Facebook Law Firm Fenwick & West Wins ‘Global’ SEC Exemption

Fenwick & West LLP, the law firm representing Facebook Inc. in its initial public offering, won an exemption that will reduce reporting requirements for companies issuing a class of restricted stock to employees, directors and some consultants.

The exemption, granted by the Securities and Exchange Commission in a letter yesterday, concerns “restricted stock units,” representing the right to receive common stock if “certain conditions” are met before they expire, according to Fenwick & West’s Feb. 7 request sent to the SEC.

Fenwick & West Chairman Gordon Davidson said yesterday in an interview that the SEC’s ruling offers “globally applicable relief” for companies. The rule means restricted stock unit plans won’t trigger registration requirements if they are awarded to more than 500 employees, Davidson said.

Without such exemptions, Davidson said, companies with more than 500 shareholders would subject to the same regulatory reporting requirements as publicly traded companies. Fenwick & West won such an exemption for Facebook in 2008, he said.

“Based on the facts presented,” the SEC’s Division of Corporation Finance “will not object if a company does not comply with the registration requirements” based on Fenwick & West’s explanation of a “written compensatory equity incentive plan,” according to the SEC’s letter. “Any different facts or conditions might require the division to reach a different conclusion.”

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