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Securities
TOP STORY—SEC guidance cracks down on spring-loaded options
The agency said that option grants that precede market-moving announcements “merit particular scrutiny by those responsible for compensation and reporting governance.” SEC staff released new guidance showing a focus on the accounting treatment of spr...
PCAOB NEWS AND SPEECHES—Reconstituted PCAOB approves new budget
November 29, 2021
Amanda Maine, J.D.
The slight increase in the budget is partly attributed to an increase in the travel budget, which the staff anticipates will rise following a reduction during the COVID-19 pandemic. In its first action on the budget since SEC Chair Gary Gensler dismi...
REGULATION TRACKER—Upcoming SEC and CFTC comment deadlines and effective dates
November 29, 2021
WK Editorial Staff
A table of proposed rule comment dates and final rule effective and compliance dates for SEC and CFTC rulemaking. Recent SEC activity includes the following: Electronic recordkeeping. The SEC proposed amendments to certain electronic recordkeeping re...
FRAUD AND MANIPULATION—2ndCir.: Shareholders plausibly alleged that proxy materials omitted relisting plan
November 29, 2021
Rodney F. Tonkovic, J.D.
The company's proxy materials said there were no current plans to relist, but the allegations plausibly showed that steps to relist had been taken by the time of the shareholder vote. A Second Circuit panel vacated the dismissal of a fraud complaint ...
FRAUD AND MANIPULATION—D. Ore.: Class action securities fraud failed to state a cause of action
November 29, 2021
Sara Cracau, J.D.
The purported misstatements or omissions were not stated with sufficient particularity to state a claim under Section 10(b) of the Exchange Act or Section 11 of the Securities Act. A federal district court in Oregon has granted LexinFintech, Inc.’s m...
FRAUD AND MANIPULATION—N.D. Cal.: Plaintiff alleges securities fraud against internet company Fastly, Inc.
November 29, 2021
R. Jason Howard, J.D.
Fastly identified and shared the risks that could cause the company to lose business, according to the court. A putative class action filed in the Northern District of California alleging securities fraud against Fastly, Inc., its CEO and CFO for mak...
Securities
TOP STORY—SEC proposes to enhance securities lending transparency, updated recordkeeping
New Rule 10c-1 would enhance the transparency and efficiency of the securities lending market by requiring data to be reported and made public in short order. By unanimous vote, the SEC has advanced two new proposed rules: one is intended to increase...
STRATEGIC PERSPECTIVES—House sends Build Back Better Act to Senate
November 19, 2021
Mark S. Nelson, J.D.
An hours-long delaying speech by House Republican Leader McCarthy was followed by a series of early-morning votes resulting in passage of the Build Back Better Act and its corporate and blockchain tax provisions along with its broader social programs...
NOTE TO SUBSCRIBERS
November 19, 2021
Securities Regulation Daily will not publish next week due to the Thanksgiving holiday. However, we will issue breaking news alerts on Monday and Tuesday if there are major developments. We will resume publication on Monday, November 29, with the ext...
ENFORCEMENT—SEC announces FY 2021 enforcement results
November 19, 2021
Joanne Cursinella, J.D.
The agency filed 697 total enforcement actions in fiscal year 2021. The Commission has announced that it filed a total of 697 enforcement actions in FY 2021, including 434 new enforcement actions representing a 7 percent increase over the prior year....
FRAUD AND MANIPULATION—Advisory company’s subsidiary pays $18M for mishandling nonpublic information
November 19, 2021
Jay Fishman, J.D.
The subsidiary did not have policies in place to address the risks posed by allowing the company’s active partners access to, and oversight of, nonpublic information pertaining to the subsidiary’s investment options for current/former partners and em...
EXECUTIVE COMPENSATION—ISS study sees “tipping point” in companies increasingly tying executive pay to ESG metrics
November 19, 2021
Lene Powell, J.D.
Social metrics predominate in compensation programs, but environmental metrics are growing fast. A new report by Institutional Shareholder Services (ISS) finds an accelerating upward trend in the number of U.S. companies using environmental and socia...
WORTH NOTING—Other litigation, regulatory activity and industry news
November 19, 2021
WK Editorial Staff
A weekly roundup of other items of interest to the securities, commodities, and corporate governance communities. SEC NEWS AND SPEECHES— The SEC appointed MIT finance professor Haoxiang Zhu as Director of the Division of Trading and Markets . Among o...
Securities
The association noted that a SPAC’s sponsors will receive $100 million if the SPAC completes an acquisition—a significant return on a $25,000 investment. The Council for Institutional Investors (CII) has filed an amicus brief in one of three high-pro...
CORPORATE GOVERNANCE—CCMC objects to SEC’s rescission of staff legal bulletins on shareholder proposals
November 18, 2021
Elena Eyber, J.D.
The CCMC urged the SEC to withdraw Staff Legal Bulletin No. 14L and reinstate Staff Legal Bulletin Nos. 14I, 14J and 14K on shareholder proposals. In a letter to the SEC, the U.S. Chamber of Commerce’s Center for Capital Markets Competitiveness (CCMC...
