How the Dodd-Frank Act Affects Practice in Idaho
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Presentation to the Idaho State Bar Business & Corporate Section, January 11, 2012

Presentation to the Idaho State Bar Business & Corporate Section, January 11, 2012

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How the Dodd-Frank Act Affects Practice in Idaho Presentation Transcript

  • 1. How the Dodd-Frank Act Affects Practice in Idaho Wendy Couture Associate Professor University of Idaho College of Law Presented to the Idaho State Bar Business & Corporate Section January 11, 2012
  • 2. The Dodd-Frank ActRegistration Financial PublicExemptions Professionals Companies
  • 3. The Dodd-Frank Act Registration Financial Public Exemptions Professionals Companies Definition SOX 404(b) Mine of State Exemption Safety“Accredited Regulation Investor” of “Mid- Disclosures Sized” Investment Broker-Dealer “Bad Actor” Advisers Standard of Care Say on Pay Disqualification When Making Recommendations
  • 4. The Dodd-Frank Act Registration Financial Public Exemptions Professionals Companies Definition of“Accredited Investor”
  • 5. Relevance of “Accredited Investor” Status Rule 505 and Rule 506 Exemptions• Limited to 35 non-accreditedinvestors• Must furnish Rule 502(b)(2)disclosures to non-accreditedinvestors• Non-accredited investorsmust qualify as knowledgeableand sophisticated investors
  • 6. Relevance of “Accredited Investor” Status Rule 505 and Rule 506 § 4(5) [formerly § 4(6)] Exemptions Exemption• Limited to 35 non-accredited • Limited to accreditedinvestors investors• Must furnish Rule 502(b)(2)disclosures to non-accreditedinvestors• Non-accredited investorsmust qualify as knowledgeableand sophisticated investors
  • 7. Relevance of “Accredited Investor” Status Rule 505 and Rule 506 § 4(5) [formerly § 4(6)] Rule 504 Exemption Exemptions Exemption • Prohibition on general• Limited to 35 non-accredited • Limited to accredited solicitation and generalinvestors investors advertising lifted under certain circumstances if• Must furnish Rule 502(b)(2) sold only to accrediteddisclosures to non-accredited investorsinvestors • Restrictions on resale• Non-accredited investors lifted under certainmust qualify as knowledgeable circumstances if sold onlyand sophisticated investors to accredited investors
  • 8. Old Definition of “Accredited Investor”Included:“Any natural person whoseindividual net worth, or joint networth with that person’s spouse,at the time of his purchaseexceeds $1,000,000.”Rule 501(a)(5); Rule 215(e).
  • 9. Fiserv Case-Shiller Home Price Data – April 8, 2010
  • 10. Old Definition of New Definition of “Accredited Investor” “Accredited Investor”Included: Dodd-Frank § 413:“Any natural person whose “*A+ny net worth standard shall beindividual net worth, or joint net $1,000,000, excluding the value ofworth with that person’s the primary residence of suchspouse, at the time of his purchase natural person.”exceeds $1,000,000.”Rule 501(a)(5); Rule 215(e).
  • 11. New Definition of “Accredited Investor”What if the Dodd-Frank § 413:mortgage isunderwater? “*A+ny net worth standard shall be $1,000,000, excluding the value of the primary residence of such natural person.”SEC Final Rule, Effective Feb. 27, 2012, Release No. 33-9287.
  • 12. New Definition of What if the “Accredited Investor” mortgage is Dodd-Frank § 413: underwater? The amount “*A+ny net worth standard shall be by which the $1,000,000, excluding the value of mortgage is the primary residence of such underwater is natural person.” included as a liability.SEC Final Rule, Effective Feb. 27, 2012, Release No. 33-9287.
  • 13. New Definition of What if the “Accredited Investor” mortgage is Dodd-Frank § 413: underwater? The amount “*A+ny net worth standard shall be by which the $1,000,000, excluding the value of mortgage is the primary residence of such underwater is natural person.” included as a liability. Is there any grandfathering available for investors with pre- existing rights who, because of this change, are no longer accredited?SEC Final Rule, Effective Feb. 27, 2012, Release No. 33-9287.
