Supreme Court Rules Against the SEC in Gabelli; SEC Charges State of Illinois for Misleading Pension Disclosures; SEC Charges New York-Based Private EquityFund Advisers with Misleading Investors about Valuation & Performance; Harris & Hanson Reappointed to PCAOB; SEC Issues Risk Alert and Investor Bulletin on Investment Adviser Custody Rule

More SEC Appointments and Departures; SEC Charges China Affiliates of Several Accounting Firms; More Social Media Disclosure Issues; SEC Issues New Municipal Bond Investor Bulletin

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Hurricane Sandy Temporarily Closes U.S. Financial Markets and SEC Issues Temporary Relief for Certain Filers; Calamari Named Director of the SEC’s New York Regional Office; SEC Announces Agenda and Panelists for Small Business Forum; Timeline for IFRS Adoption Still Unknown

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NYSE Agrees to Settle SEC Charges; SEC Adopts Rule for Disclosing Use of Conflict Minerals.

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Presentation Materials

Forty-five DGS attorneys were named Best Lawyers® by publisher Woodward/White, Inc. in its annual guide recognizing legal excellence.

Massive Microcap Trading Suspensions; More U.S./China Auditor Disputes; FINRA Announces New Filing System for Public Offering Filings; FINRA Board Member Steps Down

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Davis Graham & Stubbs LLP was recently honored as the Colorado Lawyers Committee (CLC) 2012 Law Firm of the Year for its pro bono contributions. Additionally, the Lobato Litigation Team, made up of more than 70 volunteers from a dozen law firms, including DGS, was named CLC Team of the Year for its pro bono work on Lobato v. State of Colorado. The awards, announced at the annual Awards Luncheon on May 21, recognize individuals and organizations that performed significant pro bono work through the CLC during 2011.

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On March 30, 2012, the Colorado Division of Securities issued an order (the “Order”) clarifying that, with some notable exceptions, investment advisers meeting the requirements of the federal exemptions for family office advisers, venture capital fund advisers, and foreign private advisers will be exempt from the adviser licensing requirements of the Colorado Securities Act.

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SEC Sues SIPC to Force Payout to Investors; European Regulators May Block Merger between NYSE and Deutsche Borse; SEC Goes After Hedge Funds with Suspect Performance; SEC Limits Confidential Initial Registration Statement Submissions by Foreign Private Issuers; SEC Names Pamela A. Gibbs as Director of the Office of Minority and Women Inclusion; Judge Orders Deloitte to Respond in Longtop Financial Case

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Presentation Materials

SEC Charges China- Based Longtop Financial Technologies for Deficient Filings; SEC Commissioners Aguilar and Gallagher Confirmed; SEC Inspector General Releases Report on Destruction of Investigative Documents

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SEC Files Subpoena Enforcement Action against Deloitte & Touche in Shanghai; Commissioner Casey to Leave SEC; Man Accused of Insider Trading Commences Online Campaign against SEC

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Thirty-eight DGS attorneys, including nearly half of the firm’s partners, were named Best Lawyers^® by publisher Woodward/White, Inc. in its annual guide to legal excellence.  The 2012 edition of The Best Lawyers in America is based on a peer-review survey in which more than 39,000 leading attorneys comment on the legal abilities of other lawyers in their practice areas.  Corporate Counsel magazine has called Best Lawyers^® “the most respected referral list of attorneys in practice.”

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On July 12, 2011, the Securities and Exchange Commission issued an order raising the dollar amount thresholds of the "qualified client" definition under the Investment Advisers Act of 1940. The dollar amount thresholds for the "assets-under-management" test and the "net worth" test have been raised to $1 million and $2 million respectively, and the new thresholds will be effective on September 19, 2011.

