Washington, D.C. partner John Sturc, associate Molly Claflin and Palo Alto associate Joshua Dick are the authors of "Coping with the New Whistleblower Rules" [PDF] published in the June 27, 2011 issue of Compliance Reporter magazine.
Topic: Corporate Governance
D.C. Circuit Vacates Securities and Exchange Commission’s Proxy Access Rule
Today the federal appellate court in Washington, D.C. invalidated the SEC’s "proxy access" rule, which would have required that director candidates nominated by certain large shareholders be included in a company’s proxy materials.
The Employee Strikes Back
London partners James Cox and Selina Sagayam, and Century City associate Michael Titera are the authors of "The Employee Strikes Back" [PDF] published in the July/August 2011 issue of IFLR.
Self-Reporting Is Getting Complicated: Balancing FINRA’s Rule 4530 and the SEC’s Whistleblowing Requirements
FINRA rule 4530 will take effect on July 1, 2011. The new rule, part of FINRA’s consolidated rulebook process, adds to the reporting requirements currently found in NASD rule 3070 and New York Stock Exchange rule 351. Specifically, broker-dealers will soon be required to: (1) notify FINRA of certain regulatory, litigation, and related events; (2) make quarterly reports of customer complaints and (3) file copies of certain criminal actions, civil complaints, and arbitration claims with FINRA. Even if rule 4530 does not mandate the reporting of a particular event, there may be occasions when a broker-dealer will still want to notify the SEC of the information in order to foreclose a characterization of "original information" under the whistleblower provisions of Section 21F of the Securities Exchange Act of 1934.
Webcast: The New SEC Whistleblower Rules
The new SEC whistleblower rules under Dodd-Frank will be finalized this week. They have significant implications for company compliance programs. Employees will be incentivized to report suspected violations directly to the SEC rather than reporting them internally, potentially setting off a flood of whistleblower claims to the SEC and undercutting company compliance programs.Gibson Dunn has formed a multidisciplinary Whistleblower Team to offer experienced, comprehensive counsel on the full range of corporate governance, enforcement, labor and litigation issues that arise under the new rules. Please join several of our lead Whistleblower Team attorneys for a review of how the new rules are likely to impact your company and the steps you should consider in response.
Directors and Shareholders of Indian Companies are Permitted to Attend Board Meetings and Shareholder Meetings via Video Conference
On May 20, 2011, the Ministry of Corporate Affairs, Government of India ("Corporate Affairs Ministry"), issued two general circulars ("Circulars") permitting attendance of meetings of the Board of Directors ("Board") and general meetings of the shareholders of an Indian company by using an electronic mode of communication. The Circulars were issued by the Corporate Affairs Ministry as part of its "green initiative in corporate governance" and are a long-awaited change to the means of attending Board and shareholder meetings. The first circular[1] ("Circular 1") clarified that shareholders of an Indian company can participate in general meetings of the shareholders by using video conferencing facilities. The second circular[2] ("Circular 2") clarified that directors of an Indian company can participate in meetings of the Board using video conferencing facilities and also clarified that directors who participate via video conferencing facilities will be counted towards the quorum of such Board meetings.
The Securities and Exchange Board of India Takes the View that Put/Call Options and Rights of First Refusal are Unenforceable
In an unpublished letter dated March 18, 2011, the Securities and Exchange Board of India ("SEBI") has taken the view that put and call option arrangements and rights of first refusal are not enforceable in India. Although the law on this question is far from settled, the view taken by SEBI may potentially impact several public M&A transactions in India where such clauses are frequently included in transaction documents. Please note that this discussion is based on an unpublished letter and that the analysis should therefore not be taken to be final law on the subject.
SEC Adopts Final Rules Implementing Whistleblower Provisions of Dodd-Frank
On May 25, 2011, in a 3-2 vote, the U.S. Securities and Exchange Commission (“SEC” or “Commission”) approved its final rules (“Whistleblower Rules”) to implement the whistleblower award program of Section 21F of the Securities Exchange Act of 1934, which was added by Section 922 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”). The Whistleblower Rules establish the standards and procedures the SEC will apply in awarding whistleblowers monetary compensation for providing tips about possible securities law violations that lead to successful SEC enforcement actions and make definitions which set the contours for protections of whistleblowers under the Dodd-Frank Act’s anti-retaliation provisions. The SEC’s press release is available here: SEC Adopts Rules to Establish Whistleblower Program. A copy of the adopting release and the Whistleblower Rules is available here: Final Rules.[1]
The Government of India Issues a New Consolidated Foreign Direct Investment Circular
On March 31, 2011, the Department of Industrial Policy and Promotion, Ministry of Commerce and Industry, Government of India ("DIPP"), issued a new consolidated foreign direct investment policy, Circular 1 of 2011 ("Circular"), which supersedes all prior press notes, press releases and clarifications issued by the DIPP relating to foreign direct investment in India. The Circular reflects the current policy of the Indian Government with respect to foreign direct investment in India, and has the force of law.
SEC Proposes Rules on Compensation Committee Independence and the Role of Compensation Consultants and Other Advisers
On March 30, 2011, the Securities and Exchange Commission (the “SEC”) voted unanimously to propose rules implementing Section 952 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) relating to: (1) compensation committee member independence; (2) compensation consultant and other adviser independence; and (3) compensation committee authority to retain, and disclosure regarding use of, compensation consultants and other advisers. In our July 21, 2010 client memorandum, available here, we describe in detail Section 952 of the Dodd-Frank Act, which added a new Section 10C to the Securities Exchange Act of 1934 (the “Exchange Act”).