The Washington Supreme Court upheld the state's capital gains tax in a 7-2 decision, overturning Douglas County Superior Court’s ruling that the tax is an unconstitutional tax on income.

The Cyberspace Administration of China released the Measures for the Security Assessment of Cross-border Data Transfer on July 7, 2022, to regulate cross-border data transfers in accordance with the Cybersecurity Law, the Data Security Law, and the Personal Information Protection Law. The measures go into effect on September 1, 2022.

The Measures provide a six-month grace period from September 1, 2022, to March 1, 2023, for companies with previous cross-border data transfer activities to become compliant with the new standards. Companies with outbound data transfers should seek knowledgeable counsel to monitor the implementation and enforcement of the Measures by the CAC.

The Cyberspace Administration of China, the country’s internet watchdog, began collecting feedback on the draft provisions with respect to the release of its Standard Contract for Outbound Cross-border Transfer of Personal Information, which includes guidelines for the use of the Standard Contract for data processors, on June 30, 2022. An unofficial English translation of the contract is also available. The deadline for the submission of public comments is July 29, 2022.

A Los Angeles Superior Court judge struck down California’s board gender diversity statute on May 13, 2022. The court found that Senate Bill 826 violated the California Constitution’s Equal Protection Clause.

China’s internet watchdog, the Cyberspace Administration of China, has continued to tighten its regulation of internet industries and driven the formulation of many new laws and regulations in cybersecurity and data protection in China.

Mayor Muriel Bowser signed the District of Columbia’s Ban on Non-Compete Agreements Amendment Act of 2020 (D.C. Act 23-563) (the Act) on January 11, 2021.

A New Jersey based nonprofit organization, Save Long Beach Island, and its president sued in the U.S. District Court for the District of Columbia in January 2022.

The Infrastructure Investment and Jobs Act, signed into law by President Biden on November 15, 2021, has the potential to transform the surface transportation sector in the United States.

Our sixth edition of The Public Company Handbook:  A Corporate Governance and Disclosure Guide for Directors and Executives, provides a “plain English” guide for directors, officers, and other executives seeking to familiarize themselves with legal and other board and management issues facing public or soon-to-be-public companies.

The 26th United Nations Climate Change Conference of the Parties, wrapped up earlier this month in Glasgow, Scotland, after two weeks of negotiations. This update discusses how international agreements and U.S. policy announcements coming out of COP26 will affect businesses and provide opportunities in the months and years ahead.

Following up on the new excessive heat rules, Oregon has issued temporary rules to protect employees from wildfire smoke, which will remain in place for six months while the Oregon Occupational Safety and Health Administration (OSHA) drafts permanent rules.

The Law of the People’s Republic of China on Countering Foreign Sanctions (Anti-Sanctions Law) was passed by the Standing Committee of the 13th National People’s Congress on June 10, 2021.

This first substantive installment in our multipart series addresses arguably the most significant implication of AMLA 2020: a new and expansive requirement to disclose corporate beneficial ownership, set out by the Corporate Transparency Act.

On July 8, 2021, Oregon Occupational Safety and Health Administration (OSHA) adopted emergency rules implementing requirements for employers to protect workers from the dangers of high and extreme heat, including providing access to shade and cool water, cool-down breaks, training, and other measures.

On April 25, 2021 the Washington Legislature passed Senate Bill 5096, a state capital gains tax on individual residents of the State of Washington. This update was originally published on April 30, 2021, with the title "Washington’s New 7% Capital Gains Tax Questions Answered."

On April 14, 2021, the US Department of Labor (DOL) released three-part guidance on cybersecurity issues for employee benefit plans, marking its first significant commentary on the issue since its comprehensive, but non-binding, report in late 2016. The DOL’s guidance provides “tips” and “best practices” for ERISA plan sponsors, responsible fiduciaries, recordkeepers, service providers, and participants in appropriately safeguarding non-public plan and participant information against cybersecurity threats. 

On New Year’s Day 2021, Congress overrode a presidential veto to pass the Anti-Money Laundering Act of 2020 (AMLA 2020), which amends and modernizes the Bank Secrecy Act (BSA).

The American Rescue Plan Act of 2021 (ARPA) includes a number of provisions requiring immediate action by employers.

In this report, Perkins Coie offers an analysis of the past year’s most noteworthy regulatory developments and litigation outcomes in the mortgage lending and servicing industry.

The Ministry of Commerce of the People’s Republic of China started the multi-year process of enacting a new comprehensive Export Control Law by releasing an initial draft for comment in 2017.

In May of 2019, the Clean Energy Transformation Act (CETA) became law in Washington state and set bold decarbonization and renewable energy mandates for electric utilities

The Ministry of Commerce (MOFCOM) released Order No. 1 of 2021 on Rules on Counteracting Unjustified Extraterritorial Application of Foreign Legislation and Other Measures (the Rules) effective on January 9, 2021.

The Regulations contain important clarifications regarding the taxpayers eligible to claim Section 45Q tax credits.

President Donald Trump signed into law the Consolidated Appropriations Act, 2021 (the Omnibus Bill) on December 27, 2020.

After much political gridlock, Congress passed an omnibus government-spending bill (Appropriations Act), which includes another COVID-19 relief package.

In the 2020 Augmented and Virtual Reality Survey conducted by Perkins Coie LLP, Boost VC, and the XR Association, nearly three-quarters of industry leaders polled indicated that they expect immersive technologies to be mainstream within the next five years. 

President-elect Biden has long been allied with the labor movement, and during his tenure as vice president, the administration pursued policies favorable to organized labor.

The Federal Permit Improvement Steering Council on November 27, 2020, proposed to add mining to the list of infrastructure sectors that are covered by Title 41 of the Fixing America’s Surface Transportation Act (FAST-41).

Oregon’s Occupational Safety and Health Administration (OSHA) has issued a temporary rule in response to the COVID-19 pandemic that went into effect on November 16, 2020, although many of the rule’s requirements have a later effective date. 

On Election Day 2020, California voters approved Proposition 22 which allows some gig economy companies to continue to classify drivers as independent contractors.

California’s legislative session closed with the state Assembly and Senate signing nearly 40 bills related to employment.

After undergoing several rounds of revisions to the 2019 draft specifications, the new Information Security Technology-Personal Information Security Specifications (GB/T35273-2020) (New Personal Information Specifications) were released jointly by the State Administration of Market Regulation and the Standardization Administration of China on March 6, 2020.

In response to the ongoing coronavirus (COVID-19) pandemic, the U.S. Congress, the executive branch, and the Internal Revenue Service (IRS) have taken several actions intended to provide immediate relief to taxpayers.

The U.S. Department of Justice has issued an opinion letter (catalogued as FCPA Opinion No. 20-01) stating that it does not intend to take enforcement action under the FCPA against a U.S.-based investment advisor planning to pay something akin to a “finder’s fee” to a foreign state-owned investment bank.

COVID-19 is the biggest disruption to consumer retail spending patterns in recent history.

President Donald Trump on June 22, 2020, signed an executive order extending until December 31, 2020, and expanding on his April 22, 2020, proclamation, temporarily suspending the entry of certain immigrants into the United States.

The proclamation was amended on June 29, 2020, please see our summary of the amendment.  

Many employee benefit plan sponsors, administrators, and fiduciaries have been asking about regulatory relief in response to administrative challenges created by the COVID-19 pandemic.

Following recent press and new guidance from the Small Business Administration (SBA), many nonprofit organizations are carefully considering whether borrowing funds under the Paycheck Protection Program (PPP loans) is “necessary” for their organization, a critical component of the loan application.

Companies affected by COVID-19 must carefully consider immigration implications for all foreign national and expat employees, including issues of immigration compliance.

In response to the ongoing coronavirus (COVID-19) pandemic, U.S. Congress, the executive branch, and the Internal Revenue Service (IRS) have taken several actions intended to provide immediate relief to taxpayers.

In response to the ongoing coronavirus (COVID-19) pandemic, the U.S. Congress, the Executive Branch, and the Internal Revenue Service have taken several actions intended to provide immediate relief to taxpayers, including by postponing federal income tax return and tax payment deadlines, providing businesses with tax credits to the extent that such businesses are subject to new paid sick and paid family and medical leave requirements, and declaring COVID-19 a national emergency.

Parties to commercial contracts that may be affected by COVID-19 are now examining their force majeure provisions, as well as all other risk allocation provisions, to determine which party bears the cost of delay or impossibility of performance.

As federal and state governments respond to COVID-19, employers and plan fiduciaries must also address the evolving issues arising under employer-sponsored health plans.

The IRS issued final regulations on September 19, 2019, easing the 401(k) hardship distribution rules.

Thirty-five years after deciding that arbitration clauses in employee benefit plans governed by the Employee Retirement Income Security Act of 1974 (ERISA) were unenforceable, the U.S. Court of Appeals for the Ninth Circuit has reversed itself by approving the use of mandatory arbitration clauses and class action waivers in ERISA-governed benefit plans in Dorman v. Charles Schwab Corp.

The Standing Committee of the National People’s Congress released the Encryption Law of the People’s Republic of China (Draft) for public comment on July 5, 2019 (the “2019 Draft”).

