Tagged: SEC

SEC Fines ADT Inc. $100k for Non-GAAP Disclosure in Earnings Releases

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On December 26, 2018, the SEC filed a cease-and-desist order and fined ADT Inc. (“ADT”) $100,000 for its use of non-GAAP financial measures without giving equal or greater prominence to the comparable GAAP financial measures. The order serves as a reminder of the importance of the SEC’s “equal or greater prominence” rule when disclosing non-GAAP financial measures, even when comparable GAAP financial measures are also...

U.S. Government Shutdown Impacts SEC Operations, EDGAR and Other Filings, Enforcement and Regulatory Activities

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In response to the U.S. government shutdown that began on December 22, 2018, the U.S. Securities and Exchange Commission and its Divisions of Corporation Finance and Investment Management published public guidance regarding the impacts on their operations. Although electronic filings will continue to be accepted in many cases, as described below, nearly all SEC operations, including the review and processing of filings and enforcement and...

SEC Clarifies Effective Date for Disclosure Simplification Rules

Cam C. Hoang

In August, the SEC adopted amendments updating and simplifying disclosure rules. See our prior summary here. Notable amendments included: the extension of a previously annual requirement to interim periods, to present a statement of changes in shareholders’ equity and to disclose the amount of dividends per share for each class of shares (vs common shares only) (either in a separate statement or a footnote)(revised Rules...

Marijuana Investments and Fraud Featured in SEC Investor Alert

David Marx

The marijuana industry is attracting considerable interest from investors, and unfortunately, scam artists trying to take advantage of those investors. In response to these concerns, on September 5, 2018, the Securities and Exchange Commission’s Office of Investor Education and Advocacy (OIEA) and Retail Strategy Task Force issued an alert to investors warning them about investment schemes involving marijuana-related companies. According to the release, the OIEA...

SEC Approves Series of Final and Proposed Rules in Line with Stated Priorities

Cam C. Hoang

The SEC held a very busy open meeting yesterday, voting on the following final and proposed rules: Adoption of amendments to modernize the definition of “smaller reporting company,” which was established in 2008.  See our previous discussion of the amendments.   Adoption of amendments to require the use of the Inline XBRL format in certain filings, which were proposed in 2017 and have been under...

SEC Expands on “Smaller Reporting Companies” Eligible for Scaled Disclosure

Cam C. Hoang

The SEC announced that it has voted to amend the definition of “smaller reporting company,” or “SRC,” expanding the population of companies that qualify for a range of scaled (reduced) disclosure requirements. The rules will become effective 60 days after publication in the Federal Register. Examples of scaled disclosure include that SRCs, in their annual reports on Form 10-K, are not obligated to include risk...

Ninth Circuit Rejects Decisions of Five Other Circuits: Exchange Act Section 14(e) Does Not Require Scienter

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Scienter has been a critical element of a claim based on Exchange Act Section 10(b) in an SEC enforcement action since the Supreme Court’s decision in Aaron v. SEC, 446 U.S. 680 (1980). It has also been a key element in private damage actions based on the cause of action implied under Section 10(b) and Rule 10b-5 since Ernst & Ernst v. Hochfelder, 425 U.S....

Recent Developments in Auditor Tenure and Independence

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Last month, over 35% of General Electric Co.’s shareholders voted against ratification of KPMG LLC as GE’s auditor. This high level of opposition (for some context, last year’s votes against KPMG were at a mere 5.7%) comes in the wake of GE’s recent accounting issues and criticism from proxy-advisory firms. More specifically, the SEC is currently investigating some of GE’s accounting practices, including its need...

Failure to Disclose Leads to $35 Million Penalty in the Yahoo! Cybersecurity Breach

Cam C. Hoang

The Securities and Exchange Commission (the “SEC”) announced Tuesday that Altaba, the entity formerly known as Yahoo! Inc., has agreed to pay a $35 million penalty to settle charges that it misled investors by failing to disclose one of the world’s largest data breaches in which hackers stole personal data relating to hundreds of millions of user accounts. According to the SEC’s order, within days...

NYSE Rule Change Requires Ten Minutes Advance Notice of Public Announcement of Dividends or Stock Distributions

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On August 14, 2017, the SEC approved an NYSE rule change that requires listed companies to give notice to the NYSE at least 10 minutes before any public announcement of dividends or stock distributions, even if such announcements occur outside the hours of the Exchange’s current immediate release policy. The rule change was effective immediately. The Exchange’s immediate release policy (Sections 202.05 and 202.06 of...