Monthly Archives: April 2014

New York Attorney General announces unprecedented steps by PR Newswire to curb High Frequency Traders

On February 7, WSJ Financial Regulations reporter and author Scott Patterson broke the story Speed Traders Get an Edge: Paying for Direct Access to News Releases Can Give a Lucrative Time Advantage.

In this exposé, PR Newswire was identified as a newswire organization that does not sell to High Frequency (HFT) nor algorithmic trading firms. We believe this decision serves the best interests of both our corporate clients and the capital markets. The original story is available here for WSJ subscribers.

Today, as a follow up to the ongoing HFT issue, we’re pleased to share this important news from NY Attorney General Eric T. Schneiderman and an announcement from Ninan Chacko, CEO of PR Newswire.

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FOR IMMEDIATE RELEASE:

A.G. Schneiderman Announces Unprecedented Steps by News Distribution Firm to Curb Preferential Access for High Frequency Traders

Agreement With PR Newswire Is Latest Effort To Prevent Insider Trading 2.0, Practices That Result In Elite Traders Gaining Unfair Advantage Over Rest Of Market

Schneiderman: PR Newswire’s Industry-Leading Actions Help Restore Confidence In Markets And Protect The Investing Public

New York, April 30, 2014/PRNewswire/–Attorney General Eric T. Schneiderman today announced that PR Newswire, a leading news distribution and reporting firm, has agreed to require its direct data feed recipients to certify that they will not engage in high-frequency trading when using direct feeds of the information PR Newswire distributes on behalf of its clients. PR Newswire also agreed to counsel its customers that wish to release information upon the close of the markets to do so after 4:00:00 p.m., to ensure that high-frequency traders do not have the ability to trade on the news in the milliseconds after the closing bell. Today’s announcement follows agreements earlier this year between the Attorney General and Business Wire and Marketwired, each of which agreed to stop providing similar market-moving data to high-frequency traders.

“By going the extra mile to ensure its service is not abused by high frequency traders – at any time during the trading day and in the moments after  the closing bell – PR Newswire has proven itself to be an industry leader,” said Attorney General Schneiderman. “High frequency traders can use information in the milliseconds before it becomes widely available to other investors, effectively skimming from the rest of the investing public. Today’s agreement is another important step toward curbing Insider Trading 2.0, and PR Newswire deserves credit for its leadership.” 

PR Newswire provides an information distribution platform designed to help companies distribute press releases and other mandatory disclosures to the broad market. While PR Newswire had previously declined to provide its primary direct data feed to high-frequency traders, today’s agreement turns that practice into a formal policy at the company, and requires PR Newswire’s customers to certify annually that the direct data feeds they receive will not be used for high-frequency trading.

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As part of today’s agreement with the Office of the Attorney General, PR Newswire also adopted a first-in-the-industry policy to counsel clients to delay “4:00 p.m.” releases, which are intended to be released upon the close of the market, so as not to influence trading. Because certain securities exchanges, including NASDAQ, allow trading to continue for milliseconds beyond the 4:00 p.m. closing time, these close-of-market releases sometimes give high-frequency traders an edge that they can exploit in the milliseconds after 4:00 p.m.  Following discussions with the Office of the Attorney General, PR Newswire has adopted a policy to counsel clients that it is best to issue releases at 4:01 p.m., if the company’s intent is to make the release after the close of the markets.

Ninan Chacko, CEO of PR Newswire, said,

“Since our inception, we have taken a proactive approach to establishing practices that supply material news to investors and the general public equitably. Today’s steps solidify our industry-leading position promoting fair access to market-moving information.”

This agreement is part of Attorney General Schneiderman’s efforts to end Insider Trading 2.0 – the practice of providing preferred, technologically sophisticated traders with early access to market-moving information.  In March, Attorney General Schneiderman delivered a speech at New York Law School calling for regulators, stock exchanges, and other trading venues to curb arrangements that cater to high-frequency trading firms.  Last summer, Attorney General Schneiderman announced an agreement with Thomson Reuters to end its practice of selling early access to consumer confidence data to high-frequency traders.  Earlier this year, Attorney General Schneiderman also announced an agreement with BlackRock to end its global analyst survey program after an investigation revealed that a number of questions were worded to capture analysts’ unpublished views regarding management, competitive position, earnings, and other aspects of covered companies.  As part of that investigation, Attorney General Schneiderman announced that his office has secured interim agreements with 18 major financial firms to discontinue or to continue refraining from the practice of responding to such surveys and to continue their cooperation with the Attorney General’s investigation into the early release of analyst sentiment.

