exchange Commission adopted a final hedging disclosure rule, as required by Section 955 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

The Final Rule generally requires U.S. public companies to disclose any company practices or policies regarding the ability of employees, officers, directors or their respective…

On June 15, 2017, the Securities and Exchange Commission (the “SEC”) entered an order (the “Order”) instituting cease-and-desist proceedings against the former CEO and CFO (the “Respondents”) of UTi Worldwide Inc. (the “Company”)[1]. The Respondents each agreed to pay a civil money penalty of $40,000 to settle the proceeding, which found that they caused the Company to violate Section 13(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), by failing to comply with the requirement of Regulation S-K Item 303 that it disclose “any known trends or uncertainties that will result in or that are reasonably likely to result in the registrant’s liquidity increasing or decreasing in any material way.”[2]
Continue Reading Trend Disclosure Under S-K 303: How Far Does the Eye Have to See?

In 2016, the Financial Accounting Standards Board (FASB) issued ASU 2016-01, which adopts a new standard that will require companies to generally change the way they account for equity investments of less than 20%.
Continue Reading Accounting for Minority Equity Investments: A Small Change with Significant Implications

Playing a Zynga game often requires patience.  Patience, and persistence, were a winning combination for the plaintiff Thomas Sandys who brought a derivative suit against Zynga for alleged breaches of fiduciary duties after the Zynga Board approved a secondary sale of company stock by insiders, including Zynga’s controlling shareholder and then-CEO (“controlling shareholder/CEO”) during a blackout period.  Shortly after the sale, a disappointing earnings announcement resulted in a significant stock price drop.
Continue Reading From the Game Room to the Board Room – Reconsidering the Independence of Independent Directors

On May 17, 2016, the Division of Corporation Finance of the Securities and Exchange Commission (the “SEC”) released new and updated Compliance and Disclosure Interpretations (“C&DIs”) on the use of non-GAAP financial measures (“NGFMs”).  The release of the C&DIs follows a series of recent speeches by SEC Chair Mary Jo White, Chief Accountant James Schnurr and other staff that expressed concerns over prevalent and liberal use of NGFMs.  The C&DIs signal a tightening of the SEC’s policy toward NGFMs and renewed SEC focus on their use.
Continue Reading SEC Releases New Guidance on Non-GAAP Financial Measures