Subscribe

RSSAdd blog to your RSS reader

All Topics

Contact Us

(212) 451-2300
www.olshanlaw.com

Securities Law Blog

The Securities Law Blog provides commentary and news on the latest securities law developments impacting established and emerging growth publicly-traded issuers and investment banks, as well as entrepreneurs and venture-backed private entities. Our blog closely follows SEC rulemaking in several key areas including public and private securities offerings, shareholder activism and equity investment, and mergers & acquisitions.

The authors of this blog are members of the Corporate/Securities practice of Olshan Frome Wolosky LLP.  Since our founding, this firm has been distinguished by responsive, independent and client-focused legal services provided by lawyers with a profound commitment to the companies they serve. This blog is an outgrowth of this representation of our clients in a wide range of capital market transactions.

SEC Issues Guidance on Proxy Voting Responsibilities of Investment Advisers and Interpretation Regarding Applicability of Proxy Voting Rules to Proxy Advisory Firm Voting Recommendations

On August 21, 2019, the Securities and Exchange Commission (the “SEC”) (i) approved new guidance (the “Guidance”) regarding the proxy voting responsibilities of investment advisers under the Investment Advisers Act of 1940, as amended (the “Advisers Act”), and (ii) issued an interpretation and related guidance (the “Interpretation”) regarding the applicability of the federal proxy rules under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), to proxy voting advice provided by proxy advisory firms. The Guidance discusses, among other things, the ability of investment advisers to establish a variety of different voting arrangements with their clients and matters they should consider when they utilize the services of a proxy advisory firm. Specifically, the Guidance clarifies how an investment adviser’s fiduciary duties to its clients and Rule 206(4)-6 of the Advisers Act relate to an investment adviser’s voting authority on behalf of clients, particularly where the investment adviser retains a proxy advisory firm. The Interpretation confirms the SEC’s historical position that proxy voting advice generally constitutes a “solicitation” under Rule 14a-1(l) of the Exchange Act and, as such, falls under the purview of the antifraud provisions of Rule 14a-9 of the Exchange Act. The Guidance and Interpretation will become effective upon publication in the Federal Register. The Guidance and Interpretation were issued after years of advocacy by members of Congress, corporations and others claiming that proxy advisory firms such as Institutional Shareholder Services and Glass Lewis & Co. wield too much power and a regulatory framework should be put in place to address issues related to the services provided by these firms such as conflicts of interest, accuracy of reports, transparency and oversight. Read More ›

The SEC Proposes a Philosophical Shift to Principles-Based Disclosure in Response to Increasingly Irrelevant, Outdated and Immaterial Information in Public Filings

While the SEC favors a more flexible principles-based approach to disclosure of business descriptions and risk factors as determined by a company’s management, a lack of bright-line, quantitative rules to specify when disclosure is required may lead to second guessing by regulators, among others. Read More ›

The SEC Encourages Public Company Borrowers to Address the Risks of LIBOR’s Phase-Out in Their Public Filings

The SEC staff will be actively monitoring the extent to which public companies and other market participants are identifying and addressing risks associated with the expected discontinuation of LIBOR, a common system of interest rates for financial transactions, past 2021. Read More ›

Delaware Court Rules That Overbroad Questionnaires “Went Too Far” in Decision to Enjoin Closed-End Funds From Invalidating Shareholder Nominations

On June 27, 2019, the Delaware Chancery Court entered an injunction requiring the boards of trustees of two closed-end investment funds (the “Funds”) to count the votes in favor of director candidates nominated by shareholder Saba Capital at the annual meetings scheduled for July 8, 2019.  Saba Capital had timely given notice of its nominations in compliance with the Funds’ advance notification bylaws.  In a response weeks later, the Funds asked that the nominees complete a supplemental questionnaire, which had “nearly one hundred questions over forty-seven pages, and was due in five business days.”  The Funds declared the nominations invalid after Saba Capital missed the five-day deadline for submitting the questionnaires.  In the case captioned Saba Capital Master Fund, Ltd. v. BlackRock Credit Allocation Income Trust, et al., Vice Chancellor Zurn granted Saba Capital’s request for injunctive relief, finding that the Funds’ rejection of the nominations submitted by Saba Capital violated the Funds’ bylaws. As discussed in this Client Alert, the Court’s ruling is consistent with views recently expressed by Olshan that overzealous defense advisors continue to “cross the line” by using onerous, overbroad questionnaires as traps to thwart shareholder nominations and chill activist campaigns.  Read More ›

The SEC Looks for More Transparency in Influencer Marketing

The SEC’s Office of Investor Education and Advocacy warns investors to be skeptical of endorsements from famous influencers marketing new investment opportunities. Read More ›

Eye-Opening Study on the Use of Boilerplate in IPO Prospectuses Highlights the Real Costs to Issuers and Investors

Prof. McClane’s extensive 20-year study of IPOs finds that, although boilerplate - as a substitute for specific disclosure and costly information gathering - may be an efficient (and perhaps strategically vague) means by which to make disclosure, efficiency comes at a high price to IPO issuers due to information-related costs such as underpricing and securities litigation. Read More ›

The SEC Warns Prospective Investors to Beware of Claims that the SEC Has Approved a Securities Offering (Because It Hasn’t, Technically)

Fraudsters may use SEC forms and filings to falsely claim SEC registration or that an offering was approved by the SEC. Don’t confuse that with the actual vetting by the SEC staff of disclosure during the review process and acceleration of effectiveness of a registered securities offering. Read More ›

The Personal Touch of Founder's Letters in IPO Prospectuses: A View Inside the Zeitgeist of Our Newest Public Companies

Letters to prospective investors like those included in the Lyft and Uber IPO prospectuses may be symbolic gestures by founders, chairpersons and CEOs to lead the selling effort, but nonetheless provide an insight into the unique mission, core beliefs and “karma” of today’s newest IPO companies, with the SEC closely monitoring the bounds of this informal disclosure. Read More ›

The SEC Proposes to Extend the JOBS Act's "Testing the Waters" Provision to All Issuers, Regardless of Size, in All Types of Securities Offerings

The proposal would allow companies to more effectively consult with potential institutional investors to better identify acceptable offering terms in advance of a public offering, as compared to the current practice of repeated registration statement amendments to calibrate the public markets. Read More ›

Back to Page