  • 14. New Definition of What if the “Accredited Investor” mortgage is Dodd-Frank § 413: underwater? The amount “*A+ny net worth standard shall be by which the $1,000,000, excluding the value of mortgage is the primary residence of such underwater is natural person.” included as a liability. Is there any grandfathering available for investors with pre- existing rights who, because of this change, are no longer accredited? Yes, if the investor held the right and other securities of the same issuer on July 20, 2010.SEC Final Rule, Effective Feb. 27, 2012, Release No. 33-9287.
  • 15. New Definition of What if the “Accredited Investor” mortgage is Dodd-Frank § 413: underwater? The amount “*A+ny net worth standard shall be by which the $1,000,000, excluding the value of Can’t an investor mortgage is the primary residence of such just obtain a underwater is natural person.” mortgage to included as a convert home liability. equity into assets that will count in Is there any grandfathering the net worth available for investors with pre- calculation? existing rights who, because of this change, are no longer accredited? Yes, if the investor held the right and other securities of the same issuer on July 20, 2010.SEC Final Rule, Effective Feb. 27, 2012, Release No. 33-9287.
  • 16. New Definition of What if the “Accredited Investor” mortgage is Dodd-Frank § 413: underwater? The amount “*A+ny net worth standard shall be Can’t an investor by which the $1,000,000, excluding the value of just obtain a mortgage is the primary residence of such mortgage to underwater is natural person.” convert home included as a equity into assets liability. that will count in the net worth Is there any grandfathering calculation? available for investors with pre- Yes, but a 60-day existing rights who, because of lookback will this change, are no longer capture any accredited? incremental Yes, if the investor held the right indebtedness that and other securities of the same isn’t used to issuer on July 20, 2010. acquire theSEC Final Rule, Effective Feb. 27, 2012, Release No. 33-9287. primary residence.
  • 17. The Dodd-Frank Act Registration Financial Public Exemptions Professionals Companies Definition of“Accredited Investor” “Bad Actor” Disqualification
  • 18. “Bad Actor” Disqualification Reg. A Rule 505Rule 262 Rule 505(b)(iii)
  • 19. “Bad Actor” Disqualification Rule 506 Reg. A Rule 505 Dodd-Frank § 926 – “*SEC+ shallRule 262 Rule 505(b)(iii) issue rules . . . substantially similar to the provisions of [Rule 262.”
  • 20. “Bad Actor” Disqualification Rule 506 Reg. A Rule 505 Dodd-Frank § 926 – “*SEC+ shallRule 262 Rule 505(b)(iii) issue rules . . . substantially similar to the provisions of [Rule 262.” SEC Proposed Rule; Release No. 33-9211
  • 21. “Bad Actor” Disqualification Rule 506 Reg. A Rule 505 Dodd-Frank § 926 – “*SEC+ shallRule 262 Rule 505(b)(iii) issue rules . . . substantially similar to the provisions of [Rule 262.” SEC Proposed Rule; Release No. 33-9211Possibly apply auniform “bad actor”rule to Reg. A, Rule505, and Rule 506
  • 22. “Bad Actor” Disqualification Rule 506 Reg. A Rule 505 Dodd-Frank § 926 – “*SEC+ shallRule 262 Rule 505(b)(iii) issue rules . . . substantially similar to the provisions of [Rule 262.” SEC Proposed Rule; Release No. 33-9211Possibly apply a Possibly adoptuniform “bad actor” a uniform 10-rule to Reg. A, Rule year look-back505, and Rule 506 period
  • 23. “Bad Actor” Disqualification Rule 506 Reg. A Rule 505 Dodd-Frank § 926 – “*SEC+ shallRule 262 Rule 505(b)(iii) issue rules . . . substantially similar to the provisions of [Rule 262.” SEC Proposed Rule; Release No. 33-9211Possibly apply a Possibly adopt Explicitly includeuniform “bad actor” a uniform 10- “managing member”rule to Reg. A, Rule year look-back of issuer as a505, and Rule 506 period “covered person”
  • 24. “Bad Actor” Disqualification Rule 506 Reg. A Rule 505 Dodd-Frank § 926 – “*SEC+ shallRule 262 Rule 505(b)(iii) issue rules . . . substantially similar to the provisions of [Rule 262.” SEC Proposed Rule; Release No. 33-9211Possibly apply a Possibly adopt Explicitly include “Reasonableuniform “bad actor” a uniform 10- “managing member” care” exception –rule to Reg. A, Rule year look-back of issuer as a would require the505, and Rule 506 period “covered person” issuer to conduct a “factual inquiry”
  • 25. The Dodd-Frank Act Registration Financial Public Exemptions Professionals Companies Definition of State“Accredited Regulation Investor” of “Mid- Sized” Investment “Bad Boy” Advisers Disqualification
  • 26. Investment Adviser Registration Pre-Dodd-FrankSMALL < $25,000,000 AssetsUnder ManagementState Registration IF• “regulated or required to beregulated as an investmentadviser in the State in which itmaintains its principal office”(all states except Wyoming)Otherwise, SEC Registration.LARGE ≥ $25,000,000 AssetsUnder ManagementSEC RegistrationInvestment Advisers Act § 203A (until July 1, 2011).