This update outlines the current trends in China’s bankruptcy filings based on surveys and data of bankruptcy court cases released by the Supreme People’s Court (SPC) in the past five years.

The Cyberspace Administration of China (i.e., the Office of the Central Cyberspace Affairs of China) promulgated the draft Measures for Data Security Management (the Measures) for public comment on May 28.

This update has also been published in the February-March 2020, Vol. 6 No. 2 issue of Pratt's Privacy & Cybersecurity Law Report.

Perkins Coie partnered with PitchBook and National Venture Capital Association (NVCA) on the newly published Venture Monitor.

The National People’s Congress Standing Committee (NPCSC) released a draft proposal of the new PRC Foreign Investment Law on December 26, 2018, which will be available for public comment until February 24, 2019. This new draft law will serve as a replacement to the prior draft, which the Ministry of Commerce (MOFCOM) proposed in 2015, and is significantly shorter (the prior draft included 170 articles, while this present draft only has 39).

During 2018, the SEC issued rule updates and guidance that are intended to ease certain public reporting requirements and clarify the SEC’s position with respect to the shareholder proposal process. While the SEC is taking steps aimed at decreasing public company disclosure burdens, the investor community is sharpening its focus on public company actions and reporting on environmental, social and governance issues. In anticipation of the upcoming reporting season, we highlight rule changes, guidance and trends for public companies to consider in preparing annual report and proxy disclosures in 2019.

Known by many names, including business email compromise fraud, CEO or CFO fraud, impersonation attacks, or “Man-in-the-Email” scams, cyber-related frauds involving spoofed or otherwise compromised business electronic communications continue to be an increasingly pervasive threat to businesses of all sizes, including public companies.

Pop-ups are a fun and effective way to engage new clients and increase brand awareness while keeping overhead costs low. While these temporary retail stores have been embraced by both retailers and consumers, the approach has the following significant legal considerations that should be kept top of mind.

Public companies use their investor relations websites to conveniently disseminate important corporate news and information, and many investors and other interested parties in turn rely on those websites as a primary source of such news and information. To continue reading the full article, click here.

In what is believed to be the first criminal case examining whether so-called “initial coin offerings” (ICOs) are securities under U.S. law, Judge Raymond J. Dearie of the Eastern District of New York refused to dismiss the indictment against Maksim Zaslavskiy for a deceptive virtual currency scheme and fraudulent ICOs by REcoin Diamond Reserve Club.

Thanks to better technology and lower costs, fuel efficient electric vehicles (EVs) are on the move in nearly every state in the country.

The Hart-Scott-Rodino Annual Report Fiscal Year 2017, published earlier this year by the FTC and the DOJ, summarizes FTC and DOJ actions conducted under the Hart-Scott-Rodino Antitrust Improvements Act in fiscal year 2017. 

This update was quoted in deallawyers.com "Antitrust: HSR Second Requests & Deal Challenges Decline in 2017," on 09.05.2018.

Driven by a newly aggressive “America First” trade policy under the Trump administration, global trade barriers are increasing rapidly, with proposals for new tariffs and non-tariff barriers issued by U.S. and foreign governments on a near-daily basis.

The SEC proposed three rule changes last week to the commission’s whistleblower program, including one that would authorize the SEC to “downward adjust” monetary awards in large actions for which an award might “exceed an amount that is reasonably necessary to advance the program’s goals”—in the view of the commission.

The U.S. Supreme Court this week overruled longstanding precedent to hold that public-sector unions may no longer extract agency fees from nonconsenting employees who have opted not to join a union.

The United States will reimpose sanctions against Iran to implement President Donald Trump’s decision to withdraw from the Joint Comprehensive Plan of Action (JCPOA), a multilateral agreement under which Iran agreed to curb development of certain nuclear capabilities in exchange for the United States lifting specified sanctions.

This article surveys key investigation-related issues important to companies, including why investigations matter; balancing investigative objectives against business realities; key investigative steps (and pitfalls); how to avoid the "runaway investigation"; how to share investigative findings; and how to construct an effective remediation plan.

What is the current state of federal enforcement as to cannabis? Are there ways that companies not directly involved in the cannabis industry may still do business with companies in the industry, while minimizing potential exposure to federal criminal penalties under the CSA?

A version of this article was originally published by Bloomberg BNA White Collar Crime Report on April 18, 2018.

President Donald Trump’s recent decision to impose a wide range of restrictive new measures against China, in response to China’s practices involving U.S. intellectual property and technology, creates new risks, barriers—and in certain cases, opportunities—for U.S. industries that depend on China as an important market, production center and trading partner.

On Tuesday, a unanimous U.S. Supreme Court held that state courts have jurisdiction to hear “covered” class-action claims under the Securities Act of 1933, and that defendants may not remove such claims to federal court.

Last year saw continued aggressive Foreign Corrupt Practices Act enforcement by the U.S. Department of Justice and all indicators are that investigations are not going to slow down in 2018.

At this year’s PLI “SEC Speaks” conference held February 22-23, 2018, in Washington, D.C., the U. S. Securities and Exchange Commission’s senior leadership showcased its 2017 accomplishments, and previewed priorities for 2018 and beyond.

Highlighted in  Law360's: "In Case you Missed It:  Hottest Firms And Stories On Law360," on 03.02.2018.

The U.S. Securities and Exchange Commission (SEC) issued its first formal interpretative release on public company disclosure obligations relating to cybersecurity since the SEC Division of Corporation Finance’s guidance in 2011.

This update was republished in Bloomberg BNA's White Collar Crime Report on 03.16.2018, "New SEC Cybersecurity Guidance Reflects Clayton's 'Light Touch'," and Bloomberg's Big Law Business on 03.13.2018, "SEC on Cybersecurity: Jay Clayton’s “Light Touch."

Although business-related settlement payments (and attorneys’ fees) are generally tax-deductible, the 2017 Tax Cuts and Jobs Act (the Tax Act) restricts an employer’s ability to obtain tax deductions for settlements of sexual harassment and abuse claims that are subject to nondisclosure agreements.

The Federal Trade Commission last week announced that the reporting thresholds under Section 7A of the Clayton Act, known as the Hart-Scott-Rodino (HSR) Antitrust Improvements Act of 1976, will be increased.

The Hart-Scott-Rodino Annual Report Fiscal Year 2016 , published last year by the FTC and the DOJ, summarizes FTC and DOJ actions conducted under the HSR Act in fiscal year 2016, the period from October 1, 2015, through September 30, 2016. 

This practice note outlines 10 practice points for public companies to consider when responding to comment letters from the Securities and Exchange Commission (SEC).

With the passage of the Tax Cuts and Jobs Act of 2017, attorneys in Perkins Coie’s Trust & Estate Planning practice, along with our clients running closely held businesses, have already begun reviewing and implementing tax-efficient strategies. 

In anticipation of the upcoming annual report and proxy season, we are highlighting new requirements and trends for public companies in 2018. 

In the wake of the onerous settlement imposed on Target Corporation arising from its data breach, the cyberattack against Equifax and its aftermath, the U.S. Securities and Exchange Commission’s (SEC’s) own questionable handling of its data breach, and ongoing data breach lawsuits against directors, public company directors are rightfully concerned about their cybersecurity oversight duty.

The SEC recently issued new guidance to help companies prepare their pay ratio disclosures that provides some relief for companies—and further validates that these rules are highly unlikely to be deferred or reversed prior to the 2018 proxy season.  

In its opinion in In re Martha Stewart Living Omnimedia, Inc. Stockholder Litigation, issued in August 2017, the Delaware Chancery Court addressed a question left open under Kahn v. M&F Worldwide. 

The Securities and Exchange Commission’s final rules requiring hyperlinking of exhibits to SEC filings will be effective for most public companies on September 1, 2017.

The Federal Trade Commission (FTC) recently announced that the reporting thresholds under Section 7A of the Clayton Act, known as the Hart-Scott-Rodino (H‑S‑R) Antitrust Improvements Act of 1976, will be increased.

President Trump has now appointed the senior members of his administration (some of whom remain subject to U.S. Senate confirmation) who will help him develop, coordinate and enforce U.S. trade policy.

Our fifth edition of The Public Company Handbook:  A Corporate Governance and Disclosure Guide for Directors and Executives, provides a “plain English” guide for directors, officers and other executives seeking to familiarize themselves with legal and other board and management issues facing public or soon-to-be-public companies.

In anticipation of the upcoming annual report and proxy season, we are highlighting new requirements and trends that may impact public companies in 2017. 

President-elect Donald Trump has promised action that could drastically change the rules for U.S. importers and exporters, foreign shippers to the United States and service providers.

An initial public offering is the realization of a dream for many entrepreneurs, executives, board members and stockholders, a singular achievement that demonstrates their success in building a strong business and creating value for owners, employees and customers. View The IPO Handbook.

In Morris v. Ernst & Young, LLP, the U.S. Court of Appeals for the Ninth Circuit recently reviewed an arbitration agreement that required employees “as a condition of employment” “to sign agreements not to join with other employees in bringing legal claims against the company.”

The Federal Trade Commission recently sued 1-800 Contacts, Inc., the largest contact lens retailer in the United States, charging it with restraining competition in violation of Section 5 of the Federal Trade Commission Act, 15 U.S.C. § 45.

