Corporate & Securities Law

European Commission Proposes Liquidation Authority for Financial Firms Similar to Dodd-Frank Title II

Posted on January 11, 2011
The European Commission has begun a consultation leading to legislation on a liquidation authority to wind down failing financial firms similar to Title II of the Dodd-Frank Act, but with an important difference. The consultation is a significant step in delivering the commitment made to the G-20 to ensure that authorities across the EU have the powers and tools to restructure or resolve all types of financial institution in crisis, without taxpayers ultimately bearing the burden...

SEC Proposed Antifraud Rule for Security-Based Swaps Exceeds Dodd-Frank?s Authorization Says Hedge Fund Association

Posted on January 10, 2011
SEC proposed Rule 9j-1 to prevent fraud and manipulation in the trading and exercise of security-based swaps exceeds the authority granted the Commission under Section 763(g) of the Dodd-Frank Act, said a global hedge fund association, and go beyond Congress?s delegated authority in extending the prohibitions of Rule 10b-5 to ongoing obligations between the execution and extinguishment of a security-based swap contract which do not fall within the statutory definitions of purchase and sale...

PCAOB Enters Agreement with U.K. Regulator to Share Auditor Information

Posted on January 10, 2011
PCAOB Enters Agreement with U.K. Regulator to Share Auditor InformationThe Public Company Accounting Oversight Board (PCAOB) has entered into a statement of protocol with the U.K. Professional Oversight Board (POB) to share information regarding auditors that practice in both the U...

Securities Industry Urges Cautious Recognition of Market Realities in Implementing Dodd-Frank Volcker Rules

Posted on January 10, 2011
The securities industry has asked the SEC and other federal financial regulators to implement the Volcker provisions of Dodd-Frank in a manner that is firmly grounded in market realities. Based on a recent SIFMA study, the industry said that regulators must be able to distinguish between prohibited proprietary trading and activities permitted under the Volcker provisions, which can vary substantially across asset classes, market practices, and market conditions...

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Supreme Court Oral Argument in Materiality Case Discusses Deference Due to SEC

Posted on January 10, 2011
As the US Supreme Court considered at oral argument the materiality element of Rule 10b-5 for the first time in decades, the Assistant US Solicitor General contended that the SEC is due a significant deference based on its long-standing historical practice in applying the materiality standard, which is part of its own Rule 10b-5, and its special expertise in knowing what a reasonable investor would want to know based upon its experience in this area...

SEC Proposals Implementing Dodd-Frank Hedge Fund Mandates Provide Important Clarifications for Foreign Fund Exemptions

Posted on January 08, 2011
The hedge fund and private equity fund registration requirements of Dodd-Frank, as implemented by the SEC, will be a ``major compliance headache?? for many EU private equity firms, in the opinion of the European Private Equity & Venture Capital Association (ECVA)...

Hedge Fund Industry Asks CFTC for Guidance in Regulations Prohibiting Disruptive Trading Practices under Dodd-Frank

Posted on January 07, 2011
Dodd-Frank Section 747, which authorizes the CFTC to prohibit disruptive trading practices, is vague and vulnerable to constitutional challenge by market participants, in the view of the hedge fund industry, and the CFTC should provide clarity or risk having the statute undermine the Commission?s enforcement efforts to deter price manipulation...

Hedge Fund Industry Urges SEC and CFTC to Find a Market Solution to Uniform Description Standards for Financial Derivatives

Posted on January 06, 2011
Given the dynamic nature of derivatives markets, noted the Managed Funds Association, the ultimate manner in which uniform computer readable description standards are developed for financial derivatives should be left to the market. In a letter to the SEC and CFTC, the MFA said that the Commissions should act as facilitators in a principles-based and collaborative approach to develop the appropriate method to implement standards for computer readable descriptions in derivatives markets...

Directors Cannot Adopt Bylaw Making Delaware Chancery Court Exclusive Venue for Derivative Actions

Posted on January 06, 2011
In a case of first impression, a federal judge (ND CA) has ruled that corporate directors cannot control the venue for shareholder derivative actions brought against them by adopting a bylaw purporting to require that such cases be filed in the Delaware Chancery Court...

Washington State Adopts Dodd-Frank Accredited Investor Definition

Posted on January 06, 2011
Washington State's accredited investor definition is amended, effective January 21, 2011, to exclude the value of an investor's primary residence from the $1 million net worth calculation to reflect the modification of the federal "accredited investor" definition under the Dodd-Frank Wall Street Reform and Consumer Protection Act...

