The Securities and Exchange Commission’s Division of Economic and Risk Analysis is hosting a session in collaboration with New York University’s Salomon Center for the Study of Financial Institutions to discuss shareholder engagement and corporate governance related matters, including the roles of institutional and activist investors.  The session will be held on January 19th.  Additional details and information on registration are available here:

PwC recently released its 2017 Annual US Capital Markets Watch report.   The report notes a 77% increase from 2016 in the number of IPOs, with 181 IPOs completed in 2017, raising $44.2 billion in proceeds.  The average size of IPOs in 2017 was $244 million.

The pharmaceuticals and life sciences sector was the most active sector for IPOs in 2017 with 42 deals, raising $4.0 billion.  The special purpose acquisition company (SPAC) sector completed 33 IPOs, raising almost $9 billion.  While the technology, media and telecommunications (TMT) sector accounted for fewer IPOs than the previously mentioned sectors, the 33 IPOs raised $12.3 billion in 2017.

To read PwC’s full report, visit:


In June 2017, the SEC’s Division of Corporation Finance (“Corp Fin”) announced a new policy effective July 2017 that essentially extends the confidential submission process to all issuers while keeping the EGC process unchanged.  The new policy also permits an issuer to submit for confidential review a registration statement filed to register a class of securities under the Exchange Act, such as a registration statement on Form 10 for a U.S. issuer or a Form 20-F for an FPI. An issuer must publicly file an Exchange Act registration statement at least 15 days prior to seeking its effectiveness. For certain large, privately held companies that have undertaken various rounds of private financings and may not have an immediate need to raise additional capital, a “direct listing” may be an attractive alternative to a traditional IPO.

Historically, there have not been many issuers that have undertaken a “Form 10 IPO” or “backdoor IPO,” but market dynamics have changed. However, for a unicorn, which has been able to raise capital in the private markets at attractive valuations, a direct listing may be a good alternative. A listing on a national securities exchange will provide much-needed liquidity for employees, early investors, and even venture capital and private equity sponsors. A unicorn, advised by financial intermediaries acting as financial advisers (not underwriters), likely will be able to attract the attention of additional or new institutional investors that might purchase its securities in the secondary market. These same financial intermediaries, or others familiar with the company, might provide research coverage following the listing of its stock on a securities exchange.

To learn more about direct listings, listen to our ThinkingCapMarkets podcast.

Below, a continuation of our bibliography of thought-provoking articles on issues related to right-sizing regulation, staying private versus going public, and related topics:

A Framework for Thinking about Leidos

In “Ask Me No Questions and I Will Tell You No Lies:  The Insignificance of Leidos Before the United States Supreme Court,” Joseph Grundfest addresses the issues arising in Leidos, Inc. v. Indiana Public Retirement System.  The Supreme Court had agreed to hear the case; however, it was settled before it reached the Court.  In Leidos, the Court would have considered whether a separate Section 10(b) action may exist as a result of a pure omission (even if the omission does not render any affirmative statement false or misleading) to address Item 303 of Regulation S-K to discuss known trends.  The Second Circuit has held that an omission of Item 303 disclosure is actionable under Rule 10b-5, while the Ninth Circuit has taken a contrary view.  Grundfest notes that the importance of the case has been overstated as it is of no practical significance as to whether a material pure omission is actionable because it is a pure omission or because it results in a half-truth.  More importantly, the paper provides an excellent discussion of Rule 10b-5 liability and the standard under Item 303.

The Staff of the Office of the Chief Accountant and of the Division of Corporation Finance issued SAB 118 (see: in order to provide guidance for issuers as they prepare their financial statements. The staff guidance provides a “measurement period” for issuers to evaluate the impacts of the Tax Cut and Jobs Act on the their financial statements and sets forth staff expectations for disclosure to investors during the measurement period. The Staff also issued a Compliance and Disclosure Interpretation 110.02, which we set out below:

Question 110.02

Question: Does the re-measurement of a deferred tax asset (“DTA”) to incorporate the effects of newly enacted tax rates or other provisions of the Tax Cuts and Jobs Act (“Act”) trigger an obligation to file under Item 2.06 of Form 8-K?

Answer: No, the re-measurement of a DTA to reflect the impact of a change in tax rate or tax laws is not an impairment under ASC Topic 740. However, the enactment of new tax rates or tax laws could have implications for a registrant’s financial statements, including whether it is more likely than not that the DTA will be realized. As discussed in Staff Accounting Bulletin No. 118 (Dec. 22, 2017), a registrant that has not yet completed its accounting for certain income tax effects of the Act by the time the registrant issues its financial statements for the period that includes December 22, 2017 (the date of the Act’s enactment) may apply a “measurement period” approach to complying with ASC Topic 740. Registrants employing the “measurement period” approach as contemplated by SAB 118 that conclude that an impairment has occurred due to changes resulting from the enactment of the Act may rely on the Instruction to Item 2.06 and disclose the impairment, or a provisional amount with respect to that possible impairment, in its next periodic report.

See our more detailed client alert here.

The US Chamber of Commerce submitted a letter to the SEC noting the challenges that may exist for many public companies, especially those with complex global operations, by the recent passage of the tax changes. The letter notes that it may be quite difficult for public companies that have a December 31 fiscal year to take into account and reflect in their SEC filings, including in their Forms 10-K, the effects of the tax law changes on their financial results. See the letter here:

NASDAQ Private Markets and Morrison & Foerster recently discussed trends in private company capital raising.  In this video blog, Anna Pinedo discusses market trends, including the trend toward remaining private longer and deferring IPOs and other exits; the increased reliance on private placements over registered offerings; the investors active in late-stage private placements; and the late-stage private placement market.

To watch this video, visit the NASDAQ Private Markets Resource Center.

Today, FINRA announced that its Board of Governors had approved publication of a Regulatory Notice seeking comment on rule amendments that would remove certain impediments to capital formation that are unnecessary to protect investors. Specifically, the proposal would amend Rules 5130 (Restrictions on the Purchase and Sale of Initial Equity Public Offerings) and 5131 (New Issue Allocations and Distributions) to exempt additional persons and types of transactions from the scope of the rules, modify current exemptions to enhance regulatory consistency, and address unintended operational issues.  The statement does not refer to the proposed amendments to FINRA’s Corporate Financing Rule that were released earlier in the year however.  See the notice here.

Morrison & Foerster Webinar 

Our speakers reviewed and discussed SEC and FASB developments that registrants and directors should consider as they prepare their Forms 10-K, including the following:

  • Use of Non-GAAP financial measures;
  • Comment letter trends;
  • Updating your MD&A;
  • New revenue recognition standard;
  • Developments in derivatives/hedge accounting;
  • New lease accounting rules; and
  • New credit impairment rules.


To view this complimentary webinar, please click here.