Friday, February 5, 2021
The New Year is still young, but major changes are already afoot in securities enforcement as Congress amended the Securities Exchange Act of 1934 (“Exchange Act”) on January 1, 2021. It was easy to miss these changes to the Exchange Act as they were included in the unlikeliest of places – the National Defense Authorization Act for Fiscal Year 2021 (“NDAA”), which chiefly dealt with appropriations for military activities. Specifically, Section 6501 of the NDAA (“Section 6501” or the “Amendment”) offered a number of amendments to the Exchange Act, including to the SEC’s ability to seek disgorgement and other equitable relief for violations of the federal securities laws. The Amendment appears to be a direct response from Congress to recent Supreme Court decisions
Monday, February 1, 2021
On November 17, 2020, the SEC adopted amendments to Rule 302(b) of Regulation S-T to permit the use of electronic signatures in authentication documents required for SEC filings on EDGAR. In addition, the SEC adopted amendments to certain rules and forms under the Securities Act of 1933, the Securities Exchange Act of 1934 and the Investment Company Act of 1940 to permit the use of electronic signatures in authentication documents for certain other filings when these filings contain typed, rather than manual, signatures, under generally the same conditions available under Rule 302(b). The amendments to Rule 302(b) and related amendments to other rules and forms took effect upon their publication in the Federal Register on December 4, 2020.
Wednesday, January 20, 2021
Last month, the SEC staff provided much-needed no-action relief allowing broker-dealers, subject to certain conditions, to treat family offices as institutional, rather than retail, clients for purposes of Regulation BI and Form CRS.
1 Without the relief, family offices not managed by a registered professional were deemed “retail customers” for purposes of Regulation BI and “retail investors” under Form CRS even though broker-dealers traditionally service such family offices as institutional accounts given their sophistication and assets under management. As such, broker-dealers providing services to such family offices, particularly broker-dealers that did not otherwise service “retail customers,” faced the difficult choice of (a) developing a burdensome Regulation BI program that did not apply for most of its client base, solely to address the potential application to family office clients or (b) not servicing family office clien
Friday, January 15, 2021
COVID-related securities claims continue to rattle the marketplace. On December 7, a leading plaintiffs firm announced an investigation on behalf of shareholders of The Cheesecake Factory Inc., just days after the SEC announced it was settling charges against the company for making misleading disclosures about the impact of the COVID-19 pandemic on its business operations and financial condition. The SEC’s action was its first charging a public company for actions tied to the worldwide pandemic.
In SEC filings in March and April, The Cheesecake Factory disclosed that its restaurants were “operating sustainably” during the pandemic. The SEC order, however, states that on March 18, 2020, the company sent a letter to its landlords saying it would not be paying rent in April 2020 due to a “severe decrease in restaurant traffic [due to COVID-19 that] has severely decreased our cash flow and inflicted a tremendous financial blow to our busines