U.S. Customs and Border Protection (CBP) has issued new interim regulations to remedy and penalize evasion of antidumping and countervailing duties (AD/CVD) orders.

Several recent public statements make it clear that both the DOJ and the SEC are focused on finding fraud and other civil and criminal violations at private Silicon Valley companies.

The IRS recently issued Notice 2016-31, providing further guidance regarding the “beginning of construction” requirement for the production tax credit (PTC).

The federal government took another step in the fight against human trafficking and forced labor.  President Obama signed into law on February 24, 2016, the Trade Facilitation and Trade Enforcement Act of 2015 (TFTEA).

This week Congress amended U.S. customs law to create new risks and opportunities for companies importing goods into the United States.

Iran has reached an agreement with the international community that would require Iran to restrict aspects of its nuclear program in return for the eventual lifting of certain U.S. and international sanctions against it. The agreement is called the Joint Comprehensive Plan of Action (JCPOA).

President Obama signed Trade Promotion Authority (TPA) into law this week. TPA permits the Obama administration to submit free trade agreements (FTAs) to Congress for a simple yes-or-no vote, without amendment.

In the ramp up to this holiday season, the record number of retail and mall closures and bankruptcies should put retailers and their vendors on alert. Several retail icons have sought or considered bankruptcy protection.

Republished in Law360 on 06.25.2015.

The new election rules adopted by the National Labor Relations Board (NLRB) went into effect on April 14, 2015, and will apply to all requests for elections filed after that date. The new rules significantly speed up the scheduling of an election when a union files a petition seeking to represent a group of employees.

During the same week that President Barack Obama announced sweeping changes in the diplomatic and trade relationships between the United States and Cuba, the president signed congressional legislation authorizing additional sanctions against Russia (December 19, 2014) and Venezuela (December 18, 2014). 

On December 17, 2014, President Barack Obama announced sweeping changes in the diplomatic and trade relationships between the United States and Cuba.  These changes, outlined below, will require time to implement; certain aspects will require Congressional approval. 

The National Labor Relations Board (NLRB) issued its decision in Purple Communications, Inc. & Communication Workers of America, AFL-CIO today, holding that employees who are given access to company email accounts have a right to use those email accounts for activities protected by federal labor law, including union organizing.

On May 21, 2014, the Federal Trade Commission and the Department of Justice published the Hart-Scott-Rodino Annual Report Fiscal Year 2013 (for the period from October 1, 2012 to September 30, 2013).

The annual “SEC Speaks Conference,” where the U.S. Securities and Exchange Commission (SEC) and its senior staff review the major developments from the prior year, and preview the SEC’s enforcement priorities for the upcoming year, convened in Washington D.C. on February 21-22, 2014.

The National Labor Relations Board, the agency that enforces federal labor law, continues to challenge employer policies that seek to impose confidentiality constraints on employees.  This is unlikely to change now that the Senate has confirmed President Obama’s nominations for all five members, bringing the NLRB to full strength for the first time in years.

The Investment Management Report provides information on recent changes in the financial industry. Read the full newsletter.

Following numerous revisions and opportunities for public comment, on May 30, 2013, U.S. Citizenship and Immigration Services (USCIS) released a Policy Memorandum for all USCIS employees regarding EB-5 adjudications.

On April 30, 2013, the Federal Trade Commission and the Department of Justice published their Hart-Scott-Rodino Annual Report Fiscal Year 2012 for the period from October 1, 2011 to September 30, 2012.  The annual report summarizes the actions of the Federal Trade Commission and Department of Justice that were conducted under the Hart-Scott-Rodino Antitrust Improvements Act, or HSR Act, in fiscal year 2012.

In December 2012, the Federal Trade Commission (FTC) adopted final amendments to the Children's Online Privacy Protection Act (COPPA) Rule, which regulates how companies may collect information online from children under 13.  Last month, the FTC also issued an updated set of Frequently Asked Questions regarding the revised COPPA Rule.  The revised COPPA Rule went into effect today, July 1, 2013, and will impact "operators" of certain websites and online services for a long time to come.

Last Friday, March 8th, the Department of Homeland Security, U.S. Citizenship and Immigration Services, adopted a new I-9 Form that must be used by all employers (and some other entities), starting no later than May 8, 2013—two months after the new requirement was published in the Federal Register.  A copy of the announcement can be found here.

A recent appellate decision requires strict adherence to disclosure requirements before third-party releases contained in a Chapter 11 plan may be approved.

A recent Washington Supreme Court case, Gandee v. LDL Freedom Enterprises, Inc., No. 87674-6 (Feb. 7, 2013), provides important insights into how Washington courts approach the enforceability of arbitration agreements in the wake of the U.S. Supreme Court’s seminal decision in AT&T Mobility v. Concepcion, 131 S. Ct. 1740 (2011).

In the waning days of 2012, the National Labor Relations Board (NLRB) issued several game-changing decisions that are important to all private sector employers—both union and nonunion.

On January 1, 2013, all employers with employees in California who are paid by commission will be required to have written contracts with those employees.  This law is a significant departure from the previous law, which only required employers based outside of California to have written contracts with their commissioned employees.

The U.S. Department of the Treasury and the Internal Revenue Service (IRS) recently issued much-anticipated final regulations under Section 4191 of the Internal Revenue Code (Code), which imposes a 2.3% tax on sales of any “taxable medical device” by a manufacturer, producer or importer (collectively referred to as “manufacturers”). The IRS simultaneously issued Notice 2012-77, providing interim guidance to manufacturers while it continues to study certain issues that are not addressed by the final regulations.

The Washington Supreme Court has just issued its unanimous decision in the Washington State Nurses Association case.  The court concluded that when a full-time employee (working 40 hours a week) works through a paid rest break, the employee is entitled to overtime pay on top of his or her regular pay.

Whether “Corporate Social Responsibility” (CSR) is a new phrase to your company or is something you have observed and worked on for years, these are perilous times indeed for companies with large, complex, global supply chains.

On September 25, 2012, President Obama signed a groundbreaking Executive Order designed to strengthen protections against trafficking in persons in federal contracting.

Those working in today's in-house law departments or supervising global supply chains and third-party business partners have become sensitive to the significant dangers posed by not complying with the U.S. Foreign Corrupt Practices Act (“FCPA”).  The well-publicized recent events surrounding Wal-Mart's FCPA woes have only raised already-elevated anxiety levels.

On June 13, 2012, the Federal Trade Commission and the Department of Justice published their Hart-Scott-Rodino Annual Report Fiscal Year 2011 for the period from October 1, 2010 to September 30, 2011.  The Annual Report summarizes Federal Trade Commission and Department of Justice actions conducted under the Hart-Scott-Rodino Antitrust Improvements Act, or HSR Act, in fiscal year 2011.  The number of HSR filings in fiscal 2011 increased by 24% over the number of filings in 2010.  And the agencies continue to enforce the HSR Act's notification requirements with respect to acquisitions of company stock by corporate officers and directors, often in an inadvertent "failure to file" situation.

This Update provides key highlights of the Annual Report and offers practical advice.

In double overtime, the Washington State Legislature ended the 2012 legislative session Wednesday morning, April 11, closing a roughly half-billion dollar shortfall for the two-year budget cycle.

Employers that allow dependents to be covered under their health plans need to be aware of health care reform rules that may limit their ability to retroactively remove ineligible dependents from coverage.

The IRS recently issued Notice 2012-9, which provides clarifications and additional guidance on the new employer obligation, added by the health care reform law, to report on Form W-2 the cost of health coverage provided to employees.

The Department of Health and Human Services has begun a pilot program of HIPAA privacy and security audits for health care providers and health plans, and the audits will have some very short turnaround times.

As part of the changes made by health care reform, Section 6051(a)(14) of the Internal Revenue Code requires employers to report on Form W-2 the aggregate cost of employer-sponsored health coverage provided to employees.

In a recent decision, In re Openlane, the Delaware Chancery Court validated the so-called “sign-and-consent” approval structure in a merger transaction.

The FTC and the Antitrust Division of the U.S. Department of Justice recently announced final amendments to the Hart-Scott-Rodino Premerger Notification Rules, the Premerger Notification and Report Form and associated Instructions in order to streamline the Form and capture new information that will help the Agencies conduct their initial review of a proposed transaction's competitive impact.

On May 25, 2011, in a 3-2 vote, the U.S. Securities and Exchange Commission (“SEC”) adopted its final rules (“Rules”), as required under Section 922 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act” or the “Act”). The Rules implement the SEC’s hotly anticipated new whistleblower bounty program that rewards individuals who provide the SEC with information leading to successful enforcement actions that exceed $1 million in monetary sanctions. Eligible whistleblowers can earn a payout of 10% to 30% of any monetary sanctions collected because of the tipster's information.

This well-established principle surprises many nonunion employers who mistakenly think that the federal law protecting union activities, the National Labor Relations Act ("NLRA"), does not apply to them.  The reality is that the NLRA protects nonunion employees in exactly the same way it protects employees engaged in union activities.

Understanding the many SEC, NYSE, Nasdaq and state law issues that affect their companies can be a bewildering task for directors and officers. To help with this is the just released fourth edition of The Public Company Handbook: A Corporate Governance and Disclosure Guide for Directors and Executives, a "plain English" guide for directors and executives seeking to familiarize themselves with legal matters facing public companies.

