Securities Law

Archive for May 2013

Posted on Friday, May 17 2013 at 8:15 pm by


As discussed in our March 14 entry, NASDAQ recently proposed a new rule that would require listed companies to establish and maintain an internal audit function, which would make the NASDAQ listing requirement similar to the NYSE in this regard.  However, after receiving comments from issuers and others, NASDAQ has opted to withdraw the proposed rule while it further considers the comments it received. 

In comments sent to NASDAQ, issuers complained primarily of the cost of complying with the new rule, particularly for small market cap issuers or for issuers that lack the complexity or volume of transactions to necessitate an internal audit function .  Additionally, NASDAQ received comments stating that the new rule was redundant with SOX rule 404 and would defeat the purpose of the exemption given to smaller reporting companies from SOX 404(b) compliance.  Some commenters also expressed concerns that the requirements under the proposed rule lacked appropriate flexibility.  

NASDAQ noted that it intends to revise and resubmit the proposed rule taking into account comments received.  NASDAQ stated that it is important for listed companies to have “appropriate mechanisms and processes in place to review risks and the system of internal controls.”  Based on this, when NASDAQ revises the rule there may be an exemption based on market cap or the complexity of the business, or an attempt to add flexibility to the compliance process.

We will continue to follow any new developments and will update you accordingly.

Posted on Thursday, May 16 2013 at 2:28 pm by

The Role of the Board of Directors in Strategic Planning

In light of the number of bank failures since 2009, the regulatory focus on risk management and the increased regulatory burden imposed on community banks by recent legislation and implementing regulations, there has been a greater focus on the roles and responsibilities of bank directors when it comes to leadership of the bank. The fundamental duties of directors re-main the same – the duty of care and the duty of loyalty. However, the banking industry and the environment in which banks operate are changing on a continuing basis and this makes it essential that community banks have a clear strategic plan. more

This article is authored by Kilpatrick Townsend partner Chris Gattuso

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