We (John) first addressed the topic of “remote-only” or “remote-first” public companies — that claim to have no physical address — (not surprisingly) in 2021. At the time, he shared that the SEC cleared an IPO S-1 even though the cover page did not identify the address of the company’s principal executive offices. John’s last blog about “remote-first” public companies was just over three years ago now, and, by that time, the SEC Staff would no longer declare a registration statement effective unless and until it included a physical address in response to the requirement to disclose principal executive offices. Consider not just the cover page requirement, but also the rules that require certain communications to be sent to the principal executive offices — like Rules 14a-8 and 14d-3(a)(2)(i).
Fast forward to 2025. Comment and response letters related to the same company’s 2022 and 2023 10-Ks were just made public, and the Staff is now saying it needs to disclose its principal executive offices. Here are the threerelevantcomments and responses on this issue:
Please revise your filing to provide the address of your principal executive offices.
The Company advises the Staff that since May 2020 the Company has been, and continues to be, a remote-first company with no headquarters or principal executive offices. Furthermore, the Company’s executive team and Board of Directors (the “Board”) are distributed. Since May 2020, all Board meetings have been held virtually with the exception of one meeting in 2023, which was held at a location that was not in the Company’s offices. Substantially all of the Company’s executive team meetings are also held virtually, with meetings occasionally held in-person at locations that are either not in the Company’s offices or in various of the Company’s offices distributed around the world. The Company holds all of its stockholder meetings virtually. The Company’s employees are distributed across over 40 states and ten countries.
Because it does not have a headquarters or principal executive offices, the Company currently includes a footnote on the cover page of its periodic and current reports filed with the Commission providing that stockholder communications be directed to an email address set forth in the Company’s proxy materials and/or identified on the Company’s investor relations website and, beginning with its Form 10-Q for the quarter ended September 30, 2023, the Company will update this footnote to further provide such email address, as well as the address of its agent for service of process in the state of Delaware, for purposes of receiving physical mailings from its stockholders and regulatory communications from the Commission.
We note your response to prior comment 2 and reissue. Please revise disclosure in future filings to provide the address of your principal executive offices. While we note that you are a remote-first company and you have provided the address of your agent for service of process, identification of a principal executive office is a requirement of Form 10-K.
The Company acknowledges the Staff’s comment and advises the Staff that as described in the Company’s response to prior comment 2, since May 2020 the Company has been, and continues to be, a remote-first company with no headquarters or principal executive offices. As previously noted, the Company’s employees are distributed across over 40 states and ten countries, the Company’s executive team and Board of Directors (the “Board”) are geographically distributed, and meetings of the executive team and the Board are generally held virtually. However, in response to the Staff’s comment, the Company advises the Staff that the Company has initiated a process to identify an address to satisfy the principal executive offices requirement for purposes of its filings with the Commission and will disclose such address in the Company’s future filings with the Commission no later than the Company’s Annual Report on Form 10-K for the year ended December 31, 2024 (the “2024 Form 10-K”).
We note your response to prior comment 1 that you have “initiated a process to identify an address to satisfy the principal executive offices requirement for purposes of [your] filings with the Commission and will disclose such address in the Company’s future filings with the Commission no later than the Company’s Annual Report on Form 10-K for the year ended December 31, 2024.” Please disclose the address of your principal executive offices in your next Exchange Act report.
The Company advises the Staff that beginning with the Company’s Current Report on Form 8-K filed in connection with the Company’s public release of earnings for the quarter ended September 30, 2024 the Company has included, and will include in future filings with the Commission, an address as requested by the Staff.
John’s prior blog noted that the Staff sometimes accepted a P.O. Box and one company that had its related registration statement declared effective even said that any stockholder communication required to be sent to its principal executive offices may be directed to its agent for service of process. It’s unclear to me whether these options are still accepted. For similarly situated companies, the company did include an address on the cover of its 8-K and 10-Q, but it continues to omit a phone number and includes a footnote that reads: “We are a remote-first company. Accordingly, we do not maintain a headquarters. We are including this address solely for the purpose of compliance with the Securities and Exchange Commission’s rules. Stockholder communications may also be sent to the email address: secretary@coinbase.com.”