  • 27. Investment Adviser Registration Pre-Dodd-FrankSMALL < $25,000,000 Assets MULTI-STATE EXCEPTIONUnder Management But, if a small investment adviserState Registration IF would be required to register in• “regulated or required to be 30+ states, it can elect to registerregulated as an investment with SEC instead.adviser in the State in which itmaintains its principal office”(all states except Wyoming)Otherwise, SEC Registration.LARGE ≥ $25,000,000 AssetsUnder ManagementSEC RegistrationInvestment Advisers Act § 203A (until July 1, 2011); SEC Rule203A-2(e) (until Sept. 19, 2011).
  • 28. Investment Adviser Registration Pre-Dodd-FrankSMALL < $25,000,000 Assets MULTI-STATE EXCEPTIONUnder Management But, if a small investment adviserState Registration IF would be required to register in• “regulated or required to be 30+ states, it can elect to registerregulated as an investment with SEC instead.adviser in the State in which itmaintains its principal office” BUFFER(all states except Wyoming) But, if an investment adviser has assetsOtherwise, SEC Registration. under management of $25,000,000- $30,000,000, it may elect to remainLARGE ≥ $25,000,000 Assets state-regulated.Under ManagementSEC RegistrationInvestment Advisers Act § 203A (until July 1, 2011); SEC Rule203A-1(a) (until Sept. 19, 2011).
  • 29. Investment Adviser Registration Post-Dodd-Frank SMALL < $25,000,000 Assets Under Management State Registration IF • “regulated or required to be regulated as an investment adviser in the State in which it maintains its principal office” (all states except Wyoming) Otherwise, SEC Registration. MID-SIZED $25,000,000-$100,000,000 Assets Under Management State Registration IF • “required to be registered as an investment adviser” in the state where it maintains its principal office AND • “would be subject to examination as an investment adviser by *the State+” (all states except Wyoming and New York) Otherwise, SEC Registration. LARGE ≥ $100,000,000 Assets Under Management SEC RegistrationInvestment Advisers Act § 203A; SEC Release No. IA-3221.
  • 30. Investment Adviser Registration Post-Dodd-FrankSMALL < $25,000,000 Assets Under ManagementState Registration IF• “regulated or required to be regulated as an MULTI-STATE EXCEPTIONinvestment adviser in the State in which it maintains But, if an investmentits principal office” adviser would be(all states except Wyoming) required to register inOtherwise, SEC Registration. 15+ states, it can elect to register with SECMID-SIZED $25,000,000-$100,000,000 Assets Under instead.ManagementState Registration IF• “required to be registered as an investment adviser”in the state where it maintains its principal officeAND• “would be subject to examination as an investmentadviser by *the State+”(all states except Wyoming and New York)Otherwise, SEC Registration.LARGE ≥ $100,000,000 Assets Under ManagementSEC RegistrationInvestment Advisers Act § 203A; Rule 203A-2(d).
