Jim Hamilton's World of Securities Regulation: Corporate & Securities Law

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Corporate & Securities Law

Jim Hamilton's World of Securities Regulation

Opines on every level of securities regulation (federal, state, international, theoretical) covering market players of all types (e.g., accountants, broker-dealers, foreign issuers, hedge funds, market manipulators) who engage all sorts of transactions and activities (acquisitions, financial reporting, private placements, pyramid schemes). Highlights issues of particular importance to securities lawyers and their clients with emphasis on SEC rulemaking, industry trends, and the many curiosities that inhabit this world.
By Jim Hamilton

Post Frequency: 15.3/day

Last Entry: April 01, 2011 at 16:29:00

Sen. Dodd Describes Dodd-Frank Mandated SEC Study on Broker and Adviser Standard of Care

Posted on September 07, 2010
Section 913 of the Dodd-Frank Act requires the SEC to conduct study of the standard of care for brokers and advises, as well as authorizing the SEC to adopt a uniform federal fiduciary duty for brokers and advisers. Among other things, Section 913 requires a review of the effectiveness, frequency and duration of the regulatory examinations of brokers and investment advisers...

Legislative History Cautions FDIC on Taking Lien on Insurance Company under Dodd-Frank Liquidation Authority

Posted on September 06, 2010
Title II of the Dodd-Frank Act establishes an orderly liquidation authority for large faining financal firms that threaten US financial stability, with the FDIC as receiver. Senator Dodd said that Section 204(d) of the Dodd-Frank Act contemplates that the FDIC, as receiver, may take a lien on assets of a covered financial company or a covered subsidiary...

SEC and CFTC Chairs Participate in FDIC Roundtable on Dodd-Frank Resolution Authority Title

Posted on September 06, 2010
Title II of the Dodd-Frank Act establishes an orderly liquidation authority to unwind complex systemically important financial firms whose failure could put the entire financial system in jeopardy. The FDIC is the designated receiver of such a financial firm...

UK Regulators Move to More Deeply Embed Auditors in Prudential Regulation, Professional Skepticism Targeted

Posted on September 05, 2010
As markets attempt to recover from the financial crisis, the UK?s financial and audit regulators have embarked on an initiative to involve the outside auditor more deeply in effective prudential regulation based on a belief that quality financial reporting and quality audit is the key to increasing market confidence...

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EU Reaches Deal on New Supervisory Authorities for Securities and Banking and Systemic Risk Board as part of New Regulatory Regime

Posted on September 04, 2010
European authorities have reached a consensus on legislation creating a European financial regulatory framework with separate regulators for securities, banking and insurance, as well as a European Systemic Risk Board similar to the Financial Stability Oversight Council created by the Dodd-Frank Wall Street Reform and Consumer Protection Act...

European Commission Gives Green Light to Exchange of Audit Working Papers with PCAOB

Posted on September 04, 2010
The European Commission has formally recognized the adequacy of the auditor oversight of the PCAOB to fulfill the requirements of the EU?s Audit Directive and, particularly, the Board?s capacity to enter into reciprocal working arrangements with EU states on the exchange of audit working papers and other relevant documents...

Oregon Temporarily Adopts Dodd-Frank "Accredited Investor" Definition

Posted on September 03, 2010
The "accredited investor" definition in the Dodd-Frank Wall Street Reform and Consumer Protection Act that excludes the value of the primary residence from the $1 million net worth calculation was temporarily adopted by the Oregon Division of Finance and Corporate Securities from August 3, 2010 through January 30, 2011.

California To Mandate SEC's Newly Adopted Part 2 of Form ADV for IAs in 2011

Posted on September 03, 2010
Investment adviser applicants for licensing in California must include the SEC's newly adopted Part 2 of Form ADV with their applications submitted electronically through the IARD on or after January 1, 2011. Similarly, California-licensed investment advisers will need to include new Part 2 with their next annual renewal filing of Part 1 of Form ADV through the IARD on or after January 1, 2011 that is required within 90 days of their fiscal year-end...

SEC Cautions Rating Agencies That It Will Use Enhanced Extraterritorial Jurisdiction Given by Dodd-Frank

Posted on September 02, 2010
The SEC has issued a report cautioning credit rating agencies that, where appropriate, the Commission will utilize Section 929P of the Dodd-Frank Act, which grants jurisdiction for SEC enforcement actions alleging otherwise extraterritorial fraudulent misconduct that involves significant steps or foreseeable effects within the United States...

SIFMA Comments to SEC on Dodd-Frank Uniform Fiduciary Standard for Brokers and Advisers

Posted on September 02, 2010
In a comment letter to the SEC, SIFMA said that Dodd-Frank driven SEC regulations establishing a uniform federal fiduciary standard for brokers and advisers should be broadly guided by the dual principles of individual investor protection and individual investor choice...