The Attorney General’s Insider Trading 2.0 initiative is led by the Office’s Investor Protection Bureau.

New York City Press Office / 212-416-8060
Albany Press Office / 518-473-5525
nyag.pressoffice@ag.ny.gov
Twitter: @AGSchneiderman

Source: New York State Office of the Attorney General

How Investors Consume Content Q#5: For the companies you currently hold, do you listen to quarterly earnings webcasts?

From a raw content perspective, earnings calls are very rich. Unfortunately, they are rich in pressure too. It’s almost as if the other 361 days don’t exist.

Certainly the pressure is really about the results themselves, but the tactical aspects (and execution) of the telephony and webcast are all too real to IR: scripting, preparing visuals, media alerts, scheduling, CEO and staff verbal tenor, phone quality, Q&A management… even the detail of the operator pronouncing names correctly. Phew.

Is it worth it? As you’ll read below, yes. Plus, the investors that reported they do not listen to earnings’ webcasts dropped 7% from the first time we asked.

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Click image to enlarge.

Please click here to learn about IR Room (webcasting and website solution).

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Have a great day.

IPOs and Transactions: April 21 – 25

There were 37 transactions filed with the SEC last week.

Congratulations to all of the corporations and law firms that selected our transactions services last week including Five Oaks Investment Corp w/ Kaye Scholer LLP, United States Gasoline Fund LP w/ Reed Smith LLP and Sensage Inc. w/ Holland & Knight LLP and KEYW Holding Corp.

We appreciate that they selected to work with us and we’re pleased that they found us both accurate and affordable.

