Category: Section 16

Section 16: On September 10, 2014, the SEC filed 28 separate actions against officers, directors and major shareholders and an additional 6 actions against reporting companies, all stemming from violations of the reporting requirements contained in Section 16 of the Securities Exchange Act of 1934, as amended (“Exchange Act”). The SEC announced that it had created a task force to investigate violations using quantitative data sources and ranking algorithms to identify repetitive late filers. The SEC settled with all but one of the charged for a total of $2.6 million in penalties…

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

Sep152014

SEC Files Dozens of Charges for Violations of the Section 16 and Section 13 Corporate Insider Reporting Requirements

ABA Journal’s 10th Annual Blawg 100

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Introduction

On September 10, 2014, the SEC filed 28 separate actions against officers, directors and major shareholders and an additional 6 actions against reporting companies, all stemming from violations of the reporting requirements contained in Sections 13 and 16 of the Securities Exchange Act of 1934, as amended (“Exchange Act”).  The SEC announced that it had created a task force to investigate violations using quantitative data sources and ranking algorithms to identify repetitive late filers.  The SEC settled with all but one of the charged for a total of $2.6 million in penalties.

The actions against insiders and major shareholders were based on direct violations of their individual reporting requirements.  The actions against reporting companies were for “contributing to” the violations.  In these cases, the companies had contractually agreed to take on the responsibility of making the filings for their insiders, and had been delinquent in doing so.

Historically the SEC has rarely

Jun302014

Section 16 Insider Reporting and Potential Liability for Short-Swing Trading Practices

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 (“Reporting Requirements”).  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.

Last week, I wrote about the “certain shareholder” filing requirements under Sections 13d and 13g of the Exchange Act, Regulation 13D-G beneficial ownership reporting and related Schedules 13D and 13G.  This blog is a summary of the “certain shareholder and affiliate” reporting and related requirements under Section 16 of the Exchange Act.  In particular, all directors, executive officers and 10% stockholders (“Insiders”) of reporting companies are subject to the reporting and insider trading provisions of Section 16 of the Exchange Act.  At the end of the blog is a reference chart related to the

Oct012009

Reverse Mergers Hinge on Due Diligence and Cleaning Up Public Shells

When a publicly traded company “goes dark” and becomes delinquent in its filing requirements, it generally becomes a public shell and is no longer quoted on the Over the Counter Bulletin Board Exchange (OTCBB). However, with the assistance of an experienced securities attorney, the shell company can be restored so that a merger candidate can be introduced.

Some of the specific details that constitute the clean-up process include:

  • Reinstating the Company’s corporate charter and paying franchise taxes to the Company’s state of domicile, if necessary
  • Working with a PCOAB (Public Company Oversight Accounting Board) auditor to update all necessary financial statements and audits
  • Holding a shareholder meeting for purposes of electing directors and amending articles of incorporation and bylaws as necessary
  • Updating the Company’s articles of incorporation and bylaws to ensure they suit the needs of the successor Company
  • Conducting reverse splits of the Company’s outstanding shares of common stock in order to decrease the size of the outstanding common
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