Apparently, CFOs are not immune to the trends that are causing record CEO turnover. Russell Reynolds reports that CFO tenure reached a 5-year low of 5.6 years in 2024. KPMG’s April 2025 Directors Quarterly discusses the need for robust CFO succession planning to avoid disruption from unexpected turnover. Key to effective succession planning is ensuring that the process evolves to reflect the skills and experiences that CFOs need in today’s business environment. And the role is expanding. The article points to the fact that CFOs now:
– Take on more responsibility as strategic leaders
– Lead (versus support) technology & innovation projects
– Have responsibility for cybersecurity, AI, digital transformations and sustainability
Accordingly, it says, CFOs often come to the role without traditional accounting and financial reporting backgrounds. That means talent management is also an increasingly important skill for CFOs since having a strong controller and accounting team is as important as ever. Given the increased dependence on CFO reports, KPMG suggests that effective CFO succession planning should also address those roles.
The article also discusses signs of a healthy (or not so healthy) relationship between the CFO and the audit committee. The KPMG team spoke to audit committee members & CFOs who cited these potential red flags that the relationship between the CFO and the audit committee isn’t what it should be:
– An audit committee member asks a question and the controller or CAE hesitates before answering
– The audit committee chair learns bad news from someone other than the CFO
Audit committees need to be vigilant. Lack of accounting resources/expertise was still one of the top 5 reasons for material weaknesses in internal controls in 2024, and the talent shortage in accounting isn’t going away anytime soon.
The transcript for our recent “Conduct of the Annual Meeting” webcast is now available. Chevron’s Mary Francis, The Shareholder Service Optimizer’s Carl Hagberg and Peder Hagberg, Lucky Strike Entertainment’s Matthew Kane and Alliance Advisors’ Jason Vinick discussed the latest developments and timely considerations for before, during and after your annual meeting.
During the program, Carl shared this helpful reminder of the importance of someone on the team sounding alarm bells if something in the voting or tabulation process doesn’t look right:
My number one suggestion, make sure you have a good inspector of election who, (A) has written presumptions as to the validity of proxies, and (B) knows what they mean, knows how to enforce them and rule on them, and (C) who can stand up if challenged and explain. At least five times a year, our inspectors get questions like, “How do you really know these votes are right?” We have a little mini script in our heads, where we tell them what we did to assure that the numbers are right.
Make sure that your inspector and your proxy solicitor has what I call a “good sniffer.” They smell trouble when the numbers don’t look right. We’ve had many cases where they discovered, “Oh, they forgot to mail to the employee plan,” or some big giant pile of proxies got left in a corner and didn’t get counted, or there’s something wrong, and you need to swing into action, or it’s just a mistake. Somebody made a big mistake and voted the wrong way.
We always look at the big voters. If you don’t see JP Morgan Chase voting only 70% of their position, you know there’s something wrong there. That would be number one – to make sure that you see potential problems coming and you’re prepared to respond to it.
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This Paul Weiss client alert highlights a recent decision by a federal district court in Colorado, Cupat v. Palantir Technologies, Inc. (D. Colo.; 4/25), that dismisses a Section 11 claim arising out of a direct listing after applying the strict tracing requirement from SCOTUS’s Slack decision. The Slack decision required that a plaintiff plead and prove that it purchased shares traceable to the registration statement it claims was materially misleading when making a Section 11 claim.
[The court] noted that the Supreme Court “did not assess whether any specific allegations were sufficient to plead traceability, nor what evidence is sufficient to prove it.”
Plaintiffs sought to satisfy the tracing requirement by alleging that (i) the probability that plaintiffs “purchased at least one registered share is so high as to constitute a legal certainty”; (ii) they would be able to prove traceability with appropriate discovery; and (iii) “any unregistered shares they purchased should be deemed registered on an integrated offering theory.”