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Registrant Symbol Form Exchange Account / Firm
ALLIANZ LIFE INSURANCE CO OF NORTH AMERICA S-1 Allianz Life Insurance Company of North America
TORCHLIGHT ENERGY RESOURCES INC TRCH S-1 Nasdaq Axelrod, Smith & Kirshbaum
NAVIENT CORP S-1 Baker Botts L.L.P.
PATTERN ENERGY GROUP INC. PEGIV S-1 Nasdaq Blake, Cassels & Graydon LLP
COMPRESSCO PARTNERS, L.P. GSJK S-3 Nasdaq Compressco Partners, L.P.
PATTERN ENERGY GROUP INC. PEGIV S-1 Nasdaq Davis Polk & Wardwell LLP
ULTHERA INC S-1 Davis Polk & Wardwell LLP
ATLAS FINANCIAL HOLDINGS, INC. AFH S-3 Nasdaq DLA Piper LLP
VITACIG, INC. S-1 Eilers Law Group, P.A.
MYOS CORP MYOS S-1 OTC Ellenoff Grossman & Schole LLP
VERTICAL CAPITAL INCOME FUND N-2 Gemini Fund Services, LLC
AXA EQUITABLE LIFE INSURANCE CO S-3 Goodwin Procter LLP
MONY LIFE INSURANCE CO OF AMERICA S-1 Goodwin Procter LLP
SENSAGE, INC. S-3 Holland & Knight LLP
ELLINGTON FINANCIAL LLC EFC S-3 NYSE Hunton & Williams LLP
PINNACLE ENTERTAINMENT INC. PNK S-4 NYSE Irell & Manella LLP
PYRAMID DELAWARE MERGER SUBSIDIARY, INC. S-4 Jones & Keller, P.C.
AQUABOUNTY TECHNOLOGIES, INC. 10-12B Jones Day
ETFS WHITE METALS BASKET TRUST WITE S-1 NYSE Katten Muchin Rosenman LLP
FIVE OAKS INVESTMENT CORP. OAKS S-3 NYSE Kaye Scholer LLP
SENSAGE, INC. S-3 KEYW Holding Corp.
ATHLON ENERGY INC. S-4 NYSE Latham & Watkins LLP
DYNAGAS LNG PARTNERS LP DLNG F-1 Nasdaq Latham & Watkins LLP
ORION ENGINEERED CARBONS HOLDINGS GMBH F-1 Latham & Watkins LLP
ULTHERA INC S-1 Latham & Watkins LLP
SIGNAL ADVANCE INC S-1 Law Offices of Richard C. Seltzer Atty.
GWG HOLDINGS, INC. S-1 Maslon Edelman Borman & Brand, LLP
HERITAGE INSURANCE HOLDINGS, LLC S-1 Mayer Brown LLP
CRAILAR TECHNOLOGIES INC CRLRF S-1 OTC McMillan LLP
CRAILAR TECHNOLOGIES INC CRLRF S-1 OTC Morgan, Lewis & Bockius LLP
INTERCLOUD SYSTEMS, INC. ICLD S-1 Nasdaq Pryor Cashman LLP
UNITED STATES 12 MONTH OIL FUND, LP USL S-1 NYSE Reed Smith LLP
UNITED STATES GASOLINE FUND, LP UGA S-1 NYSE Reed Smith LLP
CODORUS VALLEY BANCORP INC CVLY S-3 Nasdaq Rhoads & Sinon LLP
DYNAGAS LNG PARTNERS LP DLNG F-1 Nasdaq Seward & Kissel LLP
INGERSOLL RAND CO S-4 Simpson Thacher & Bartlett LLP
ORION ENGINEERED CARBONS HOLDINGS GMBH F-1 Sullivan & Cromwell LLP
ACCELERIZE NEW MEDIA INC ACLZ S-3 OTC Sullivan & Worcester LLP
JUHL ENERGY, INC JUHL S-1 OTC Synergy Law Group, LLC
CACHE INC CACH S-3 Nasdaq Thompson Hine LLP
VERTICAL CAPITAL INCOME FUND N-2 Thompson Hine LLP
TORCHLIGHT ENERGY RESOURCES INC TRCH S-1 Nasdaq Torchlight Energy Resources, Inc.
PATTERN ENERGY GROUP INC. PEGIV S-1 Nasdaq Torys LLP
PYRAMID DELAWARE MERGER SUBSIDIARY, INC. S-4 TroyGould PC
COMPRESSCO PARTNERS, L.P. GSJK S-3 Nasdaq Vinson & Elkins L.L.P.
PATTERN ENERGY GROUP INC. PEGIV S-1 Nasdaq Vinson & Elkins L.L.P.
KANSAS CITY SOUTHERN KSU S-4 NYSE White & Case LLP
FIREEYE, INC. FEYE S-1 Nasdaq Wilson Sonsini Goodrich & Rosati, PC
HERITAGE INSURANCE HOLDINGS, LLC S-1 Winston & Strawn LLP
PYRAMID DELAWARE MERGER SUBSIDIARY, INC. S-4 Yuma Energy, Inc.

Click here to review the week’s underwriters.

Have a great week.

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IPO Underwriters of the Week: April 21 – 25

Congratulations to the corporations and underwriters that worked with our transaction services team. Watch our brief transactions services video HERE and discover why we have become a top choice for both traditional and confidential IPOs.

