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:
Updated Summary of Director Education Opportunities Available
Gibson Dunn’s summary of director education opportunities has been updated as of April 2023. A copy is available at this link. Boards of Directors of public companies find this a useful resource as they look for high quality education opportunities.
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.
Updated Summary of Director Education Opportunities Available
Gibson Dunn’s summary of director education opportunities has been updated as of January 2023. A copy is available at this link. Boards of Directors of public companies find this a useful resource as they look for high quality education opportunities.
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.
Updated Summary of Select Director Education Opportunities Available
Gibson Dunn’s summary of director education opportunities has been updated as of October 2022 and is available
at this link. Boards of Directors of public companies find this a useful resource as they look for high quality education opportunities.
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