[But] the district court held that plaintiffs could not plausibly allege that the shares they purchased were issued pursuant to the allegedly deficient registration statement because both registered and unregistered shares of the issuer’s stock were available at the time of the direct listing.
The alert continues with these implications, which are similar to those Liz had highlighted when Slack was released:
– The decision confirms that Slack’s strict tracing requirement may effectively insulate companies that go public through a direct listing from Section 11 liability.
– The decision further suggests that nothing short of chain-of-title allegations will suffice to plead traceability, posing a significant challenge to plaintiffs seeking to plead a Section 11 claim arising out of a direct listing.
– The decision may also have implications in other circumstances where tracing shares to a particular registration statement is difficult, such as where unregistered shares enter the market after an IPO lockup period expires, or where there have been multiple offerings pursuant to multiple registration statements. Ultimately, this decision and others interpreting Slack may make direct listings a more attractive avenue for companies that are looking to go public, as a direct listing may reduce associated litigation exposure.
KPMG recently released its 2024 study on material weaknesses and reported on trends over the last five years. Here are some of the data points highlighted in the report:
– Of the 3,502 annual reports filed in the 2023/2024 year, 279 companies (8%) disclosed material weaknesses in their filings.
– The percentage of companies disclosing material weaknesses in 2024 increased slightly as compared to the prior year.
– The top five issues driving material weaknesses were: lack of documentation, policies and procedures; lack of accounting resources or expertise; IT, software, security and access issues; lack of segregation of duties/design controls; and inadequate disclosure controls. (These are consistent with prior years.)
– Material weaknesses related to restatement of company filings decreased by 7% in FY24, and this is also within the typical range that’s been shown over the last several years.
– Perhaps not surprisingly, material weaknesses related to lack of accounting resources/expertise and IT, software, security and access issues have steadily increased from 2021 to 2024.
– Process areas with the highest concentration of material weaknesses include: financial close/reporting; control environment; systems; nonroutine/complex transactions; and revenue.
– Of the 757 companies that filed a report with a material weaknesse between 2020 and 2024, 236 companies (31%) disclosed material weaknesses in multiple years.
I’ve been listening to and loving Dave & Liz’s Mentorship Matters Podcasts. I mostly recently listened to their podcast with Keir Gumbs, and on that and many of their podcasts, they’ve discussed how folks new to securities law can develop foundational skills and knowledge. One of the things it got me thinking about is how I can make blogs more accessible to securities lawyers who are earlier in their careers. So, if that’s you and you’re looking for a commute read (a practice of Keir’s!) to understand internal controls over financial reporting, material weaknesses, significant deficiencies, the related disclosure requirements and other implications, navigate over to our “Internal Controls Disclosure” Handbook when you have a moment.
The US Attorney General has announced a major change in how federal regulators approach cryptocurrency markets. A recent memorandum directed the U.S. Department of Justice (DOJ) to scale back litigation and enforcement actions against digital asset platforms. Instead, the DOJ will focus on individuals and organizations using digital assets in unlawful ways. A recent memo from Sidley summarizes the changes:
“Continuing the Trump Administration’s shift away from targeting digital asset platforms, software, and other facilitating spaces, DOJ leadership has directed its prosecutors to deprioritize cases against virtual currency exchanges, mixing and tumbling services, and offline wallets for the acts of their end users or for ‘unwitting’ violations of regulations. Instead, DOJ prosecutors are instructed to focus on cases against individual actors that victimize investors, including: (1) embezzlement of funds on exchanges; (2) digital asset scams; (3) rug pulls; (4) hacking; and (5) exploitation of smart contract vulnerabilities”
The DOJ’s National Cryptocurrency Enforcement Team is now disbanded, as part of the DOJ’s new approach. Additionally, the memorandum reaches beyond the DOJ and is being implemented by other federal agencies. The Commodity Futures Trading Commission (CFTC) has announced its intentions to adhere to the memorandum. The spotlight is shifting from digital asset platforms, but the DOJ will still litigate against platforms directly engaging in unlawful activity. This comes as the administration makes efforts to expand the use and adoption of cryptocurrencies into traditional banking systems. It is unclear how this might affect the broader cryptocurrency ecosystem, but it does bring several pending enforcement actions against crypto platforms to an end.