Many companies might be surprised to learn that the difficult to control acts of their foreign agents, intermediaries, consultants, joint venture partners, suppliers, distributors and even outside counsel, private equity portfolio companies and franchisees can result in—and, in fact, have resulted in—potentially devastating civil and criminal Foreign Corrupt Practices Act (FCPA) liability to the principal or parent company . . . even absent any evidence of the company’s actual knowledge of this misconduct. And all indications are that the government will ramp up its reliance on such third-party liability as we move into 2011 and beyond. This update examines the growing threat of third-party liability and how clients can, through precautionary steps tailored to the particular circumstances of the company, effectively fend off the potentially catastrophic effects of third-party liability.

On December 17, 2010, President Obama signed into law the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010 (the “Act”).  Among other provisions, the Act extends for one additional year the exclusion from gross income of 100% of future capital gains of non-corporate taxpayers from certain investments in qualified small business stock.

On September 27, 2010, President Obama signed into law the Creating Small Business Jobs Act of 2010 (the “Act”).  Among other provisions, the Act excludes from gross income for regular income and alternative minimum tax purposes 100% of the capital gains (subject to a per issuer limitation described below) of non-corporate taxpayers from investments in qualified small business stock made after September 27, 2010 and before January 1, 2011.  For investments in qualified small business stock made after December 31, 2010, only 50% of the capital gains generally will be excluded from gross income.

On September 24, 2010, the IRS released final Schedule UTP and its corresponding instructions that require certain corporations with audited financial statements to report uncertain tax positions.  Earlier this month, on September 9, 2010, a notice of proposed rulemaking was issued setting forth a proposed regulation that specifically authorizes the IRS to require the filing of Schedule UTP. 

On June 30, 2010, the House of Representatives approved the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Financial Reform Act, a comprehensive and expansive set of financial reforms widely thought to be the toughest changes to financial regulation in the United States since the Great Depression.

On Wednesday, July 21, 2010, President Obama signed the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 into law.

On June 30, 2010, the House of Representatives approved the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Financial Reform Act, a comprehensive and expansive set of financial reforms widely thought to be the toughest changes to financial regulation in the United States since the Great Depression.

Congress has approved the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, and President Obama has signed it into law.

On Thursday, July 15, 2010, the Senate approved the Dodd-Frank Bill by a vote of 60 to 39.  Having already passed the House, it is now anticipated that President Obama will sign the bill into law next week.

On Tuesday, June 29, 2010, the conference committee that previously finalized the Dodd-Frank Bill reopened the conference in order to swap out a controversial $19 billion tax on large banks in favor of winding TARP down early and assessing modest fees through the FDIC.

Last year, Governor Christine Gregoire signed into law the Uniform Limited Partnership Act, or ULPA.  ULPA modified Washington's existing limited partnership statute, which was based on the Revised Uniform Limited Partnership Act, or RULPA.  ULPA became effective for new limited partnerships on January 1, 2010, but generally takes effect for existing limited partnerships, with certain significant exceptions, on July 1, 2010.

Early Friday morning, June 25, 2010, the House-Senate Conference reached final agreement on financial regulatory reform legislation, otherwise known as the Dodd-Frank Act of 2010. The Act, among other things, establishes a consumer financial protection entity, eliminates "too big to fail" bailouts, establishes a warning system to avoid systemic crises, and improves transparency and accountability for complex financial instruments as derivatives.

The House-Senate Conference Committee continues to negotiate financial regulatory reform legislation. Both sides have put forth offers and counter offers in an effort to have the final legislation signed by the President before the July 4th recess.

On June 15, 2010, the House-Senate Conference committee began reconciling the two versions of financial regulatory reform legislation. The current timeline is to have the President sign a finalized bill by the July 4th recess.

On Wednesday, June 2, 2010, the Economic and Monetary Affairs Committee approved a resolution to toughen regulation regarding derivatives trading so as to "reduce speculative trading" and ensure that derivatives are traded openly and with uniform standards.

On Friday, May 28, 2010, the House passed the American Jobs and Closing Tax Loopholes Act of 2010, H.R. 4213.  The bill passed by a vote of 215-204.

On Thursday Evening, May 20, 2010, the Senate passed the Restoring American Financial Stability Act of 2010.  The vote of 59 to 39 came with four Republicans voting in favor of the bill, and two Democrats voting against it.

On Thursday, May 20, 2010, the Senate invoked cloture on the Restoring American Financial Stability Act of 2010.  The vote of 60-40 allows the Senate to move the bill to a final vote by the end of the week, although it can still be further amended before the final Senate vote.

On Wednesday, May 5, 2010, Congressman Mike Pence (R-IN), Chairman of the House Republican Conference, and Conference Vice-Chair Cathy McMorris Rodgers (R-WA) sent a letter to Vice President Joe Biden, opposing an International Monetary Fund (IMF) bailout for Spain.

On April 23, 2010, Governor Christine Gregoire signed into law Second Engrossed Substitute Senate Bill 6143, which extends Washington's business and occupation (B&O) tax to corporate directors beginning July 1, 2010.

On Wednesday, April 28, 2010, Senate Republicans finally agreed to allow the opening of the debate of the Restoring American Financial Stability Act of 2010.

On April 20, 2010, the Federal Trade Commission and the Antitrust Division of the U.S. Department of Justice jointly released their proposed revisions to the Horizontal Merger Guidelines for public comment.

On Friday, April 16, 2010, President Obama threatened to veto a Wall Street reform bill that fails to regulate the derivatives market.  The President stated that he “want[s] to see what emerges, but [he] will veto legislation that does not bring the derivatives market under control in some sort of regulatory framework and assures that we do not have the same sort of mess that we've seen in the past.”

On Wednesday, April 7, 2010, Federal Reserve Chairman Ben Bernanke gave a speech at the Dallas Regional Chamber discussing the origins of the financial crisis, the Federal Reserve's policy responses, and both near term and longer term economic challenges facing the United States.

On April 12, 2010 the Washington State Legislature resolved the budget impasse and adopted a $794 million tax package that the governor is expected to sign.  The tax bill, 2ESSB 6143, contains a number of major changes to Washington’s tax system.

On March 15, 2010, the Securities and Exchange Commission approved Nasdaq's proposed rule change to modify its requirements pertaining to public disclosures by listed companies.  In an effort to eliminate duplicate disclosures, the Nasdaq rule change will allow companies to make a public announcement by filing a Form 8-K, where required by SEC rules, or by issuing a press release.

On Thursday, March 25, 2010 the Securities and Exchange Commission announced that it is conducting a review to evaluate the use of derivatives by mutual funds, exchange-traded funds and other investment companies.

Continuing its focus on Regulation FD, the SEC filed an action in early March against Presstek, Inc., a manufacturer and distributor of high-technology digital imaging equipment, and its former CEO, Edward J. Marino.

On Thursday, March 18, 2010, members of the House Financial Services Committee, Ranking Member of the Capital Markets Subcommittee, Scott Garret (R-NJ), along with support from Chairman Paul Kanjorski (D-PA) and Ranking Member Spencer Bachus (R-AL), introduced the United States Covered Bond Act.

On Monday, March 15, 2010, Senator Christopher J. Dodd (D-CT), Chairman of the Senate Banking, Housing and Urban Affairs Committee, released a draft of a financial services reform bill entitled "Restoring American Financial Stability Act of 2010."  This legislative proposal is a companion to a similar bill that was passed by the House of Representatives in December 2009.

On Thursday, February 25, the Technical Committee of the International Organization of Securities Commissions (IOSCO) published a template for the global collection of hedge fund information.  SEC Commissioner Kathleen Casey is the chair of the Technical Committee of IOSCO.  The IOSCO template is aimed at enabling “the collection and exchange of consistent and comparable data amongst regulators and other competent authorities for the purpose of facilitating international supervisory cooperation in identifying possible systemic risks in this sector.”

The Securities and Exchange Commission recently adopted amendments to the e-proxy rules in an effort to increase shareholder participation in the voting process.  Data indicates that, since the adoption of the e-proxy model, participation by retail shareholders has been lower when those shareholders receive only the Notice of Internet Availability rather than a full set of proxy materials.

On Friday, February 19, the Federal Reserve launched an informational website aimed at helping consumers understand the recent credit card rules, which took effect Monday, February 22.  The website helps consumers by summarizing the rules, promulgated as part of the Federal Reserve's implementation of provisions of the Credit Card Accountability, Responsibility and Disclosure Act of 2009 (Credit CARD Act), and explaining how they will affect credit card users.

The successive snow storms in Washington D.C. have limited the activity this week in Congress on financial services reform.  Nonetheless, on Tuesday, February 9, House Financial Services Committee Chairman, Barney Frank issued a statement regarding the financial industry and the need for increased consumer protection in the U.S. financial industry.

On Wednesday, January 27, the SEC approved new rules aimed at reforming the regulation of money market funds in order to increase investor protection and curb risk. The approval provides for new rules and amends existing rules under the Investment Company Act of 1940.