  • 31. Investment Adviser Registration Post-Dodd-FrankSMALL < $25,000,000 Assets Under ManagementState Registration IF• “regulated or required to be regulated as an MULTI-STATE EXCEPTIONinvestment adviser in the State in which it maintains But, if an investmentits principal office” adviser would be(all states except Wyoming) required to register inOtherwise, SEC Registration. 15+ states, it can elect to register with SECMID-SIZED $25,000,000-$100,000,000Assets Under instead.ManagementState Registration IF• “required to be registered as an investment adviser”in the state where it maintains its principal officeAND BUFFERS• “would be subject to examination as an investment • But, if an investment adviser hasadviser by *the State+” assets under management of(all states except Wyoming and New York) $90,000,000-$100,000,000, it may electOtherwise, SEC Registration. to remain SEC-regulated. • But, if an investment adviser hasLARGE ≥ $100,000,000 Assets Under Management assets under management ofSEC Registration $100,000,000-$110,000,000, it mayInvestment Advisers Act § 203A; Rule 203A-1(a). elect to remain state-regulated.
  • 32. Investment Adviser Registration Post- Dodd-Frank DEADLINES FOR TRANSITION FROM SEC- TO STATE-REGULATION March 30, 2012 ALL investment advisers currently registered with the SEC must file an amendment to Form ADV, which will identify mid-sized advisers that are no longer eligible for SEC registration.SEC Release No. IA-3221; SEC Rule 203A-5(b).
  • 33. Investment Adviser Registration Post- Dodd-Frank DEADLINES FOR TRANSITION FROM SEC- TO STATE-REGULATION March 30, 2012 June 28, 2012 ALL investment advisers Mid-sized advisers no currently registered with longer eligible to register the SEC must file an with the SEC must amendment to Form ADV, withdraw by filing Form which will identify mid- ADV-W and registering sized advisers that are no with the applicable longer eligible for SEC state(s). registration.SEC Release No. IA-3221; SEC North American Securities Administrators Association (“NASAA”) –Rule 203A-5(c). Investment Adviser Coordinated Review Program for SEC-registered advisers switching their registration to between 4 & 14 states
  • 34. The Dodd-Frank Act Registration Financial Public Exemptions Professionals Companies Definition of State“Accredited Regulation Investor” of “Mid- Sized” Investment Broker-Dealer “Bad Boy” Advisers Standard of Care Disqualification When Making Recommendations
  • 35. Standard of Care When Making RecommendationsInvestment Advisers Broker-Dealers
  • 36. Investment AdvisersDefinition - “‘Investment adviser’ means any person who, for compensation, engages in thebusiness of advising others, either directly or through publications or writings, as to the valueof securities or as to the advisability of investing in, purchasing, or selling securities…”Investment Advisers Act of 1940 § 202(a)(11).
  • 37. Investment AdvisersDefinition - “‘Investment adviser’ means any person who, for compensation, engages in thebusiness of advising others, either directly or through publications or writings, as to the valueof securities or as to the advisability of investing in, purchasing, or selling securities…”Investment Advisers Act of 1940 § 202(a)(11).Fraud/Deceit - “It shall be unlawful for any investment adviser, by use of the mails or anymeans or instrumentality of interstate commerce, directly or indirectly-- … to engage in anytransaction, practice, or course of business which operates as a fraud or deceit upon anyclient or prospective client…” Investment Advisers Act of 1940 § 206(2).
  • 38. Investment AdvisersDefinition - “‘Investment adviser’ means any person who, for compensation, engages in thebusiness of advising others, either directly or through publications or writings, as to the valueof securities or as to the advisability of investing in, purchasing, or selling securities…”Investment Advisers Act of 1940 § 202(a)(11).Fraud/Deceit - “It shall be unlawful for any investment adviser, by use of the mails or anymeans or instrumentality of interstate commerce, directly or indirectly-- … to engage in anytransaction, practice, or course of business which operates as a fraud or deceit upon anyclient or prospective client…” Investment Advisers Act of 1940 § 206(2).Fiduciary Duty - “The *+ Act *+ thus reflect a congressional recognition of the delicatefiduciary nature of an investment advisory relationship . . .” SEC v. Capital Gains ResearchBureau, 375 U.S. 180 (1963).
