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On April 24, 2018, the Securities and Exchange Commission (the "SEC") announced that Altaba Inc. f/d/b/a Yahoo! Inc. ("Yahoo") agreed to pay a $35 million penalty to settle charges that it misled investors by failing to disclose a 2014 personal data breach impacting more than 500 million user accounts.1 This is the SEC's first enforcement action for failure to make timely disclosure regarding cybersecurity risks or cyber incidents. The proceeding follows the SEC’s recent release of updated cybersecurity disclosure guidance for reporting companies (the “New Guidance”)2 and reinforces the fact that the agency is focused on companies' cybersecurity disclosure practices.
On March 29, 2018, Institutional Investor Services ("ISS") updated its US Proxy Voting Research Procedures & Policies frequently asked questions ("FAQs") . While the 2018 US proxy season is well underway, these updated FAQs provide helpful information to companies, particularly with respect to engagement with ISS' research analysts, as they prepare for the receipt of their ISS reports in advance of their upcoming shareholder meetings.
Supreme Court Limits Scope of Anti-Retaliation Protections for Whistleblowers Under Dodd-Frank: Rules That Protections Only Apply to Whistleblowers Who First Report Directly to the SEC
On February 21, 2018, in Digital Realty Trust, Inc. v. Somers, the United States Supreme Court (the "Court") unanimously held that whistleblowers are not protected by the anti-retaliation provision and thus not entitled to the related incentives of the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank") unless the whistleblower first reports the securities law violation directly to the Securities and Exchange Commission (the "SEC"). The Court ruled against an employee who reported to senior management but did not file an administrative complaint or report to the SEC directly, which would have earned him anti-retaliation protection under Dodd-Frank. The Court’s decision resolves a split among the Second, Fifth and Ninth Circuits.
SEC Issues Interpretive Guidance on Public Company Cybersecurity Disclosures: Greater Engagement Required of Officers and Directors
On February 21, 2018, the Securities and Exchange Commission ("SEC") issued an interpretive release providing long-awaited guidance (the "New Guidance") to assist public companies in preparing disclosures about cybersecurity risks and incidents. Significantly, the New Guidance discusses cybersecurity and its related disclosure requirements not merely in terms of network threats and vulnerabilities, but as a key element of enterprise risk management in which program development and oversight responsibilities move straight "up the corporate ladder" to officers and directors.
BlackRock, Inc. ("BlackRock") recently published its updated "Proxy Voting Guidelines for US Securities". Consistent with BlackRock's recent communications related to its investment principles, the guidelines emphasize BlackRock’s focus on environmental and social risk reporting and indicate its intent to use its proxy voting power to influence corporate governance and management practices in these key areas.
This memorandum outlines certain considerations for foreign private issuers ("FPIs") in preparation for the 2018 annual reporting season. Part I of this memorandum discusses new developments and practical action items for the 2018 reporting season, and Part II includes a discussion of potential regulatory developments and pending rulemaking initiatives.
On December 22, 2017, the Tax Cuts and Jobs Act (the "Act") was signed into law. The Act includes significant changes to the executive compensation deduction rules contained in §162(m) of the Internal Revenue Code (the "Code") that could significantly impact the way many companies design and administer executive compensation programs. As boards of directors and compensation committees begin to focus on the 2018 compensation and proxy season, there are certain key considerations related to the impact of the Act that should be taken into account.
This memorandum outlines certain considerations for US public companies in preparation for the 2018 annual reporting and proxy season. Part I of this memorandum discusses new developments and practical action items for the 2018 reporting season; Part II sets forth an overview of recent corporate governance and regulatory developments and trends; and Part III includes a brief discussion relating to upcoming regulatory developments and pending rulemaking initiatives.
On December 22, 2017, tax reform (the "Tax Act")1 was signed into law. The Tax Act will have significant implications for companies, including on their accounting and associated disclosure, as discussed below. The SEC’s Office of the Chief Accountant and the Division of Corporation Finance ("Corp Fin") have each issued guidance to aid companies in their disclosures addressing the accounting impact of the Tax Act.
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