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SEC Proposes to Remove Credit Ratings under the Exchange Act; SEC Proposes Raising Performance Fee Eligibility Thresholds for Investment Advisors; FDIC Chairwoman Sheila Bair to Leave Agency

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On May 10, 2011, the SEC issued a proposed rule that, if adopted, would raise the performance fee eligibility thresholds of Rule 205-3 under the federal Investment Advisers Act of 1940 to $1 million in  assets -under-management or  $2  million in  net  worth. The proposed rule also would amend Rule 205-3 to specify the inflation index that will govern the inflation adjustments to these thresholds every five years. Comments on the proposed  rule  are due on or before July 11, 2011.

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SEC’s Proposes Rules on Disclosure of Incentive-Based Compensation Arrangements at Financial Institutions; SEC’s Inspector General Opens Investigation into Potential Conflicts of Interest in Madoff Scheme; SEC Heightens Focus on Loss Contingencies

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Anonymous Tip Leads to OIG Investigation of Citigroup Settlement; SEC Unveils First Non-Prosecution Agreement;SEC Proposes New Rules for Resource Extraction Issuers, Specialized Disclosure of Mine Safety Information

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On November 3, the Securities and Exchange Commission (SEC) issued proposed Regulation 21F under the Securities Exchange Act of 1934 (Exchange Act) to implement the whistleblower provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank). The SEC believes that the proposed rules provide a “simple, straightforward procedure would be whistleblowers to provide critical information to the agency.”

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On August 31, the Securities and Exchange Commission (SEC) released its investigative report addressing whether the credit rating business segment of Moody’s Corp. violated the nationally recognized statistical rating organization (NRSRO) registration provisions or the antifraud provisions of federal securities laws. The SEC decided not to pursue an action against Moody’s “because of uncertainty regarding a jurisdictional nexus to the United States” in the matter, specifically because the activities at the center of the SEC investigation took place in Europe.

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The inaugural, 2010 edition of the U.S. News - Best Lawyers® “Best Law Firms” Guide ranks Davis Graham & Stubbs LLP as a national leader in mining law and mutual funds law – and honors the LoDo-based firm with first-tier regional rankings in energy, natural resources, commercial litigation and several corporate law areas, including tax, securities, private equity and M&A. U.S. News & World Report published the results yesterday. The survey included responses from 9,514 corporate executives, in-house lawyers, marketing officers or private practice attorneys.

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The newly announced, 2011 edition of the Best Lawyers in America ranks Davis Graham & Stubbs LLP first in Colorado-based law practices for corporate governance and compliance law, environmental law, mergers and acquisitions law, natural resources law, oil and gas law and securities law. This year Best Lawyers recognizes 36 DGS attorneys, including 13 who have been named to the list for at least 10 years. Nearly half (46 percent) of DGS partners are recognized in the definitive guide to legal excellence, in addition to several attorneys of counsel to the firm. Best Lawyers is a peer-review survey of more than 39,000 in-house counsels and private practice attorneys.

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One provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act with immediate effectiveness is of special concern to businesses engaged in unregistered offerings of stock or other securities. Under the Dodd-Frank Act, for the 4-years beginning on the date of enactment, the net worth standard for determining whether a natural person is an "accredited investor" under SEC Regulation D has been locked in at $1,000,000, but now that standard excludes the value of the primary residence of such natural person. Previously the value of the primary residence was included in the $1,000,000 net worth test. The result is an increase in the minimum net worth requirement for the vast majority of prospective investors and the likely exclusion of many individuals previously eligible to purchase securities in offerings made to "accredited investors only" – the most common type of private placement.

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On May 11, Securities and Exchange Commission Chairman Mary Schapiro and Commodity Futures Trading Commission Chairman Gary Gensler announced the formation of the “Joint CFTC-SEC Advisory Committee on Emerging Regulatory Issues.” The establishment of the Joint Committee was one of the 20 recommendations included in the harmonization report issued by  the two agencies last year. The Joint Committee will develop recommendations on emerging and ongoing regulatory issues relating to both agencies.

