23 March 2018
by Jeanne R. Solomon and Sheri M. Yano This week's Corporate news roundup includes information regarding the SEC's proposed rules for mining company disclosures, the creation of the Investors' Exchange LLC (a new U.S. stock exchange that slows the speed of trading) and a Massachusetts court holding that text messages can meet statute of fraud requirements: SEC PROPOSES RULES MODERNIZING MINING COMPANY DISCLOSURES On June 16, 2016, the SEC proposed to update the disclosure requirements for mining registrants under the Securities Act of 1933 and Securities Exchange Act of 1934 by rescinding Industry Guide 7 and including mining property disclosure requirements in Regulation S-K Item 102. The rules are intended to align mining property disclosure requirements with industry and global regulatory practices and standards such as the Committee for Mineral Reserves International Reporting Standards. The rules would require a mining company registrant to provide a summary disclosure for its mining operations as a whole, in addition to more detailed disclosure for material individual properties. A “qualified person” (defined as a mineral industry professional, in good standing with a recognized professional organization, with at least five years of relevant experience in the type of mineralization and in the specific type of mining activity being undertaken by the company) would need to prepare documentation to support all disclosures of mineral resources, mineral reserves and material exploration results reported in the filed registration statements and reports. The rules would require a mining company registrant to disclose mineral resources and material exploration results in addition to mineral reserves, and implement a standard for registrants to disclose mining operations that are material to their business or financial condition. Comments are due 60 days after Federal Register publication. For more information, click here. SEC APPROVES CREATION OF INVESTORS' EXCHANGE LLC (IEX) AS THE NEWEST U.S. STOCK EXCHANGE On June 17, 2016, the SEC approved the application of Investors' Exchange LLC (IEX) to register as a national stock exchange, and certified IEX as the U.S.'s newest stock exchange, with trading expected to begin September 2, 2016. A stock exchange that slows the speed of trading, IEX claims that its “speed bump” (a 350-microsecond delay that causes all trades to arrive in roughly the same amount of time) delays trading just enough to shield trading on IEX from high-frequency traders, who benefit from trading that front-runs slower investors' orders. Proponents of the IEX speed bump believe that traders with the fastest execution speeds are more profitable than traders with slower execution speeds, potentially giving an unfair advantage to high-frequency traders. IEX hopes that its speed bump will even the playing field. Critics have, however, warned that trading delays may create stale prices, stock market infrastructure complications and manipulation potential. For more information, click here. MASSACHUSETTS COURT HOLDS THAT TEXT MESSAGES MEET STATUTE OF FRAUD REQUIREMENTS A Massachusetts land court recently ruled that a series of text messages between two real estate brokers constituted a writing sufficient to meet the Massachusetts Statute of Frauds requirements, thereby binding the brokers' clients to a multi-million dollar deal. In the process of negotiating a $3 million commercial building sale, two brokers discussed the deal in person and memorialized the deal terms in a binding letter of intent (which the brokers further discussed, negotiated and revised through email and text messages). The court held that the seller's broker's text request for the buyer to sign the final letter of intent constituted a counteroffer because a material term had changed, and when the buyer signed the letter of intent and produced the required earnest money check, the counteroffer was accepted, thus binding the parties. When the seller accepted a third party offer instead of countersigning the letter of intent, the court held the seller to the accepted counteroffer. The court noted that in the brokers' communications, the brokers had added their names in messages containing material terms and omitted their names in mere informational discussions, so that when the relevant text messages included the broker's typed name, it signaled a binding offer and acceptance. For more information on the St. John's Holdings, LLC v. Two Electronics, LLC case, click here. To subscribe to our weekly Corporate e-newsletter and receive future news updates, please click here.