HSE Securities and Capital Markets Newsletter – Spring 2022

Editor’s Message 

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Hopefully you are all starting to experience warmer weather as spring returns. As you will read in this issue, it was a busy first quarter of rulemaking at the SEC. The SEC issued proposed rules on climate change disclosure; share repurchases; private fund reporting; SPAC disclosure; and cybersecurity disclosure, to name a few. We expect rulemaking and activity at the Commission to continue to increase as the new Chairman seeks to implement his policy proposals. These proposed rules will need to go through the rulemaking process before they are adopted, and many will likely need to withstand legal challenges. Continuing with a trend over the last several Commissions, many of these rules were adopted along party lines, raising questions if the rules will be eliminated if there is a change to Republican leadership after the next Presidential election. Companies should familiarize themselves with these proposed rules so when they become final, they will be in a better position to quickly prepare an implementation plan.

While the SEC rulemaking process was heating up, the capital markets were as cold as the winter weather outside. Per Dealogic, just 77 companies went public as of March 30, 2022, down from 395 during the first quarter last year. Of the 77 IPOs, 53 were special-purpose acquisition companies, or SPACs, a decline from the 297 SPACs that went public during the first quarter of 2021. While this is partially a return to a more typical SPAC market, the impact of inflation and the war in Ukraine had an impact as well.

We hope you are all safe, well, and ready for a busy second quarter. We look forward to working with you to navigate SEC rulemaking and the challenges posed by the capital markets.

Alex McClean
Practice Group Leader, Securities and Capital Markets Group 

Featured Article

Entire Fairness is Entirely Fair for De-SPAC Says Delaware Court
Since the beginning of the COVID-19 pandemic, the SPAC market has been red hot. With so much activity over the last 2+ years, it was only a matter of time before a contested breach of fiduciary duty claim in the context of a de-SPAC was brought. Read about the Delaware Court of Chancery’s decision involving stockholder challenges to de-SPAC transactions and the impact on the SPAC industry. Click here to view article.

HSE Boosts Efforts to Achieve Greater Diversity, Equity, and Inclusion 

We are excited to share that we are one of 70 mid-sized law firms in the U.S. and Canada participating in the Midsize Mansfield Rule certification process. Established by Diversity Lab in 2020, this 18-month rigorous program is designed to increase the number of attorneys from historically underrepresented groups (racial/ethnic minority attorneys, female attorneys, LGBTQ+ attorneys, and attorneys with disabilities) working in and leading law firms with 25 to 150 US attorneys. Click here to view article.

Upcoming Live Event | Planet MicroCap Showcase 
May 3-5, 2022

Alex McClean and Maggie Rhoda will be participating on a panel at the Planet MicroCap Showcase 2022 on “Hot Topics in Law: Board Diversity Initiatives, Cross Border Transactions, Uplisting, and more!” The Showcase brings together C-level executives, MicroCap investors, financial professionals, and industry leaders for three days of presentations, one-on-one meetings, and networking in Las Vegas.

SCM Team News

Our team has been busy over the last few months with events, volunteering, and a little healthy competition, including a fun night of team building and laughs at a local bowling alley recently.

Chris Murillo participated in the SPAC IPO panel discussion at the 2022 Virtual Growth Conference, presented by Maxim Group. Investors heard from executives from a wide range of sectors and featured company presentations, fireside chats, roundtable discussions, and live Q&A with CEOs moderated by Maxim Research Analysts.

Siddharth (Sid) Bahl has added two new leadership roles in violunteer organizations: Town of Webster Parks, Recreation, Open Space & Athletic Review Committee and Make-A-Wish Foundation Western New York, Rochester New Leadership Council.

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:

Executive Compensation Forum

SEC Reopens Comment Period on Pay Versus Performance Rules
The SEC reopened the comment period on the pay-versus-performance rules under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, which were previously proposed in 2015 but never finalized. The reopening was intended to gather comments on the rules considering regulatory and market developments since 2015, including developments in executive compensation practices. Click here to view article.

HSE Views

Checklist for Hosting the Annual Meeting
Whether you are holding a virtual, in-person, or hybrid annual meeting, the planning and execution of the event can be daunting. Being prepared for any glitches that may arise will help you have a well-run annual meeting. Click here to view article.

Attorney Advertising. Prior results do not guarantee a similar outcome. This publication is provided as a service to clients and friends of Harter Secrest & Emery LLP. It is intended for general information purposes only and should not be considered as legal advice. The contents are neither an exhaustive discussion nor do they purport to cover all developments in the area. The reader should consult with legal counsel to determine how applicable laws relate to specific situations. ©2022 Harter Secrest & Emery LLP