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On February 22, the Securities and Exchange Commission (SEC) revised the rules governing electronic access to proxy materials (e-proxy). The amendments are designed to increase shareholder participation in the voting process, as well as to reduce shareholder confusion. The new rules will be effective as of March 29, 2010.

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On January 13, Robert Khuzami, the Director of the Securities and Exchange Commission’s Enforcement Division, announced new enforcement initiatives in an effort to improve the quality, quantity, and timeliness of the information that the SEC receives from individuals and/or entities. Director Khuzami described the new initiatives as a “potential game-changer for the Division of Enforcement.”

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Colorado has a common law legal system, subject to preemption by the federal laws of the US. Under Colorado law, the Colorado constitution takes precedence over all other laws and the courts can declare statutes, regulations, or actions that violate the constitution invalid.

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SEC Charges 13 Additional Individuals and Entities in Galleon Insider Trading Case; SEC Proposed Amendments to Shed Light on Dark Pools; SEC and CFTC Issue Joint Report on Harmonization; SEC Delays Vote on Shareholder Access Proposals; SEC Proposes Amendments to E-Proxy Rules; and SEC Launches Investor Education Website

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SEC Establishes New Division of Risk, Strategy, and Financial Innovation; Madoff Report Ushers in a Potential Shift in SEC Funding; Chairman Schapiro Issues Open Letter to Broker-Dealer CEOs; SEC Proposes Flash Order Ban

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Investment Advisory Committee Meeting; California IOU's; Diversity Initiatives; & an Alert about Investing in Bankrupt Companies

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The First Insider Trading/Credit Default Swap Enforcement Action, and Updated Rule 10b5-1 Guidance

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On March 5, Securities and Exchange Commission Chairwoman Mary L. Schapiro announced that the SEC intends to improve the handling of whistleblower complaints and enforcement tips in order to better protect investors.

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Effective March 16, 2009, all Form D notices must be filed electronically with the SEC via the EDGAR/IDEA system.¹  This will mark the end of the transition period that started September 15, 2008, during which the SEC accepted either paper filings or online filings.²

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SEC Proposes IFRS Roadmap; CFTC, Fed and SEC Execute MoU on CDS; SEC Approves Amendments to Mutual Fund Prospectus Disclosure and Delivery Requirements

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On October 15, 2008, the SEC issued new interim final Rule 10a-3T under the Securities Exchange Act of 1934 ("Rule 10a-3T" or the "Rule") [1] requiring large institutional managers to disclose certain short positions on Form SH. Rule 10a-3T extends the emergency order issued by the SEC (the "Emergency Order")[2], which was set to expire at midnight on October 17, 2008. Rule 10a-3T became effective on October 18, 2008, and will continue through August 1, 2009.

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The SEC issued an emergency order on Friday, September 19, 2008 requiring certain institutional investment managers to electronically file with the SEC a new form, Form SH, disclosing any short sale[1] transactions that occurred during the prior week.  Any institutional investment manager that has filed or was required to file a Form 13F for the quarter ended June 30, 2008 is subject to the new requirement.

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In the first case certified by the Securities and Exchange Commission for review by the Delaware Supreme Court using the new procedures under the Court’s rules, as amended May 2007, the Court held that under Delaware law, a corporate bylaw cannot require reimbursement of election expenses in a contested election of directors unless the bylaw reserves to the board of directors the full power to exercise their fiduciary duty to decide whether awarding reimbursement, in whole or in part, would be appropriate in the particular circumstances under review.

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In separate presentations at the annual conference of International Organization of Securities Commissions (IOSCO), held in Paris, France on May 25-29, SEC Chairman Christopher Cox addressed two of the SEC’s international projects – mutual recognition for regulatory regimes in other countries1 and the standardization and universal adoption of International Financial Reporting Standards (IFRS).

