Capital Markets & Securities Law Watch

On December 14, 2022, the Securities and Exchange Commission (SEC) adopted amendments to Rule 10b5-1 under the Securities Exchange Act of 1934. The adopted amendments modify rules applicable to the affirmative defense to insider trading liability available for Rule 10b5-1 trading plans and also impose new disclosure requirements on issuers with respect to these trading plans.

On November 17, 2021, the Securities and Exchange Commission (SEC) adopted amendments to the federal proxy rules to require the use of a universal proxy card in public solicitations involving contested director elections where a dissident shareholder seeks to solicit proxies for a slate of candidates other than the company nominees. The universal proxy rules will become effective for any shareholder meeting involving a contested election held after August 31, 2022.

On November 5, 2021, the SEC approved Rule 6100, Board Determinations Under the Holding Foreign Companies Accountable Act, of the Public Company Accounting Oversight Board (PCAOB). Rule 6100 establishes a framework for the PCAOB’s determinations under the Holding Foreign Companies Accountable Act (HFCAA) that the PCAOB is unable to inspect or investigate completely registered public-accounting firms located in a foreign jurisdiction because of a position taken by an authority in that jurisdiction. Rule 6100 is effective immediately.

On July 30, 2021, SEC Chair Gary Gensler directed the SEC staff to seek certain disclosures and engage in targeted reviews of issuers associated with China-based operating companies in order to enhance the overall quality of disclosures in SEC registration statements and filings of these issuers.

On December 18, 2020, President Trump signed into law the “Holding Foreign Companies Accountable Act” (the Act), requiring foreign companies and their auditing firms to submit to U.S. regulator inspections of their audits—or face trading prohibitions on U.S. stock exchanges and over-the-counter markets for failure to have an inspection for three consecutive years.

On November 23, 2020, the Division of Corporation Finance (the Division) of the U.S. Securities and Exchange Commission (the SEC) released new disclosure guidance on the Division’s views regarding disclosures for companies based in, or with the majority of their operations located in, China.

As public companies prepare for quarterly earnings releases in the midst of the COVID-19 pandemic, they face the challenge of providing meaningful, forward-looking disclosure based on future projections and historical data of questionable relevance. On April 8, 2020, SEC Chairman Jay Clayton and Division of Corporation Finance Director Bill Hinman issued a joint statement (the Statement) addressing these challenges and reaffirming the SEC’s long-held positions on earnings release disclosure.

Following the conditional extensions issued earlier this month, the SEC announced further relief from upcoming reporting and delivery deadlines for public companies, funds, and investment advisors. The Division of Corporation Finance (the Division) also issued Disclosure Guidance Topic No. 9 providing guidance on disclosure obligations relating to COVID-19 business disruptions.

On March 12, 2020, the SEC adopted new amendments to the definitions of accelerated filers and large accelerated filers under Rule 12b-2 to reduce the preparation burden on smaller issuers.