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Just around the corner: an Advanced Search page for No-Action Letters

July 10, 2014

Photo from Wikipedia Commons. Click photo for attribution.

About a year ago we added over 62,000 SEC No-Action Letters to our database (including this odd one), increasing our collection by over tenfold — and blowing away many of our competitors in the process.  Today we announce the upcoming addition of a dedicated, Advanced Search page on No-Action Letters that is worthy of such a prodigious collection.

The new No-Action Letters page is fully text searchable and has search filters for:

  • The requesting company,
  • The subject category assigned to the letter by SEC (e.g., Regulation S-X, Investment Advisers Act of 1940),
  • The SEC Division that handles the request (Division of Corporation Finance, etc.),
  • The SEC’s stated position (you can include only letters in which the SEC is “unable to concur” with the request), and
  • Shareholder proposal-related letters (you can include or exclude requests related to Exchange Act Rule 14a-8).

The new page is perfect if you’re looking specifically and exclusively for No-Action Letter guidance.  If you’re interested in seeing any and all SEC guidance on a particular issue – that is, in cross-searching across various guidance materials including No-Action Letters, C&DI, telephone interpretations, FAQs, etc. — you’ll continue to be able to do that on Knowledge Mosaic, as you can today.

You Asked For It: 144A Offering Memoranda Coming Soon to Knowledge Mosaic

July 3, 2014

A little later this month, we’ll be releasing some great new enhancements to Knowledge Mosaic — you can read about them here — but the headliner has to be the long-awaited and much-requested addition of Private Placement Memoranda, including offering documents under Rule 144A.   We’re excited to finally being able to offer this elusive and high-value content, which customers have been asking us about for years.

Here are some quick facts about our collection:flickr-7893698530-hd

  • It includes both global and domestic offerings of both debt and equity securities.
  • Most offerings are exempt from SEC registration under either Regulation S, Regulation D, and/or Rule 144A.
  • When we first release, we’ll have several thousand offering documents going back to 2011.
  • By the fall, our collection should be approaching 20,000 documents, with coverage back to 2005.
  • The collection will grow as we regularly update our database with new documents.
  • Documents will be fully text searchable.
  • Users will be able to filter by exemption type, security type, currency type, and party information, including issuer and law firm.

Questions:  Contact us at or 1.866-650-3600 during regular business hours.

Happy Fourth of July!



Our proprietary database of Private Placement Memoranda includes thousands of recent global and domestic offerings exempt from SEC registration
under certain ’33 Act regulations like Rule 144A.
• Additional search parameters include exemption type, security type, offering amount, currency and
party information (issuer, legal advisor, book runner, trustee, auditor).



Chair White Seeks Transparency for the Fixed Income Markets

June 23, 2014

Two weeks ago, SEC Chair Mary Jo White announced plans aimed at improving the structure of U.S. equities markets. She discussed her proposals for promoting market stability and fairness, enhancing market transparency and disclosures, and building more effective markets for smaller companies. On Friday, she turned her attention to the fixed income markets.

White notes that in contrast to the equity markets, where many have voiced the concern that technology and competition have gone too far, investors in the fixed income markets have yet to experience the transformative power of technology.  500px-US-SecuritiesAndExchangeCommission-Seal.svg

In the fixed income markets, White fears, technology is being used simply to make the existing decentralized method of trading more efficient for market intermediaries without achieving more widespread benefits for investors. Those benefits include the broad availability of pre-trade pricing information, lower search costs, and greater price competition.

To remedy that concern, and to help assure that investors receive the best prices reasonably available, the SEC is working with the Municipal Securities Rulemaking Board to finalize a best execution rule for the municipal securities market. The Commission is also working with the MSRB and the Financial Industry Regulatory Authority to provide practical guidance on how brokers might effectively achieve best execution.

In addition, the SEC is working with FINRA and the MSRB in their efforts to develop rules by the end of this year regarding disclosure of markups in “riskless principal” transactions for both corporate and municipal bonds.

View the full text of White’s speech here.

