U.S. Securities and Exchange Commission Updates Compliance and Disclosure Interpretations

Originally published June 10, 2010

Keywords: SEC, Division of Corporation Finance, Compliance and Disclosure Interpretations, C&DIs, Securities Act form, Regulation S-K, Exchange Act rules, Form 8-K, Regulation FD

On June 4, 2010, the Division of Corporation Finance of the U.S. Securities and Commission updated its Compliance and Disclosure Interpretations (C&DIs) regarding Securities Act sections (http://www.sec.gov/divisions/corpfin/guidance/sasinterp.htm), Securities Act rules (http://www.sec.gov/divisions/corpfin/guidance/securitiesactrules-interps.htm), Securities Act forms (http://www.sec.gov/divisions/corpfin/guidance/safinterp.htm), Regulation S-K (http://www.sec.gov/divisions/corpfin/guidance/regs-kinterp.htm), Exchange Act rules (http://www.sec.gov/divisions/corpfin/guidance/exchangeactrules-interps.htm), Exchange Act Form 8-K (http://www.sec.gov/divisions/corpfin/guidance/8-kinterp.htm), and Regulation FD (http://www.sec.gov/divisions/corpfin/guidance/regfd-interp.htm). We have selected some of the key questions and answers from the updated C&DIs and set them forth below.

Regulation FD Implications of Directors Speaking Privately with Shareholders

Question 101.11

Question: Does Regulation FD prohibit directors from speaking privately with a shareholder or groups of shareholders?

Answer: No. Regulation FD prohibits a company or a person acting on its behalf — such as directors, executive officers and investor relations personnel — from selectively disclosing material, non-public information to a shareholder under circumstances in which it is reasonably foreseeable that the shareholder will purchase or sell the company's securities on the basis of that information. If a company's directors are authorized to speak on behalf of the company and plan on speaking privately with a shareholder or group of shareholders, then the company should consider implementing policies and procedures intended to help avoid Regulation FD violations, such as pre-clearing discussion topics with the shareholder or having company counsel participate in the meeting. In addition, because Regulation FD does not apply to disclosures made to a person who expressly agrees to maintain the disclosed information in confidence, a private communication between an independent director and a shareholder would not present Regulation FD issues if the shareholder provided such an express agreement.

NEO Status of Principal Financial Officer Serving Part of a Year

Question 117.06

Question: An individual who was the company's principal financial officer for part of the last completed fiscal year was serving the company as an executive officer in a different capacity at the end of that year...