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If recently proposed SEC changes to the public offering process become law, there will be significant changes to how many companies conduct public offerings and communicate with investors. That was the theme of a timely discussion that took place at the East Bank Club in Chicago on November 16, led by Jenner & Block Partners Joseph P. Gromacki and William L. Tolbert, Jr.
The program, titled “Hot Securities Law Topics: The Amazing Race Continues,” was hosted by the Association of Corporate Counsel’s Chicago chapter. Messrs. Tolbert and Gromacki, Co-Chairs of the Firm’s Securities Practice, were joined on the panel by James Keane, Associate General Counsel – Corporate & Securities at Sears, Roebuck and Co.
Mr. Tolbert focused on the proposed SEC reform of the public offering process. Three major areas of change would be the relaxation of the rules regarding the types of permitted communications during a registered offering, changes in the registration process and changes in the prospectus delivery rules.
Much of this change has been made possible by the modernization of securities offerings and communications processes including connectivity yielded by the Internet, he explained to the audience of approximately thirty attorneys and law students--if this proposal is adopted by the SEC, larger well-known companies will be permitted to provide free writing prospectuses throughout an offering period. Mr. Tolbert mentioned that the proposal also eases the restrictions currently known as the "gun jumping" rules for all companies.
Mr. Gromacki then provided an overview of the recent changes to the disclosure requirements of Form 8-K, which became effective just a few months ago. According to the SEC, these enhancements to the "current disclosure" requirements for public companies also help pave the way for the proposed reform of the public offering process. Various hypothetical situations involving triggering events for disclosure under the rules were discussed, including a merger transaction, a replacement of a senior executive officer, entry into and renewal of a key contract and entry into a revolving credit facility. Mr. Gromacki also touched on the topic of the SEC’s safe harbor provisions.
Mr. Keane then addressed shareholder activism, including the strong current focus on executive compensation. Mr. Keane closed the evening’s presentation with this observation: “The most effective right that shareholders have right now is its privilege of electing its directors. Executive compensation is in the spotlight right now. There is a lot yet to come on this.”