HSE Securities and Capital Markets Newsletter | Fall 2023

Editor’s Message

Happy Fall!  I hope you are enjoying the latest pumpkin spice invention and the cooler weather and leaves changing colors.  The third quarter of 2023 was characterized by increased capital market activity during August and September with a slowdown caused by recent events in the Middle East.  Typically, the fourth quarter is the strongest quarter for capital market activity and the second half of 2023 was shaping up to be a strong market, but geopolitical events and the threat of a government shutdown in the United States have created headwinds slowing the pace of deals during the fourth quarter.

As described in greater detail in the summer newsletter, by December 1, 2023 all public companies in the United States will need to have adopted a clawback policy.  If you haven’t already implemented a clawback policy, you should do so now.  Thought should be given on whether the compensation committee or board will be responsible for administering the policy and whether the existing compensation committee charter contemplates responsibility for clawback decisions.  Companies who adopted clawback policies after Dodd-Frank but prior to the adoption of the SEC’s clawback policy rules will need to decide whether to retain their existing policy, create a new policy for the SEC’s clawback policy rules or combine the two policies. 

In addition, the SEC’s cybersecurity disclosure rules have gone into effect.  You can find more information about the new disclosure rules in this newsletter.  Public companies should be evaluating board oversight of cybersecurity disclosure issues and updating board charters if that responsibility will be delegated to a committee.  Public companies should also consider adopting policies and procedures to ensure timely compliance with the SEC’s new rules.

One of the major trends of 2023 has been the large number of micro-cap companies effectuating reverse stock splits to comply the Nasdaq or NYSE $1.00 minimum bid price requirements.  As described in this newsletter, recent changes to the Delaware General Corporate Law have made obtaining stockholder approval for a reverse stock split easier to obtain for companies incorporated in Delaware.

In other news, our Securities and Capital Markets group welcomed Clayton Dubin and Jason Delmont to the team.  Clayton and Jason are starting their legal careers with us and we are excited to have our clients get to know them.

Best wishes on a productive fall and a strong finish to 2023!

Alex McClean
Practice Group Leader, Securities and Capital Markets Group

Future Events
NobleCon19 | Boca Raton, FL | December 3-5

HSE is proud to sponsor Noble Capital Markets’ 19th Annual Emerging Growth Equity Conference at Florida Atlantic University. NobleCon is considered to be the preeminent showcase of emerging growth companies.
Contact Alex McClean or Maggie Rhoda if you plan to attend. 

In The News
Harter Secrest & Emery Advises Transcat, Inc. in $80.5 Million Public Offering

The HSE Securities & Capital Market team recently represented Transcat, Inc. (Nasdaq: TRNS) in an $80.5 million underwritten public offering of shares of common stock, which includes the full exercise of the underwriter’s over-allotment option. Read more. 

Legal Insights

We regularly provide insight on a range of important securities and regulatory developments through our LEGALcurrents. Below are links to some of our recent articles and some additional content that may be of interest:

• Public Companies Beware: SEC Introduces Yet Another Data Breach Notification Deadline and Other Cybersecurity Requirements 
• Cboe Looks To Give Issuers A Global Alternative To NYSE and Nasdaq 
• Approval of Reverse Stock Splits and Adding Authorized Shares May Become Easier  
• New York Will Require Disclosure of LLC Owners 
• Time to Hit the Range: New York State’s Pay Transparency Law Now in Effect
• SEC Adopts Private Fund Advisor Rules