• Skip to main content
  • Skip to primary sidebar

Securities Regulation and Corporate Governance Monitor

  • Home
  • About
  • Editors
  • Topics
  • Subscribe
  • Home
  • About
  • Editors
  • Topics
  • Subscribe
Stewart McDowell

Stewart McDowell

Partner, New York

[email protected]

+1 415.393.8322

View Full Profile

Supreme Court Upholds Tracing Requirement For Section 11 Claims in Direct Listings – Slack Technologies LLC v. Pirani, No. 21-200

June 6, 2023 | Posted by Stewart McDowell; Ronald O. Mueller; Andrew L. Fabens; Hillary H. Holmes; Peter Wardle Topic(s): Capital Markets

On June 1, 2023, the Supreme Court of the United States unanimously upheld that  plaintiffs alleging the registration statement for a “direct listing" IPO contained a material misstatement or omission, who sue under Section 11 of the Securities Act of 1933, must trace the shares they bought  to the registration statement.  In a direct listing, unlike a traditional IPO, unregistered shares can be sold by non-affiliates on the initial listing date, so it is possible that certain shares bought on the first day will be unregistered shares and thus not subject to the strict liability standard of Section 11.   

Read More

SEC Releases COVID-19 FAQs to Provide Guidance on Disclosure Requirements and Form S-3

May 11, 2020 | Posted by Stewart McDowell; Hillary H. Holmes; James J. Moloney Topic(s): Corporate Governance; Miscellaneous; Securities Regulation

The SEC Division of Corporation Finance staff (the “Staff") has released a list of FAQs on COVID-19 for registrants (available here) that provides guidance on required disclosures under the SEC’s COVID-19 Order and the application of such order to Form S-3 filings.  The FAQs and responses provided by the Staff as of May 5, 2020 are summarized below—please follow the link above to read the full text of the FAQs.

Read More

Nasdaq Provides Temporary Exemption from Certain Shareholder Approval Requirements in Response to COVID-19

May 11, 2020 | Posted by Stewart McDowell; Peter Wardle; James J. Moloney Topic(s): Audit Committee; Corporate Governance; Miscellaneous; Securities Regulation

On May 4, 2020, the SEC announced (available here) that it has immediately approved proposed rule changes by The Nasdaq Stock Market LLC (“Nasdaq") that provide listed companies with a temporary exception from certain shareholder approval requirements under the Nasdaq Rules (the “Rules") through and including June 30, 2020 (available here). 

Read More

Desktop Calendar of SEC Deadlines for 2020 Now Available

August 21, 2019 | Posted by Hillary H. Holmes; Andrew L. Fabens; Peter Wardle; Stewart McDowell; James J. Moloney; Elizabeth A. Ising; Lori Zyskowski Topic(s): Audit Committee; Corporate Governance; Miscellaneous; Securities Regulation

​This is a smart time of year to confirm plans for SEC reporting and capital markets transactions in 2020. To assist public companies in keeping track of the various filing deadlines, we have prepared a desktop reference calendar that sets forth filing deadlines for many SEC reports. To assist companies with planning capital markets transactions, including IPOs, our calendar also provides the staleness dates (i.e., the last date financial statements may be used in a prospectus or proxy statement without being updated).

Read More

SEC Proposes Long-Awaited Expansion of “Test-the-Waters” to All Issuers – Use With Caution

February 20, 2019 | Posted by Hillary H. Holmes; Stewart McDowell; Andrew L. Fabens; Peter Wardle Topic(s): JOBS Act; Securities Regulation

On February 19, 2019, the Securities and Exchange Commission (the “SEC") proposed a new rule that would allow all issuers to engage in “testing the waters." Specifically, the SEC proposed an exemption (the “Proposed Rule") to certain provisions of Section 5 of the Securities Act of 1933 (the “Securities Act") commonly referred to as “gun-jumping" provisions. This exemption would permit any issuer or authorized person (e.g., an underwriter) to engage in oral or written communications with potential investors that the issuer reasonably believes are qualified institutional buyers (“QIBs") or institutional accredited investors (“IAIs").  Currently, this exemption to the gun-jumping provisions is only available to emerging growth companies (“EGCs").  The SEC believes that the Proposed Rule may “help issuers better assess the demand for and valuation of their securities," which may in turn “enhance the ability of issuers to conduct successful offerings and lower their cost of capital."  This goal is consistent with the SEC’s overall effort to increase the number of public companies and reduce the regulatory burden of capital raising.

