Conflict-of-Interest Disclosure

What this video covers

• When the disclosure obligation applies: opinion to the board plus "knows or has reason to know" it will reach public shareholders, usually through proxy statements, prospectuses, or tender-offer documents
• Why "knows or has reason to know" is broader than explicit knowledge, and how a deal headed to a public shareholder vote satisfies this standard automatically
• How to map the big three compensation and relationship disclosures to their item numbers: item one (success fee), item two (other contingent payments including stapled financing), and item three (material relationships)
• Why the two year lookback in item three applies to all parties on both sides of the transaction, not just the company receiving the opinion
• The conditional nature of item four (independent verification) versus the absolute yes-or-no requirements of items five (fairness committee approval) and six (insider-compensation comparison)
• Whether the opinion expresses a view on the fairness of compensation to officers, directors, or employees relative to compensation to public shareholders under item six
• Why the FINRA fairness opinion rule requires disclosure of conflicts rather than prohibiting them, and who makes the final decision to retain a conflicted advisor