This week we highlight a speech by Stephanie Avakian, Co-Director of the SEC’s Division of Enforcement, on cybersecurity and retail investor protection. In her remarks, she addresses the key priorities of the Enforcement Division in its allocation of resources, including its focus on retail investors, cyber-related issues, the conduct of investment advisers and broker-dealers, financial fraud and disclosure issues, and insider trading.
On October 17, 2017, the Staff of the Securities and Exchange Commission (SEC) issued new Non-GAAP Financial Measures Compliance and Disclosure Interpretations (C&DI) that clarify when financial forecasts used in connection with a business combination transaction are considered non-GAAP measures subject to Item 10(e) of Regulation S-K and Regulation G.
On October 11, 2017, the Securities and Exchange Commission (SEC) published for comment a proposal by NASDAQ Stock Market LLC (Nasdaq) to modify its initial and continued listing requirements for special purpose acquisition companies (SPACs).
Beginning in 2018, U.S. public companies will generally need to comply with the pay ratio disclosure rule under the Dodd-Frank Wall Street Reform and Consumer Protection Act, which requires that each such company disclose the annual total compensation of its CEO, the median of the annual total compensation of all employees of the company other than the CEO and the ratio of these two numbers. In order to provide this information, a company must determine (i) its “median employee” (ii) the annual total compensation of its CEO and (iii) the annual total compensation of its “median employee.” The rule generally provides companies with flexibility in making these determinations. For example, companies may use reasonable estimates in the methodology used to both identify the median employee and calculate the annual total compensation for employees other than the CEO. In addition, companies may evaluate their entire employee population, a statistical sampling of that population or other reasonable methods to identify the median employee. Non-U.S. employees may be excluded from this employee population in situations where non-U.S. employees constitute 5 percent or less of the company’s total employee workforce (the “5 percent exemption”).
Government contractors are subject to cybersecurity requirements, found in the Federal Acquisition Regulation (FAR) and each agency’s supplement to the FAR, and some important deadlines are fast approaching. Set forth below is a high-level overview of cybersecurity requirements found in the FAR and the Department of Defense (DoD) FAR Supplement (DFARS).
This week we highlight a study by the EY Center for Board Matters, “Audit Committee Reporting to Shareholders in 2017.” EY reviewed audit committee-related proxy disclosures by Fortune 100 companies to examine trends in voluntary reporting and finds a continued increase in voluntary audit committee disclosures to shareholders.
On August 17, 2017, the Securities and Exchange Commission (SEC) Staff issued new Compliance and Disclosure Interpretations (C&DIs) that clarify the financial information that Emerging Growth Companies (EGCs) and non-EGCs may omit from their draft registration statements. As we previously blogged, beginning on July 10, 2017, the SEC began to accept voluntary draft registration statements from all issuers for nonpublic review (not just EGCs). While these latest C&DIs provide useful examples about what financial statements to include in a registration statement, they are consistent with the SEC’s prior announcement, on June 29, 2017, regarding the expanded draft registration statement processing procedures, which was supplemented on August 17, 2017.
This week we highlight a report by PricewaterhouseCoopers which explores the challenges that boards face when key risks are overlooked. It’s easy for boards to focus on financial and compliance risks, but strategic and operational risks are also important. Directors need to make sure they are focusing on the right risks, those that can result in success or failure of the company.