About a year ago, the SEC brought several enforcement proceedings targeting shortcomings in related party transactions disclosures, including by Lyft.  The action provides a reminder that Item 404(a) is broadly construed and reminded me that related party transactions are a topic worthy of blogging about.  Last week I published a blog on related party transaction disclosures for domestic companies (see HERE) and this week covers foreign private issuers (FPIs). Item 404 of Regulation S-K sets forth the related party disclosure obligations for domestic companies that must be included i ..read more

About a year ago, the SEC brought several enforcement proceedings targeting shortcomings in related party transactions disclosures, including by Lyft.  The action provides a reminder that Item 404(a) is broadly construed to require a description of transactions since the beginning of the registrant’s last fiscal year in excess of $120,000 in which it was or is to be a participant, and in which a related person had or will have a direct or indirect material interest.  When the cases came out, I added related party transactions to my (very long) list of topics worthy of a blog and now ..read more

It has been a tough few years for small cap (and all) initial public offerings (IPOs). Although I have been seeing a small up-tick in priced deals recently, we are not yet near the highs of 2020 – 2022. Among the various challenges facing IPO issuers, lengthy Nasdaq/NYSE review periods and trouble building out sufficient allocations have been especially difficult resulting in a lengthier IPO process than expected. An increased IPO timeline adds significant expense to the process. A registration statement cannot go effective with stale financial statement. Financial statements for domestic issu ..read more

On July 24, 2024, the SEC approved an NYSE rule change to allow for the delisting of companies that change their primary business. NYSE Continued Listing Standards As I wrote about in October 2023, the NYSE continued listing requirements as set forth in the Listed Company Manual section 802.01 include (pre-rule change) (see HERE): Distribution of Capital Stock: (i) total stockholders of 400; or (ii) total stockholders of 1,200 and an average monthly trading volume of less than 100,000 shares; or (iii) total non-affiliated publicly held shares of 600,000. Market Value: (i) average global marke ..read more

In June 2024, the U.S. Supreme Court struck down a decades old judicial precedent that provided guidance as to when judges could defer to a federal agencies’ interpretation of a law.  The original precedent derived from the 1984 case Chevron v. Natural Resources Defense Council, which gave deference to federal agencies’ interpretations of a law over the judicial system.  Although Chevron applied to all federal agencies, in light of a slew of recent litigation by and against the SEC related to rule making and interpretations (for example related to who is a “dealer” – see HERE) I deci ..read more

On August 19, 2024, SEC Commissioner Mark T. Uyeda published a statement regarding one of the numerous defendants in SEC initiated enforcement proceedings claiming unlicensed dealer activity.  The statement resonates with the sentiments of most of my colleagues, peers and clients. Background In November 2017 the SEC shocked the industry when it filed an action against Microcap Equity Group, LLC and its principal alleging that its investing activity required licensing as a dealer under Section 15(a) of the Exchange Act.  Since that time, the SEC has filed numerous additional ..read more

In March 2024, the Nasdaq Stock Market quietly amended Rule 5210 requiring that all lead underwriters on an IPO must be Nasdaq members or limited underwriting members as a prerequisite to applying for a listing.  The new rules also created the “limited underwriting member” class and accompanying rules applicable to the group and its associates including eligibility, application process and ongoing requirements.  Although the amendment garnered little attention at the time, now that it has become effective, it is loudly impacting the small cap IPO market. Rule 5210 – Background Nasdaq ..read more

On July 9, 2024, the SEC published its semi-annual Spring 2024 regulatory agenda (“Agenda”) and plans for rulemaking.  The Agenda is published twice a year, and for several years I have blogged about each publication.  Although items on the Agenda can move from one category to the next, be dropped off altogether, or new items pop up in any of the categories (including the final rule stage), the Agenda provides valuable insight into the SEC’s plans and the influence that comments can make on the rulemaking process. The Agenda is broken down by (i) Proposed Rule Stage; (ii) Final Rule ..read more

On June 24, 2024, Erik Gerding the Director of the SEC’s Division of Corporation Finance made a statement regarding the SEC’s state of disclosure review.  In fiscal year 2023 and continuing into 2024, the top areas of review and comment by the SEC were China-related matters, artificial intelligence, non-GAAP disclosures, management’s discussion and analysis, revenue recognition and financial statement presentation.  In addition, disruptions in the banking industry, cybersecurity risks, the impact of inflation and disclosure related to or as a result of newly adopted rules (such as pa ..read more

On June 24, 2024 the SEC published five (5) new compliance and disclosure interpretations (C&DI) on cybersecurity incident disclosures supplementing the C&DI published in December 2023 (see HERE). Cybersecurity In July, 2023 the SEC adopted final new rules requiring disclosures for both domestic and foreign companies related to cybersecurity incidents, risk management, strategy and governance (see HERE for a review of the new rules). The cybersecurity rules add new Item 1.05 to Form 8-K requiring disclosure of a material cybersecurity incident including the incident’s nature, scope, ti ..read more