SEC Approves Nasdaq Golden Leash Disclosure Rule: Effective in 30 Days!

Cydney Posner writes:

Rule 5250(b)(3) will require each listed company to disclose, by the date the company files its definitive proxy statement for its next annual meeting, the parties to and material terms of all arrangements between any director or nominee and any person or entity other than the company relating to compensation or other payment in connection with that person’s candidacy or service as a director. A company must make the required disclosure at least annually until the earlier of the resignation of the director or one year following the termination of the agreement or arrangement.

The accompanying interpretive material indicates that the terms “compensation” and “other payment” as used in the rule are not limited to cash payments and are intended to be construed broadly. The disclosure requirement encompasses non-cash compensation and other forms of payment obligation, such as indemnification or health insurance premiums. Note that the rule does not separately require the initial disclosure of newly entered arrangements so long as disclosure is made under the rule for the next annual meeting. The information must be disclosed either on or through the company’s website (in which case it must be continuously accessible) or in its definitive proxy statement.

Nasdaq also explicitly states that, if a company provides disclosure in a definitive proxy or information statement, including to satisfy the SEC’s proxy disclosure requirements, sufficient to comply with the proposed rule, the company’s obligation to satisfy the rule is fulfilled regardless of the reason that the disclosure was made.



On November 26, 2013, the Nasdaq Stock Market filed a proposal to amend its listing rules implementing Rule 10C-1 of the Securities Exchange Act of 1934, governing the independence of compensation committee members. Currently, Nasdaq Listing Rule 5605(d)(2)(A) and IM-5605-6 employ a bright line test for independence that prohibits compensation committee members from accepting directly or indirectly any consulting, advisory or other compensatory fees from the company or any subsidiary subject to certain exceptions.

Based on the potential burden the bright line approach places on companies’ ability to recruit eligible directors, Nasdaq has proposed to replace this rule and its exceptions with a requirement that all compensation received from a company be considered in the independence determination. Separately, Nasdaq has also proposed some minor revisions to the affiliation prong of the compensation committee independence test under Rule 10C-1, which requires that consideration be given in independence determinations to whether a compensation committee member is affiliated with the issuer, a subsidiary of the issuer or an affiliate of a subsidiary of the issuer. All of these changes would align Nasdaq’s approach to compensation committee independence with that employed by the NYSE.

via Weil Gotshal & Manges, Davis Polk & Wardwell,, Cleary Gottlieb Steen & Hamilton, Shearman & Sterling






via N.Y. Times Dealbook



As with any technology system, the SIP has finite capacity. The SIP’s governing committee plans for capacity based on the needs of its member exchanges, adding an appropriate cushion of extra capacity to handle heavier than expected volume. In January 2013, a regularly scheduled systems capacity test showed the SIP system was capable of handling approximately 500,000 messages per second across 50 of the SIP system’s ports, for an average peak of approximately 10,000 messages per-port, per second. The tests are conducted in a controlled environment – performance in real-life scenarios will typically be lower.

On the morning of August 22, however, a sequence of events combined to create an unprecedented volume of message traffic into the SIP; well beyond the system’s tested capacity of 10,000 messages per-port, per second.

On August 22, the SIP received more than 20 connect and disconnect sequences from NYSE Arca, each of which consumed significant resources. Available capacity was further eroded as the SIP received a stream of quotes for inaccurate symbols from NYSE Arca, and generated quote rejects. Both of these actions served to degrade the system below the tested capacity of 10,000 messages per per-port, per second. During this period, NYSE Arca sent multiple bursts with each connect and disconnect, topping more than 26,000 quote updates per-port, per second as it attempted to reconnect. By comparison, a typical August day for NYSE Arca would peak at less than 1000 messages per-port, per second. The events of August 22 were 26 times greater than the average per-port, per-second activity.

The confluence of these events vastly exceeded the SIP’s planned capacity, which caused its failure and then revealed a latent flaw in the SIP’s software code.

This latent flaw prevented the system’s built-in redundancy capabilities from failing over cleanly, and delayed the return of system messages. The combination of large system inputs and delayed outputs ultimately degraded the ability of the SIP system to process quotes to an extent that a shutdown of the system was in the broader public interest, to prevent information asymmetry and ensure fair conditions for all market participants.

Although the problem was quickly identified and data feeds were operational within 30 minutes of the halt, additional time was required for NASDAQ to consult UTP SIP committee members and market participants, and to test and evaluate scenarios to re-open the market to ensure that trading could be resumed in a fair and orderly manner. As soon as that process was completed, connectivity to the SIP was made available to UTP participants. The markets reopened without incident.

via NASDAQ, N.Y. Times Dealbook, Economist


Nanex Image

Digging into market data before the Nasdaq blackout at 12:20 EDT on August 22, 2013, we came across several significant periods of extremely high quote bursts. …[T]he 3 quote bursts at 11:48, 11:50 and 11:54 – which were just minutes before Nasdaq decided to shut down the SIP – were each comprised of a loop of the last 50 minutes worth of quotes. Basically, the previous 50 minutes worth of quotes in hundreds of stocks were blasted, with fresh new timestamps, to millions of subscribers, over a 3 second period. …

via The Big Picture, Nanex

Facebook IPOに対する証券訴訟




Facebook IPO Litigation California State 2012-05-22

2012年5月22日に提出された,第一の訴状は,大手の原告側弁護士事務所によるものではないようですので,影響は小さいと思います。興味深いと思われる点は,(1) IPOなので連邦証券法11条,15条に基づく訴訟であること,(2) 訴訟がカリフォルニア州裁判所に提起されていること,(3) 発行者,CEOに加えて,多くの引受証券会社が被告になっていること,でしょうか。陪審裁判他,通常の証券訴訟で見られる特徴については省略します。

