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CEOs, Your FB Posts Matter

In the latest instance of social media and the law converging in unexpected ways, Reed Hastings, CEO of Netflix, may have run afoul of the Securities and Exchange Commission?ÇÖs regulations with a Facebook post he made this summer.?á Hastings?ÇÖ post read: ?á?Ç£Netflix monthly viewing exceeded 1 billion hours for the first time ever in June.?Ç¥?á Hastings, who has over 200,000 followers, very well might have intended the post to be a public announcement of the company?ÇÖs success since even the most unsophisticated of users knows that Facebook postings can be potentially made public. The potential securities concern, however, is not simply where Hastings posted his comment, but that his posting likely did not comply with the SEC?ÇÖs requirements for disclosure of company information. Hastings?ÇÖ post may have violated 17 C.F.R. ?º?á243.100, better known as Regulation FD (the ?Ç£FD?Ç¥ for Fair Disclosure).?á Regulation FD prohibits an issuer or any person acting… Continue Reading

IRS Issues Proposed Rules for New Medicare Tax on High Wage Earners?ÇÖ Net Investment Income; Whether Tax Applies to 404(k) Dividends is Unclear

The U.S. Internal Revenue Service (?Ç£IRS?Ç¥) recently issued proposed regulations regarding a new 3.8 percent Medicare tax on the ?Ç£net investment income?Ç¥ of high wage earners ($200,000 for single filers, $250,000 for joint filers, and $125,000 for married persons filing separately), effective January 1, 2013.?á Under the proposed regulations, net investment income includes income from interest, dividends, annuities, royalties, and rents, less any allowable deductions.?á Notably, the proposed regulations exclude from net investment income distributions from most tax-favored retirement plans, such as those described in Internal Revenue Code (?Ç£Code?Ç¥) sections 401(a), 403(a), 403(b), 408, 408A, or 457(b).?á Yet, the proposed regulations did not directly address whether 404(k) dividends paid under an Employee Stock Ownership Plan (?Ç£ESOP?Ç¥), including a 401(k) plan with an ESOP component, would be included in net investment income. Code section 404(k) permits plan participants, to the extent provided under the plan, to elect to receive dividends on… Continue Reading

January 2013