Category: Disclosures


In Enforcement Action, SEC Underscores Heightened Scrutiny of KPIs in MD&A Reporting

Posted on March 4th, by and in Disclosures, SEC Guidance. Comments Off on In Enforcement Action, SEC Underscores Heightened Scrutiny of KPIs in MD&A Reporting

In February, the Securities and Exchange Commission (SEC) announced a settlement with Diageo plc, a London-based producer of liquor, wine and beer, for failure to make required disclosures of known trends and uncertainties, thereby rendering its required periodic filings materially misleading with respect to its financial results. The enforcement action provided immediate insight into how the Securities and Exchange Commission would act on its recent guidance related to disclosing key performance indicators and other metrics in MD&A reporting. The enforcement action makes it clear that public issuers should expect increased scrutiny of any metrics used to assess business performance and ensure they have appropriate disclosure controls and procedures in place.


SEC Gives Management’s Discussion and Analysis (MD&A) a Makeover

Posted on February 14th, by , and in Corporate Disclosures, Disclosures, SEC Guidance. Comments Off on SEC Gives Management’s Discussion and Analysis (MD&A) a Makeover

With the aim of eliminating certain duplicative disclosures, and modernizing and enhancing Management’s Discussion and Analysis (MD&A) disclosures for the benefit of investors while reducing the compliance burden on companies, the Securities and Exchange Commission (SEC) has proposed amendments to simplify and enhance certain financial disclosure requirements in Regulation S-K. The proposed amendments, released January 30, 2020, are part of an ongoing re-evaluation of the current disclosure regime per the SEC’s recommendation in the Report on Review of Disclosure Requirements in Regulation S-K, which was mandated by Section 108 of the JOBS Act, adopted in 2012.

The proposed amendments would eliminate Items 301 (Selected Financial Data), 302 (Supplementary Financial Information) and 303(a)(5) (Tabular Disclosure of Contractual Obligations in MD&A) of Regulation S-K, as well as revise a number of disclosure obligations under Item 303 (Management’s Discussion and Analysis of Financial Condition … Read More »


The SEC Files Another Litigated Disclosure Case – With More Violations

Posted on September 11th, by and in Conflict of Interest, Corporate Disclosures, Disclosures, Enforcement, Office of Compliance Inspections and Examinations (OCIE), SCSD Initiative. Comments Off on The SEC Files Another Litigated Disclosure Case – With More Violations

On August 29, 2019, the SEC filed a complaint against a registered investment adviser alleging failures to disclose four categories of conflicts of interest and seeking disgorgement of $10 million in undisclosed compensation. This litigated action was filed within a month of the SEC filing a litigated complaint against another firm alleging failing to disclose material conflicts of interest related to revenue sharing, despite that advisory firm having self-reported pursuant to the SEC’s Share Class Selection Disclosure Initiative (“SCSD Initiative”).

Based on these litigated actions (and despite the SCSD Initiative being over 18 months old), the SEC’s Division of Enforcement continues to focus its investigative and litigation resources on “Main Street” and to aggressively pursue registered investment advisory firms for disclosure violations involving actual or potential conflicts of interest.

In this most recent litigated action, not surprisingly, the SEC’s allegations with respect … Read More »


ALJ Deals Blow to SEC’s Fraud Case Against Hedge Fund Manager

Posted on October 24th, by and in Administrative Proceedings, Disclosures, Mispresentations, Scienter. Comments Off on ALJ Deals Blow to SEC’s Fraud Case Against Hedge Fund Manager

An SEC administrative law judge recently rejected some of the SEC’s fraud charges against hedge fund manager RD Legal Capital, LLC and its owner Roni Dersovitz (“Respondents”) by finding that the SEC did not prove that Respondents made certain material misrepresentations and failed to establish that other alleged material misrepresentations were made with scienter. In the Matter of RD Legal Capital, LLC, and Roni Dersovitz, File No. 3-17342, Initial Decision (Oct. 15, 2018). While ALJ Jason S. Patil did conclude that Respondents were liable for negligence-based fraud violations, his rulings with respect to the scienter-based charges and the drastically-reduced penalties he ordered were largely a defeat for the SEC.

Background

In July 2016, the SEC instituted proceedings alleging, among other things, that Respondents defrauded investors by misrepresenting the types of legal receivables in which two funds managed by RD Legal Capital invested. … Read More »




From the Blog:

SEC OCIE and Enforcement Are Still Watching

As the world is navigating through COVID-19 and as we are focused on our health and well-being as we self-quarantine and engage in social...

Delaware Supreme Court Upholds Federal Forum Selection Provisions Requiring Securities Claims Be Brought in Federal Court

In its highly anticipated decision in Salzberg v. Sciabacucchi, No. 346, 2019 (Del. Mar. 18, 2020), the Delaware Supreme Court confirmed the facial validity...

SEC Disgorgement: Looking to the Future

On March 3, 2020, the Supreme Court heard arguments in the case of Liu v. SEC, No. 18-1501. This article summarizes what transpired at...