Monthly Archives: December 2018

2018 Year-End Issues for Audit Committees

Steve W. Klemash is Americas Leader and Jennifer Lee is Senior Manager at the EY Center for Board Matters; and John F. Schraudenbach is Americas Assurance Senior Client Service Partner at EY. This post is based on their EY Center for Board Matters memorandum.

In the current year, audit committees have played a vital role in navigating evolving oversight challenges and stakeholder expectations related to a number of developments, including new accounting standards, tax reform implementation, trade policy shifts, technology’s impact on the company’s risk profile and finance function, and regulatory developments concerning cybersecurity disclosures and the auditor’s reporting model.

Going forward, ongoing changes in the political and regulatory environment, as well as increasing stakeholder interest in topics such as data privacy, strategy and corporate culture, will continue to shape the audit committee’s critically important work.


Spotlight on Boards

Martin Lipton is a founding partner of Wachtell, Lipton, Rosen & Katz, specializing in mergers and acquisitions and matters affecting corporate policy and strategy. This post is based on a Wachtell Lipton memorandum authored by Mr. Lipton.

The ever-evolving challenges facing corporate boards prompt an updated snapshot of what is expected from the board of directors of a major public company—not just the legal rules, but also the aspirational “best practices” that have come to have equivalent influence on board and company behavior. Today, boards are expected to:

  • Oversee corporate strategy and the communication of that strategy to investors, keeping in mind that investors want to be assured not just about current risks and problems, but threats to long-term strategy from global, political, social, and technological developments;
  • Determine the board’s response to proposed legislation like Senator Elizabeth Warren’s bill, Accountable Capitalism Act, which would federalize all companies with annual revenues of $1,000,000,000, preempt state corporation law and mandate board fiduciary duty to all stakeholders, not just shareholders, and require not less than 40% of the directors be elected by employees;
  • Be aware that ESG and sustainability have become major, mainstream governance topics that encompass a wide range of issues, such as climate change and other environmental risks, systemic financial stability, labor standards, employee training, and consumer and product safety;


Online Digital Token Platforms as National Securities Exchanges

Susan I. Gault-Brown is a partner and F. Dario de Martino and Daniel R. Kahan are associates at Morrison & Foerster LLP. This post is based on a Morrison & Foerster memorandum by Ms. Gault-Brown, Mr. de Martino, Mr. Kahan, and Alfredo B. D. Silva.

Until November 8, 2018, the enforcement actions of the U.S. Securities and Exchange Commission (SEC) in the digital token (aka cryptocurrency) space have primarily focused on the primary issuances of tokens. However, on November 8, 2018, the SEC announced in an order (the “Order”) [1] that it had settled charges against Zachary Coburn, the founder of the digital token exchange EtherDelta, marking the first time that the SEC has brought an enforcement action against an online digital token platform for operating as an unregistered national securities exchange.


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