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Registrant Form Underwriter 1 Underwriter 2 Underwriter 3 +
ALLIANZ LIFE INSURANCE CO OF NORTH AMERICA S-1 Allianz Life Financial Services, LLC
ATHLON ENERGY INC. S-4 Apollo Global Securities, LLC
AXA EQUITABLE LIFE INSURANCE CO S-3 AXA Advisors, LLC AXA Distributors, LLC
MONY LIFE INSURANCE CO OF AMERICA S-1 AXA Distributors, LLC
PATTERN ENERGY GROUP INC. S-1 BMO Nesbitt Burns Inc. Morgan Stanley & Co. LLC RBC Dominion Securities Inc.
HERITAGE INSURANCE HOLDINGS, LLC S-1 Citigroup Global Markets Inc. SunTrust Robinson Humphrey, Inc. Sandler O’Neill & Partners, L.P. / Dowling & Partners Securities LLC / JMP Securities LLC / Willis Securities, Inc.
DYNAGAS LNG PARTNERS LP F-1 Credit Suisse Securities (USA) LLC Merrill Lynch, Pierce, Fenner & Smith Inc. Morgan Stanley & Co. LLC / Deutsche Bank Securities Inc. / ABN AMRO Securities (USA) LLC / DNB Markets, Inc.
ULTHERA INC S-1 J.P. Morgan Securities LLC Citigroup Global Markets Inc. William Blair & Company, L.L.C. / Canaccord Genuity Inc.
VITACIG, INC. S-1 mCig, Inc.
GWG HOLDINGS, INC. S-1 MLV Capital
ORION ENGINEERED CARBONS HOLDINGS GMBH F-1 Morgan Stanley & Co. LLC Goldman, Sachs & Co. UBS Securities LLC
VERTICAL CAPITAL INCOME FUND N-2 Northern Lights Distributors, LLC
CRAILAR TECHNOLOGIES INC S-1 Roth Capital Partners, LLC

Post IPO, thousands of organizations count on us to assure regulatory compliance and target new investors.

Have a great week.

More proof XBRL is a universal language

Beyond the Senate’s recent bipartisan passing of the Digital Accountability and Transparency Act (DATA) of 2014, Vintage Filings’ SVP Liam Power and VP Trevor Loe are living proof that XBRL is THE global language for financial reporting.

PRNAsia

Vintage Filings met and presented to a captive audience of Chinese-based US-issuers in Beijing this week.

These ethically minded Chinese companies are working very hard to counter balance the tainted brush from the “mini-crisis” we experienced a couple years ago from the herd of Chinese reverse shells.

The audience was very interested in the advances we have made with our XBRL solutions. A more interesting observation was their companies’ reporting teams passion for XBRL  – the CEOs and CFOs instantly grasped the importance of a “common language” needed for both regulatory oversight and investor transparency.

This drive for a global financial language demonstrated by these Chinese corporations is an ironic juxtaposition to the backward movement being lobbied here in the US. Read this Fortune magazine article for a concise overview.

Have a great day.

A review of Section 16 filing responsibilities

With all the attention on High Frequency Trading and some pundit viewpoints that they are insider trading, here is a review of insider trading from an issuer perspective.

There are three types of corporate insiders for purposes of Section 16: officers, directors and greater than 10% shareholders. We refer to these three types of corporate insiders collectively as Section 16 insiders.

The company officers subject to Section 16 are:

  • The president
  • The principal financial officer
  • The principal accounting officer (or, if there is no such accounting officer, the controller)
  • Any vice president in charge of a principal business unit, division or function (such as sales, administration or finance)
  • Any other officer who performs a significant policy-making function
  • Any other person who performs similar policy-making functions for the company

Section 16 insiders must file reports with the SEC disclosing their beneficial ownership of and transactions in a public company’s equity securities. The three forms on which Section 16 insiders must make these reports – Forms 3, 4 and 5.

insiderForm 3: Initial Statement of Beneficial Ownership of Securities.

Section 16 insiders must file an initial report on Form 3 with the SEC within 10 days of becoming subject to Section 16. For a person who is elected an officer or director of a company that already has a class of equity securities registered under Section 12, the 10-day period begins when the person becomes an officer or director. Section 929R of the Dodd-Frank Act amended Section 16 of the Exchange Act to authorize the SEC to establish by rule a shorter time period within which a new Section 16 insider would be required to file a Form 3. As this handbook goes to publication, the SEC has not proposed any rule change that would shorten the current 10-day reporting window.

Persons who are officers, directors or greater than 10% shareholders of a company that registers a class of equity securities (and did not previously have a class of registered equity securities) are required to file a Form 3 on the effective date of the company’s registration statement. In any case, the Form 3 must disclose all equity securities of the company that the Section 16 insider beneficially owned on the date the person became subject to Section 16. Even if a director or officer owns no securities on the date he or she becomes a Section 16 insider, he or she is still required to file a Form 3.

