Simpson Thacher Discusses SEC Clarifications of Shareholder Proposal Issues

On October 23, 2018, the Division of Corporation Finance of the Securities and Exchange Commission (the SEC) issued new Staff Legal Bulletin 14J[1], following up on previous bulletins clarifying issues arising under Exchange Act Rule 14a-8. The new bulletin addresses the Division’s views on:

  • Board of directors analyses provided in no-action requests that seek to rely on the “economic relevance” exception or the “ordinary business” exception as a basis to exclude shareholder proposals from a company’s proxy materials;
  • the scope and application of micromanagement as a basis to exclude a proposal under the “ordinary business” exception; and
  • the

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Simpson Thacher Discusses Combating Securities Fraud Allegations With10b5-1 Trading Plans

A recent decision issued by the United States District Court for the District of Massachusetts, Harrington v. Tetraphase Pharmaceuticals, Inc., highlights the value of established trading plans in defending against securities fraud allegations.[1] These trading plans, which are established pursuant to Rule 10b5-1 under the Securities Exchange Act of 1934, are not absolute defenses, but do offer corporate directors and officers (“insiders”) a greater level of protection in the event they purchase or sell company shares during the putative class period of a subsequent securities litigation. There are, however, several factors to consider in deciding whether a 10b5-1 … Read more