September 30, 2009Client Alert

Securities Report - September 2009

Legal Compliance

  • Proxy Compliance: Earlier this month the U.S. Securities and Exchange Commission (“SEC“) charged Bank of America for failing to disclose Merrill Lynch (“Merrill”) bonus payments that Bank of America agreed to pay at the time of its acquisition of the firm. In proxy materials, Bank of America stated that the U.S. Securities and Exchange Commission (“SEC“) Lynch had agreed that it would not pay year-end performance bonuses prior to the closing of the merger without Bank of America's consent. Bank of America had already contractually authorized Merrill to pay up to $5.8 billion in discretionary bonuses to Merrill executives for 2008. This contractual obligation was disclosed on a nonpublic disclosure schedule as part of the acquisition. According to the SEC's complaint, the disclosures in the proxy materials were materially false and misleading.
  • Regulation FD: According to the SEC staff in a recent update to the Regulation FD Compliance and Disclosure Interpretations, the “mere presence” of a reporter at a nonpublic corporate meeting does not render the meeting public for purposes of Regulation FD.
  • 13D-G Regulation: The SEC has promulgated new guidance for filings made under Regulations 13D-G (beneficial ownership reporting).
  • Investor Advisory Committee: The SEC Investor Advisory Committee formed three new subcommittees: Investor Education, Investor as Purchaser and Investor as Shareholder.

Proposed Legislation and Regulation

  • Mortgage-Backed Securities: Earlier this month federal lawmakers introduced a bill that would establish an oversight committee for mortgage-backed securities. The committee would include the SEC chairman, Comptroller of the Currency, Secretary of Housing and Urban Development, Undersecretary of the Treasury for Domestic Finance and a Federal Reserve Board governor. The committee would be charged with establishing rules and certifying those mortgage securities that meet specific standards set forth in the rules.
  • Short Selling: The SEC announced in a press release earlier this month that it was reopening the public comment period on an alternative approach to the short selling price test restrictions. The SEC stated that this new proposal may be more effective and easier to implement and monitor than the previously proposed price test restrictions that are currently under consideration. The previous approaches require monitoring of the sequence of bids because short selling price restrictions would be based the national best bid or the last sale price. Under the new, more restrictive proposal, short selling would only be allowed only at an increment above the national best bid.
back to top