On December 19, 2009, the COBRA subsidy program first introduced by the American Recovery and Reinvestment Act of 2009 (ARRA) was extended as a part of the Department of Defense Appropriations Act, 2010 (2010 Act).  The extension allows individuals who are involuntarily terminated up to February 28, 2010 to pay only 35% of the premium for COBRA coverage and extends the maximum duration of subsidized coverage from 9 to 15 months.

On Thursday, January 21, House Financial Services Committee Chairman Barney Frank (D-MA) released a memo clarifying uncertainties surrounding the Consumer Financial Protection Agency (CFPA).

Last week, the Federal Reserve issued new rules regulating credit cards that go into effect February 22, 2010.  These consumer protective rules will affect credit card companies and consumers alike.

The Internal Revenue Service recently issued new final regulations addressing the return and information statement requirements applicable to exercises of incentive stock options, or ISOs, and transfers of shares purchased under an employee stock purchase plan, or ESPP.  The IRS has waived the requirements under the new regulations for ISO exercises and transfers of ESPP shares that occur during 2009.

On Friday, December 11, 2009, the House passed the extensive Wall Street Reform and Consumer Protection Act.  The Wall Street Reform Act, as proposed to the floor of the House and aimed at financial regulatory reform, was discussed in our December 11, 2009 Financial Services Bulletin.

On Wednesday, December 2, 2009, the House Financial Services Committee finished working on a comprehensive set of legislative initiatives aimed at financial regulatory reform, which are reflected in The Wall Street Reform and Consumer Protection Act (H.R. 4173).

On Wednesday, December 2, 2009, the House of Representatives Financial Services Committee passed two significant acts, the Financial Stability Improvement Act and the Federal Insurance Office Act, both of which are aimed at further regulation of the financial services sector.  Both bills have been referred to the full House for consideration.  Below are brief summaries of the acts and links to the legislative text.

Public companies should take steps to determine whether any amendments may be required to new and outstanding compensatory arrangements in light of Section 162(m) of the Internal Revenue Code and certain transition relief under Revenue Ruling 2008-13.

On November 12, 2009, the SEC announced the settlement of its first Regulation G enforcement action.  Regulation G prohibits the presentation of non-GAAP financial measures in a misleading way and requires companies to present—alongside the non-GAAP financials—the most directly comparable GAAP measures and a clearly understandable reconciliation of the GAAP and non-GAAP measures.

On Tuesday, November 10, 2009, Senator Dodd (D-CT), Chairman of the Senate Banking Committee, released a draft of a financial services reform bill, entitled "Restoring American Financial Stability Act of 2009."  This legislative proposal is a companion to a similar, albeit less extensive, version that has been introduced in the House of Representatives.

The IRS announced the Year 2010 cost-of-living adjustments for various provisions affecting employee benefit plans.

The Securities and Exchange Commission in June 2009 proposed amendments to the federal proxy rules to expand access to the board of directors nomination process for eligible shareholders.

Last week's settlement of a Reg. FD action by the SEC against the CFO of American Commercial Lines (ACL) seems like a throwback to an interrupted line, to the enforcement actions from 2002 to 2005 that slowed to a crawl with the "Siebel II" action in late 2005.

This month, Congress will begin to address the proposed Consumer Financial Protection Agency Act of 2009, known as the CFPAA, which is one piece of the dramatic financial regulatory reform that Barney Frank, Chairman of the House Financial Services Committee, introduced in July 2009.

On July 31, 2009, the House of Representatives, with the support of the Obama Administration, passed H.R. 3269, the Corporate and Financial Institution Compensation Fairness Act of 2009, proposed legislation that would require all publicly traded companies to seek a nonbinding "say‑on-pay" vote of shareholders on executive compensation packages annually and in acquisition transactions.

A recent decision by the Delaware Court of Chancery reinforces the responsibility of a board of directors to assertively defend the interests of the noncontrolling stockholders when negotiating with a controlling stockholder in order to satisfy the board's duty of loyalty.

A recent full court First Circuit decision held that the taxpayer's tax accrual workpapers are not protected under the work product privilege and must therefore be released to the Internal Revenue Service.

On June 10, 2009, the Securities and Exchange Commission proposed amendments to the federal proxy rules to expand access to the board of director nomination process for eligible shareholders.

The Pension Protection Act of 2006 made numerous changes to rules regarding employee benefit plans, including tax-qualified defined benefit and defined contribution plans.  Although the changes took effect at various dates (and plans have been required to operationally comply with each change as of the specified effective date), amendments reflecting these changes generally do not have to be adopted until the last day of the plan's 2009 plan year.

The Obama Administration has proposed sweeping new regulations that would overhaul the U.S. financial regulatory system, including a proposal published June 17, 2009 that would require investment advisers of hedge funds and other private pools of capital whose assets under management exceed some unspecified, but modest, threshold to register with the Securities and Exchange Commission under the Investment Advisers Act of 1940.

The Financial Accounting Standards Board recently issued Staff Position No. 141(R)-1, Accounting for Assets Acquired and Liabilities Assumed in a Business Combination That Arise from Contingencies, which provides new guidance that changes the accounting treatment of contingent assets and liabilities in mergers and acquisitions and other business combinations under FASB Statement No. 141 (revised 2007), Business Combinations.

In Lyondell Chemical Corp. v. Ryan, C.A. 3176 (Del. Mar. 25, 2009), the Delaware Supreme Court, acting en banc, reversed the decision of the Delaware Court of Chancery and granted summary judgment to Lyondell's board of directors, dismissing the claim that it failed to act in good faith in conducting the sale of its company through an accelerated negotiation process.  The Court reaffirmed important principles governing a board's Revlon duties in connection with the sale of a company and directors' good faith performance of those duties.

In a decision that affirms existing Delaware law, the Delaware Court of Chancery in In re Citigroup Inc. Shareholder Derivative Litigation, No. 3338-CC, 2009 WL 481906 (Del. Ch. Feb. 24, 2009), upheld the business judgment rule and its protection of directors' business decisions in the face of worldwide economic losses.  The court dismissed all but one facet of the case, which alleged Caremark violations against Citigroup directors due to Citigroup's losses in the subprime lending market.

In Gantler v. Stephens, C.A No. 2392, 2009 WL188828 (Del. Jan. 27, 2009), the Delaware Supreme Court affirmed a principle of corporate law that had been implied in prior decisions:  officers of Delaware corporations owe the same fiduciary duties of care and loyalty to the corporation and its shareholders as directors owe.  The Court also resolved contradictory prior opinions on the common law doctrine of shareholder ratification by limiting the doctrine to approval of board action that is not otherwise required to be approved by shareholders in order to be effective.

Unless the SEC grants another extension, a non-accelerated filer must provide its first auditor attestation report under Section 404(b) of the Sarbanes-Oxley Act in its SEC annual report for the fiscal year ending on or after December 15, 2009.  A "non-accelerated filer" is a company that did not have a public float of $75 million or more on the last business day of its most recently completed second fiscal quarter.

In February 2009, at the annual SEC Speaks conference in Washington, D.C., senior staff of the U.S. Securities and Exchange Commission reviewed significant actions of the previous year and identified top priorities for the year to come.  This update lists our top takeaways from the conference that may have an impact on your business.

The American Recovery and Reinvestment Act of 2009, commonly referred to as the Stimulus Bill, signed into law on February 17, 2009, contains renewable energy tax incentives, defers realization of certain cancellation of debt income, suspends certain restrictions on the deductibility of original issue discount, and limits S corporation built-in gain recognition.

Proxy statement preparation and planning for annual meetings of stockholders are in full swing.  Along with proxy season comes the possibility that stockholders may submit proposals or nominations for consideration at the annual meeting.

While the downturn in the economy has adversely affected the sellers of directors’ and officers’ liability insurance – much as it has companies in all sectors of the economy – investing in D&O insurance is still a wise course of action.  This Update offers nine suggestions for ensuring that a company’s directors and officers are adequately protected in this environment against potential liabilities that D&O insurance normally would pay.

A greater emphasis on corporate record keeping under the Sarbanes-Oxley Act of 2002 and related regulations, shareholders’ heightened expectations of directors and the intense scrutiny of director conduct in litigation, including option backdating cases, are increasingly placing corporate minutes in the spotlight.

The Securities and Exchange Commission amended its new executive officer and director compensation disclosure rules in December 2006 and released Staff guidance on these rules in 2007. The substantial changes to the rules will likely increase the attention and scrutiny the SEC, investors and the public apply to proxy statements and annual reports during ongoing proxy and annual reporting seasons. The revised edition of the Executive Compensation Disclosure Handbook: A Practical Guide to the SEC's New Rules provides an overview of the most significant changes and requirements through mid-February 2007 under the new rules and guidance and offers practical advice to help companies understand, and comply with, the new disclosure requirements.

Recently introduced Washington House Bill 1111 and its Senate counterpart, Senate Bill 5294, would add Washington to the list of states with so-called "constituency statutes." If adopted, these bills will significantly change the standards of conduct that apply to directors of corporations organized in the State of Washington.

Perkins Coie is pleased to announce the Executive Compensation Disclosure Handbook: A Practical Guide to the SEC's New Rules. This handbook is the most practical, plain English guide available for public company management, directors and general counsel on the SEC's new requirements for public company disclosure and reporting of executive and director compensation and related issues.

