Securities Law Blog

Olshan litigation partner John Moon and corporate partner Kenneth Silverman authored an article in Bloomberg Law entitled “SEC Enforcement Sweep Shows It Takes Reporting Failures Seriously.” In the article, John and Ken discuss the Securities and Exchange Commission’s (SEC) recent settlement with 11 institutional investment managers, highlighting a potential shift toward stricter enforcement of Form 13F violations. They explain the implications of these settlements for foreign and domestic investment managers, shedding light on the importance of compliance with U.S. reporting requirements, and emphasize the SEC's renewed focus on Forms 13F and 13H reporting obligations, which demand increased attention from large institutional investors operating in U.S. capital markets. They also highlight the SEC’s lenience towards those delinquent filers that self-reported their violations and cooperated with the SEC’s investigation. "Regardless where an investor and their broker-dealer are physically located, the SEC maintains jurisdiction if they invest in US capital markets," John and Ken note. They explain that the SEC’s cross-border enforcement sends a strong message to the international investment community to remain diligent about regulatory filings.

Olshan litigation partner John Moon and corporate partner Kenneth Silverman authored an article in New York Law Journal entitled “SEC Enforcements Highlight Risk of Noncompliance—Gone Are 'You Pay Your Money and Takes Your Chance' Days in the U.S.” In the article, John and Ken discuss the significant amount of foreign investment in the United States, representing 20 percent of all U.S. securities and approximately 17 percent of all equity securities traded on U.S. stock markets. Because of such large figures, they advise that, while investment by foreign money managers in U.S. markets can indeed show high returns, investors must diligently navigate the nation’s complex regulatory requirements. “Recently, SEC concerns over the influence of large investors on the securities markets have manifested a robust sweep of enforcement actions,” John and Ken write. “The extra-territorial nature of the SEC’s jurisdiction over foreign money managers runs counter to our conceptions of jurisdiction that are generally based on the use of domestic wires or the mails, or where the defendant corporation is headquartered or registered.” They advise that foreign compliance teams and U.S. securities counsels must stay abreast of all laws—and any new reporting requirements the SEC may implement. “The costs of failing to do so can be extensive,” they explain. “If an investor is faced with delinquent filings, proactive self-reporting and cooperation with the SEC are critical tools for remediation.”

Corporate partner Kenneth Silverman and litigation partner Kerrin Klein published an article in the Securities Regulation Law Journal, Summer 2024 ed. entitled “Quarterly Survey of SEC Rulemaking and Major Court Decisions.” The article reviews the SEC’s rulemaking activities and other decisions relating to federal securities laws from January 1, 2024 through March 31, 2024. “This quarter,” the authors write, “the SEC proposed one new rule and approved nine final rules. In relevant part, the final and proposed rules continue the SEC’s trend of increasing the scope of information available to investors. The highlights of this latest round of rulemaking are the changes to SPAC regulations and the hotly contested climate-risk disclosures.”

Publicly traded companies making strategic pivots from their current primary business focus may be unintentionally becoming “shell companies” if they dispose or monetize their legacy business assets before, upon completion of, or shortly after their pivot. The NYSE is also considering suspensions for companies changing their primary business focus after listing.

Corporate partner Kenneth Silverman and litigation partner Kerrin Klein published an article in the Securities Regulation Law Journal, Spring 2024 ed. entitled “Quarterly Survey of SEC Rulemaking and Major Court Decisions.” The article reviews the SEC’s rulemaking activities and other decisions relating to federal securities laws from October 1, 2023 through December 31, 2023. “This quarter,” the authors write, “the SEC proposed one new rule and approved eight final rules. In relevant part, the SEC’s latest round of rulemaking largely targets reforms to the 1934 Act to increase regulatory oversight and promote market fairness for all participants. The most significant rule affects investors’ beneficial ownership reporting obligations.”

A debt initial public offering (IPO) provides a viable alternative to the challenging traditional equity IPO to gain access to public markets for growth capital. For the right company at the right time under the right circumstances, it might make sense.

On December 28, 2023, Vice Chancellor Will of the Delaware Court of Chancery rendered an important decision in Kellner v. AIM ImmunoTech, Inc., which provides key guidance on advance notice bylaw provisions (“ANBs”). The Court found that four out of six of the amended ANBs at issue in the case were “overbroad, unworkable, and ripe for subjective interpretation by the Board,” and struck them down for running afoul of Delaware law. In so doing, Vice Chancellor Will noted the following about these four offensive ANBs:

Certain of the new rules governing beneficial ownership reporting on Schedule 13D and 13G take effect on Monday, February 5, 2024. Please refer to our Client Alert discussing in detail the new rules. The new filing deadlines that you should begin to take into consideration with respect to your ongoing securities acquisition programs are as follows:

Corporate partner Kenneth Silverman and litigation partner and co-chair Brian Katz published an article in the Securities Regulation Law Journal, Winter 2023 ed. entitled “Quarterly Survey of SEC Rulemaking and Major Court Decisions.” The article reviews the SEC’s rulemaking activities and other decisions relating to federal securities laws from July 1, 2023 through September 30, 2023. “This quarter,” the authors write, “the SEC proposed six new rules and approved seven final rules. In pertinent part, the final and proposed rules continue the ongoing trend in recent years to modernize current regulatory frameworks in a manner that facilitates increased market resiliency and investor protection.” The highlight of SEC’s rulemaking this quarter was the adoption of new cybersecurity disclosure requirements for issuers.

Consideration of a More Measured Approach for Smaller Public Companies