Posts Tagged 'Securities and Exchange Commission'

SEC to Institute Corporate Governance Scorecard for Quoted Companies

by James Emejo for THISDAY LIVE

The acting Director General of the Securities and Exchange Commission (SEC), Mr. Mounir Gwarzo on Tuesday said a corporate governance scorecard would soon be launched to strengthen the performance of companies operating in the nation’s capital market.

He said among other things, the commission believes there will be better returns and service delivery if adherence to the tenets of corporate governance is taken seriously by publicly quoted companies.

Speaking when he received members of the Institute of Directors Centre for Corporate Governance in Abuja, Gwarzo said the proposed launch of the scorecard which would probably be the first by an institution in the financial system in the country, underscored the importance the Commission attaches to corporate governance.

He added that SEC’s immediate ambition would be to see that every operator in the capital market complies with corporate governance in no distant time.
Gwarzo said the commission was currently consulting on the scorecard “to ensure that before we launch the Corporate Governance Scorecard in the next couple of weeks, we would have consulted widely with the relevant bodies.”

He said:”Corporate governance is very close to our heart and we believe that collaboration with you will further propagate the advocacy in terms of its importance. I can assure you that we are ready to collaborate with you.” Read more here.

Businesses Take a Cautious Approach to Disclosures Using Social Media

By Michelle Leder and Michael. J de la Merced, The New York Times, 25th April 2013

Zynga’s latest quarterly earnings report, released on Wednesday, came in the typical format and was accompanied with the usual financial tables investors expect.

But the social gaming company that counts FarmVille among its games included a new addition: a 204-word paragraph encouraging investors to check its corporate blog and Facebook and Twitter pages for regular news updates.

It was just one of dozens of companies taking advantage of newly clarified rules from the Securities and Exchange Commission that have now blessed the use of social media sites to disclose financial information.

Although social networks have proliferated for years and the public more readily turns to Twitter than the S.E.C.’s Edgar Web portal for updates, the agency just a few months ago was still evaluating whether using newer outlets would violate its rules.

Even with the updated guidelines, uncertainty over what exactly the commission will allow has meant that many companies, and their legal teams, are playing it safe this earnings season. Continue reading…

What Others Are Saying About The SEC’s First DPA

published by Corporate Compliance Insights. This post was reprinted from Mike Koehler’s blog, FCPA Professor

Non-prosecution and deferred prosecution agreements have been a staple of DOJ FCPA enforcement for years. 2010 saw 15 such resolution vehicles (4 NPAs) and (11 DPAs), and these resolution vehicles are significantly different than a corporate entity being criminally charged or pleading guilty.

Last month, the SEC used a DPA for the first time in resolving the Tenaris FCPA enforcement action.

Today I collect what others are saying about the SEC’s first DPA, including whether resolution via such a vehicle is all that different from traditional SEC resolution procedures.

In this publication, Shearman & Sterling note:

“Prior to this settlement, the SEC had employed only two enforcement options: civil complaints seeking injunctive relief or administrative cease-and-desist orders. In both cases, even though the company could settle without admitting or denying the SEC’s allegations, the relevant adjudicator (either a judge or the Commission) necessarily made a formal finding that the company had indeed violated the law and that the injunction or order was necessary to prevent it from doing so again.” (continue reading… )

SEC Proposes Rule on Comp Committee Members

by Stephen Barlas for Human  Resource Executive Online, June 7th, 2011.

The Securities and Exchange Commission does not require compensation committee members to be “independent,” but companies will have to disclose potential conflicts of interest, according to the proposed rule, which is similar to the rules regarding comp committee advisers. 

Business groups are generally happy with the U.S. Securities and Exchange Commission’s proposal requiring independence of board compensation committees, although they are resisting new disclosures about compensation consultants.

The SEC’s proposed rule is another of the many proposed and final rules flowing out of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, which added Section 10C to the Securities Exchange Act of 1934.

Section 10C requires the Commission to adopt rules directing the national securities exchanges — the big players are the New York Stock Exchange, Euronext and NASDEQ — to establish guidelines for the ways companies must determine whether comp committee members are independent.

The legislation does not require compensation consultants to be independent, but companies may have to disclose in their annual reports potential consultant conflicts beyond what is currently required in Regulation S-K.