In certain circumstances, the Section 16 insider should file an initial Form 3 earlier than is required. As discussed below, a Section 16 insider generally must report changes in his or her beneficial ownership of the company’s equity securities on Form 4 within two business days. If the Section 16 insider’s beneficial ownership of the company’s equity securities changes during the 10-day period before he or she must file a Form 3 (e.g., where a new director is granted restricted stock upon his or her appointment), the SEC recommends that the Section 16 insider file an initial Form 3 concurrently with a Form 4 reporting the change, notwithstanding that the rules permit the Form 3 to be filed at a later date.

Form 4: Statement of Changes in Beneficial Ownership.

After filing a Form 3, a Section 16 insider must report any subsequent change in beneficial ownership of the company’s equity securities by filing a Form 4 within two business days, unless the transaction is exempt from reporting or is eligible for deferred reporting.

Transactions that must be reported on Form 4 include, but are not limited to:

  • Non-exempt purchases and sales of equity securities held in the Section 16 insider’s name
  • Transactions involving equity securities held by others but that the Section 16 insider is deemed to beneficially own (i.e., equity securities in which the Section 16 insider has a “pecuniary interest,” as discussed above)
  • Exercises or conversions of derivative securities
  • Acquisitions and grants of any of the company’s equity awards (including options), even if not presently exercisable
  • Entry into various other derivative transactions, including equity swaps and similar hedges
  • Awards to non-employee directors made pursuant to equity incentive plans
  • Equity securities received from a non-exempt dividend reinvestment
  • Dispositions of equity securities to the company (e.g., the company’s retention of shares to pay the Section 16 insider’s tax withholding obligation upon the exercise of stock options)
Click the image to request our free Corporate Governance Handbook.

Click the image to request our free Corporate Governance Handbook.

Following an IPO, the directors and officers of the company before it became public may be required to report certain pre-IPO transactions in the company’s equity securities. Such a filing obligation may arise if the director or officer engages in a reportable transaction less than six months after the date that the company’s registration statement becomes effective. In such event, the director or officer is required to “look back” for a period of six months from the date of the reportable transaction and report on its first required Form 4 any transactions in the company’s equity securities that occurred during that period. Persons who are Section 16 insiders by virtue of being greater than 10% shareholders are not subject to six-month look-back periods. Likewise, a covered officer or director may be required to report transactions that occur after the company ceases to be a public company (i.e., because of termination of its Section 12 registration and reporting obligations). An otherwise reportable transaction occurring after the company is no longer public will be reportable on Form 4 if (and only if) the transaction is not exempt from Section 16(b) and occurs within six months of an “opposite way” transaction that was also subject to Section 16(b) and occurred while the company was public. For purposes of this rule, an acquisition and subsequent disposition (or vice versa) are considered “opposite way” transactions.

A covered officer or director may also be required to report transactions that occur after the termination of that person’s officer or director status. An otherwise reportable transaction occurring after the cessation of a person’s officer or director status will be reportable on Form 4 in the same circumstance as a transaction that occurs after a company ceases to be public (i.e., if (and only if) the transaction is not exempt from Section 16(b) and occurs within six months of an “opposite way” transaction that was also subject to Section 16(b) and occurred while the person was still a director or officer). A person who is a Section 16 insider solely by virtue of being a greater than 10% shareholder ceases to be subject to Section 16 reporting requirements once the person ceases to be a greater than 10% shareholder.

The SEC has adopted a variety of exemptions from the reporting requirements of Section 16(a) based upon the nature of the transaction. These exemptions apply to the following types of transactions:

  • Any increase or decrease in the number of equity securities held as a result of a stock split or a stock dividend applying equally to all securities of a class
  • The acquisition of rights, such as shareholder or preemptive rights, pursuant to a pro rata grant to all holders of the same class of registered equity securities
  • Transactions that effect only a change in the form of beneficial ownership without changing the person’s pecuniary interest in the subject equity securities (note, however, that this exemption does not cover the exercise and conversion of derivative securities or deposits to and withdrawals from voting trusts)
  • Certain transactions pursuant to tax-conditioned employee benefit plans
  • Acquisitions made pursuant to a dividend reinvestment plan, provided that the plan meets certain requirements specified in Rule 16a-11 under the Exchange Act
  • Acquisitions or dispositions of an equity security pursuant to a domestic relations order
  • The disposition or closing of a long derivative security position as a result of cancellation or expiration, provided that the Section 16 insider receives no value in exchange for the expiration or cancellation

In addition to the above exemptions, the SEC has adopted a number of exemptions based upon the status of the Section 16 insider. Depending on the circumstances, certain of these exemptions may be available to executors and other fiduciaries, odd-lot dealers, market makers, arbitrageurs, underwriters and other persons who participate in a distribution of the company’s equity securities.