In a decision with potentially far-reaching effects, the United States Court of Appeals for the Second Circuit recently toughened the standard for granting class certification under Rule 23 of the Federal Rules of Civil Procedure. In In re Initial Public Offering Securities Litigation, No. 05-3349-cv (Dec. 5, 2006), the court reversed an order granting class certification in six consolidated securities fraud actions brought by thousands of investors against major investment banks alleging that they had inflated market prices and received secret commissions when underwriting IPOs. This decision may affect all areas of law influenced by class actions, including employment, antitrust, consumer protection and product liability.

The Securities and Exchange Commission just announced that it has amended its new executive officer and director compensation disclosure rules, effective immediately. The FASB requires companies to recognize the costs of equity awards over the period in which an employee must provide service in exchange for the award under Statement of Financial Accounting Standards No. 123 (revised 2004) Share-Based Payment. The new SEC amendments will more closely align the reporting of equity awards in the Summary Compensation Table and the Director Compensation Table to the amounts that are disclosed in the financial statements under FAS 123R.

The Department of Justice recently announced that it will revise some controversial policies outlined in a document known as the Thompson Memorandum. The new policies will place procedural limits on attempts by the Department of Justice to require companies under investigation to waive the attorney-client privilege. The policies will also bar federal prosecutors from considering as a factor in charging decisions whether a company is advancing attorneys' fees to employees or other corporate agents. These widely anticipated changes respond to strong criticism of the Thompson Memorandum from many sources and are designed to preempt legislation introduced by Arlen Specter, the outgoing chair of the Senate Judiciary Committee.

On December 7, 2006, the U.S. Supreme Court granted certiorari in Leegin Creative Leather Products v. PSKS, Inc., a potential landmark case challenging the long-standing "Dr. Miles" doctrine condemning resale price maintenance and minimum vertical price fixing as per se violations of Section One of the Sherman Act.

Public companies, and other companies that need audited financial statements, must begin accounting for uncertain income tax positions under a new rule: Financial Accounting Standards Board Interpretation No. 48, which was released in July, and is effective for fiscal years beginning after December 15, 2006. Most reporting companies will implement the new rule for their first quarter 2007 financial statements.

Public company executives and directors are in the crosshairs again, this time over stock option "backdating" and related issues. According to media reports, more than 80 companies have announced investigations into or deficiencies with their option granting practices, and at least 19 public company executives have been fired or have resigned as a result of option granting issues.

In a decision generally protective of directors and officers, a Seattle federal district court recently held that shareholders who seek to bring derivative claims under Washington law must meet requirements similar to those imposed under Delaware law. In re Cray, Inc., 431 F. Supp. 2d 1114 (W.D. Wash. 2006).

In recognition of the central role of the Internet in today's global economy, many companies rely on their corporate websites as basic information sources and marketing tools for business partners, customers and the general public. In light of increased attention to corporate governance matters and recent SEC and stock exchange corporate governance requirements, public companies typically create within their corporate websites a separate page devoted to investor relations, and many companies also create separate pages devoted exclusively to corporate governance matters, such as information about the board of directors and committees.

A carefully conceived and well-implemented document retention policy has long been an important component of an effective corporate compliance program. Recent events have made reviewing and updating corporate document retention policies a priority for most companies.

In the Delaware Supreme Court's recent opinion in the Disney case, Justice Jacobs provided better "best practices" advice for compensation committee decision making (and by analogy, board and other board committee decision making) than we may have seen in decades. The court also rejected the argument that making a decision in the absence of adequate information and deliberation amounts to bad faith.

Perkins Coie is pleased to announce the third edition of the most practical, plain English guide available for public company corporate governance in the post-Sarbanes-Oxley world: The Public Company Handbook: A Corporate Governance and Disclosure Guide for Directors and Executives.

The federal securities laws already require clear, concise and understandable disclosure about the amount and type of all compensation paid to chief executive officers and other highly compensated executives of public companies. In recent years widespread and increasing interest in executive pay and the perceived inadequacy of current disclosure spawned frequent front-page headlines and heated rhetoric from members of Congress and shareholder advocates.

The Securities and Exchange Commission recently proposed amendments to its tender offer "best-price rule," which it adopted in 1986 to prevent discriminatory tender offers by requiring that the highest price paid to any security holder in a tender offer must be paid to all other tendering security holders. Several court decisions interpreting the SEC's best-price rule have created uncertainty about whether compensatory and other arrangements made with a target company's officers, employees, directors and shareholders in an acquisition structured as a tender offer will be deemed tender offer consideration that is subject to this rule.

Internal Revenue Code Section 409A, along with recent changes in financial accounting rules, has significantly increased the focus of private companies on accurately valuing their common stock for purposes of granting options and other equity incentive awards. Section 409A has upped the ante by imposing severe tax consequences on individuals for certain stock-based compensation that does not comply with the new deferred compensation tax rules, including stock options granted with an exercise price that is less than the fair market value of the company's common stock on the grant date.

The deadline is rapidly approaching for amending nonqualified deferred compensation plans subject to Internal Revenue Code Section 409A to reflect certain transition relief provisions provided by IRS Notice 2005 1. If your plan has taken advantage of any of the following forms of transition relief, it must be amended by December 31, 2005.

The new compliance and disclosure requirements for internal control over financial reporting enacted by the SEC under Section 404 of the Sarbanes-Oxley Act of 2002 disproportionately burden smaller public companies because of the relatively fixed cost of designing effective controls and demonstrating they are in place. Recognizing this disparity, the SEC has sought guidance on how smaller companies can effectively implement and test their internal controls and on whether and how Section 404 requirements and deadlines should be revised for smaller companies.

In the first case to directly address the question, a federal district court has held that private parties have no right to enforce Section 304 of the Sarbanes-Oxley Act of 2002. Neer v. Pelino, No. 04-CV-04791-SD (E.D. Pa. Sept. 27, 2005). Instead, the court held that only the SEC can enforce Section 304.

The IRS has issued proposed regulations that expand the guidance available for complying with the deferred compensation tax rules of Section 409A of the Internal Revenue Code. Section 409A generally provides that amounts deferred under a nonqualified deferred compensation plan are currently includible in income if not subject to a substantial risk of forfeiture, unless the plan meets specified design and operational requirements. Failure to comply can result in significant federal income tax consequences, including a 20% additional tax.

A judge in the U.S. District Court for the Southern District of New York recently dismissed the SEC's first Regulation FD enforcement action to be tested in federal courts. In dismissing the action against Siebel Systems and two of its officers, the Court took the SEC to task for its overly aggressive enforcement of Regulation FD.

The SEC recently approved final rules that significantly modify the registration, communications and offering processes under the Securities Act of 1933, as amended. The new rules will be effective December 1, 2005. The most significant changes include:

In early August 2005, the Delaware Court of Chancery issued its opinion after a widely publicized three-month trial in In re The Walt Disney Company Derivative Litigation, absolving Disney's directors of liability in connection with the 1995-1996 hiring and firing of former Disney president Michael Ovitz. Ovitz received a severance package of approximately $140 million after his unsuccessful 14-month tenure at Disney.

The Securities and Exchange Commission recently amended Rules 16b-3 and 16b-7 under the Securities Exchange Act of 1934, to clarify that Rule 16b-3 may be relied on to exempt officer and director securities transactions from Section 16(b) short-swing profit recovery, even if the transactions are not compensatory in nature, and Rule 16b-7 may be relied on to exempt stock reclassifications, even if they involve securities with different risk characteristics or change the percentage ownership of the holders.

In a decision that broadens the right to a jury trial for parties in California, the California Supreme Court recently held that California courts cannot enforce predispute waivers of the right to a jury trial . The case, Grafton Partners L.P. v. Superior Court, No. S123344 (Cal. Aug. 4, 2005), applies retrospectively to all existing contracts governed by California law and will significantly affect dispute resolution efforts by parties to such contracts.

In a unanimous decision, the U.S. Supreme Court recently reversed Arthur Andersen's criminal conviction for violating a federal witness tampering statute by encouraging its employees to shred Enron documents pursuant to a document retention policy. Arthur Andersen LLP v. United States, 125 S. Ct. 2129, 2005 WL 1262915 (U.S. May 31, 2005). In doing so, the Supreme Court avoided direct evaluation of the conduct that led to the accounting firm's conviction.

The Delaware Court of Chancery recently rejected as inadequate a proposed settlement in a derivative action brought against directors and officers of the Fairchild Corporation. This Update highlights the key issues in the Court's rejection and offers practical guidance.

The SEC recently approved new rules adopted by the New York Stock Exchange and National Association of Securities Dealers to limit conflicts of interest between the selling and research arms of investment banks. Under these rules, research analysts at investment banks may not participate in road show meetings relating to an investment banking services transaction or communicate with current or prospective customers while investment banking personnel or company management is present.

The Staff of the Securities and Exchange Commission, the SEC itself and the Public Company Accounting Oversight Board (PCAOB) each issued separate statements last week with guidance for companies implementing Section 404 of the Sarbanes-Oxley Act of 2002. This Update highlights some of the key concepts emphasized by the SEC and the PCAOB in last week's guidance and provides practical advice.