SEC Staff Issue Volcker Rule Guidance

June 10, 2014
wall street

Photo from Wikipedia Commons. Some rights reserved.

Late tonight, the SEC’s Divisions of Trading and Markets, Investment Management, and Corporation Finance provided guidance on the Commission’s final rule implementing the “Volcker Rule.” The guidance, in the form of frequently asked questions and answers, addresses:  the requirement to record and report certain quantitative measurements, the conformance period, the definition of covered fund, and organizing and offering a covered fund.

Requirement to record and report certain quantitative measurements. The guidance addresses when banking entities with trading assets and liabilities of at least $50 billion must begin to measure and record the required metrics on a daily basis. Generally, recording of the required metrics will start on July 1, 2014. The daily metrics recorded during July must be reported to the Commission by September 2, 2014. Beginning with information for the month of January 2015, the final rule requires banking entities to report metrics data within 10 days of the end of each calendar month, unless notified otherwise.

The guidance also addresses how trading desks panning multiple affiliated banking entities should be treated for purposes of recording and reporting quantitative measurements.

Conformance period. The Federal Reserve Board has extended the rule’s conformance period to July 21, 2015. As explained by the Board, a banking entity must conform all of its proprietary trading activities and covered fund activities and investments to the prohibitions and requirements of the Volcker Rule by that date. During the conformance period, a banking entity is expected to engage in good-faith efforts, including the evaluation of the extent to which the banking entity is engaged in activities and investments that are covered by the rule, as well as developing and implementing a conformance plan that is appropriately specific about how the banking entity will fully conform all of its covered activities.

Covered fund definition. The guidance addresses the treatment of servicing assets, foreign public funds, and seeding vehicles that will become a foreign public fund.

Organizing and offering a covered fund. The guidance discusses the conditions which must be met if a banking entity acquires and retains an ownership interest in a covered fund that the banking entity organizes and offers. The conditions require, among other things, that the covered fund not share the same name or a variation of the same name with the banking entity (or an affiliate thereof), nor use the word “bank” in its name.

View the guidance here.

The Specter of Section 20(b) Liability

June 4, 2014

Last month SEC Chair Mary Jo White discussed the use of Securities Exchange Act Section 20(b) to impose primary liability on a person who, directly or indirectly, does anything “by means of any other person” that would be unlawful for that person to do on his or her own.

The specter of Section 20(b) liability was raised by the Supreme Court three years ago when Justice Clarence Thomas referred to that provision in Prague-Marionettea footnote to his majority opinion in Janus Capital Group, Inc. v. First Derivative Traders. In Janus, the Court held that only the “maker” of a statement may be liable in a private lawsuit brought under Section 10(b). In doing so, the Court remarked, at footnote 10, “We do not address whether Congress created liability for entities that act through innocent intermediaries in 15 U.S C.A. §78t(b).” As described by Chair White, Section 20(b) “is analogous in the criminal context to 18 U.S.C. Section 2(b), which provides for criminal liability as a principal for anyone who ‘willfully causes an act to be done which if directly performed by him or another would be’ a criminal violation.”

According to Weil, Gotshal & Manges, in the wake of Janus Joseph K. Brenner, the Chief Counsel to the Division of Enforcement, has twice suggested that the SEC would employ Section 20(b). Mr. Brenner’s most recent comments concerning the provision were made at the SEC’s 2014 SEC Speaks conference, where he stated that the agency will rely on that section in an enforcement action this year. View Weil, Gotshal’s law firm memo here.

Shortly after Mr. Brenner made his comments Chair White expanded on the prospect of a Section 20(b) prosecution. Chair White said, “We are focusing on Section 20(b) charges where – as is frequently the case in microcap and other frauds – individuals have engaged in unlawful activity but attempted to insulate themselves from liability by avoiding direct communication with the defrauded investors.” She emphasized that Section 20(b) “is a form of primary liability, rather than secondary liability, which would require proof of a separate violation by someone other than the defendant.  So, we can use Section 20(b) where aiding and abetting or controlling person theories may fall short because there is no underlying violation by someone else, such as, for example, when the other person who publicly makes the misleading statements lacks knowledge that they were misleading.”  View the full text of Chair White’s speech here.