Read More

Partial Shutdown: Potential Impact on SEC Operations

December 24, 2018 | Posted by Andrew L. Fabens; Hillary H. Holmes; Ronald O. Mueller; Stewart McDowell Topic(s): Securities Regulation

A partial shutdown of the federal government began at midnight on December 21, 2018. As a result, the SEC Division of Corporation Finance (the “Staff”) announced that the SEC would “remain fully operational for a limited number of days” from the beginning of the federal government shutdown. The SEC will be closed on December 24th and 25th in observance of the federal holiday. It is expected to have funding to remain in “open” status through the end of December 26th. Should the shutdown continue past the 26th, the SEC’s operating status is expected to change to “closed” and the SEC will begin to operate according to its Operations Plan under a Lapse in Appropriations and Government Shutdown. As currently envisaged, starting on December 27th the SEC “will have only an extremely limited number of staff members available to respond to emergency situations involving market integrity and investor protection, including law enforcement.” Regardless of the SEC’s operating status, the EDGAR filing system will continue to accept reports, registration statements and other filings. Accordingly, public companies must continue to file periodic and current reports when due on Forms 10-K, 10-Q and 8-K; however, from December 27th the SEC will not be able to declare registration statements effective nor qualify Form 1-A offering statements. A prolonged shutdown could create difficulties for the IPO market and for many public companies without an effective shelf registration statement and, in particular, would create a complex calculus for any company thinking about going public in January.

Read More

California Requires Public Companies Headquartered in California to Have Minimum Number of Women Directors on Board

October 3, 2018 | Posted by Stewart McDowell; Lori Zyskowski; Elizabeth A. Ising Topic(s): Corporate Governance

​On September 30, 2018, Governor Jerry Brown signed SB 826 into law (effective January 1, 2019), requiring a minimum number of female directors on the boards of publicly traded corporations with principal executive offices in California. Under this new Section 301.3 to the California Corporation Code, the location of a corporation’s principal executive office will be determined by the corporations’ Annual Report on Form 10-K, and publicly traded corporation means any “corporation with outstanding shares listed on a major United States stock exchange."

Read More

Strengthening U.S. Public Capital Markets – Recommendations from SIFMA Report

May 11, 2018 | Posted by Hillary H. Holmes; Elizabeth A. Ising; Stewart McDowell; Peter Wardle; James J. Moloney Topic(s): Dodd Frank; JOBS Act; Securities Regulation

On April 27, 2018, the Securities Industry and Financial Markets Association (“SIFMA”), the leading industry group representing broker-dealers, banks and asset managers, along with other securities industry related groups, released a report called “Expanding the On-Ramp: Recommendations to Help More Companies Go and Stay Public” (the “Report”).  In response to the decline in the number of IPOs and the number of public companies generally in the United States over the last twenty years, the Report provides recommendations aimed at reducing perceived impediments to becoming and remaining a public company. As the Report notes, the United States is now home to only about half the number of public companies that existed 20 years ago.  This decline is believed to have had adverse repercussions for the American economy generally, and the jobs market specifically.  In addition, the growth of private capital markets at the expense of public capital markets has raised concerns that individual investors are being marginalized.  More specifically, as many of the most innovative companies in the U.S. stay private longer and raise significant amounts of capital privately, the returns generated by such companies appear to accrue disproportionally to institutional, high net worth and other similar investors.

