Corporate & Securities Law

US Manufacturers Ask Supreme Court to Apply Efficient Market Theory to Loss Causation Element of Rule 10b-5

Posted on December 28, 2010
The federal courts should apply the efficient market theory underlying the fraud-on-the-market presumption equally to both the reliance and loss causation elements of Rule 10b-5, said the National Association of Manufacturers in an amicus brief filed with the US Supreme Court...

Congress Amends Dodd-Frank to Provide Fix for Full FDIC Protection for Lawyer Trust Accounts

Posted on December 27, 2010
Congress has passed legislation, HR 6398, 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...

In letter to SEC and Fed, Rep. Brad Miller Warns that Qualified Residential Mortgage Exception Could Swallow Dodd-Frank?s 5% Skin in the Game Mandate

Posted on December 26, 2010
A leading member of the House Financial Services Committee has asked the SEC to carefully craft rules for the qualified residential mortgage exception to the Dodd-Frank risk retention requirements for securitized mortgages lest the exception swallow the five percent skin in the game provision...

Congress Passes Legislation Mandating Accountability and Performance at Federal Agencies

Posted on December 24, 2010
Congress has passed landmark, bipartisan legislation requiring federal agencies to set clear goals that can be measured and reported to Congress and the American people in a more transparent way. The Government Performance and Results Modernization Act (HR 2142) calls on federal agencies to identify overlapping federal programs and requires more focused efforts to identify potential taxpayer savings...

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Senior Global Regulators Report that Sound Corporate Governance Is Key to Effective Risk Appetite Framework for Firms

Posted on December 23, 2010
A consortium of global senior regulators, including the SEC, the Fed, BaFin, and the UK and Japanese FSAs, have concluded that financial firms that most effectively implement a risk appetite framework are those that create a strong corporate governance culture involving the engagement of the board and senior management and distinctive mandates and duties at each stage of governance...

Corporate Secretaries Society Says SEC Proposed Whistleblower Rules Could Undermine Corporate Compliance Programs

Posted on December 23, 2010
The rules proposed by the SEC to implement the Dodd-Frank whistleblower provisions could undermine corporate compliance programs, in the view of the Society of Corporate Secretaries and Governance Professionals. In a letter to the SEC, the Society suggested modifications in the proposal that are intended to strike the proper balance in preserving the purposes of effective corporate compliance programs while also fulfilling the legislative mandate to maximize the submission of high-quality tips and enhance the utility of the information reported to the Commission...

Incoming Chair of House Oversight Subcommittee Might Introduce Legislation Delaying Dodd-Frank Regulations

Posted on December 22, 2010
Congressman Randy Neugebauer (R-TX), the incoming Chair of the House Financial Services Subcommittee on Oversight and Investigations, might introduce legislation to delay for one year the implementation of some provisions of the Dodd-Frank Act, presumably including derivatives rulemaking mandates...

President Signs Legislation Modernizing Federal Tax Code Treatment of SEC-Regulated Investment Companies

Posted on December 22, 2010
President Obama signed today bi-partisan legislation modifying and updating federal tax code provisions pertaining to SEC-regulated investment companies in order to make them better conform to, and interact with, other aspects of the tax code and applicable federal securities laws...

Law Professors Join SEC in Urging Supreme Court to Reject Bright Line Test for Rule 10b-5 Materiality

Posted on December 21, 2010
A group of law and business professors have filed an amicus brief urging the US Supreme Court to reject a bright line test for Rule 10b-5 materiality and retain the current fact specific test that federal courts and the SEC have used for years to determine materiality...

SEC Censures Outside Auditor of NASDAQ Shell Company that Owned Mainland China Manufacturer

Posted on December 21, 2010
The SEC censured the outside auditor of a NASDAQ-listed shell company with ownership of a Mainland China manufacturer of energy savings products for failing to exercise professional skepticism and take due professional care with regard to revenue recognition and failing to consider the reasonableness and consistency of management?s response to inquiries concerning significant sales transactions...

Business Coalition Supports Chambliss-Corker Amendment to Nail Down Commercial End-User Exemption from Dodd-Frank Derivatives Mandate

Posted on December 19, 2010
In a letter to the US Senate, the Coalition of Derivatives End Users urged support for the Chambliss-Corker Amendment to legislation amending the Dodd-Frank Act, which would clarify that derivatives trades by commercial end-users are not subject to margin requirements...