A Bingham client alert points out that the few cases involving Section 20(b) do not address the potential scope of liability under that provision. However, Wayne State University Law Professor Peter J. Henning, writing for DealBook, has described how Section 20(b) could be used against activist investors. View the Bingham alert here. View Professor Henning’s blogpost here.

Until a Section 20(b) is actually filed, the speculation will continue.


A Reckless Production Endangers an Informer’s Privilege

May 23, 2014
barn door

Photo from Some rights reserved.

Last week the U.S. District Court for the Southern District of New York addressed what happens when a federal agency’s “complete recklessness” could lead to the unmasking of a confidential informant. Contrary to what might be imagined, the case doesn’t involve corrupt police or ambitious prosecutors. Nor does it involve jailhouse snitches or microphone wearing witnesses. Instead, the agency in question is the CFTC and the confidential informant is an employee of an energy trader.

The case stems from a three-year old CFTC civil enforcement action alleging the accumulation and sell-off of a large position in physical crude oil for the purpose of manipulating the futures price. Defendants are Parnon Energy Inc., Arcadia Petroleum Ltd. Arcadia Energy (Suisse) SA, James T. Dyer, and Nicholas J. Wildgoose. View the CFTC press release announcing the lawsuit here.

As part of the pre-trial discovery process, the parties executed a protective order in which they agreed to return inadvertently produced privileged information. In March and April of last year, and in accordance with that protective order, the CFTC made two document productions. The March documents contained unredacted information, including emails between the agency and a third-party attorney. In the April production, the CFTC invoked the “informer’s privilege” and redacted information that “tended to reveal the identity of an attorney and a law firm representing certain anonymous sources.” By comparing the information from the two sets of documents and using unredacted metadata from 21 redacted documents produced in April, defendants were able to learn that the third-party attorney represented a confidential informant who worked for defendants’ competitor. Defendants then subpoenaed the attorney.

In an attempt to close the barn door after the horse escaped, the CFTC moved to suppress the subpoena and have the unredacted metadata returned. It was only partially successful. The Court found that “the CFTC’s utter failure to review tens of thousands of third-party documents for privilege constituted ‘complete recklessness’” which effectively waived any claim of privilege the agency may have had in the documents and in the identity of the attorney.

However, the Court did rein in defendants’ subpoena to some extent. It drew the distinction between the identity of the attorney, which had been waived, and the information sought in the subpoena. To the extent that the subpoena sought information which would have revealed the identity of the informant, that information remained privileged. Defendants failed to establish that their need for information concerning the informant outweighed the CFTC’s need to keep that information secret.

Additional salve was applied to the CFTC’s wounds when the Court ordered the return of the unredacted metadata. That metadata was associated with an otherwise carefully redacted document production and was, therefore, clearly inadvertent and must be returned.

So while the CFTC’s horse remains in its paddock, it’s time for the agency to check its fence. View the District Court opinion here.

Following the Developments on Form SD? Don’t Blink.

May 15, 2014

Photo on Some rights reserved.

It’s been a tumultuous month and a half for the SEC’s Conflict Minerals rule — and presumably for those companies subject to filing the rule’s attendant Form SD.    The latest development happened yesterday, May 14, as the D.C. Circuit denied manufacturing groups’ petition to stay the SEC’s conflict minerals disclosure rule. Petitioners sought an emergency order that would have prevented the SEC from requiring manufacturers to file Form SD by June 2, 2014. On April 29th, the Division of Corporation Finance issued guidance on complying with Form SD’s requirements.

If you’re a Knowledge Mosaic subscriber, we can help you easily stay on top of things.

  • To search or set up email alerts on all SEC releases pertaining to the new Form SD, click here.
  • To search or set up email alerts on all SEC guidance related to the new Form SD, click here.
  • To search or set up email alerts on any new company filings of Form SD (including amended versions), click here.

If you’re not a subscriber, contact us at 1-866-650-3600, and we’ll get you set up with a free trial.


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