2010 RR Donnelley SEC Hot Topics SEC Update: Current Issues Presenters: Douglas Besch James Moloney Diana Tani.

2010 RR Donnelley SEC Hot Topics

SEC Update: Current Issues

Presenters:

Douglas Besch

James Moloney

Diana Tani

22010 RR Donnelley SEC Hot Topics

Recent Developments in Enforcement

Creation of Office of Market Intelligence

Specialized units within the Division

Issues

32010 RR Donnelley SEC Hot Topics

Creation of Office of Market Intelligence

Dodd-Frank Act whistleblower provision – change away from ITSFEA bounty program to address wider range of conduct; also impose formal tracking of such complaints

SEC handling of tips, complaints, and referrals – how review is now centralized, matters triaged and assigned, high level risk analysis

42010 RR Donnelley SEC Hot Topics

Specialized Units Within the Division

Municipal Securities and Public Pensions

Asset Management

Structured Securities and New Products

Foreign Corrupt Practices Act

Market Abuse

52010 RR Donnelley SEC Hot Topics

Current Issues

In disclosure area: MD&A and executive compensation

Financial reporting and internal controls

In Southern California region – unregistered securities offerings and regulated entity violations continue to represent steady number of cases

62010 RR Donnelley SEC Hot Topics

Frequently Issued Corp Fin Comments

Executive Compensation Matters

• Compensation Policies and Related Risks

• CD&A

• Performance Targets

• Benchmarking / Peer Groups

72010 RR Donnelley SEC Hot Topics

Frequently Issued Corp Fin Comments

Corporate Governance

• Board's role in risk oversight

• Director Independence

• Executive Conflict of Interest / Comp Consultants

82010 RR Donnelley SEC Hot Topics

Frequently Issued Corp Fin Comments

MD&A

• Fair Value

• Level 2 and 3 Measurements

Off-Balance-Sheet Arrangements

Debt vs. Equity Classification

• EITF 00-19

• ASC 815

92010 RR Donnelley SEC Hot Topics

Frequently Issued Corp Fin Comments

Material Contracts

• attachments / annexes

Use of Experts / Consents

Certifications

• 302 / 906

102010 RR Donnelley SEC Hot Topics

Frequently Issued Corp Fin Comments

Mergers / Tender Offers

• PSLRA safe harbor

• Lock-Ups

Going Private Transactions

• Fairness Opinions / Reports / Board Books

• 13e-3 Filing Persons

• Factors Considered

Proxy Contests

• Participant Info / Rule 14a-12

• Share Ownership / Arrangements

112010 RR Donnelley SEC Hot Topics

Division of Corporation Finance Comments

Common across industries

Industry-specific

Suggestions for managing the process

122010 RR Donnelley SEC Hot Topics

Division of Corporation Finance Comments – Common Across Industries

Goodwill

MD&A

Controls

Error corrections

Pensions

Auditor’s Report

132010 RR Donnelley SEC Hot Topics

Division of Corporation Finance Comments – Industry-Specific

Consumer Products and Technology

Financial Services

Pharmaceuticals and Life Sciences

Construction

142010 RR Donnelley SEC Hot Topics

Division of Corporation Finance Comments – Suggestions for Managing the Process

Understand the process

Contemporaneous documentation

Respond directly and cite literature

Open dialogue