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March 24 Announcement of Action Steps – Noting that “regulatory overlap from different national securities regulatory regimes can pose impediments to cross-border trading,” on March 24, the SEC announced a series of actions intended to further the implementation of mutual recognition for regulatory regimes in other countries. 

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On December 14, a three-judge panel of the Fourth Circuit Court of Appeals held that the transmission of an allegedly fraudulent Form 10-Q via the EDGAR server maintained by the Securities and Exchange Commission (“SEC”) was sufficient to sustain venue in the Eastern District of Virginia, where the EDGAR server is located.

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On August 8, 2006, the United States Securities and Exchange Commission (“SEC”) approved rule changes proposed by the American Stock Exchange (“AMEX”), the New York Stock Exchange (“NYSE”), and the NASDAQ Stock Market (“NASDAQ”) that require listed securities to be eligible to participate in the Direct Registration System (“DRS”).  All securities initially listed on or after January 1, 2007 on AMEX, NASDAQ, or NYSE (each, an “Exchange” and collectively, the “Exchanges”) must be eligible for the DRS, except for securities of companies which already have securities listed on the same Exchange and securities of companies that transfer the listing of their shares from another registered U.S. securities exchange.  On and after January 1, 2008, companies must comply with the DRS eligibility requirements for all of their securities listed on the Exchanges.  To comply, companies may have to amend their bylaws by year end to remove provisions that mandate the issuance of paper certificates for all shares of stock.  The new rules do not apply to non-equity securities which are book-entry only.

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SEC Adopts Rules Improving Smaller Public Company Regulation; SEC Seeks Public Commentary on Disclosure of Business Activities in Countries Designated as Sponsoring Terrorism; FINRA Reaches Out to Baby Boomers

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On August 8, 2006, the United States Securities and Exchange Commission (“SEC”) approved rule changes proposed by the American Stock Exchange (“AMEX”), the New York Stock Exchange (“NYSE”), and the NASDAQ Stock Market (“NASDAQ”) that require listed securities to be eligible to participate in the Direct Registration System (“DRS”).

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Davis Graham & Stubbs – with 29 attorneys practicing in 30 fields – ranks first in Colorado-based attorneys listed in the 2008 edition of Best Lawyers in America for the practice areas of commercial litigation, natural resources, environmental law and corporate governance and compliance law. The number of DGS lawyers recognized in the definitive guide to legal excellence increased by three, and includes half of the firm’s partners. The book, targeted for in-house counsel, is to be published in December 2007.

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Chapter 3

Liability and Risk Management for Nonprofit Organizations

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Final Rules on Internet Availability of Proxy Materials; Senate Finance Committee Votes to Curtail Deferred Compensation; NYSE Seeks Power to Grant Exemptive Regulatory Relief in Event of Emergency

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New legislation passed by the Delaware General Assembly will change the notification and filing procedures for Delaware domestic corporation annual franchise tax reports.  The notification process was changed as part of a plan to encourage, and then mandate, the electronic filing of annual reports.

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Effective November 7, 2006, the Securities and Exchange Commission made significant changes to the executive compensation disclosures under Form 8-K. Some of those changes are summarized below:

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On September 8, 2006, the Securities and Exchange Commission (“SEC”) released final rules regarding the disclosure of executive and director compensation, related party transactions, director independence, and various other corporate governance matters in proxy statements and other SEC filings (the “Compensation Rules”). This Client Alert is a reminder that, because the Compensation Rules include significant changes to the requirements of Form 8-K concerning disclosure of executive compensation, and those changes are effective for Form 8-K triggering events that occur on or after November 7, 2006, reporting companies need to carefully consider the effect of the changes on their current event reporting obligations. This following is a brief summary of the changes to Form 8-K made by the Compensation Rules, an analysis of their implementation, and some practical recommendations.

