On February 15, 2023, the SEC adopted final rules shortening the standard settlement cycle from two business days (T+2) to one business day (T+1).  A shorter settlement cycle will reduce the credit, market and liquidity risks in securities transactions.  The SEC previously shorted the standard cycle from three days (T+3) to T+2 in 2017 (see HERE) and at that time, and in speeches and rule making agendas since then, has consistently indicated efforts to move to T+1. In addition to shortening the standard settlement cycle, the new rules also shorten the standard settlement cycle for fi ..read more

The rules related to direct listings continue to evolve, with the latest Nasdaq rule change being approved on December 2, 2022, although their utilization has been slow to gain traction.  Despite the Exchange’s efforts to make the process more attractive and viable, based on a few articles on the subject, only 10 companies had gone public via direct listing as of December 31, 2021, and I could not find a single example of any others since that time.  Moreover, and certainly due to the elevated listing standards and arduous process, each of the companies have been much more mature suc ..read more

Effective June 3, 2023, FINRA will be replacing and updating the system for filing a Company Related Action Notification form, which form begins the process with FINRA to effectuate a corporate action initiated by a company trading on OTC Markets.  The new process allows companies to submit forms, get updates and respond to comments through an electronic FINRA gateway. Background/Rule 6490 Effective September 27, 2010, the SEC approved FINRA Rule 6490 (Processing of Company Related Actions).  Rule 6490 requires that corporations whose securities are trading on the OTC ..read more

Just a few weeks ago, I wrote about the Garfield v. Boxed, Inc. case in Delaware questioning whether Class A and Class B common stock in a SPAC structure were different series of a same class or different classes of stock requiring separate class voting in certain circumstances (see HERE).  The Delaware Chancery court in Garfield v. Boxed, found that in that particular case, the Class A and Class B were separate classes requiring a separate class vote to increase the total outstanding common stock as required by the Delaware General Corporate Law (DGCL) Section 242(b)(2). Following the Ga ..read more

On December 13, 2022, the SEC issued seven new Compliance & Disclosure Interpretations (C&DI) related to the use of non-GAAP financial measures, the first new C&DI on the subject since 2018. Several of the new C&DI update or replace the language of prior existing C&DI.  The C&DI cover revenue recognition, misleading information and GAAP reconciliation, in some cases replacing a principles-based response with a more prescriptive approach. The SEC permits companies to present non-GAAP financial measures in their public disclosures subject to compliance with Regulatio ..read more

In the year and a half since Gary Gensler made it clear to the world that he intends to focus on the crypto “wild west” (see HERE) things have gone from bad to worse for the industry.  Of course, it is not all the SEC’s extreme crypto scrutiny that is causing problems, but the very real crypto winter including the collapse of the FTX exchange and its FTX Future Fund, and the realization that the metaverse of tomorrow, will actually not be here until… tomorrow have all added to industry problems.   Not to mention a slew of bankruptcy filings (FTX, Blockfi, Celsius and Voyager) an ..read more

As anticipated, on February 14, 2023, the SEC proposed revisions to the Privacy Act, governing the handling of personal information in the federal government.  The proposed revisions would codify current practices for processing requests for information made by the public under the Privacy Act and would result in an entire re-write of the current rules. Background The Privacy Act is the principal law governing the handling of personal information in the federal government regulating the collection, maintenance, use, and dissemination of information about individuals that is maintained in ..read more

On October 26, 2022, the SEC adopted final rules on listing standards for the recovery of erroneously awarded incentive-based executive compensation (“Clawback Rules”) (see HERE).  The Clawback Rules implement Section 954 of the Dodd-Frank Act and require that national securities exchanges require disclosure of policies regarding and mandating clawback of compensation under certain circumstances as a listing qualification. The proposed rules were first published in July 2015 (see HERE) and have moved around on the SEC semiannual regulatory agenda from proposed to long-term and back again ..read more

In December 2022, the Delaware Chancery Court entered a ruling sending the SPAC world spiraling, for what seems like the 10th time in the last couple of years.  As is always the case in a SPAC (or at least 99% of the time), common stock is broken into two series, Class A and Class B.  The Class A common stock is issued to the public shareholders in the underwritten initial public offering and the Class B common stock is issued to the sponsor.  Upon closing a business combination transaction, the sponsor Class B common stock automatically converts into Class A common stock, leavi ..read more

On January 30, 2023, the SEC’s Division of Corporation Finance updated its Financial Reporting Manual (“Manual”).  The latest update is dated as of December 31, 2022.  Although we attorneys like to leave the accounting to the accountants, the Financial Reporting Manual is a go to resource for all practitioners and is generally one of the many resources always open on my desktop. As the preamble to the Manual states, it was originally created as internal guidance to the SEC staff.  In 2008, in an effort to increase transparency of informal staff interpretations, the SEC posted a ..read more