Category: Form 10-Q

Form 10-Q: These reports are signed by company officers and directors. Moreover, the Sarbanes-Oxley Act of 2002 (“SOX”) implemented a requirement that the company principal executive officer or officers and principal financial officer or officers execute certain personal certifications included with each Form 10-Q and 10-K. Certifications are not required on a periodic Form 8-K…

Feb142017

What Does The SEC Do And What Is Its Purpose?

ABA Journal’s 10th Annual Blawg 100

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As I write about the myriad of constantly changing and progressing securities law-related policies, rules, regulations, guidance and issues, I am reminded that sometimes it is important to go back and explain certain key facts to lay a proper foundation for an understanding of the topics which layer on this foundation. In this blog, I am doing just that by explaining what the Securities and Exchange Commission (SEC) is and its purpose. Most of information in this blog comes from the SEC website, which is an extremely useful resource for practitioners, issuers, investors and all market participants.

Introduction

The mission of the SEC is to protect investors, maintain fair, orderly and efficient markets and facilitate capital formation.  Although each mission should be a priority, the reality is that the focus of the SEC changes based on its Chair and Commissioners and political pressure. Outgoing Chair Mary Jo White viewed the SEC enforcement division

Oct272015

SEC Small Business Advisory Committee Public Company Disclosure Recommendations

ABA Journal’s 10th Annual Blawg 100

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On September 23, 2015, the SEC Advisory Committee on Small and Emerging Companies (the “Advisory Committee”) met and finalized its recommendation to the SEC regarding changes to the disclosure requirements for smaller publicly traded companies.    

By way of reminder, the Committee was organized by the SEC to provide advice on SEC rules, regulations and policies regarding “its mission of protecting investors, maintaining fair, orderly and efficient markets and facilitating capital formation” as related to “(i) capital raising by emerging privately held small businesses and publicly traded companies with less than $250 million in public market capitalization; (ii) trading in the securities of such businesses and companies; and (iii) public reporting and corporate governance requirements to which such businesses and companies are subject.”

The topic of disclosure requirements for smaller public companies under the Securities Exchange Act of 1934 (“Exchange Act”) has come to the forefront over the past year.  In early December

May192015

SEC Proposed Pay Versus Performance

ABA Journal’s 10th Annual Blawg 100

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On April 29, 2015, the SEC published the anticipated pay versus performance proposed rules.  The rules are in the comment period and will not be effective until the SEC publishes final rules.  Although timing is unclear, some commentators believe the new rules will be implemented as soon as the 2016 proxy season. 

The proposed rules require companies to clearly and concisely disclose the relationship between executive compensation actually paid and the financial performance of the company, taking into account any change in the value of the shares of stock and dividends of the registrant and any distributions.  The new proposed disclosure requirements will not apply to emerging growth companies or foreign private issuers.  In addition, smaller public companies will have a scaled back disclosure requirement. 

The proposed new rules implement Section 14(i) of the Securities Exchange Act of 1934, as amended (“Exchange Act”) and as added by Section 953(a) of the Dodd-Frank Wall

Dec232014

Will the Disclosure Modernization and Simplification Act of 2014 Simplify Reporting Requirements for ECG’s and Smaller Reporting Companies?

ABA Journal’s 10th Annual Blawg 100

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In early December the House passed the Disclosure Modernization and Simplification Act of 2014, which will now go to the Senate for action—or inaction, as the case may be.

The bill joins a string of legislative and political pressure on the SEC to review and modernize Regulation S-K to eliminate burdensome, unnecessary disclosure with the dual purpose of reducing the costs to the disclosing issuer and ensure readable, material information for the investing public.

The Disclosure Modernization and Simplification Act of 2014, if passed, would require the SEC to adopt or amend rules to: (i) allow issuers to include a summary page to Form 10-K; and (ii) scale or eliminate duplicative, antiquated or unnecessary requirements in Regulation S-K.  In addition, the SEC would be required to conduct yet another study on all Regulation S-K disclosure requirements to determine how best to amend and modernize the rules to reduce costs and burdens while

Aug262014

CEO and CFO Certifications for Forms 10-Q and 10-K

ABA Journal’s 10th Annual Blawg 100

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A public company with a class of securities registered under Section 12 or which is subject to Section 15(d) of the Securities Exchange Act of 1934, as amended (“Exchange Act”) must file reports with the SEC.  The underlying basis of the reporting requirements is to keep shareholders and the markets informed on a regular basis in a transparent manner.   Reports filed with the SEC can be viewed by the public on the SEC EDGAR website.  The required reports include an annual Form 10-K, quarterly Form 10Q’s and current periodic Form 8-K as well as proxy reports and certain shareholder and affiliate reporting requirements.