Incoming Chair of House Capital Markets Subcommittee Wants to Reform GSEs and Create US Covered Bond Market

Posted on December 18, 2010
Rep. Spencer Bachus (R-AL), incoming Chair of the House Financial Services Committee, has named Rep. Scott Garrett (R-NJ) to chair the subcommittee with jurisdiction over the financial markets, the SEC, the NYSE, NASD, the SROs, and the government -sponsored enterprises, such as Fannie Mae and Freddie Mac...

Rep. Bachus Hints at Legislation to Delay SEC-CFTC Implementation of Dodd-Frank Derivatives Regime as Concerns Grow

Posted on December 18, 2010
The incoming Chair of the House Financial Services Committee has voiced concern over the direction and pace of the SEC-CFTC efforts to implement the derivatives regulatory regime mandated by the Dodd-Frank Act. In a letter to SEC Chair Mary Schapiro and CFTC Chair Gary Gensler, Rep...

State of Delaware Amicus Brief Says SEC Proxy Access Rule Runs Afoul of Principles of Stockholder Choice and Private Ordering

Posted on December 17, 2010
The SEC?s proxy access rule is completely contradictory to Delaware law governing proxy access and denies stockholders their state law right to freely amend proxy access bylaws, according to the State of Delaware. In an amicus brief filed in an action in the DC Circuit Court of Appeals seeking to have the proxy access rule vacated, the State of Delaware contended that the SEC?s attempt to facilitate shareholders? effective exercise of their traditional state law rights to nominate directors and cast their votes for nominees fails because it ignores Delaware?s policy of allowing stockholders, through their ability to amend bylaws, to determine how any particular corporation will protect the rights of stockholders in the election process...

Congress Passes Legislation Modernizing Federal Tax Code Treatment of SEC-Regulated Investment Companies

Posted on December 16, 2010
Congress has passed bi-partisan legislation modifying and updating federal tax code provisions pertaining to SEC-regulated investment companies in order to make them better conform to, and interact with, other aspects of the tax code and applicable federal securities laws...

Mutual Fund Industry Strongly Supports Legislation Modernizing Federal Tax Code Treatment of Funds

Posted on December 16, 2010
The mutual fund industry strongly supports the legislation passed by Congress modernizing the tax treatment of mutual funds and other investment companies regulated by the SEC. In a statement, the Investment Company Institute said that the Regulated Investment Company Modernization Act (HR 4337) will make funds more efficient and reduce the need for investors to file amended tax returns related to their investments...

Nebraska No-Action Letter Interprets "Institutional Buyer" Definition

Posted on December 16, 2010
Legal counsel for the Nebraska Department of Banking and Finance, responding to a no-action letter request, interpreted the definition of an "institutional buyer" specified by statutory exemption at Section 8-1111(8) of the Nebraska Securities Act and elaborated upon in a 1985 interpretative opinion (No...

Mutual Fund Industry Opposes Applying SEC Proxy Access Rule to Funds

Posted on December 16, 2010
The Investment Company Institute has joined the effort to vacate the proxy access rule adopted by the SEC. In an amicus brief filed in the U.S. Court of Appeals for the District of Columbia, the ICI, joined by the Independent Directors Council, focused exclusively on the application of the rule to registered investment companies and urged a panel of the court to vacate the proxy access rule as it applies to funds...

CALIFORNIA Amends Corporation Code

Posted on December 15, 2010
Senate Bill No. 1155 amends, adds and repeals Corporation Code provisions relating to capital access companies effective January 1, 2011.Sec. 25102-Transactions exempted from qualification requirement. Language has been added to subsection (p) exempting an offer or sale of nonredeemable securities to accredited investors by a person licensed under the Capital Access Company Law provided that all purchasers either (1) have a preexisting personal or business relationship with the offeror or any of its partners, officers, directors, controlling persons, or managers, or (2) by reason of their business or financial experience or the business or financial experience of their professional advisers who are unaffiliated with and who are not compensated by the issuer or any affiliate or selling agent of the issuer, directly or indirectly, could be reasonably assumed to have the capacity to protect their own interests in connection with the transaction...