  • 39. Investment AdvisersDefinition - “‘Investment adviser’ means any person who, for compensation, engages in thebusiness of advising others, either directly or through publications or writings, as to the valueof securities or as to the advisability of investing in, purchasing, or selling securities…”Investment Advisers Act of 1940 § 202(a)(11).Fraud/Deceit - “It shall be unlawful for any investment adviser, by use of the mails or anymeans or instrumentality of interstate commerce, directly or indirectly-- … to engage in anytransaction, practice, or course of business which operates as a fraud or deceit upon anyclient or prospective client…” Investment Advisers Act of 1940 § 206(2).Fiduciary Duty - “The *+ Act *+ thus reflect a congressional recognition of the delicatefiduciary nature of an investment advisory relationship . . .” SEC v. Capital Gains ResearchBureau, 375 U.S. 180 (1963). Investment advisers have a fiduciary duty to act in the best interests of their clients.
  • 40. Broker-DealersDefinition - “The term ‘broker’ Definition - The term “dealer” means anymeans any person engaged in the person engaged in the business of buyingbusiness of effecting transactions in and selling securities for such persons ownsecurities for the account of others.” account through a broker or otherwise.Exchange Act § 3(a)(4). Exchange Act § 3(a)(5).
  • 41. Broker-DealersDefinition - “The term ‘broker’ Definition - The term “dealer” means anymeans any person engaged in the person engaged in the business of buyingbusiness of effecting transactions in and selling securities for such persons ownsecurities for the account of others.” account through a broker or otherwise.Exchange Act § 3(a)(4). Exchange Act § 3(a)(5).Exclusion from Definition of“Investment Adviser” – “any brokeror dealer whose performance of suchservices is solely incidental to theconduct of his business as a broker ordealer and who receives no specialcompensation therefor.” InvestmentAdvisers Act of 1940 § 202(a)(11).
  • 42. Broker-DealersDefinition - “The term ‘broker’ Definition - The term “dealer” means anymeans any person engaged in the person engaged in the business of buyingbusiness of effecting transactions in and selling securities for such persons ownsecurities for the account of others.” account through a broker or otherwise.Exchange Act § 3(a)(4). Exchange Act § 3(a)(5).Exclusion from Definition of“Investment Adviser” – “any brokeror dealer whose performance of suchservices is solely incidental to theconduct of his business as a broker ordealer and who receives no specialcompensation therefor.” InvestmentAdvisers Act of 1940 § 202(a)(11). Not subject to Investment Advisers Act fiduciary duty to act in the best interests of their clients.
  • 43. Broker-DealersDefinition - “The term ‘broker’ Definition - The term “dealer” means anymeans any person engaged in the person engaged in the business of buyingbusiness of effecting transactions in and selling securities for such persons ownsecurities for the account of others.” account through a broker or otherwise.Exchange Act § 3(a)(4). Exchange Act § 3(a)(5). NASD Rule 2310 Recommendations to Customers (Suitability) - (a) In recommending to a customer the purchase, sale or exchange of any security, a member shall have reasonable grounds for believing that the recommendation is suitable for such customer upon the basis of the facts, if any, disclosed by such customer as to his other security holdings and as to his financial situation and needs. . . . (to become FINRA Rule 2111 on July 9, 2012)
  • 44. Fabrice Tourre Goldman, Sachs & Co. Employeehttp://www.youtube.com/watch?v=X42k4ikIBKg
  • 45. Broker-DealersDodd-Frank Act § 913• SEC ReportDirects the SEC to conduct astudy and issue a report re:the obligations ofbrokers, dealers, andinvestment advisers whenproviding personalizedinvestment advice andrecommendations to retailcustomers• RulesAuthorizes the SEC tocommence rulemaking toaddress the legal orregulatory standards of carefor brokers, dealers, andinvestment advisers
  • 46. Broker-DealersDodd-Frank Act § 913 January 2011 SEC Report Recommends that the SEC establish a uniform• SEC Report fiduciary standard for investment advisers andDirects the SEC to conduct a broker-dealers when providing investmentstudy and issue a report re: advice to retail customers that is consistentthe obligations of with the standard that currently applies tobrokers, dealers, and investment advisers.investment advisers whenproviding personalizedinvestment advice andrecommendations to retailcustomers• RulesAuthorizes the SEC tocommence rulemaking toaddress the legal orregulatory standards of carefor brokers, dealers, andinvestment advisers
  • 47. Broker-DealersDodd-Frank Act § 913 January 2011 SEC Report Recommends that the SEC establish a uniform• SEC Report fiduciary standard for investment advisers andDirects the SEC to conduct a broker-dealers when providing investmentstudy and issue a report re: advice to retail customers that is consistentthe obligations of with the standard that currently applies tobrokers, dealers, and investment advisers.investment advisers whenproviding personalizedinvestment advice andrecommendations to retailcustomers• Rules Future?Authorizes the SEC tocommence rulemaking toaddress the legal orregulatory standards of carefor brokers, dealers, andinvestment advisers
  • 48. The Dodd-Frank Act Registration Financial Public Exemptions Professionals Companies Definition SOX 404(b) of State Exemption“Accredited Regulation Investor” of “Mid- Sized” Investment Broker-Dealer “Bad Boy” Advisers Standard of Care Disqualification When Making Recommendations
  • 49. Sarbanes-Oxley Act § 404(a) All companies required to file annual reports must include a management assessment of internal control over financial reporting.(b) Each registered public accounting firm that prepares or issues the audit report for the issuer shall attest to, and report on, the assessment made by the management of the issuer.