Hawaii Temporary Reduced Fees Remain in Place in 2011

Posted on January 06, 2011
Hawaii's 2010 temporarily reduced fees for investment companies, dealers, salespersons, investment advisers and investment adviser representatives will remain in place through December 31, 2011.The reduced fees are as follows:* Investment companies (initial filing) $100 (renewal filing) $50* Dealers (initial application and renewal) $100* Investment Advisers (initial application and renewal) $50* Salespersons (initial application and renewal) $25* Investment Adviser Representatives (initial application and renewal) $25For additional information please see http://hawaii...

Missouri Proposes Aligning Rule 505 and 506 notice filing requirements with electronic Form D

Posted on January 06, 2011
Issuers intending to make a securities offering under Rule 505 or 506 of federal Regulation D would, under a proposed rule change by the Missouri Securities Division, file one paper copy of their SEC-filed electronic Form D, a $100 fee and a cover letter stating the date on which the first sale of securities occurred in Missouri or whether no sales have yet occurred in the State...

SEC Asks Supreme Court to Decide the Status of Rule 10b-5 Loss Causation at Class Certification Stage

Posted on January 05, 2011
At the invitation of the Supreme Court, the SEC filed an amicus brief asking the Court to resolve a split in the federal circuits over when a plaintiff in a securities fraud action relying on a fraud-on-the-market reliance presumption must demonstrate loss causation to obtain class certification...

In Letter to SEC, Hedge Fund Industry Opposes SRO for Investment Advisers

Posted on January 05, 2011
The hedge fund industry vigorously opposes an SRO for investment advisers. In a letter to the SEC, the Managed Funds Association said that an SRO for private fund managers would only perform a function that is already being performed effectively by the SEC and could even diminish the quality of regulation of fund managers...

German Legislation Implements UCITS IV Directive for Mutual Funds; Tax Changes Also Made

Posted on January 04, 2011
Germany has passed legislation implementing the EU directive on investment funds known as UCITS, undertakings for collective investment in transferable securities. The UCITS IV Directive aims to increase the efficiency of the investment fund business as well as to create a competitive framework for fund product providers...

New EU Regulatory Framework for Securities and Banking Begins Operating in 2011

Posted on January 04, 2011
With the advent of 2011, a new EU regulatory framework for securities and banking has been born, including a European Systemic Risk Board similar to the Financial Stability Oversight Council created by the Dodd-Frank Wall Street Reform and Consumer Protection Act...

CAQ Urges SEC to Completely Exclude Outside Auditors from Dodd-Frank Whistleblower Awards

Posted on January 04, 2011
The Center for Audit Quality has asked the SEC to exclude independent auditors from whistleblower awards when their reporting is based on information about the performance of services by the audit firm related to an audit engagement required under the securities laws...

NASAA Objects to Outsourcing Adviser Regulation to SROs

Posted on January 04, 2011
In a comment letter to the SEC, the North American Securities Administrators Association (NASAA) has opposed the designation of one or more self-regulatory organizations (SROs) for the purpose of enhancing the SEC's oversight of investment advisers. NASAA's comments came as the SEC undertakes the study required by Section 914 of the of the Dodd-Frank Wall Street Reform and Consumer Protection Act to assess the need for enhanced examination of and enforcement resources for investment advisers...

Japan FSA Sets Out Reform Plan to Enhance Investments and Entice Foreign Capital

Posted on January 04, 2011
The Japanese Financial Services Authority is set to aggressively implement an action plan for financial market growth that will include a review of accounting rules and internal control standards for small and medium-sized companies and the expansion of English language disclosure by foreign companies listing on Japanese exchanges...

Dutch Corporate Governance Monitor Says Supreme Court Ruling on Shareholder-Board Relations Calmed the Waters

Posted on January 03, 2011
A Netherlands Supreme Court ruling that a company?s management board can determine corporate strategy without involving the shareholders in advance of the decisions, and that the supervisory board is not obliged to mediate in disputes between the management board and shareholders, has calmed and clarified the vexing relationships between boards and shareholders...

