In November 2022, the Securities and Exchange Commission (“SEC”) adopted amended rules that update the existing reporting requirements on Form N‑PX and create new Form N‑PX reporting requirements for institutional investment managers.[1] The purpose of these amendments is to increase transparency surrounding proxy voting records. Prior to the adoption of this new rule, registered investment management companies (“Funds”), such as mutual funds and exchange traded funds, were required to publicly report their annual proxy voting records on Form N‑PX.
Securities Regulation
NYSE and Nasdaq Allow More Time for Companies to Adopt Rule 10D-1 Clawback Policies: What to Do Now
This week, both the New York Stock Exchange (“NYSE”) and The Nasdaq Stock Market (“Nasdaq”, and together with NYSE, the “Exchanges”) filed amendments with the Securities and Exchange Commission (“SEC”) to provide a delayed effective date for the Exchanges’ proposed listing standards requiring listed companies to adopt clawback policies, as mandated by Rule 10D-1 under the Securities and Exchange Act of 1934.
New SEC Staff Guidance on Rule 10b5-1 Amendments and Summary of Compliance Dates
On May 25, 2023, the staff of the Division of Corporation Finance (the “Staff") of the Securities and Exchange Commission (the “SEC") issued three new Compliance and Disclosure Interpretations (“C&DIs") on the SEC’s recent Rule 10b5-1 amendments. The new C&DIs re-affirm prior statements made by Staff members regarding effective dates for required new disclosures and the operation of the cooling-off period when entering into back-to-back trading plans. We summarize below the C&DI and the compliance dates for new rules relating to Rule 10b5-1, Section 16 and share repurchases.
SEC Enforcement Action Highlights Importance of Non-GAAP Policies and Disclosure Controls and Procedures
On March 14, 2023, the SEC charged DXC Technology Co. (“DXC") with making material misstatements with respect to its non-GAAP financial performance measures, stating that, DXC “negligently misclassif[ied] tens of millions of dollars of expenses as [transaction, separation and integration-related (“TSI")] costs and improperly exclude[ed] them in its reporting of non-GAAP measures." The SEC’s order also found that DXC, and specifically its controllership function and disclosure committee, failed to maintain “adequate" disclosure controls and procedures relating to DXC’s non-GAAP disclosures, citing the following shortcomings:
SEC Publishes C&DIs Addressing Tender Offer Issues
On March 17, 2023, the staff of the Division of Corporation Finance (the “Staff") of the Securities and Exchange Commission released over thirty questions and answers in the form of Compliance and Disclosure Interpretations (“C&DIs") addressing various tender offer issues.
SEC Adopts New Final Rules for Clearance and Settlement; Proposes Changes for Investment Adviser Rules
On February 15, 2023, the Securities and Exchange Commission (the “SEC") adopted final rule changes intended to reduce risk in clearance and settlement for most broker-dealer securities transactions and proposed new rules designed to enhance safeguards for customer assets managed by investment advisers.
SEC Updates Non-GAAP C&DIs
On December 13, 2022, the staff of the Division of Corporation Finance (the “Staff”) of the Securities and Exchange Commission announced an update to its Compliance and Disclosure Interpretations (“C&DIs”) on Non-GAAP Financial Measures under Questions 100.01, 100.04 – 100.06, and 102.10(a)(b)(c). Many of the changes memorialize positions the Staff has taken in comment letters or provide additional detail about those positions.
EDGAR Ready to Accept Online Form 144 Filings Ahead of Deadline for Electronic Filing Requirement
Since September 23, 2022, the Securities and Exchange Commission (the “SEC") Electronic Data Gathering, Analysis, and Retrieval (“EDGAR") system has been ready to accept electronic Form 144 filings, pursuant to the SEC’s recent amendments requiring certain Forms 144 to be filed electronically. Filers have approximately six months from September 2022 to transition to electronic filing of Forms 144. The SEC’s compliance date is April 13, 2023.
SEC Raises Annual Gross Revenue Amount in the Definition of Emerging Growth Company
On September 9, 2022, the Securities and Exchange Commission (the “SEC”) amended its rules to
implement inflation-adjusted amendments to Rule 405 of the Securities Act of 1933, as amended (the “Securities Act”) and Rule 12b-2 of the Securities Exchange Act of 1932, as amended (the “Exchange Act”), and raised the annual gross revenue amount in the definition of “emerging growth company” (“EGC”) from $1,070,000,000 to $1,235,000,000. The final rule (available
Division of Corporation Finance Issues Interpretive Guidance on the SEC’s Universal Proxy Rules
On August 31, 2022, the universal proxy rules adopted late last year by the Securities and Exchange Commission (the “SEC") will become effective. As discussed in our previous client alert, the rules require proxy cards distributed by both public companies and nominating shareholders in contested director elections to include both sides’ director nominees, such that shareholders casting their vote can “mix-and-match" nominees from each of the company’s and the dissident’s slate of director nominees.