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On September 13,1 the Office of the Chief Accountant and Divisions of Corporation Finance and Investment Management of the Securities and Exchange Commission announced the release of Staff Accounting Bulletin 108 (SAB 108)2 that provides interpretive guidance on how the effects of the carryover or reversal of prior year misstatements should be considered in quantifying a current year misstatement.

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Twenty-six Davis Graham & Stubbs attorneys practicing in 28 fields will be recognized in the 2007 edition of The Best Lawyers in America. The number of DGS lawyers recognized in the definitive guide to legal excellence increased by five this year, and represents more than 40% of DGS partners overall. DGS ranks first in the number of Colorado-based attorneys listed by the 2007 edition of Best Lawyers in the Commercial Litigation, Natural Resources, Environmental Law, Securities Law and Corporate Governance and Compliance Law practice areas.

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On June 26, 2006, the Colorado Supreme Court narrowly adopted the doctrine of “reverse piercing” of the corporate veil, deciding that a corporation may, under certain circumstances, be held liable for the debts of a controlling shareholder or other corporate insider.

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On May 17, 2006, based on “extensive analysis and commentary in recent months from investors, companies, auditors, and others,” the Securities and Exchange Commission announced a series of actions it intends to take to improve implementation of the Section 404 internal control requirements of the Sarbanes-Oxley Act of 2002.

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On March 3, 2006, SEC Chairman Christopher Cox announced that the staff of the SEC would study the levels of protection afforded retail customers of financial service providers under the Securities Exchange Act and the Investment Advisers Act, and would address any investor protection concerns arising from material differences between the two regulatory regimes.

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On January 17, 2006, the SEC voted to publish for comment proposed rules that would, if adopted, amend the disclosure requirements for executive and director compensation, related party transactions, director independence and other corporate governance matters, and security ownership of offi cers and directors.1 Comments are due no later than April 10, 2006.

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On November 11, 2005, a bill entitled “Protection Against Executive Compensation Abuse Act” was introduced by, among others, Democratic Representative Barney Frank.1 As drafted, the Executive Compensation Abuse Act would amend the Securities Exchange Act of 1934 to increase the level of disclosure issuers must provide with respect to the compensation paid to certain of their executive officers, and to require shareholder approval of certain executive compensation and “golden parachutes.”

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On September 13, 2005, the staff of the Division of Corporation Finance of the Securities and Exchange Commission issued questions and answers regarding the major revisions to the securities offering reform rules adopted by the SEC in June.    The following is a summary of the staff’s guidance.

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On June 30, 2003, the Securities and Exchange Commission (SEC) approved and declared immediately effective new rules adopted by the New York Stock Exchange (NYSE) and Nasdaq requiring shareholder approval of equity compensation plans, including stock option plans, and of repricings and material plan changes to such compensation plans. This Client Alert focuses on a somewhat overlooked, but very important consequence of these new rules – the end of NYSE broker “non-votes” for stock option and other equity compensation plans.

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On April 15, the Securities and Exchange Commission amended Rule 4-01 of Regulation S-X to defer the date for compliance with Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment (“Statement No. 123R”). The revised rule establishes two possible compliance dates. Each registrant that is not a small business issuer will be required to prepare financial statements in accordance with Statement No. 123R beginning with the first interim or annual reporting period of the registrant’s first fiscal year beginning on or after June 15, 2005.

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On March 11, 2005, the Securities and Exchange Commission issued new Rule 22c-2 under the Investment Company Act of 1940,1 which will require mutual funds that redeem shares within seven days of a redemption request to:

• Either adopt a redemption fee (not to exceed 2% of the amount of shares redeemed) or determine that a redemption fee is not necessary or appropriate for the fund; and
• Enter into agreements with their intermediaries (such as broker-dealers and retirement
  plan administrators) obligating the intermediaries to provide funds with shareholder trading information.

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Presentation Materials

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On September 15, 2004, the Division of Corporation Finance of the Securitis and Exchange Commission released Staff Legal Bulletin 14B: Shareholder Proposals.