Attorneys in the Perkins Coie Corporate Finance Group recently authored an article titled "Advising the Board of Directors in Acquiring a Business" that was published in Insights: the Corporate & Securities Law Advisor. Authorizing significant acquisitions can create legal risks for directors, and directors who authorize acquisitions that prove unsuccessful can be subject to litigation.

The pattern is familiar. A public company makes some positive announcements about a product. After some time passes, the company announces bad news about the product, leading to a decline in the stock price.

The SEC has adopted a new rule that delays required stock option and other share plan expensing under the Financial Accounting Standards Board's Statement of Financial Accounting Standards No. 123 (revised 2004), Share-Based Payment (FAS 123R), for most public companies until their first fiscal year beginning after June 15, 2005; the compliance date for small business issuers is their first fiscal year beginning after December 15, 2005.

In March 2005 the SEC announced its settlement of a Regulation FD enforcement action against Flowserve Corporation, the company's CEO and its director of investor relations (IR). In the Flowserve Regulation FD enforcement action, the SEC has, for the first time: Asserted that a company violated Regulation FD by affirming, as opposed to announcing changes to, previous earnings guidance; and Included enforcement against an IR professional.

The SEC is forming an Advisory Committee on Smaller Public Companies. The Committee will assess the effect of the Sarbanes-Oxley Act and other securities regulations on smaller public companies and will recommend appropriate changes to the SEC, based on the following objectives: protecting investors; examining whether the current regulations impose costs on smaller companies proportionate to their benefits; identifying methods to minimize costs and maximize benefits; and facilitating capital formation by smaller companies.

The SEC's Division of Corporation Finance has released a Staff Alert for companies completing their upcoming annual reports on Form 10-K that highlights existing requirements and reiterates previously articulated positions. Although the Staff Alert is not a rule, regulation or an official statement of the SEC, and was not approved by the Commission, it provides valuable insight into the staff's views on the annual reporting requirements and signals where the staff may focus attention.

New York Stock Exchange listing standards require boards of listed companies to conduct self‑evaluations at least annually to determine whether the board and its committees are functioning effectively. Although Nasdaq Marketplace Rules are silent on board self‑evaluations, a growing number of companies are considering such evaluations as a matter of best practices.

What is a director's duty for corporate legal compliance? Recent amendments to the United States Organizational Sentencing Guidelines can help directors and their advisors answer that important question.

The Sarbanes-Oxley Act and recent changes in Securities and Exchange Commission and stock exchange requirements have imposed ever greater responsibilities on corporate directors. As these additional responsibilities expose directors to increasing risks, companies have struggled to attract and retain qualified candidates to serve as independent directors.

On December 20, 2004, the Treasury Department and the Internal Revenue Service issued Notice 2005-1 providing the first installment of guidance for the deferred compensation provisions of the American Jobs Creation Act of 2004, which are contained in new Section 409A of the Internal Revenue Code.

In late November 2004, Alan Beller attracted a packed audience of attentive securities lawyers, in-house company counsel and accountants attending the Federal Regulation of Securities Subcommittee meeting at the American Bar Association's Business Section Fall Meeting in Washington, D.C. The topic? The latest on current and emerging securities law developments.

The FASB has published FASB Statement No. 123 (revised 2004), Share-Based Payment, which requires that the compensation cost relating to stock options, stock appreciation rights, restricted stock or units, employee stock purchase plans and other share-based payment transactions, measured based on the fair value, be recognized in financial statements. FAS 123(R) replaces FAS 123, Accounting for Stock-Based Compensation, and supersedes APB 25, Accounting for Stock Issued to Employees.

The SEC has issued an exemptive order granting smaller accelerated filers up to an additional 45 days to include in their annual reports the management's report on internal control over financial reporting and the related auditor's report on management's assessment of internal control over financial reporting, both of which are required under SEC rules implementing Section 404 of the Sarbanes-Oxley Act of 2002. Although this postponement does not, for example, apply to Fortune 100 companies, like General Electric or Procter & Gamble, its practical effect will be to provide some additional time for many small- and mid-cap companies, including Nasdaq-listed technology and biotech companies, to complete management's assessment of internal control over financial reporting and for their auditors to complete their reports on management's assessment.

The Securities and Exchange Commission recently approved and made effective amendments to the New York Stock Exchange corporate governance standards, Section 303A of the NYSE Listed Company Manual, primarily to clarify standards that were adopted last year. This Update summarizes the amendments and offers practical guidance.

The SEC has postponed for one year the final phase-in period for acceleration of the due dates of quarterly and annual reports required to be filed under the Securities Exchange Act of 1934 by "accelerated filers." The SEC has also conformed requirements concerning financial statements contained in registration statements and proxy statements to apply the postponed phase-in period.

At an open meeting on October 26, 2004, the SEC announced proposals that would result in significant changes to the registered offering process under the Securities Act of 1933, as amended. The SEC proposed changes in three areas: communications related to registered securities offerings, liability timing issues and improved shelf registration processes. The SEC has not yet released the text of the proposed rules, which release will trigger commencement of the 75-day comment period.

The SEC release adopting the new Form 8-K rules also included revisions to Form 10-Q. Calendar-year companies preparing their first quarterly reports on Form 10-Q since the effectiveness of these new rules should be aware that the revisions have consequences relating to the voluntary reporting of information not otherwise required to be reported on Form 10-Q.

California has enacted AB 1000, effective September 27, 2004, which amends California's Corporate Disclosure Act to clarify the requirements of the original Act and conforms many of its provisions to SEC reporting requirements for public companies. California adopted the original Act in the aftermath of Sarbanes-Oxley to require public companies doing business in California to file certain corporate data with the California Secretary of State's office.

Today, President Bush signed the American Jobs Creation Act of 2004 (H.R. 4520) into law. The $145 billion corporate tax package contains a range of international tax reforms, corporate tax breaks and tax incentives that are intended to make United States manufacturing, service and high-technology businesses and workers more competitive and productive both in the United States and abroad.

Congress recently approved the American Jobs Creation Act of 2004 (H.R. 4520), which includes provisions that impose significant new restrictions on deferred compensation. If these restrictions are not satisfied, deferred compensation amounts are taxable when vested and subject to tax penalties. President Bush is expected to sign the Act, but as of October 19th has not done so. This Update highlights the Act's key changes to deferred compensation requirements and offers practical guidance.

Businesses often turn to the United States Sentencing Guidelines for guidance in designing effective corporate compliance and ethics programs. The relevant parts of the guidelines, known as the Organizational Sentencing Guidelines, include detailed criteria for effective corporate compliance and ethics programs.

An SEC enforcement action against General Electric and an ongoing SEC investigation of Tyson Foods reflect increased SEC scrutiny of disclosure relating to executive compensation. This Update summarizes the enforcement action and the pending investigation and offers practical guidance.

In August 2004, the Internal Revenue Service issued final regulations relating to incentive stock options (ISOs). Although the final regulations are similar to the proposed ISO regulations published last year, the final regulations contain important guidance and changes relating to a number of issues affecting ISOs.

The Sarbanes-Oxley Act of 2002 ("Sarbanes-Oxley") is an assortment of reforms designed to protect investors by imposing financial reporting, disclosure and corporate governance requirements on public companies. Sarbanes-Oxley was enacted with Enron and WorldCom – two large public companies – in mind.

The Private Securities Litigation Reform Act of 1995 established a safe harbor for forward-looking statements. A company cannot be liable for making a forward-looking statement if, among other factors, the statement "is accompanied by meaningful cautionary statements identifying important factors that could cause actual results to differ materially from those in the forward-looking statement."

Enron, WorldCom, and similar corporate failings were economic disasters. To the general public, and to Congress, they evidenced ethical lapses or failures of board oversight.

The SEC's recent amendments to Form 8-K, which are effective for reportable events that occur on or after August 23, 2004, expand the number of reportable events and accelerate the filing deadline for most items to four business days. For events that occur prior to August 23, 2004, companies should analyze their reporting obligations using prior Form 8-K and report information as required under that version of the form (although Form 8-Ks filed on or after August 23 must use the new item numbers, even if the information reported corresponds to the requirements of the prior Form 8-K).

In recent years there has been an upsurge in the number of stockholder derivative lawsuits. This type of lawsuit differs fundamentally from a securities class action.

The recent United States v. Manulife Financial Corporation case is an important reminder of the traps for the unwary under the "investment only" exemption under the Hart-Scott-Rodino Antitrust Improvements Act (HSR Act). The case, which was recently settled by Manulife, shows how narrowly the antitrust enforcement agencies (the Federal Trade Commission and the U.S. Department of Justice) construe this exemption. Understanding the scope of the exemption is important as M&A activity continues to increase.

While the Securities and Exchange Commission and self-regulatory organizations like the stock exchanges and Nasdaq have been preoccupied over the past two years with disclosure and governance reforms mandated by the Sarbanes-Oxley Act of 2002, a recently adopted National Association of Securities Dealers rule, Rule 2790, is designed to help reform the initial public offering market, which is showing increasing signs of life. The new NASD rule generally prohibits NASD members from selling equity securities from IPOs to any account in which NASD members, broker-dealers or other "restricted persons" have a beneficial interest. Compliance with the rule became mandatory on March 23, 2004.