Check out our “Crypto” Practice Area where we’re posting related resources on crypto developments. And, if you haven’t already, subscribe now to get free notifications from our new “AI Counsel” blog in your inbox!
NAVEX recently released its 2025 Whistleblowing & Incident Management Benchmark Report (available for download). Overall, NAVEX points to “several relatively consistent metrics from 2023 to 2024 following the major disruptions related to the COVID-19 pandemic, signaling that some workplace dynamics are likely settling into a more steady pattern.” Here are some more detailed takeaways from the executive summary:
Median reports per 100 employees were again at record levels in 2024 — matching the level from 2023 at 1.57.
Frequency of web-based reports (33.4%) surpassed hotline reports (29.4%) for the first time. “Other” reports (typically those made in person) still represent the greatest share of reports by frequency globally.
The substantiation rate (reports found to be true) again reached a new all-time high at 46% in 2024 (up from the all-time high of 45% in 2023).
In 2024, even more substantiated reports (20.2%) resulted in separation from employment, and this figure has increased a few percentage points each year since 2021, suggesting that organizations are “becoming bolder in their responses to misconduct.”
New this year, NAVEX has added reporting data broken down by entity type — including public companies, private companies, government entities, and education organizations — allowing for more tailored comparisons.
In February, Liz blogged about the Trump Administration’s announcement of a 180-day suspension of new FCPA investigations while the DOJ reviews cases & revises its enforcement guidelines. Her blog focused on why companies still benefit from maintaining their anti-corruption compliance programs during this pause and beyond. If that wasn’t enough, California and Europe have chimed in with two more reasons to add to Liz’s checklist.
California – As Gibson Dunn reports: In a press release and legal alert issued on April 2, 2025, California Attorney General Rob Bonta reminded businesses operating in California that making payments to foreign officials to obtain or retain business remains illegal [and] “[v]iolations of the FCPA remain actionable under California’s Unfair Competition Law (UCL)”—and that California may step up corruption-related enforcement if federal authorities’ priorities shift to other areas.
Broadly speaking, the UCL prohibits “unlawful, unfair or fraudulent” behavior across nearly all business practices.[1] For purposes of “unlawful” conduct, the UCL “borrows” violations of other laws, including federal laws such as the FCPA, and treats them as “independently actionable as unfair competitive practices.”[2] But under the UCL, even foreign bribery that does not meet all the elements of an FCPA violation may be actionable if it constitutes an unfair or fraudulent business act and has the requisite connection to California . . . Both the Attorney General and private parties are authorized to pursue claims . . .
There is some limited precedent for pursuing cases under the UCL that are based on a violation of the FCPA[; however, one] practical limitation to California-based anti-corruption enforcement may lie in the requirement of injury in California, as the UCL does not apply extraterritorially.
Europe – From this McGuireWoods blog: United Kingdom, France, and Switzerland have formed a new cross-border alliance: the International Anti-Corruption Prosecutorial Taskforce. Announced on March 20, 2025 by the U.K.’s Serious Fraud Office (SFO), the taskforce is designed to deepen cooperation among these three countries on bribery and corruption investigations—at a time when the Trump Administration is reshaping the United States’ approach . . .
For multinational companies, this shift reinforces a critical message: anti-bribery compliance cannot be paused simply because U.S. enforcement is in a state of transition. The U.K. Bribery Act, France’s Sapin II, and Swiss anti-corruption laws all carry significant penalties for bribery, and each country has broad jurisdiction to prosecute foreign companies operating or headquartered in their territory. Importantly, these laws are not carbon copies of the FCPA and some penalize conduct that would not fall within scope of the FCPA.
