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Survey Results: Hedging and Other Trading Prohibitions in Insider Trading Policies

By broc

Survey Results: Hedging and Other Trading Prohibitions in Insider Trading Policies

For each of the seven years I've been on this job, I've conducted an average of one survey on some aspect of insider trading policies (here is a list of them from our "Blackout Periods/Insider Trading" Practice Area). Recently, we wrapped up our latest one - this "Quick Survey" related to hedging and other trading prohibitions in insider trading policies. Below are the results:

1. Our company's insider trading policy prohibits insiders from trading in any of the following:
- Exchange-traded options - 41.1%
- Hedging/monetization transactions (e.g., zero cost collars, forward sale contracts) - 36.7%
- Puts and calls - 45.6%
- Margin accounts - 25.6%
- Pledges - 23.3%
- None of the above - 10.0%
- We don't have an insider trading policy - 1.1%

2. Our company discourages - but still permits - the following:
- Exchange-traded options - 18.2%
- Hedging/monetization transactions (e.g., zero cost collars, forward sale contracts) - 25.0%
- Puts and calls - 13.6%
- Margin accounts - 47.7%
- Pledges - 52.3%
- None of the above - 29.6%

Please take a moment to participate in our new "Quick Survey on D&O Questionnaires."

Shelley Parratt: Longest-Serving Interim Corp Fin Director?

Although my memory is limited to the modern era, I believe Shelley Parratt is the longest-serving interim Corp Fin Director in SEC history with three months under her belt so far. Marty Dunn served as an interim for a few weeks before John White started - and Meredith Cross had a brief turn before Brian Lane moved over from Chairman Levitt's office.

In fact, it's not uncommon that there be no period of time between one Director leaving and another starting - particularly when the new Director is being promoted from within the building. For example, when John Huber left the SEC in '86, Linda Quinn started that afternoon.

Not that any of this matters at all. Just some curious facts before I kick off my spring break vacation. I imagine we'll see an announcement about a new permanent Corp Fin Director in the near future.

NYSE Clarifies Shareholder Approval Requirement for Convertible Debt Exchange Offers

Below is an excerpt from this recent Gibson Dunn memo:

Many publicly-traded companies in financial distress today are struggling with issues arising from outstanding convertible debt due to a variety of factors including imminent maturity dates and covenant breaches. One potential restructuring option available to issuers is an exchange offer for new convertible debt with revised terms, such as extended maturity dates, reduced principal amounts, lower conversion prices into common stock and more lenient covenants.

The prospect of lowering the conversion price frequently creates an obstacle imposed by the stock exchange on which the company's stock is traded: the requirement of stockholder approval for certain stock issuances (whether absolute or contingent) if the number of shares to be issued equals or exceeds 20% of the shares actually outstanding (20% Test). The NYSE Staff has provided guidance on this rule that may be of significant assistance to listed companies contemplating such an exchange offer.

- Broc Romanek

Full post as published by The Corporate Counsel.net Blog on April 02, 2009 (boomark / email).