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Archives for January 2018

Federal Court Rejects Section 16(b) “Short-Swing Profits” Claim Challenging Share Withholding To Satisfy Taxes

January 26, 2018 | Posted by Elizabeth A. Ising; James J. Moloney Topic(s): Compensation Committee; Corporate Governance; Securities Regulation

A federal court in Oklahoma today issued a precedent-setting decision in favor of Gibson Dunn client WPX Energy, Inc., in Olagues v. Muncrief, No. 17-cv-153 (N.D. Okla. Jan. 26, 2018), ECF No. 42.  In the decision, the court held that pre-approved tax withholding dispositions made in connection with the vesting of equity grants are exempt from Section 16(b)’s prohibition on short-swing profits under Exchange Act Rule 16b-3(e)—even when an employee otherwise subject to the short-swing trading restrictions purchased the company’s shares during the six-month period preceding or following the tax withholding disposition.  This is the first time that a federal court has substantively addressed these types of short-swing trading claims, which have been serially raised by a small group of investors—first in the form of litigation demands and then, absent a payout to the investors, in litigation—during the last sixteen months.  A number of companies have refused the investors’ settlement demands, which has resulted in Section 16(b) cases against the companies’ executives in federal courts in California, Colorado, Delaware, Florida, Massachusetts, North Carolina, Ohio, Oklahoma, Tennessee, Texas, and Washington state. 

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Potential SEC Shutdown Coming – Where to Call Should the Lights Go Out

January 19, 2018 | Posted by James J. Moloney; Ronald O. Mueller; Brian J. Lane Topic(s): Corporate Governance

This morning the SEC posted an update regarding the potential for a government shut-down in the days and weeks ahead providing information on the Commission’s operating plan during any such shut-down.  The post indicates the Commission will remain open for a few days into any government shut-down.  While this news provides a glimmer of hope that registrants with ’33 Act filings in progress, or urgent questions on interpretive matters can obtain some guidance from the Staff, the assistance may be short-lived.  Should the SEC eventually shut-down, a list of phone numbers for emergency personnel is provided via the link in the SEC’s posting below.

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Technical Points To Remember When Preparing Your Form 10-K

January 12, 2018 | Posted by James J. Moloney; Lori Zyskowski Topic(s): Corporate Governance; Securities Regulation

With all of the substantive issues impacting disclosures in companies’ upcoming annual reports, there are a few technical points reporting companies should bear in mind when preparing their annual report.  Note that some of these issues are easy to miss given that they are not yet reflected in the official PDF of Form 10-K.

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