Form 5: Annual Statement of Changes in Beneficial Ownership

A Section 16 insider must report certain transactions on a year-end report on Form 5 within 45 days after the end of the company’s fiscal year. Some transactions, most notably gifts, are not required to be reported on Form 4, but must be reported on Form 5. A Section 16 insider is required to file a year-end Form 5 to report any transaction that the person should have reported during the fiscal year on Form 3 or Form 4, but did not. Transactions reportable on Form 5 are limited to the following:

  • Certain transactions occurring during the most recent fiscal year that are exempt from short-swing profit liability under Section 16(b), such as bona fide gifts of the company’s equity securities, but excluding exempt transactions which involve the company
  • Qualifying de minimis acquisitions of the company’s equity securities
  • Transactions that the Section 16 insider should have reported on Form 3 or Form 4 during the most recent fiscal year, but did not

Disclosure of Reporting Delinquencies; Compliance Programs. Item 405 of Regulation S-K requires a company to disclose in its annual proxy statement and annual report on Form 10-K certain information regarding the failure of any Section 16 insider to timely file a Section 16 report during the previous fiscal year or prior fiscal years. For each such delinquent Section 16 insider, the company is required to set forth the number of late reports, the number of transactions that were not reported on a timely basis, and any known failure to file a required Form 3, 4 or 5. Although there is no official sanction placed upon the company as a result of the filing delinquencies of its insiders, such disclosures are potentially embarrassing.

Accordingly, every public company should develop and implement a strong compliance program to ensure that its directors and officers timely file all required reports. In addition to minimizing the potential for embarrassing disclosures of the type described above, a strong compliance program will assist the company’s directors and officers in avoiding both short-swing liability under Section 16(b) and SEC enforcement actions to enforce Section 16(a)’s reporting requirements.

Filing Procedures and Website Posting.

All Section 16(a) reports must be filed with the SEC electronically using the SEC’s EDGAR filing system, and all reports become publicly available immediately upon filing.

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…Tuesday, Wednesday, Kudosday…

KUDOS_VFIf you work in the corporate compliance and securities law niche, you know clients are very close-to-the-vest in regard to “testimonials.” That said, our staff gets a lot of praise daily – and we can’t not share the good news (anonymized for privacy). Sales can offer you full named references. 

Here is this weeks’ 


KUDOS_quoteKudos to EDGAR team

Dear All, It’s our honor to tell you that have submitted [our] annual report on Form 20-F for the fiscal year ended December 31, 2013 with the Securities and Exchange Commission on April 18, 2014. On behalf of management, we would like to express our appreciation for all parties’ excellent work on it. We look forward to working closely with all parties in the future.

 

 

KUDOS_quoteKudos to S-1 / Transaction team

Congratulations to everyone for getting the first amendment filed!!  That is another great milestone to achieve.  Everyone’s hard work, especially at the end, is greatly appreciated, especially by the company. Let’s hope the SEC responds quickly and with very few remaining comments!

 

 

KUDOS_quoteKudos to XBRL Team

[Account manager], your team and you did a lot of high quality work over a very short period of time. Thank you very much.

 

 

 

KUDOS_quoteKudos to Entire Team

Just wanted to say again thank you so much to you and your great team for making sure both 6K, F3 and XBRL [ for our client ] will be out on time with in such a short notice and with all the lack of order we had.

 

 

KUDOS_quoteKudos to our VDR solution

My experience with the [Virtual Data Room] was very positive – the site itself is user-friendly and easy to manage. In addition, any time I had a question, [account manager] was extremely responsive and provided an answer within minutes, even in the evening or on the weekend.

 

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Thanks to our experts!