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Wolosky Quoted in Law360 on SEC’s Universal Proxy Rule

January 20, 2017

Activist & Equity Investment Practice Chair Steve Wolosky was quoted extensively in a Law360 article following his SEC Comment Letter regarding the ‘universal proxy rule’.  In his comment letter to the SEC Wolosky stated, “The purpose of this comment letter is to express our deep and fundamental concern that under certain circumstances, the proposed rules could (i) give the registrant an unfair strategic advantage over the dissident in a contested solicitation and (ii) have a chilling effect on settlement discussions between the parties.”  One of the main concerns regarding settlement discussions according to Wolosky is that companies will often waive the noticing deadline, “It is common in activist situations for the registrant and the dissident to engage in settlement discussions prior to the registrant’s nomination deadline under its governing documents. In order to maintain good faith settlement discussions with a nomination deadline looming, the registrant will sometimes temporarily waive the applicability of its nomination procedures in the hope of reaching a settlement before the dissident is forced to formally submit a nomination.”  Wolosky also raises an issue with the proposed rules’ requirement for the dissident shareholder to file its proxy statement under a specific timeline stating, “The registrant will continue to have the strategic advantage of forcing the dissident to wait until the registrant files its definitive proxy statement before the dissident has the ability to finalize and mail its definitive proxy statement.”

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