Read More

SEC Significantly Expands Confidential Review of Registration Statements

June 30, 2017 | Posted by Stewart McDowell; Andrew L. Fabens; Elizabeth A. Ising; James J. Moloney; Peter Wardle Topic(s): JOBS Act; Miscellaneous

Will Allow Confidential Submission of All Registration Statements for IPOs, Spin-Offs and Most Offerings Within 12 Months of an IPO or Spin-Off The Securities and Exchange Commission (“SEC”) announced[1] on Thursday that its the Staff of the Division of Corporation Finance (the “Staff”) will soon allow all companies to submit initial public offering (“IPO”) draft registration statements for confidential review. This change expands a benefit previously reserved for Emerging Growth Companies (“EGCs”), and is specifically aimed at encouraging more companies to enter the public market.  The SEC also announced that it will review draft registration statements submitted by non EGCs that omit financial statements that the issuer reasonably believes will not be required when the registration statement is filed publicly, and indicated a willingness to discuss expedited reviews with issuers and their advisors. 

Read More

SEC Adopts Amendment Shortening Trade Settlement Cycle From T+3 to T+2 (potential implications)

March 25, 2017 | Posted by Andrew L. Fabens; James J. Moloney; Peter Wardle; Stewart McDowell Topic(s): Corporate Governance; Securities Regulation

The SEC has adopted an amendment to Rule 15c6-1(a) of the Exchange Act (the Settlement Cycle Rule) shortening the standard settlement cycle for most broker-dealer transactions from three business days after the trade date (“T+3”) to two business days after the trade date (“T+2”).  The compliance date for the amendment is September 5, 2017.  The new requirement will prohibit broker-dealers from effecting or entering into a contract for the purchase or sale of a security (other than exempted securities, government securities, municipal securities, commercial paper, bankers’ acceptances, and commercial bills) that provides for payment of funds and delivery of securities later than the second business day after the date of the contract, unless otherwise expressly agreed to by the parties at the time of the transaction.

Read More

Non-Voting Shares Make Their Public Debut and Generate Some Governance Concerns, but How Will Courts View the Structure When First Presented?

March 12, 2017 | Posted by James J. Moloney; Elizabeth A. Ising; Peter Wardle; Stewart McDowell Topic(s): Corporate Governance; Securities Regulation

On March 1, 2017, Snap Inc. (“Snap” or the “Company”) – owner of the popular social media platform Snapchat – priced its highly anticipated initial public offering (“IPO”). With 200 million shares sold at $17 per share, the IPO raised approximately $3.4 billion for the Company. On their first trading day, Snap shares opened at $22.41 per share and peaked as high as $28.84 the following day. As of March 10, shares closed at $22.07, above its initial offering price, but below its opening trading price. As the largest IPO of any U.S.-based company since Facebook’s public offering in 2012, many investors’ primary focus here has been on the complete lack of voting privileges associated with the shares sold in the IPO. 

Read More

SEC Adopts Requirements for Active Hyperlinks In Exhibit Indexes

March 7, 2017 | Posted by Stewart McDowell; Andrew L. Fabens; Peter Wardle Topic(s): Securities Regulation

The SEC has adopted final rules requiring an active hyperlink to each filed exhibit identified in the exhibit index of most Securities Act and Exchange Act registration statements and reports that are required to include exhibits under Item 601 of Regulation S-K.  The rules become effective on September 1, 2017 (though the adopting release encourages early compliance), provided that smaller reporting companies and non-accelerated filers that submit filings in ASCII format need not comply with the rules until September 1, 2018.  The new requirements will apply to Forms S-1, S-3, S-4, S-8, S-11, F-1, F-3, F-4, SF-1, SF-3, 10, 10-K, 10-Q, 8-K, F-10, 20-F and 10-D (though the compliance date for Form 10-D will be announced at a later date).  The requirement will not apply to other forms under the multi-jurisdictional disclosure system used by certain Canadian issuers or to Form 6-K, as exhibits and exhibit indexes are not required by those forms. 

Read More

Marblegate Case Overturned by Second Circuit Court of Appeals

January 18, 2017 | Posted by Stewart McDowell; Andrew L. Fabens Topic(s): Securities Regulation

