As the regulatory landscape continues to evolve, public company officers and directors must stay abreast of the enforcement priorities and expectations of the Securities and Exchange Commission (SEC). Over the past year, the SEC has brought various enforcement actions that involve the oversight and reporting obligations of management and boards. These cases highlight potential blind spots in corporate compliance programs.
This article summarizes recent enforcement actions related to director independence, cybersecurity, insider “shadow” trading, internal investigations, executive compensation beneficial ownership and insider transaction reports, and Artificial Intelligence, which despite the change in administration, public company officers and directors should view as potential areas of continued SEC focus over the upcoming year. Director Independence In September 2024, the SEC announced it had settled [1] charges against a director of an NYSE-listed consumer packaged goods company for violation of the proxy rules, for failure to disclose in his D&O questionnaire information about his close friendship with an executive officer, which caused the company to falsely list him as an independent director in its proxy statement. [2] This undisclosed relationship included multiple domestic and international paid vacations with the executive.
[3] The director also allegedly provided confidential information to the executive about the company’s CEO search and instructed the exec.