NASAA Opposes Additional Exams for Advisory Personnel

Posted on January 03, 2011
The North American Securities Administrators Association (NASAA) has urged the SEC not to spend the agency's limited resources on developing additional qualification examinations for investment adviser personnel. In a comment letter to the SEC's Acting Director Division of Investment Management, Jennifer McHugh, on December 13, 2010, NASAA opposed a FINRA proposal concerning the development and implementation by the SEC of an investment adviser personnel qualification program...

SEC Approves PCAOB Risk Assessment Standards and Deflects General Attack on PCAOB Standard-Setting

Posted on January 03, 2011
The SEC has approved the PCAOB?s risk assessment standards, effective for audits of fiscal years beginning on or after December 15, 2010. The risk assessment standards are designed to benefit investors by enhancing the effectiveness of the auditor?s assessment of and response to the risks of material misstatement in an audit...

Revised UK Corporate Governance Code Mandates Risk Management But Declines to Require Risk Committees

Posted on January 02, 2011
The revised UK Corporate Governance Code contains a new principle stating that boards are responsible for determining the nature and extent of the significant risks they are willing to take in achieving their strategic objectives. However, the establishment of a board risk committee is optional, with the audit committee assuming risk management functions for companies that do not set up risk committees...

Senator Durbin Defends Dodd-Frank Intercharge Fee Provisions as Concerns over Sec. 1075 Mount

Posted on January 02, 2011
On the last day of the 111th Congress, Senator Dick Durbin (D-Il) strongly defended the interchange fee reform provisions of Dodd-Frank Section 1075 against a growing chorus of concern and some criticism. Describing the current interchange system as a price-fixing scheme, the senator, who authored Section 1075, said that he is ``hunkered down and ready for the fight that is coming...

Audit Firms Urge SEC Not to Extend 404(b) Exemption Beyond Dodd-Frank Relief for Companies with up to $75 Million Float

Posted on January 01, 2011
Citing the beneficial effect of PCAOB Audit Standard No. 5, global audit firms have urged the SEC not to recommend extending the exemption from Sarbanes-Oxley Section 404(b) auditor attestation of internal controls to companies with market capitalization between $75 and $250 million...

Thirteen Senators Tell Fed of Concerns with Implementation of Dodd-Frank Interchange Fee Provisions

Posted on December 31, 2010
Thirteen US Senators, including leading members of the Banking Committee have expressed concern with the consequences of replacing a market-based system for debit card acceptances with a government-controlled system pursuant to Section 1075 of the Dodd-Frank Act...

President Signs Legislation Amending Dodd-Frank to Provide Full FDIC Protection for Lawyer Trust Accounts

Posted on December 30, 2010
The President signed legislation yesterday amending Section 343 of the Dodd Frank Act to assure continued full FDIC protection for lawyer trust accounts. The current Term Asset Guarantee program under which the FDIC guarantees the total amount of client funds maintained in lawyer trust accounts expires December 31, 2010...

Rep. Bachus Urges Fed to Go Slow on Regulations Implementing Dodd-Frank Interchange Fee Provision

Posted on December 30, 2010
The incoming Chair of the House Financial Services Committee has voiced concern over pace of the Fed?s efforts to implement the derivatives regulatory regime mandated by the Dodd-Frank Act. In a letter to Fed Chair Ben Bernanke, Rep. Spencer Bachus (R-AL) questioned the feasibility of the required nine-month deadline under Section 1075 of Dodd-Frank to adopt rules on debit card interchange fees and routing...

Former SEC Commissioners Urge Supreme Court to End Circuit Split and Apply Efficient Market Theory to Loss Causation Element of Rule 10b-5

Posted on December 30, 2010
Three former SEC Commissioners and a former General Counsel have asked the US Supreme Court to resolve the split among the federal courts of appeal and rule that the efficient market theory that underlies the fraud-on-the-market reliance element of Rule 10b-5 must be equally applied to the antifraud rule?s loss causation and materiality elements...

Hedge Fund Industry Asks SEC to Require Fund Managers to Disclose Information on Say on Pay Only When They Instructed the Share Voting

Posted on December 29, 2010
Hedge fund managers and other institutional managers should be required to report information to the SEC on say-on-pay voting only when they have instructed an intermediary to vote their shares, according to the hedge fund industry. In a letter to the SEC on the Commission?s proposal requiring institutional investment manager with voting power over a vote on executive compensation to report voting information on Form N-PX, the Managed Funds Association said that reporting information with respect to such non-votes is not required by the Dodd-Frank Act, would be of minimal use to investors, and would be burdensome for managers...

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