In a case closely watched by companies and investors alike, on January 17, 2016, the Second Circuit Court of Appeals overturned the decision of the District Court for the Southern District of New York in Marblegate Asset Management vs. Education Management Corp.  The District Court had held that a series of debt restructuring transactions by Education Management Corp. violated Section 316(b) of the Trust Indenture Act of 1939, as amended.  Section 316(b) of the Trust Indenture Act provides that “the right of any holder of any indenture security to receive payment of the principal and interest on such indenture …shall not be impaired or affected without the consent of such holder.”  Reading this provision broadly, the District Court found that a restructuring that released a parent guarantee and effectively stripped most of the assets from the issuer of the debt without the consent of each bondholder violated Section 316(b), even though the particular indenture for the bonds in question was not amended in connection with the restructuring.  The District Court concluded that Section 316(b) protects a bondholder’s practical ability to receive payment even where the indenture was not explicitly modified.  The District Court’s decision, together with another similar decision in the Southern District of New York in the case of Meehancombs Global Opportunities Funds, LP v. Caesers Entertainment Corp., caused significant concern among practitioners that these decisions significantly limited companies’ ability to enter into negotiated debt restructurings without consent of 100% of all indenture bondholders.  Because the requirement of 100% approval gives bondholders significant negotiating leverage and creates a real risk of “holdouts,” such a requirement could effectively prevent many debt restructurings outside of a bankruptcy court.  

Read More

NASDAQ Issues FAQ Relaxing Historical Position on Net Share Settled Convertible Securities

May 8, 2015 | Posted by Stewart McDowell; Peter Wardle Topic(s): Miscellaneous

In a change that we believe has gotten little attention to date, in March 2015 NASDAQ updated its publicly available “Frequently Asked Questions” relating to the application of NASDAQ’s shareholder approval rules to net share settled convertible securities issued in private placements.

Read More

Removal of General Solicitation Ban, Bad Actor Disqualification Rules to Become Effective September 23, 2013; Comment Period on Related Proposed Amendments Also to End September 23, 2013

July 24, 2013 | Posted by Andrew L. Fabens; Stewart McDowell; Peter Wardle Topic(s): Dodd Frank; Investment Act/Investment Advisors Act; JOBS Act; Securities Regulation

The Commission’s final rules to remove the ban on general solicitation and general advertising in offerings pursuant to Rule 506 of Regulation D under the Securities Act of 1933 (the “Securities Act”) and pursuant to Rule 144A under the Securities Act, and to disqualify felons and certain other “bad actors” from participating in offerings pursuant to Rule 506, were published in the Federal Register today.  As a consequence, the final rules will become effective on September 23, 2013.

Read More

SEC Approves Final Rules to Permit Advertising in Rule 506 and Rule 144A Offerings; Also Proposes Rules to Add Additional Investor Protections

July 11, 2013 | Posted by Andrew L. Fabens; Peter Wardle; Stewart McDowell Topic(s): Dodd Frank; Investment Act/Investment Advisors Act; JOBS Act; Securities Regulation

At an Open Commission Meeting on July 10, 2013, the Securities and Exchange Commission (the “SEC” or the “Commission”) adopted final rules to eliminate the prohibition against general solicitation and general advertising (together, “general solicitation”) in securities offerings conducted pursuant to Rule 506 of Regulation D under the Securities Act of 1933 (the “Securities Act”) and Rule 144A under the Securities Act, as required by Section 201(a) of the Jumpstart Our Business Startups Act (the “JOBS Act”).  Rule 506 currently permits an issuer to raise an unlimited amount of capital in a private placement to an unlimited number of accredited investors and up to 35 non-accredited investors provided that the issuer does not engage in general solicitation; it is the most widely used exemption under Regulation D.  Rule 144A permits the resale of an unlimited amount of securities in a private transaction to qualified institutional buyers.  The Commission approved the rules by a vote of 4-1 with Commissioner Aguilar dissenting.

Read More

Departure of SEC Chairman Schapiro Creates Uncertainty Regarding Rules to Remove the General Solicitation Ban in Certain Private Offerings

December 10, 2012 | Posted by Andrew L. Fabens; Stewart McDowell; James J. Moloney Topic(s): Corporate Governance; JOBS Act; Securities Regulation

On November 26, 2012, SEC Chairman Mary Schapiro announced that she will leave the Commission on Friday, December 14.  Commissioner Elisse Walter will take over as Chairman.