In the SEC's recent focus on the quality of management's discussion and analysis, or MD&A, disclosure, it has re-emphasized the need to identify and analyze material trends, demands, commitments, events and uncertainties that could impact a company's liquidity, financial condition or operating results. This disclosure, the SEC believes, is critical to understanding a company's reported financial information and the extent to which reported information is indicative of future results or financial condition.

The SEC has adopted amendments to Form 8-K in response to the "real time issuer disclosure" mandate in Section 409 of the Sarbanes-Oxley Act of 2002. Amended Form 8-K is intended to provide investors with more and faster disclosure of important corporate events.

On January 23, 2004, Chancellor Chandler of the Delaware Court of Chancery held that eBay directors may be liable for usurping a corporate opportunity. In this derivative action, eBay shareholders allege that certain of eBay's directors improperly received allocations of shares in hot IPOs being underwritten by Goldman Sachs in order to induce such eBay directors to steer business to Goldman Sachs.

The SEC is extending the compliance dates for its regulations relating to "internal control" rules implementing Section 404 of the Sarbanes-Oxley Act as they apply to selected groups of companies. As announced on February 24, 2004: Accelerated filers with fiscal years ending between June 14, 2004 and November 14, 2004 do not need to comply with these requirements for the current fiscal year, as they were previously required to do.

In response to an American Bar Association request for guidance, the SEC recently issued interpretive guidance and clarifications addressing equity compensation plan disclosure issues under Regulation S-K, Items 201(d) and 601(b). The SEC's interpretive guidance and clarifications included: Guidance on aggregation of narrative description and filing of non-shareholder-approved individual equity compensation arrangements; Treatment of a non-shareholder-approved amendment to add more securities to a shareholder-approved plan; Disclosure required for assumed equity compensation plans; and Proper location for the equity compensation plan information disclosure required by Item 201(d).

The stock market bubble and crash from 1998 to 2001 and the ongoing stream of corporate scandals like Enron, WorldCom and Tyco have put corporate governance under the microscope. The actions of business leaders are now at the lowest levels of trust and highest levels of scrutiny in recent memory.

Effective December 29, 2003, the Securities and Exchange Commission issued detailed interpretive guidance regarding disclosure in Management's Discussion and Analysis (MD&A), developed from the SEC's recent experiences, including enforcement actions and its 2002 review of the annual reports and MD&A disclosure of the Fortune 500 companies. We previously provided a checklist based on the SEC's preliminary review of those filings.

The SEC recently amended the stock repurchase safe harbor rule under Rule 10b-18 of the Securities Exchange Act of 1934, which provides an issuer with a safe harbor from liability for repurchases of its common stock if the issuer complies with the rule’s manner, timing, price and volume conditions. The amendments to Rule 10b-18 simplify and update the safe harbor provisions to reflect market changes that have developed since Rule 10b-18’s adoption in 1982, and require more rapid and regular disclosure of issuer repurchases.

Judges use the Federal Sentencing Guidelines to determine sentences for individuals and corporations convicted of federal crimes. Corporate managers and their advisors can use the Sentencing Guidelines to identify areas of risk, focus compliance programs and underscore to employees the consequences of improper behavior.

The Securities and Exchange Commission has proposed a highly controversial set of rules granting shareholders greater ability to nominate directors through a company's proxy process by requiring a company to include in its proxy materials information on director candidates nominated by eligible shareholders. Many commentators immediately criticized the proposed rules, citing the potential to turn annual meetings into contested elections, divert management's attention and corporate resources from the company's business, and allow special interest groups to elect directors who may not represent the best interests of all the company's shareholders.

Last week the SEC released final rules – effective January 1, 2004 – that require public companies to disclose nominating committee procedures and procedures for shareholder communications with directors. These new rules harmonize with the recently finalized NYSE and Nasdaq nominating committee requirements and represent the SEC's latest step in its ongoing effort to make board operations more transparent to shareholders.

The Securities and Exchange Commission recently approved the Nasdaq Stock Market's corporate governance rules, which finalize Nasdaq corporate governance proposals made over the last 18 months. The most significant changes from Nasdaq's most recent corporate governance rule proposals include: Amending the "bright line" tests for director independence, including: A narrower definition of "family member," and Expanded application of the relationships that preclude a finding of independence to apply not only to directors, but also to family members.

The Securities and Exchange Commission recently approved the New York Stock Exchange's corporate governance listing standards, which finalize NYSE corporate governance proposals made over the last 18 months. The most significant changes from NYSE's most recent proposal (in April 2003) include: Accelerating of the effectiveness dates relating to board and committee independence requirements.

Perkins Coie is pleased to announce the publication of the post-Sarbanes-Oxley second edition of The Public Company Handbook: A Corporate Governance and Disclosure Guide for Directors and Executives. Increasing Importance of Director Continuing Education We have designed this practical and easy-to-digest guide for directors and executives of public companies. This book has a particular relevance at a time when both the NYSE and Nasdaq, as part of their corporate governance initiatives, strongly encourage – some say mandate – continued director education.

Earlier this month, Allan Beller of the Securities and Exchange Commission and Mark Corallo of the Department of Justice announced that neither current reports on Forms 6-K and 8-K nor employee benefit plan reports on Form 11-K are required to include the certifications mandated by Section 906 of the Sarbanes-Oxley Act of 2002. This announcement was made via telephone interviews and teleconference, and we do not know whether or when this conclusion will be announced in writing.

On September 29, 2003, following a 16-month study, the SEC staff released a report containing recommendations for changing the regulatory framework of the largely unregulated hedge fund industry. The staff's recommendations are not likely to result in rulemaking that would materially affect a hedge fund's trading strategies, and the SEC has not yet established a time line for the rule proposal that will inevitably result.

In publishing responses to a series of frequently asked questions (FAQ), the SEC's Office of the Chief Accountant has provided guidance about pre-approval policies and other matters relating to the SEC's auditor independence rules adopted in January 2003. Those rules became effective in May 2003 and, among other things, require a company's audit committee to pre-approve all audit and non-audit services provided by the company's auditors.

The SEC has followed through on its promise to continue to focus enforcement efforts on Regulation FD and selective disclosure with its September 9, 2003 charges against Schering-Plough Corporation and its former CEO, Richard J. Kogan. In the most subtle of its FD enforcement actions, the SEC brought charges arising from both verbal and nonverbal selective disclosure of material, nonpublic information about Schering's earnings.

On August 8, 2003, the Securities and Exchange Commission (SEC) proposed changes to the proxy rules that would expand disclosure regarding (a) the nominating committee and the process of nominating directors and (b) the process by which shareholders are able to communicate with a company's board of directors. The proposals do not require substantive changes by a company with respect to its nomination or shareholder communication processes; rather the proposals require disclosure of the details of the processes.

On July 15, 2003, the Securities and Exchange Commission (SEC) released a report prepared by its Division of Corporation Finance recommending major changes to SEC proxy rules relating to the nomination and election of directors. For the first time, Corporation Finance is recommending that shareholders be provided access to company proxy materials to nominate directors.

The Securities and Exchange Commission (SEC) recently responded to a variety of Frequently Asked Questions (FAQ) regarding Regulation G and related rules (in effect since March 28, 2003).

On May 28, 2003, the Delaware Court of Chancery issued a ruling that could expose directors of The Walt Disney Company (Disney) to personal liability for asserted breaches of their fiduciary duties in the hiring and subsequent termination of Michael Ovitz as Disney president—decisions that resulted in an alleged $140 million payout for a year's work.

On June 5, 2003, the Securities and Exchange Commission (SEC) posted its final rules for management's report on "internal control over financial reporting" and the related "attestation" by the issuer's outside auditors. Of the many detailed features of Sarbanes-Oxley and its implementing rules, few strike non-accountants as more technical and obscure than those relating to "internal controls."

On October 16, 2002, the former Big Five accounting firm, Arthur Andersen, LLP, received the maximum criminal penalties - a $500,000 fine and five years' probation - for destruction of documents relating to its client, Enron. Why should this concern you? All companies must and do destroy documents.

On March 19, 2002, a California Court of Appeal issued an opinion that could dramatically change pre-closing negotiations under California law. In Copeland v. Baskin Robbins U.S.A., the court ruled that "a contract to negotiate an agreement is distinguishable from a so-called 'agreement to agree' and can be formed and breached just like any other contract." The court also stated that the measure of damages in such cases is "not damages for the party's lost expectations under the prospective contract but damages caused by the injured party's reliance on the agreement to negotiate...[which] encompasses the plaintiff's out-of-pocket costs in conducting the negotiations. . . [and] may or may not include lost opportunity costs."

Perkins Coie LLP and Computershare Trust Company presented a webinar on key legal and corporate governance issue facing public companies.

This seminar examined the latest developments and trends, provided insight into what lies ahead and impart practical, actionable guidance on the crucial issues facing today's corporate and securities law practitioners and finance professionals.

Seminar and panel discussion focused on preparing attendees for the 2014 proxy and annual reporting season.

Perkins Coie Partner Ben Straughn served as moderator, discussing trends in Early-Stage Investing and more.

Exciting and excruciating – making a start-up take flight.