These reports are signed by company officers and directors.  Moreover, the Sarbanes-Oxley Act of 2002 (“SOX”) implemented a requirement that the company principal executive officer or officers and principal financial officer or officers execute certain personal certifications included with each Form 10-Q and 10-K.  Certifications are not required on a

Jun102014

An Overview of MD&A

Management’s discussion and analysis of financial condition and results of operation, commonly referred to as MD&A, is an integral part of annual (Form 10-K) and quarterly (Form 10-Q) reports filed with the Securities and Exchange Commission (SEC).  MD&A is also included in registration statements filed under both the Securities Exchange Act of 1934 (Form 10) and Securities Act of 1933 (Form S-1).  MD&A requires the most input and effort from officers and directors of a company and, due to the many components of required information, often generates SEC review and comments.  Item 303 of Regulation S-K sets forth the required content for MD&A.   This discussion will be limited to the requirements for small public companies (i.e., those with revenues of less than $75 million).

A MD&A discussion for quarterly reports on Form 10-Q is abbreviated from the requirements for annual reports on Form 10-K and registration statements and should concentrate on updating and supplementing the annual report discussion.  Although

Apr152014

Public Company SEC Reporting Requirements

A public company with a class of securities registered under either Section 12 or which is subject to Section 15(d) of the Securities Exchange Act of 1934, as amended (“Exchange Act”) must file reports with the SEC (“Reporting Requirements”).  The underlying basis of the Reporting Requirements is to keep shareholders and the markets informed on a regular basis in a transparent manner.   Reports filed with the SEC can be viewed by the public on the SEC EDGAR website.  The required reports include an annual Form 10-K, quarterly Form 10Q’s and current periodic Form 8-K as well as proxy reports and certain shareholder and affiliate reporting requirements. 

A company becomes subject to the Reporting Requirements by filing an

Feb252014

SEC Proposes Rules for Regulation A+

On December 18, 2013, the SEC published proposed rules to implement Title IV of the JOBS Act, commonly referred to as Regulation A+.  The proposed rules both add the new Section 3(b)(2) (i.e., Regulation A+) provisions and modify the existing Regulation A.  This blog is limited to a discussion of the new Regulation A+.

Background

Title IV of the JOBS Act technically amends Section 3(b) of the Securities Act, which up to now has been a general provision allowing the SEC to fashion exemptions from registration, up to a total offering amount of $5,000,000.  Regulation A is and has historically been an exemption created under the powers afforded the SEC by Section 3(b).

Technically speaking, Regulation D, Rule 504 and 505 offerings and Regulation A offerings are promulgated under Section 3(b), and Rule 506 is promulgated under Section 4(a)(2).  This is important because federal law does not pre-empt state law for Section 3(b) offerings, but it does so for Section

Jan252013

How To Bring A Delinquent Exchange Act Reporting Company Current

SEC Delinquent Filers Program

In 2004 the Securities and Exchange Commission (“SEC”) instituted the Delinquent Filers Program and created the Delinquent Filers Branch as part of its Division of Enforcement.  The Delinquent Filers Branch was instituted to encourage publicly traded companies that are delinquent in the filing of their required periodic reports (Forms 10-K and 10-Q) under the Securities Exchange Act of 1934 (“Exchange Act”) to provide investors with accurate financial information upon which to make informed investment decisions. The securities registrations of issuers that fail to make their required periodic filings are subject to suspension or revocation by the SEC and other enforcement proceedings.

Since it was instituted, the SEC Delinquent Filers Branch has suspended the trading and/or revoked the registration of hundreds of companies, often in sweeps of large groups of filers in a single day.  Generally, a delinquent filer would receive a letter from the SEC giving the Company 10 days in which to make the

Jul302012

Regulation A+; A Brief History

Title IV of the JOBS Act – Small Capital Formation – is quickly being called the new Regulation A+.  Title IV of the JOBS Act technically amends Section 3(b) of the Securities Act of 1933, which up to now has been a general provision allowing the Securities and Exchange Commission (SEC) to fashion exemptions from registration, up to a total offering amount of $5,000,000.  The new provision will be Section 3(b)(2) with the old statutory language remaining and being relabeled as Section 3(b)(1).

Technically speaking Regulation D, Rule 504 and 505 offerings and Regulation A offerings are promulgated under Section 3(b) and Rule 506 is promulgated under Section 4(2).  This is important because federal law does not pre-empt state law for Section 3(b) offerings but it does so for Section 4(2) offerings.  The cost of compliance with the various and varied state laws can be prohibitive with an offering limit of $5,000,000.  Moreover, although Regulation A is technically