  • 50. Sarbanes-Oxley Act § 404 $$$ - High Compliance Costs(a) All companies required to file annual reports must include a management assessment of internal control over financial reporting.(b) Each registered public accounting firm that prepares or issues the audit report for the issuer shall attest to, and report on, the assessment made by the management of the issuer.
  • 51. Sarbanes-Oxley Act § 404 $$$ - High Compliance Costs(a) All companies required to file annual reports must include a management • SEC had permitted “non-accelerated assessment of internal filers” to postpone their compliance. The controls over financial deferrals were set to expire for annual reporting. reports for fiscal years ending on or after June 15, 2010.(b) Each registered public accounting firm that prepares or issues the audit report for the issuer shall attest to, and report on, the assessment made by the management of the issuer.
  • 52. Sarbanes-Oxley Act § 404 $$$ - High Compliance Costs(a) All companies required to file annual reports must include a management • SEC had permitted “non-accelerated assessment of internal filers” to postpone their compliance. The control over financial deferrals were set to expire for annual reporting. reports for fiscal years ending on or after June 15, 2010.(b) Each registered public accounting firm that prepares or issues the • Dodd-Frank § 989G(a) adds § 404(c) to the audit report for the issuer Sarbanes-Oxley Act. The auditor shall attest to, and report attestation requirement now applies only on, the assessment made to accelerated filers and large accelerated by the management of filers. the issuer.
  • 53. The Dodd-Frank Act Registration Financial Public Exemptions Professionals Companies Definition SOX 404(b) of State Exemption“Accredited Regulation Investor” of “Mid- Sized” Investment Broker-Dealer “Bad Boy” Advisers Standard of Care Say on Pay Disqualification When Making Recommendations
  • 54. Citigroup’s Stock Price 2007-2010
  • 55. Dodd-Frank Act § 951 –Shareholder Vote on Executive Compensation DisclosuresPublic companies subject to thefederal proxy rules must:• not less frequently than once every3 years, must include a separate, non-binding resolution subject toshareholder vote to approve thecompensation of executives• not less frequently than once every6 years, must include a separate, non-binding resolution subject toshareholder vote to determinewhether the above votes will occurevery 1, 2, or 3 years
  • 56. Dodd-Frank Act § 951 – SEC Final Rule, Release No. 34-63768.Shareholder Vote on Executive •Effective at first annual or other Compensation Disclosures meeting on or after January 21, 2011.Public companies subject to the • But, for “smaller reportingfederal proxy rules must: companies,” effective at first annual or other meeting occurring on or after January 21, 2013.• not less frequently than once every3 years, must include a separate, non-binding resolution subject toshareholder vote to approve thecompensation of executives• not less frequently than once every6 years, must include a separate, non-binding resolution subject toshareholder vote to determinewhether the above votes will occurevery 1, 2, or 3 years
  • 57. Coldwater Creek, Inc. Proxy Statement, Filed with the SEC on 4-29-11 PROPOSAL 4 This proposal, which is commonly referred to as a "say-on-pay" vote, provides stockholders with the opportunity to advise our Board of Directors and Compensation Committee regarding their approval of the compensation of our named executive officers as described in the Compensation Discussion and Analysis section, accompanying compensation tables and narrative disclosure set forth in this proxy statement. This vote is not intended to address any specific item of compensation or the compensation of any particular named executive officer, but rather the overall compensation of our named executive officers as well as the philosophy and objectives of our executive compensation programs. Our executive compensation programs are designed to attract, retain, motivate and reward talented executives who can contribute to our long-term success and thereby build value for our stockholders. We believe that our compensation program, with its balance of base salary, cash incentive awards and equity compensation, rewards sustained performance that is aligned with long-term stockholder interests. Our Compensation Committee, which is comprised of independent directors and seeks the input of an outside compensation consultant, oversees our executive compensation and benefits programs. The Compensation Committee approves the performance measurements and targets for our executive officers incentive pay, and also reviews and approves their compensation packages annually. The say-on-pay vote is not binding on the Company, our Compensation Committee or our Board of Directors. We value the opinions of our stockholders and the Compensation Committee will take into account the result of the vote when determining future executive compensation. The Board of Directors recommends that stockholders vote FOR the approval of the compensation of our named executive officers.