Dodd-Frank’s guidelines, and the SEC’s translation of them into regulatory language, generally track the independence rules already in place at the exchanges with regard to boards of directors generally. (continue reading… )

SEC Strengthens Shareholders’ Role In Corporate Political Speech Decisions

by  Robert J. Jackson, Jr for The Harvard Law School Forum, May 15th, 2011.

The Supreme Court’s recent decision in Citizens United v. FEC makes clear that corporations have considerable freedom to spend corporate funds on elections. In an article published in the Harvard Law Review last November, Lucian Bebchuk and I argued that, in the wake of Citizens United, lawmakers should reconsider the corporate-law rules governing who decides how corporations use this freedom. Specifically, we argued that these rules should give shareholders a greater role in corporate political speech decisions. Recently, the Securities Exchange Commission provided important guidance that will strengthen shareholders’ role in deciding whether and how corporations spend on elections.

Under existing corporate-law rules, corporate political speech decisions are subject to the same rules as ordinary business decisions. Thus, political speech decisions can generally be made without input from shareholders, a role for independent directors, or detailed disclosure—the safeguards that corporate-law rules establish for special corporate decisions. In our article, we argued that the rules governing ordinary business decisions are inappropriate for corporate political speech, and proposed rules to strengthen the role of shareholders and independent directors, and mandate special disclosure, when directors and executives seek to spend corporate funds on elections.

Among the existing corporate-law rules governing who decides on corporate political speech is the Securities Exchange Commission’s Rule 14a-8, which allows shareholders to include proposals on the company’s proxy ballot for a vote by shareholders. Rule 14a-8 includes an exception for proposals related to ordinary business operations, providing that companies can exclude such proposals from the corporate ballot. The SEC staff has previously concluded that this exception applies to shareholder proposals related to corporate political spending. For example, as we noted in our article, the staff has permitted companies to exclude shareholder proposals recommending that a corporate political action committee be disbanded, and proposals requesting that the company provide shareholders with a report on lobbying activities (continue reading… )

Headaches at the SEC’s think tank

by Sarah N. Lynch for Reuters, May 3rd, 2011.

The Securities and Exchange Commission pulled out all the stops when it tapped University of Texas law professor Henry Hu to head the first new division created at the agency in 37 years.

An unusually generous temporary contract brought Hu to Washington in September of 2009 to oversee the new Division of Risk, Strategy and Financial Innovation, part of the agency’s effort to address an embarrassing failure to catch swindler Bernard Madoff and adapt to new Wall Street products that could become the next financial weapons of mass destruction.

Hu, with three degrees from Yale and the author of papers on derivatives and financial regulation, looked perfect to lead the “think tank” division that SEC Chairman Mary Schapiro tasked with anticipating market problems.

But Hu departed in January, leaving the division searching for a chief economist and new permanent director, and with questions swirling about how much was accomplished during his roughly 16 months on the job. (continue reading… )

The Destructive Ambiguity of Federal Proxy Access

by Jill Fisch for The Harvard Law School Forum, April 27th, 2011.

The paper, The Destructive Ambiguity of Federal Proxy Access, forthcoming in the Emory Law Journal, demonstrates the tension between the federal requirements for the exercise of shareholder nominating rights and the state law principles upon which the SEC purports to ground those rights. The paper unpacks the ambiguities in the SEC’s conception of which shareholders should nominate director candidates. And it highlights the ambiguity resulting from the SEC’s failure to confront, in adopting its rule, the appropriate allocation of power between shareholders and management and the effects of proxy access on that balance.

Under U.S. corporate law, the shareholders elect the board of directors. In most cases, however, those shareholders do not nominate director candidates. Instead, the nominating committee of the board chooses a slate of candidates, and those candidates are submitted to the shareholders for approval. Absent the infrequent phenomenon of an election contest, shareholders do not participate in the nomination process.

The Securities and Exchange Commission (SEC) has struggled for years with the regulation of the shareholders’ role in nominating directors. As early as 1942, the SEC proposed a rule that would have required issuers to include shareholder-nominated candidates in their proxy statements. Ultimately, the SEC abandoned the proposal. In the ensuing almost seventy years, the SEC revisited the issue at least five times but failed to adopt a rule allowing proxy access. (continue reading… )


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