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An investment adviser may rely on the services of an independent third party proxy voting firm to fulfill some of the adviser’s obligations imposed by Rule 206(4)-6 under the Investment Advisers Act of 1940, otherwise known as the proxy voting rule.¹

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On April 15, 2004, the Securities and Exchange Commission issued proposed rules “designed to protect investors by deterring fraud and abuse in our securities markets through the use of shell companies.”¹

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On April 21, 2004, the SEC adopted final rule and form amendments to mandate the electronic filing of Form ID on a new on-line system.  See SEC Rel. No. 33-8410 (April 21, 2004).  A copy of the final release can be found at http://www.sec.gov/rules/final/33-8410.htm.

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Presentation Paper

Because the educational, charitable, and scientific work that nonprofits perform, many people who agree to become involved in nonprofits assume – mistakenly – that these organizations are beyond the reach of litigation or governmental sanction.

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Presentation Materials

As a result of the SEC’s “enhanced disclosure initiative” and the Sarbanes-Oxley Act of 2002, the SEC has adopted new rules that affect reporting companies’ disclosure and certification obligations in their Forms 10-K or 10-KSB and that establish accelerated deadlines for filing such
forms.

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On August 27, 2002, the Securities and Exchange Commission adopted amendments required by the recently enacted Sarbanes-Oxley Act of 2002 to implement the accelerated filing deadlines for reports due under Section 16(a) of the Securities Exchange Act of 1934, as amended (the "Exchange Act") and other related changes.

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Until recently, the ability of public company insiders, such as directors and officers, to purchase and sell company securities has been governed by a patchwork of company-imposed trading windows, unanticipated blackout periods, and underwriter contractual "lock up" agreements. Directors and officers who seek liquidity and asset diversification in this environment can experience difficulty in achieving their financial objectives.

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On February 13, 2002, the Securities and Exchange Commission announced that it intends to propose substantial changes to the existing rules governing a public company’s disclosure obligations in an effort to improve the timeliness and content of information provided to investors. According to the SEC, these five rule proposals summarized below represent only the first phase of the SEC’s agenda to improve the current financial and reporting system. These proposals may be fairly viewed as a reaction to the wave of allegations following the collapse of Enron and Global Crossing and alleged irregularities at other troubled public companies.

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On July 18, 2001, the Securities and Exchange Commission issued a Concept Release entitled "Request for Comment on the Effects of Decimal Trading in Subpennies."¹  The release solicits comments on the impact of generally allowing trading, and potentially quoting, of securities on U.S. equity markets in increments of less than a penny. Comments are due on or before September 24, 2001.

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The Financial Accounting Standards Board (FASB) has recently announced that they plan to dramatically revise the accounting standards governing business combinations (such as mergers and acquisitions) by eliminating the "pooling-ofinterests" accounting method and changing the accounting treatment for acquired goodwill and other intangible assets. As of the date of this article, the long-anticipated revisions are proposed to be adopted in late July 2001.

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One of the recent areas of concern for the Securities and Exchange Commission ("SEC") has been "auditor independence" - the mental state of objectivity and the lack of bias of certified public accountants that perform audits or review public company's financial statements or file reports or opinion with the SEC.

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One of the recent areas of concern for the Securities and Exchange Commission has been “selective disclosure” – the release of material nonpublic information to selected persons, such as
securities analysts or institutional investors, before making the information widely available to the marketplace.

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The Internet has become an important part of the securities landscape.¹ Online brokerage accounts, company Web sites, electronic mail, chat rooms, electronic communication networks, online public and private offerings, online proxy voting, real-time stock quotes, historical securities data, and electronic document delivery represent only a sample of the new Internet-based financial tools providing information and access to investors. The number of people using the Internet for financial-related activities is growing and will probably represent an increasing share of the investment market in the future.²

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On June 8, the SEC's Division of Corporation Finance (CorpFin) reaffirmed its position that the issuance of securities in consideration of a person's registration with the issuer, whether or not through the issuer's Internet site, would be deemed an event of sale, and therefore would violate Section 5 of the Securities Act of 1933 unless the offering was subject to a registration statement or a valid exemption from registration. 