Facebook IPO Litigation RGR&D 2012-05-23

2012年5月23日に提出された,第二の訴状は,Robbins Geller Rudman & Dowd LLPが提出しています。クラスアクションの提起の数では,一番の事務所なので当然予想されるところだと思います。手元の情報だと,この弁護士事務所が和解した割合(成功率)は,2010–2011年で,35\%です。


  • 発行者

    • Facebook, Inc.
  • 経営陣

    • Mark Zuckerberg
    • David A. Ebersman
    • David M. Spillane
    • Marc L. Andreessen
    • Erskine B. Bowles
    • James W. Breyer
    • Donald E. Graham
    • Reed Hastings
    • Peter A. Thiel
  • 引受証券会社

    • Morgan Stanley & Co. LLC
    • J.P. Morgan Securities LLC
    • Goldman, Sachs & Co.
    • Merrill Lynch, Pierce, Fenner & Smith Incorporated
    • Barclays Capital Inc.




24. The statements referenced above in [Paragraphs] 21-23 were untrue statements of material fact. The true facts at the time of the IPO were that Facebook was then experiencing a severe and pronounced reduction in revenue growth due to an increase of users of its Facebook app or website through mobile devices rather than a traditional PC such that the Company told the Underwriter Defendants to materially lower their revenue forecasts for 2012. And, defendants failed to disclose that during the roadshow conducted in connection with the IPO, certain of the Underwriter Defendants reduced their second quarter and full year 2012 performance estimates for Facebook, which revisions were material information which was not shared with all Facebook investors, but rather, was selectively disclosed by defendants to certain preferred investors and omitted from the Registration Statement and/or Prospectus.




  • Goldrich Cousins P.C. 401(k) Profit Sharing Plan & Trust v. Facebook, Inc., 2012 WL 1870721 (S.D.N.Y. 2012)
  • Michael Spatz v. Facebook, Inc., 2012 WL 1866942 (N.D. Cal. 2012)
  • Maren Twining v. Facebook, Inc., 2012 WL 1861725 (S.D.N.Y. 2012)
  • Alexis Alexander v. Facebook, Inc., 2012 WL 1880603 (S.D.N.Y. 2012)
  • Edward Childs v. Mark E. Zuckerberg, 2012 WL 1880614 (S.D.N.Y. 2012)
  • James Chang v. Facebook, Inc., 2012 WL 1885243 (N.D. Cal. 2012)
  • Irving S. Braun v. Facebook, Inc., 2012 WL 1877967 (S.D.N.Y. 2012)
  • Douglas M. Lightman v. Facebook Inc., 2012 WL 1890731 (S.D.N.Y. 2012) (Stoneridgeで原告を代理したPomerantz Haudek Grossman Gross LLPが原告を代理している事案)
  • Jeff Offner v. Facebook, Inc., 2012 WL 1885242 (N.D. Cal. 2012)


[2012年6月15日追記] FBによる訴訟の併合の申し立てが為されるようです。

[2012年6月16日追記] FBによる訴訟の併合の申し立てがなされています。曰く,40以上の訴訟が提起されたようです。FBの弁護士は,Willkie Farr & Gallagher及びKirkland & Ellisで,引受証券会社の弁護士はDavis Polk & Wardwellです。それぞれ,証券募集の時とは違う弁護士事務所にしています。募集時は,それぞれ,Fenwick & WestとSimpson Thacher & Bartlettでした。

Facebook’s Motion to Consolidate

Facebook Motion




引受証券会社 引受株式数 割合
Morgan Stanley & Co. LLC 162,174,942 38.50%
J.P. Morgan Securities LLC 84,878,573 20.15%
Goldman, Sachs & Co. 63,185,042 15.00%
Merrill Lynch, Pierce, Fenner & Smith Incorporated 27,380,185 6.50%
Barclays Capital Inc. 27,380,185 6.50%
Allen & Company LLC 8,424,672 2.00%
Citigroup Global Markets Inc. 9,477,755 2.25%
Credit Suisse Securities (USA) LLC 9,477,755 2.25%
Deutsche Bank Securities Inc. 9,477,755 2.25%
RBC Capital Markets, LLC 4,212,336 1.00%
Wells Fargo Securities, LLC 4,212,336 1.00%
Blaylock Robert Van LLC 673,974 0.16%
BMO Capital Markets Corp. 421,234 0.10%
C.L. King & Associates, Inc. 631,850 0.15%
Cabrera Capital Markets, LLC 421,234 0.10%
CastleOak Securities, L.P. 673,974 0.16%
Cowen and Company, LLC. 421,234 0.10%
E*TRADE Securities LLC 210,617 0.05%
Ita_ BBA USA Securities, Inc. 210,617 0.05%
Lazard Capital Markets LLC 421,234 0.10%
Lebenthal & Co., LLC 673,974 0.16%
Loop Capital Markets LLC 673,974 0.16%
M.R. Beal & Company 673,974 0.16%
Macquarie Capital (USA) Inc. 421,234 0.10%
Muriel Siebert & Co., Inc. 673,974 0.16%
Oppenheimer & Co. Inc. 421,234 0.10%
Pacific Crest Securities LLC 421,234 0.10%
Piper Jaffray & Co. 421,234 0.10%
Raymond James & Associates, Inc. 421,234 0.10%
Samuel A. Ramirez & Company, Inc. 631,850 0.15%
Stifel, Nicolaus & Company, Incorporated 421,234 0.10%
The Williams Capital Group, L.P. 589,727 0.14%
William Blair & Company, L.L.C. 421,234 0.10%
Total: 421,233,615 100%