 

On August 29, 2012, the SEC proposed rules to implement Section 201(a) of the JOBS Act, which requires the SEC to eliminate the prohibition against general solicitation and general advertising (together, “general solicitation”) in securities offerings conducted pursuant to Rule 506 of Regulation D under the Securities Act of 1933 (the “Securities Act”) and Rule 144A under the Securities Act.  The Commission voted 4-1 to propose the rules, with Democratic Commissioner Aguilar as the lone dissent, but Commissioner Walter, also a Democrat, expressed reservations about the proposal in her opening statement at the Commission’s meeting.  Republican Commissioners Gallagher and Paredes strongly supported the proposed rules.

Read More

California Amends Corporations Code to Liberalize and Streamline Legal Standards for Corporate Distributions and Dividends

September 6, 2011 | Posted by Stewart McDowell Topic(s): Corporate Governance

On September 1, 2011, the Governor of California signed into law California Assembly Bill No. 571 (“AB 571”), which will liberalize and streamline the legal standards for California corporations and quasi-California corporations to make cash and property distributions to shareholders, including dividends and share repurchases and redemptions. AB 571 amends portions of the California Corporations Code (the “Code”) limiting corporate distributions that have been in effect since 1977, which many lawyers and clients have found confusing and overly restrictive. The new law will make California’s restrictions on shareholder distributions more consistent with analogous restrictions applicable to California limited liability companies and limited partnerships and the corporate laws of most other states. With AB 571, boards of directors of corporations will be free to consider the fair market value of a corporation’s assets, instead of historical carrying cost, and rely on whatever financial information a board deems reasonable under the circumstances, when determining whether the corporation has sufficient assets relative to its liabilities to distribute cash or property to its shareholders. This change alone will make it significantly easier for financially healthy corporations with historical book losses and appreciated assets (as is common with many growth companies) to pay dividends or redeem or repurchase shares.

Read More

Primary Sidebar

Topics

Audit Committee

Capital Markets

Compensation Committee

Corporate Governance

Disclosure

Dodd Frank

Environmental/Climate Change

ESG

EU Regulation

Executive Compensation

FCPA

Financial Statements

Human Capital Management

India Regulation

Investment Act/Investment Advisors Act

IPOs

JOBS Act

M&A

Miscellaneous

Private Placements

Proxy Access

Proxy Statements and Annual Meetings

Registered Securities Offerings

Registration Statements

Say on Pay

Securities Regulation

Shareholder Proposals

UK Regulation

Underwriters and Agents

Whistleblower Rules

Editors

Lauren M. Assaf-Holmes

J. Alan Bannister

Aaron K. Briggs

Michael Collins

Boris Dolgonos

Mellissa Campbell Duru

Andrew L. Fabens

Sean Feller

Tull Florey

Gina Hancock

Krista P. Hanvey

Lauren Hebson

Hillary H. Holmes

Elizabeth A. Ising

Thomas J. Kim

David Korvin

Stella Kwak

Brian J. Lane

Ari Lanin

Julia Lapitskaya

Robert B. Little

Cynthia M. Mabry

Stewart McDowell

Gregory Merz

James J. Moloney

Ronald O. Mueller

Michael K. Murphy

Ekaterina (Kate) Napalkova

Justine Robinson

Michael Scanlon

Eric Scarazzo

Elvia Soto

Gerry Spedale

Jack Strachan

Michael A. Titera

Tracey Tomlinson

Harrison Tucker

Peter Wardle

David C. Ware

Robyn Zolman

Lori Zyskowski

Useful Links

  • Gibson Dunn Website
  • Society of Corporate Secretaries & Governance Professionals
  • Institutional Shareholder Services
  • New York Stock Exchange
  • NASDAQ
  • SEC
  • Conference Board’s Center for Corporate Governance
  • Glass Lewis & Co., Inc.
  • The Corporate Counsel
  • CompensationStandards.com
  • Romeo & Dye’s Section 16.net
  • Harvard Law School Forum on Corporate Governance and Securities Regulation
  • National Association of Corporate Directors
  • Columbia Law Blue Sky
  • COVID-19 Resources for Public Companies
  • ESG Resources for Public Companies

Archives

Subscribe to Updates
RSS Feed
  • Privacy Statement
  • Cookie Notice
  • Contact Us
© 2025 Gibson, Dunn & Crutcher LLP. All rights reserved.