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Online brokerage accounts, chat rooms, electronic bulletin boards, Internet public offerings, Internet road shows, electronic proxies, and electronic document delivery are only a handful of the online tools that are changing how large and small investors collect, analyze, and use securities information. Although these tools are still developing, they and their progeny are playing an increasingly significant role in the investment market of the future. 

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On November 3, the Securities and Exchange Commission ("SEC" or "Commission") obtained a 30-count indictment alleging that Ronald G. Sparks and Owen K. Stephenson raised in excess of $7 million by fraudulently claiming to operate an unregulated, sovereign Indian bank on Apache tribal land in Oklahoma.1 Sparks and Stephenson were charged by the grand jury with conspiracy, mail fraud, and money laundering.

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On October 28, after conducting a "sweep" of the Internet, the SEC announced the filing of 23 enforcement actions against 44 individuals and companies across the country alleging fraud committed over the Internet. The sweep, the first national effort by the SEC to fight Internet fraud, involved a range of Internet conduct, including fraudulent "spamming" (Internet junk mail), online newsletters, message board postings and Web sites. 

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On May 4, the Division of Corporation Finance granted a no-action request made by Excalibur Technologies Corporation ("Excalibur") to omit a shareholder proposal that sought to require Excalibur to maintain on its Web Site "any and all Company filings, information or forms of any type as provided to the SEC or any other governmental regulatory authority and also to include forms 13-D, 144, 3, 4 and 5 and any others that are required filings by individuals and entities because of their stock ownership of the company."

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On March 9, the SEC permitted Prodigy and its wholly-owned subsidiary, Electronic Wall Street, Inc., to provide information about properly unregistered dividend reinvestment and stock purchase plans ("DRSPP") on its Internet site without triggering registration requirements under Section 5 of the Securities Act of 1933. Prodigy indicated in its application that, as part of a larger suite of information services called "Electronic Wall Street" ("EWS"), it planned to offer an information service called "NoLoad Online" containing information about registered and unregistered DRSPPs.

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As shareholders become increasingly sophisticated about the Internet and electronic commerce issues, the variety and frequency of shareholder efforts to influence corporate policy in these areas can be expected to increase. Initial SEC responses indicate, however, that at least for now, the shareholder proxy process will not be an effective tool for shareholders seeking such influence.

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On December 1, the Division of Corporation Finance made public its granting of a no.action request to Bloomberg, L.P., in which the company asserted that the transmission of a multimedia road show presentation over THE BLOOMBERG( service, under the circumstances described in the letter, would not constitute a “prospectus” within the meaning of Section 2(a)(10).

Electronic Road Shows Allowed on The Bloomberg Service

The Internet has recently emerged into the securities spotlight. On-line brokerage accounts, investor chat rooms, electronic trading and bulletin boards, Internet public offerings, and electronic document delivery  are only a few of the new financial tools in this expanding electronic investment universe. Although the scope of investment activity occurring over the Internet is difficult to measure, it is clearly growing, and will represent an increasing share of the investment market in the future. Both the power and peril of this new medium can be portrayed with two contrasting visions of the Internet. 

Protecting the Online Investor and the Markets: SEC and SRO Activities

The Securities and Exchange Commission ("SEC" or "Commission") recently issued a no-action letter to Net Roadshow, Inc., allowing the Atlanta-based startup to offer previously recorded road shows to qualified investors and underwriting investment banks over the Internet without the road shows being deemed prospectuses under Section 2(a)(10) of the Securities Act of 1933. SEC NoAction Letter, Net Roadshow, Inc. (publicly available Sept. 8, 1997) ("Net Roadshow").

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