Emerging Markets Law

Showing 3 posts in Sarbanes-Oxley.

SEC Publishes Final Regulation A+ Rules

Posted In Crowdfunding, Government, Sarbanes-Oxley, SEC, Securities

The SEC published in the Federal Register on April 19th its final rules, implementing the Regulation A+ provisions of the 2012 JOBS Act.

We are pulling together a more detailed summary of the Regulation A+ rules, but the bottom line is that the new rules will allow private companies to raise up to $50 million in an exempt, non-registered offering under the rule.

The previous rules, which practitioners know as Regulation A, had been in place for decades and had a $5 million cap on the amount an issuer could raise.

With the demise of the small-cap IPO market (largely eliminated by Sarbanes-Oxley and its attendant costs) many analysts believe that offerings under new Regulation A+ will allow growing companies to raise significant amounts of growth capital as a precursor to a strategic exit or an IPO.

With publication on April 19, 2015, the rules will become effective in 60 days, on June 19, 2015.

SEC Brings First-Ever Whistle-Blower Retaliation Case

The SEC announced recently a settlement in its first-ever whistle-blower retaliation case.

Retaliation against a whistle-blower is prohibited under various legal theories, including the Sarbanes-Oxley Act and the Dodd-Frank Act each of which contain express prohibitions against whistle-blower retaliation.

The SEC had accused Paradigm Capital Management Inc. and its ownership of punishing a trader for blowing the whistle on allegedly improper transactions.  The SEC alleged that Paradigm punished the trader by demoting him after it learned he was the source of leaks to the SEC about the improper transactions.

According to the SEC, Paradigm agreed to pay about $2.2 million in sanctions to settle the charges without admitting or denying wrongdoing.

The strengthening of whistle-blower protections gives the SEC and other regulators extraordinary powers to sanction firms that might appear to retaliate against employees who cooperate with regulators.  First who are aware of allegations against them are well-advised to act cautiously when dealing with employees in such circumstances.

Supreme Court Hears SOX Whistleblower Case

Posted In Sarbanes-Oxley

The Sarbanes-Oxley Act dramatically changed the way public companies did business by substantially increasing the level of disclosure required to be made to the public and defining precise procedural requirements for who those disclosures must be made.

At the same time, the Sarbanes-Oxley Act (or "SOX") created incentives for corporate insiders to publicly-report (or "blow the whistle") on wrongdoing inside of their own companies.  To protect those whistle-blowers, SOX implement multiple protections for the individuals involved, creating a cause of action for a whistle-blower whose employment was terminated in retaliation for the whistle-blowing activity.

The Supreme Court yesterday heard oral argument in the case of Jackie Hosang Lawson and Jonathan M. Zang v. FMR LLC et al., on the question of whether SOX's whistle-blower protections covered contractors and sub-contractors to a public company. (Law 360 article).

The Supreme Court's decision will have a significant impact on public companies and the way in which they management their contractors and sub-contractors.

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