PUBLIC COMPANY REPORTING AND DISCLOSURE—SEC grants first no-action relief to non-U.S. swap dealers under substituted compliance regime
November 18, 2021
John Filar Atwood
Banks from Sweden and Canada receive assurance that they may file periodic financial and operational information under the terms of other countries’ substituted compliance orders. The SEC’s Division of Trading and Markets has granted no-action relief...
ENFORCEMENT—Cornerstone: SEC public company enforcement actions dropped 15% in 2021
November 18, 2021
Jeffrey H. Brochin, J.D.
Despite the lowest number of enforcement filings in seven years, monetary settlements imposed by the regulatory agency were up over FY 2020 settlement figures. Economic and financial analysts Cornerstone Research, in conjunction with the NYU Pollack ...
BLOG TRACKER—Noteworthy blog posts and other commentary
November 18, 2021
WK Editorial Staff
The week’s most insightful, intriguing, and entertaining blog posts from the securities, commodities, and corporate governance communities. FCPA Professor, FCPA “Tips” Continue To Be A Minor Component Of The SEC’s Whistleblower Program , by Mike Koeh...
Securities
TOP STORY—SEC amends rules to require universal proxy voting, proposes to amend proxy advice rule
In new final rules, the SEC eliminated procedural differences for shareholders voting in director elections in person versus by proxy. The SEC also proposed to ease current heightened requirements for proxy advice firms, which some see as necessary a...
ACCOUNTING AND AUDITING—Crenshaw sees role for internal accounting controls in managing ESG risks
November 17, 2021
John Filar Atwood
SEC Commissioner believes cybersecurity, climate change, and digital assets are three areas where accounting controls should be robust. Environmental, social, and governance (ESG) issues have taken center stage at the SEC, making the reliability of c...
ENFORCEMENT—N.D. Cal.: Ohio AG files suit against Facebook for securities fraud, cites alleged harm to children
November 17, 2021
Jeffrey H. Brochin, J.D.
The lawsuit alleges egregious breach of public trust by Facebook by knowingly exploiting its most vulnerable users--including children--and making materially false and misleading statements as part of a scheme to mislead the market. Ohio Attorney Gen...
FRAUD AND MANIPULATION—S.D. Fla.: Florida resident and two Israeli residents to pay $7 million for role in fraudulent binary options and digital asset scheme
November 17, 2021
Elena Eyber, J.D.
A Florida resident and two Israeli residents and their company are to pay $7 million in disgorgement and civil monetary penalties for their role in fraudulent binary options and digital asset scheme. A federal court in Florida issued two orders grant...
INDUSTRY NEWS—CFTC /SEC chairs tie Treasury Market to commodities and securities
November 17, 2021
Jay Fishman, J.D.
Chairs Behnam and Gensler offer help to strengthen Treasury Market functioning and resiliency. As part of the seventh annual U.S. Treasury Market Conference held virtually on Wednesday November 17, 2021, Acting Commodity Futures Trading Commission (C...
Securities
TOP STORY—House FSC reports two bills on SPACs
One of the SPAC bills focuses on disclosures to retail investors and is similar to a bill previously introduced in the Senate. The House Financial Services Committee reported two bills that would place new limits on special purpose acquisition compan...
ACCOUNTING AND AUDITING—CAQ finds that more audit committees disclosed cybersecurity risks during COVID
November 16, 2021
Amanda Maine, J.D.
Audit committees have an important role to play in making important disclosures to demonstrate transparency to investors and other stakeholders. The Center for Audit Quality (CAQ) released its eighth annual “Transparency Barometer ,” which analyzes d...
FRAUD AND MANIPULATION—S.D.N.Y.: New York fund manager and his company charged with securities fraud
November 16, 2021
R. Jason Howard, J.D.
Misleading offering materials and misappropriated funds for Opportunity Zone investments. The SEC has filed a complaint against a defendant and his company, Activated Capital, LLC, on allegations of securities violations in connection with Opportunit...
PROXIES—D.Del.: Qualcomm derivative complaint fails to show proxy violations or director liability
November 16, 2021
Rodney F. Tonkovic, J.D.
The plaintiffs failed to show any actionable false statements and failed to identify what, if any, laws were violated, or by whom. The district court for Delaware dismissed derivative claims brought against Qualcomm's board of directors. The complain...
FRAUD AND MANIPULATION—2d Cir.: No abuse of ‘Mandate Rule’ by district court in declining supplemental jurisdiction
November 16, 2021
Jeffrey H. Brochin, J.D.
Upon remand, district court had discretion to decline supplemental jurisdiction over state law claims because remand mandate was only controlling as to matters within its parameters, and lower court could dispose of the case on grounds not dealt with...
IPO TRACKER—Rivian’s $11.9B debut is fifth largest U.S. IPO ever
November 16, 2021
John Filar Atwood
A snapshot of the week’s IPO activity, including completed deals, new preliminary filings and IPO withdrawals. Rivian Automotive completed an $11.9 billion offering last week, making it the fifth largest U.S. IPO in history. The maker of electric SUV...