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CALIFORNIA CORPORATE & SECURITIES LAW

Exactly What Part Of “To The Commission” Is Ambiguous?

The Dodd-Frank Act gave us many things, including Section 21F of the Securities Exchange Act of 1934.  Section 21F, prohibits employers from retaliating against a “whistleblower”.  15 U.S.C. § 78u-6(h)(1)(A).  We need not guess about the definition of “whistleblower” because Congress conveniently provided the following definition: . . . any individual who provides, or 2 or more…

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How Independent Is The SEC And How Independent Should It Be?

Can the President say “You’re Fired!” to an SEC Commissioner? In a recent post, John Jenkins emphasized the commonly held understanding that the Securities and Exchange Commission is an “independent agency”.  The independence of the SEC, however, is not beyond debate.  In Free Enter. Fund v. Pub. Co. Accounting Oversight Bd., 561 U.S. 477, 546 (2010), Justice Stephen G.…

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Is This SEC Claim False And Misleading?

Last week, the Securities and Exchange Commission announced yet another whistleblower award.  According to the SEC, the award totals more than $5.5 million dollars.  Tellingly, we don’t, and won’t, know the exact amount.  The headline to the SEC’s press release pegs the number at $5.5 million while the order itself reads: Claimant shall receive an award of [Redacted] percent [Redacted]…

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There’s Still Time For Congress To Void The SEC’s Resource Extraction Rule

Last June, the Securities and Exchange Commission belatedly adopted a rule requiring disclosure of resource extraction payments by issuers.  As I wrote at the time: Congress had ordered the SEC to adopt a rule by April 17, 2011.  After belatedly adopting a rule, the U.S. District Court vacated the rule and sent it back to the SEC.  American…

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Five Propositions Concerning The SEC Whistleblower Program

Congress, not the Securities and Exchange Commission, established the whistleblower program six years ago as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act.  As the program has awarded over $100 million to date, it merits a critical analysis and review. Accordingly, I propose the following five propositions for consideration and debate: The whistleblower program…

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Is This The SEC Or The Lotto?

Last week, the Securities and Exchange Commission trumpeted that whistleblower awards have now exceeded $100 million, or a million Benjamins! “Chance, the loss or gain of a moment” The SEC’s total payout is impressive, but the number of payees is extremely small.  According to the SEC, awards were paid to only 33 persons. Moreover, 77.6% of the…

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Is Forced Speech In Responding To Staff Comment Letters Inaccurate Speech?

In 2014, the Securities and Exchange Commission announced that all comment letters would request that the issuer include the so-called “Tandy Letter”.  Thus, all staff comment letters include a request for a written statement in haec verba: The company is responsible for the adequacy and accuracy of the disclosure in the filing; Staff comments or…

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What The SEC Doesn’t Understand About Blue Sky Laws

I recently submitted this comment letter to the Securities and Exchange Commission with respect to its proposal to modernize the exemption applicable to intrastate offerings.  The SEC somewhat misleadingly describes its proposal as ” “amendments to Rule 147 under the Securities Act of 1933”.  While that may technically be accurate, the SEC is actually jettisoning…

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Staff Releases Report on its Review of the Definition of “Accredited Investor”

On Friday, the Securities and Exchange Commission staff published a report of its review of the definition of “accredited investor”.  Congress directed the SEC to review the definition every four years in Section 413(b)(2)(A) of the Dodd-Frank Wall Street Reform and Consumer Protection Act.  Below are the staff’s recommendations: The Commission should revise the financial thresholds…

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Does The SEC Know How To Assess Risks And Rewards?

The Securities and Exchange Commission’s proposed rules governing stock exchange listing standards governing recovery of erroneously awarded compensation cause me to wonder whether the SEC understands how to assess risks and rewards. Proposed Rule 10D-1(b)(1)(iv) would require an issuer to recover such compensation in compliance with its recovery policy “except to the extent that it…

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