Tennessee Sets Forth Form ADV New Part 2 Filing Procedures

Posted on December 14, 2010
Up until January 1, 2011, investment adviser applicants registering for the first time in Tennessee may electronically submit old Part II or new Part 2 of Form ADV through the IARD. Similarly, registrants may file Form ADV amendments through the IARD using either old Part II or new Part 2...

NASAA Requests Comments on Model Rule on Private Fund Adviser Registration and Exemption

Posted on December 14, 2010
The North American Securities Administrators Association (NASAA) is seeking public comments on a proposed model rule governing the registration and reporting requirements for advisers to private funds.In its request for comments, NASAA noted that the Dodd-Frank Wall Street Reform and Consumer Protection Act has made substantial changes to the regulation of investment advisers to hedge funds and other private funds...

Senate Passes Legislation Modernizing Federal Tax Code Treatment of SEC-Regulated Investment Companies

Posted on December 14, 2010
The Senate passed by unanimous consent bi-partisan legislation modifying and updating federal tax code provisions pertaining to investment companies in order to make them better conform to, and interact with, other aspects of the tax code and applicable securities laws...

Comments to EU Corporate Governance Proposals Emphasize Strong Board Risk Committees and Chief Risk Officer

Posted on December 13, 2010
A separate and mandatory board risk committee is a good corporate governance practice, said commenters on a European Commission proposal, but the requirement for a risk committee should be proportionate and care should be taken to avoid diluting the responsibilities of the whole board for risk oversight...

Sen. Warner Drafting Legislation Mandating Regulatory Pay as You Go

Posted on December 13, 2010
Senator Mark Warner (D-Va), a key member of the Banking Committee, is drafting legislation requiting federal regulatory agencies to eliminate one outdated or duplicative regulation of the same approximate economic impact for each new rule they want to enact...

Federal Appeals Court Overturns Conviction of CFO for Lying to the Company?s Independent Auditors

Posted on December 13, 2010
The conviction of a chief financial officer for lying to the company?s outside independent auditor has been overturned by a Ninth Circuit panel which found that the government did not sufficiently prove that the CFO willfully and knowingly made false statements to PwC, the outside auditor...

Hong Kong Appeals Court Will Not Allow Criminal Law Principles to Be Imported into SFC Disciplinary Proceedings

Posted on December 11, 2010
A Hong Kong appeals court has ruled that it is not appropriate for the tribunal reviewing disciplinary decisions of the Securities and Futures Commission to guide itself by analogy to criminal proceedings. Criminal procedures are not applicable to SFC disciplinary proceedings, said the court...

Securities and Futures Associations Ask the SEC and CFTC to Extend Comment Periods on Proposed Regulations Implementing Dodd-Frank Derivatives Regime

Posted on December 11, 2010
While recognizing that the Dodd-Frank Act imposes short and strict deadlines on the SEC and CFTC to adopt regulations implementing the legislation?s derivatives provisions, and commending the agencies for diligence with regard to this unprecedented endeavor, securities and futures trade associations have asked the SEC and CFTC to extend the comment period of the rule proposals so that a more coordinated response can be crafted...

President Obama Will Begin `"Conversation" with Congress Next Year to Overhaul the Federal Tax Code

Posted on December 11, 2010
In a recent interview with NPR, President Barack Obama said that he will begin a "conversation" with Congress in 2011 about doing a complete overhaul of the federal tax code. While not agreeing with every proposal made in a recent report by his Fiscal Reform Commission, the President did endorse the Commission?s proposals to simplify the Code, eliminate loopholes, deductions, and exemptions, as well as reforming the Code so that corporations, partnerships, mutual funds, and other enterprises can have a more efficient way of doing business...

CAQ Urges Caution with European Commission Proposals to Reform the Financial Statement Audit Process

Posted on December 11, 2010
The Center for Audit Quality takes a cautious view of European Commission proposals to reform the financial statement audit process to enhance the role of auditors, eliminate conflicts of interest by mandating rotation of audit firms and ending the issuer pay model...

In Letter to SEC, Senator Cardin Clarifies Legislative Intent behind Dodd-Frank Provision Requiring Disclosure by Resource Extraction Companies

Posted on December 10, 2010
With the SEC readying rule proposals to implement Section 1504 of the Dodd-Frank Act, Senator Ben Cardin, a co-author of the provision, gave the Commission further context behind the provision in an effort to inform the rulemaking process. In a letter to the SEC, Senator Cardin said that the purpose of Sec...

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