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Companies in the mining and oil and gas industries are increasingly subject to requirements to disclose the payments they make to governments.  In December 2015, the U.S. Securities and Exchange Commission published its proposed rule on the disclosure of “resource extraction payments,” implementing a directive of the Dodd-Frank Act of 2010.  The Commission, under pressure…

Overstock.com, Inc. (“Overstock”) recently filed a shelf registration statement with the Securities and Exchange Commission (the “SEC”) allowing for the issuance of “digital securities.”[1]  The SEC declared that registration statement effective on December 9, 2015.   The digital securities described in Overstock’s registration statement will be evidenced only by entry into a publicly distributed ledger and transfers of the digital securities can only be effected on that ledger.  They will not be evidenced by physical certificates or notes, recorded in book-entry system of the type typically used by issuers and transfer agents today, traded through a traditional securities exchange or cleared through an established clearing system.    Instead, ownership of digital securities and trades will be reflected in a publicly distributed proprietary ledger maintained by an alternative trading system (“ATS”) run by Pro Securities LLC using the technology of tØ, a subsidiary of Overstock.  In June 2015, Overstock completed the first placement of corporate bonds in the form of digital securities pursuant to Rule 506(c) of Regulation D using the technology of tØ.
Continue Reading Bitcoins and Blockchain – The Use of Distributed Ledger Technology for the Issuance of Digital Securities

On December 11, 2015, the Securities and Exchange Commission issued a proposed rule on disclosure of resource extraction payments, over two years after a federal court vacated a prior version of the rule.  The new proposal is similar in many ways to the SEC’s original rule, adopted in August 2012 – in large part because the SEC is implementing a detailed congressional directive contained in Section 1504 of the 2010 Dodd-Frank Act.  However, in addition to addressing the deficiencies the court found in the original rulemaking, the SEC has made other notable changes to reflect global developments in transparency for resource extraction payments, particularly in the European Union and Canada.
Continue Reading Resource Extraction Payments – The SEC Tries Again

On Aug. 18, 2015, a divided panel of the D.C. Circuit Court of Appeals in National Ass’n of Manufacturers v. U.S. Securities and Exchange Commission (Minerals II) reaffirmed its April 2014 decision that the SEC’s conflict minerals rule, and the underlying provision of the Dodd-Frank Act, violate the First Amendment to the extent they require a company to report to the SEC, and to state on its website, that any of its products have “not been found to be ‘[Democratic Republic of the Congo] conflict free.’”[1]  The panel had agreed to reconsider the case because of an intervening en banc decision of the full D.C. Circuit in another case, American Meat Institute v. U.S. Department of Agriculture (Meat II),[2] which raised a similar First Amendment challenge to USDA requirements for labeling meat products.
Continue Reading Mixing Meat And Minerals On Compelled Commercial Speech

On April 1, the SEC announced its first enforcement action against a company for requiring employees to sign confidentiality agreements containing language that allegedly impeded whistleblowing activity in violation of Rule 21F-17, enacted under the Dodd-Frank Act. 
Continue Reading ACTION REQUIRED: How to Update Employee Confidentiality Provisions in Light of Recent SEC Enforcement Action

As expected, 2014 proved to be a challenging year for boards.  The legal and economic environments continued to grow more complex, and directors faced increasing scrutiny from investors and governmental authorities in the forms of market reaction, shareholder activism, litigation and enforcement and regulatory activity.  We expect these trends to continue, and boards will need to remain extremely proactive in their oversight and involvement in 2015.
Continue Reading Selected Issues for Boards of Directors in 2015

On June 30, the Divisions of Investment Management and Corporation Finance of the SEC issued staff guidance, in the form of a Staff Legal Bulletin, addressing investment advisers’ responsibilities in voting client proxies and retaining proxy advisory firms.  The guidance also addresses the requirements of the exemptions from the federal proxy rules that proxy advisory firms may seek to satisfy. 
Continue Reading SEC Issues Staff Guidance on Rules Applicable to Investment Advisers and Proxy Advisory Firms

As widely reported, a vehicle formed by Pershing Square and Valeant Pharmaceuticals acquired just under 5% of Allergan’s shares after Allergan apparently rebuffed  confidential efforts by Valeant to get Allergan to negotiate a potential acquisition.  The Pershing Square/Valeant vehicle then crossed the 5% threshold and nearly doubled its stake (to 9.7%) over the next ten days, at which point it made the required Schedule 13D disclosures regarding the accumulation and Valeant’s plans to publicly propose an acquisition of Allergan.  The acquisition program has raised a number of questions. 
Continue Reading The Schedule 13D Ten-Day Window and Other Issues: Will the Pershing Square/Valeant Accumulation of a 9.7% Stake in Allergan Lead to Regulatory or Congressional Action?

The Commissioners of the SEC voted 3-2 on September 18, 2013 to propose regulations (the “Proposed Rules”)[1] implementing the mandate of Section 953(b) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) [2] to require disclosure by a reporting company of the median annual total compensation of all its employees (excluding the company’s principal executive officer (“PEO”)) and the ratio of that median to the annual total compensation of the PEO.  This memorandum summarizes the requirements of the Proposed Rules.
Continue Reading SEC Proposes Pay Ratio Disclosure Rule