Noting that “criminal enforcement of the FCPA by DOJ is only one risk of committing bribery abroad, and the global anti-corruption landscape is shifting,” the blog gives these recommendations:
– Companies that operate internationally should not limit their anti-bribery compliance efforts. European authorities appear to be filling the gap left by the pause in FCPA enforcement. Companies that scale back compliance efforts risk becoming easy targets for cross-border investigations.
– Expect more multi-agency investigations. Increased use of taskforces and JITs means that misconduct discovered in one country could quickly become the basis for enforcement elsewhere.
– Tailor your compliance program to multiple regimes. One-size-fits-all compliance may not satisfy the requirements of U.K., French, or Swiss authorities. Programs should be evaluated and adapted accordingly.
– Stay alert to future developments in the U.S. The Order pausing FCPA enforcement is a policy decision that may be rescinded by this or a subsequent administration and the FCPA is still a valid law. Further, the pause does not fully foreclose the possibility that an FCPA investigation can be initiated and carried through to an enforcement action, so long as it is approved by the Attorney General. In addition, misconduct which occurs during the current presidential administration may be prosecuted during the next administration.
Liz and I continue to post new items regularly on our “Proxy Season Blog” for TheCorporateCounsel.net members. In particular, we’ve covered a number of developments related to institutional investor voting policies applicable to 2025 annual meetings (cheers to Liz on these — they are not easy to track!) and to shareholder proposals. Here are some of the recent related entries:
Following that blog an easy way to stay in-the-know on shareholder proposals, engagement trends and more. Members can sign up to get that blog pushed out to them via email whenever there is a new post.
Dave and Liz recently shared helpful tariff-related disclosure considerations for upcoming 10-Qs. This H/Advisors Abernathy article has tips for navigating earnings and investor calls in these periods of unprecedented uncertainty. Generally, it stresses that management teams need to be nimble, provide detailed and precise information where they are able to and also be comfortable saying “we don’t know” when asked questions they shouldn’t be expected to have answers to. Here are some tips from the alert:
Ditch the “closely monitoring” and “wait and see” messages. Leadership must be able to answer detailed, pointed questions from investors and analysts. This is especially important if a company has substantial exposure and/or a complex global supply chain. Tackle the issue head on. Don’t wait for the question.
Ensure internal alignment and message consistency. Board directors should use the same talking points as the CEO and CFO, and the same goes for investor relations and government affairs. All must be consistent to avoid confusion with financial audiences and uncertainty with other stakeholders.
Deliver earnings and investor calls live – or be prepared to ditch any pre-recorded versions. Daily, if not hourly, news and market jolts mean messages may have to quickly change to be credible with audiences. Addressing pressing issues immediately instills confidence in management.
Tailor financial guidance to a specific situation. Adjust and augment disclosures if needed. Even if near-term expectations have not changed, longer-term outlooks may be nearly impossible to peg accurately. It’s acceptable to adjust guidance disclosures to reflect current circumstances. Outline underlying assumptions and key swing factors. Silence can be perceived as re-affirming.
Talk about operational changes being considered or implemented – to a point. Focus on options rather than disclosing specific long-term plans, given that tariffs could be diluted or reversed if Trump strikes deals. It’s also OK to acknowledge what level of tariff in a certain country the business can sustain – and what it can’t.
On the compliance front, this CFA Institute post reminds us that companies are unlikely to adjust out the impact of tariffs in their non-GAAP numbers. It notes that tariffs are generally “normal, recurring, cash operating expenses necessary to operate a business, especially if that business already has an established history of paying tariffs.”
I would add that companies should be especially mindful of the Reg. FD risks posed by private meetings in these periods of uncertainty. Private reaffirmation of earnings guidance even shortly after a public earnings announcement may not be appropriate with the current pace of change. Be wary of investor “one-on-ones” having a different tone than recent public statements or providing “additional color.” Companies might be finding themselves following a “no comment” policy more often than usual or making more frequent public disclosures to accommodate private meetings.