  • 58. Coldwater Creek, Inc. Proxy Statement, Filed with the SEC on 4-29-11 Broker non- For Against Abstain votes 45,163,605 512,501 3,823,918 8,744,864 PROPOSAL 4 This proposal, which is commonly referred to as a "say-on-pay" vote, provides stockholders with the opportunity to advise our Board of Directors and Compensation Committee regarding their approval of the compensation of our named executive officers as described in the Compensation Discussion and Analysis section, accompanying compensation tables and narrative disclosure set forth in this proxy statement. This vote is not intended to address any specific item of compensation or the compensation of any particular named executive officer, but rather the overall compensation of our named executive officers as well as the philosophy and objectives of our executive compensation programs. Our executive compensation programs are designed to attract, retain, motivate and reward talented executives who can contribute to our long-term success and thereby build value for our stockholders. We believe that our compensation program, with its balance of base salary, cash incentive awards and equity compensation, rewards sustained performance that is aligned with long-term stockholder interests. Our Compensation Committee, which is comprised of independent directors and seeks the input of an outside compensation consultant, oversees our executive compensation and benefits programs. The Compensation Committee approves the performance measurements and targets for our executive officers incentive pay, and also reviews and approves their compensation packages annually. The say-on-pay vote is not binding on the Company, our Compensation Committee or our Board of Directors. We value the opinions of our stockholders and the Compensation Committee will take into account the result of the vote when determining future executive compensation. The Board of Directors recommends that stockholders vote FOR the approval of the compensation of our named executive officers.
  • 59. Coldwater Creek, Inc. Proxy Statement, Filed with the SEC on 4-29-11 PROPOSAL 5 ADVISORY VOTE ON THE FREQUENCY OF "SAY-ON-PAY" VOTE This proposal provides our stockholders an advisory vote on whether the frequency with which we should holda say-on-pay vote should be once every one, two, or three years. Alternatively, stockholders may choose to abstain. Our Board of Directors and Compensation Committee believe that having a say-on-pay vote every year is thebest approach for the Company. The Board believes that an annual advisory vote will give our stockholders theopportunity to provide us with direct and timely input on our compensation philosophy, policies and practices asdisclosed in the proxy statement. You are not voting to approve or disapprove of the Boards recommendation. This advisory vote on thefrequency of future advisory votes on named executive officer compensation is non-binding on the Company, ourCompensation Committee or our Board of Directors. Notwithstanding the Boards recommendation and theoutcome of the stockholder vote, the Board may in the future decide to conduct advisory votes on a more or lessfrequent basis and may vary its practice based on factors such as discussions with stockholders and the adoption ofmaterial changes to compensation programs.The Board of Directors recommends a vote for the frequency of EVERY YEAR
  • 60. Coldwater Creek, Inc. Proxy Statement, Filed with the SEC on 4-29-11 Broker non- One Year Two Year Three Year Abstain votes 41,129,987 81,457 4,429,403 3,859,177 8,744,864 PROPOSAL 5 ADVISORY VOTE ON THE FREQUENCY OF "SAY-ON-PAY" VOTE This proposal provides our stockholders an advisory vote on whether the frequency with which we should holda say-on-pay vote should be once every one, two, or three years. Alternatively, stockholders may choose to abstain. Our Board of Directors and Compensation Committee believe that having a say-on-pay vote every year is thebest approach for the Company. The Board believes that an annual advisory vote will give our stockholders theopportunity to provide us with