On April 5, 2012, President Obama signed H.R. 3606, the Jumpstart Our Business Startups (JOBS) Act (the “Act”), into law. The Act is intended to help smaller companies access the U.S. capital markets by relaxing certain regulatory compliance and disclosure requirements and easing the capital formation process for private companies and private investment funds. A copy of the Act is available here.
With the January 4, 2012 recess appointment of former Ohio Attorney General Richard Cordray as its first director, the Consumer Financial Protection Bureau quickly is coalescing around an aggressive regulatory agenda. What can large financial institutions and other participants in the financial services industry expect from this new federal regulator?
Continue Reading...On March 8, 2012, the House of Representatives (the “House”) passed H.R. 3606, the Jumpstart Our Business Startups (JOBS) Act (the “Bill”), by a vote of 390 to 23. The Bill consists of a collection of bills that have been introduced in the House over the past year, including four that had already passed the House by wide margins. The Bill is intended to help smaller companies access the U.S. capital markets by relaxing certain regulatory compliance.
On March 7, 2012, the Staff of the Securities and Exchange Commission (the “Staff”) issued responses to a series of no-action requests seeking to exclude shareholder proxy access proposals. These no-action responses represent the first significant guidance from the Staff following the 2011 amendments to Rule 14a-8 that permit inclusion of proxy access proposals. The Staff permitted six companies to exclude precatory proposals that were based on a model prepared by a coalition of shareholders called the “United States Proxy Exchange.”1 The Staff did not permit exclusion, however, of a binding proposal submitted by Norges Bank Investment Management. That proposal would provide access to holders of 1% of a company’s stock for one year. In addition, the Staff did not agree that a company that had voluntarily adopted a proxy access bylaw could exclude a proposal on the basis that it had been substantially implemented.
On February 15, 2012, the Securities and Exchange Commission ("SEC") adopted new rules under the Investment Advisers Act of 1940, as amended (the "Advisers Act"), as required by Section 418 of the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank"). The new rules codify the SEC's July 12, 2011 order to increase the dollar amount tests applicable to qualified clients that may be charged performance fees under Rule 205-3. A copy of the SEC's adopting release is available here.
On December 21, 2011, the Securities and Exchange Commission (“SEC”) adopted new rules under the Securities Act of 1933, as amended (the “Securities Act”), as required by Section 413(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”). The rules exclude the value of a person’s primary residence for purposes of determining whether the person qualifies as an “accredited investor” on the basis of having a net worth in excess of $1 million. A copy of the SEC’s release is available here.
Institutional Shareholder Services (“ISS”) recently announced its updated voting policies for the 2012 proxy season. The policies will become effective for shareholder meetings held on or after February 1, 2012. While the policies cover various matters, we have summarized below certain policies relating to corporate governance matters that may be of particular interest to corporations.
On October 26, 2011, the Securities and Exchange Commission (“SEC”) adopted new rules under the Investment Advisers Act of 1940, as amended (the “Advisers Act”), as required by Sections 404 and 406 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”). The new rules create a new reporting form — Form PF — to be filed quarterly or annually by registered investment advisers that manage private funds, including hedge funds and private equity funds. A copy of the SEC’s adopting release is available here.
Earlier today, the U.S. Court of Appeals for the D.C. Circuit vacated the Securities and Exchange Commission's ("SEC") proxy access rules, which had been stayed pending the outcome of this litigation. The court found that the SEC "inconsistently and opportunistically framed the costs and benefits of the rule; failed adequately to quantify the certain costs or to explain why those costs could not be quantified; neglected to support its predictive judgments; contradicted itself; and failed to respond to substantial problems raised by commenters." In addition, the unanimous three-judge panel stated that "[b]y ducking serious evaluation of the costs that could be imposed upon companies from use of the rule by shareholders representing special interests, particularly union and government pension funds, we think the Commission acted arbitrarily."
As we previously explained, the proxy access rules would have permitted shareholders who collectively owned at least 3% of a company's shares for a period of three years to include nominees in a company's proxy materials. The court's decision is a rebuke to the SEC, but the SEC could request a rehearing, appeal to the supreme court or revise its analysis without necessarily changing the rules.
On May 25, 2011, the U.S. Securities and Exchange Commission (SEC) by a 3–2 vote adopted final rules implementing the whistleblower award program of Section 922 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank).i New Regulation 21F requires the SEC to pay cash awards to whistleblowers who voluntarily supply the SEC with original information leading to a judicial or administrative action in which the SEC obtains monetary sanctions over $1 million, subject to certain limitations. Whistleblowers who provide such information are eligible for a cash award of from 10 to 30 percent of the monetary sanctions. Employers are prohibited from retaliating against individuals who provide the SEC with information about possible federal securities law violations, and victims of retaliation are granted an independent cause of action.
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