direct and timely input on our compensation philosophy, policies and practices asdisclosed in the proxy statement. You are not voting to approve or disapprove of the Boards recommendation. This advisory vote on thefrequency of future advisory votes on named executive officer compensation is non-binding on the Company, ourCompensation Committee or our Board of Directors. Notwithstanding the Boards recommendation and theoutcome of the stockholder vote, the Board may in the future decide to conduct advisory votes on a more or lessfrequent basis and may vary its practice based on factors such as discussions with stockholders and the adoption ofmaterial changes to compensation programs.The Board of Directors recommends a vote for the frequency of EVERY YEAR
  • 61. The Dodd-Frank Act Registration Financial Public Exemptions Professionals Companies Definition SOX 404(b) Mine of State Exemption Safety“Accredited Regulation Investor” of “Mid- Disclosures Sized” Investment Broker-Dealer “Bad Boy” Advisers Standard of Care Say on Pay Disqualification When Making Recommendations
  • 62. Dodd-Frank Act § 1503 – Reporting Requirements Regarding Coal or Other Mine SafetyEach issuer that is required to fileperiodic reports and that is an operatorof a mine (or that has a subsidiary thatis) shall include in each periodic reportthe following information for the timeperiod covered by the report: • total # of violations of health or safety standards that could “significantly and substantially” contribute to a health or safety hazard under § 104 of the Mine Safety and Health Act for which operator received a citation from Mine Safety and Health Administration • total # of orders, citations, violations issued under other specified sections of the Mine Act
  • 63. Dodd-Frank Act § 1503 – Reporting Requirements Regarding Coal or Other Mine SafetyEach issuer that is required to file SEC Final Rule, Dec. 21, 2011,periodic reports and that is an operator Release No. 34-66019of a mine (or that has a subsidiary thatis) shall include in each periodic report • applies only to mines located in the U.S.the following information for the timeperiod covered by the report: • requires mine-by-mine disclosure • total # of violations of health or • no special treatment for smaller reporting safety standards that could companies “significantly and substantially” contribute to a health or safety • no exclusion of orders or citations that hazard under § 104 of the Mine issuer is contesting Safety and Health Act for which operator received a citation from • no exclusion of orders or citations that were Mine Safety and Health received but subsequently Administration dismissed, reduced, or vacated • total # of orders, citations, violations issued under other specified sections of the
  • 64. Dodd-Frank Act § 1503 – Reporting Requirements Regarding Coal or Other Mine Safety SEC Final Rule, Dec. 21, 2011, Release No. 34-66019 Example of Tabular Presentation
  • 65. Dodd-Frank Act § 1503 – Reporting Requirements Regarding Coal or Other Mine Safety File Form 8-K within 4 business days after receipt by issuer (or subsidiary) of: • imminent danger order under § 107(a) of the Mine Act • written notice from the MSHA of a pattern of violations of mandatory health or safety standards as could significantly and substantially contribute to the cause and effect of health or safety hazards under § 104(e) of the Mine Act • written notice from the MSHA of the potential to have a pattern of such violations New Item 1.04 Mine Safety – Reporting of Shutdowns and Patterns of Violations
  • 66. The Dodd-Frank Act Registration Financial Public Exemptions Professionals Companies Definition SOX 404(b) Mine of State Exemption Safety“Accredited Regulation Investor” of “Mid- Disclosures Sized” Investment Broker-Dealer “Bad Boy” Advisers Standard of Care Say on Pay Disqualification When Making Recommendations
  • 67. http://www.sec.gov/spotlight/dodd-frank.shtml
  • 68. How the Dodd-Frank Act Affects Practice in Idaho Wendy Couture Associate Professor University of Idaho College of Law wgcouture@uidaho.edu Thank you!