SEC and CFTC Consider if Lynch-Type Ownership Caps Can Mitigate Conflicts of Interest

Posted on September 01, 2010
There was congressional concern throughout the process of passing Dodd-Frank that, with derivatives trading required to be conducted through clearinghouses, large financial institutions would own and control the clearinghouses and effectively set rules for their own derivatives deals...

Dodd-Frank Legislative History Reveals Great Importance of Treasury Study of GSEs

Posted on August 31, 2010
A Dodd-Frank mandated Treasury study on Fannie Mae and Freddie Mac is almost certain to be the first step in federal legislation to reform government-sponsored enterprises and the secondary mortgage market. The study, which must be submitted to Congress by the end of January 2011, was mandated by an amendment offered by Senator Chris Dodd, Chair of the Banking Committee, codified as section 1074, as the Senate was beating back an amendment offered by Senator John McCain that would have either ended the conservatorship of Fannie and Freddie or disbanded them with no reasonable alternative offered...

SEC-CFTC Roundtable Highlights Lynch Issues of Control and Governance in Crafting Dodd-Frank Derivatives Regulations

Posted on August 31, 2010
As the SEC and CFTC begin the momentous task of adopting regulations to implement the derivatives provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act, the conflict of interest and governance and control issues raised by Rep. Stephen Lynch (D-MA) throughout the legislative process will be a major part of regulatory consideration...

Florida Adopts Review of Dealer, Issuer-Dealer, Associated Person and Investment Adviser Applicants' Law Enforcement Records

Posted on August 30, 2010
The law enforcement records of applicants for dealer, issuer-dealer, associated person and investment adviser registration who have been found guilty of, or who have pled guilty or nolo contendere to, certain crimes will be reviewed by the Office of Financial Regulation to determine their eligibility to register in Florida...

SEC-CFTC Roundtable Illuminates Major Issues in Implementing Derivatives Provisions of Dodd-Frank

Posted on August 30, 2010
An SEC-CFTC roundtable on implementing the derivatives provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act discussed the very important and difficult issues of access to derivatives clearing organizations, clearinghouses, and security-based and non-security based swap execution facilities...

SEC-CFTC Roundtable on Dodd-Frank Derivatives Regulations Focuses on Governance and Risk Management

Posted on August 30, 2010
At the recent CFTC-SEC roundtable, CFTC Director of the Division of Clearing and Intermediary Oversight Radhakkrishnan said that Dodd-Frank mandates clearing as many OTC derivatives as possible and bringing transparency to these products through the listing of them on exchanges and swaps execution facilities...

Volcker Board Proposes Changes in Taxation of Investment Funds as Part of Reforming Federal Tax Code

Posted on August 29, 2010
A report issued by the Volcker Tax Advisory Board proposes the reform of mutual fund and carried interest taxation within the scope of a broad simplification of how the Internal Revenue Code taxes capital gains. The report comes against the backdrop of pending but stalled legislation that would reform the carried interest taxation of hedge fund and other asset managers...

Keeping the Dream Alive

Posted on August 28, 2010
I once heard Alabama federal district judge (later named to the 11th Circuit Court of Appeals) Frank Johnson Jr. caution people not to think that federal judges decide momentous civil rights cases every day. Most of the work of federal judges, he said, consists of interpreting arcane federal regulations and US code provisions...

Hong Kong Securities Regulator Calls for Internationally Harmonized Hedge Fund Regulation

Posted on August 27, 2010
A senior official of the Hong Kong Securities and Futures Commission emphasized that the regulation of hedge funds must be globally harmonized in order to prevent regulatory arbitrage and protectionist entry barriers. In remarks at a seminar, SFC Executive Director Alexa Lam said that large financial firms are internationally active, operating through affiliates in many countries, and financial markets themselves are increasingly linked...

Dodd-Frank Volcker Provisions Sponsor Explains GSE Permission

Posted on August 26, 2010
The Volcker provisions of the Dodd-Frank Act authorize banks and non-bank financial companies to purchase or sell government obligations, including government-sponsored enterprise (GSE), obligations. According to Senator Jeff Merkley, a co-author of the provisions, Dodd-Frank does this on the grounds that such products are used as low-risk, short-term liquidity positions and as low-risk collateral in a wide range of transactions, and so are appropriately retained in a trading account...

SEC Adopts Proxy Access for Significant Long-Term Shareholders

Posted on August 25, 2010
Armed with specific congressional authorization, the SEC has adopted shareholder proxy access, which is shorthand for a framework of rules under which a shareholder may require the company to include in its proxy statement and proxy card a person nominated by the shareholder, and not by the board, for election to the board...

Dodd-Frank Legislative History Reveals What is Expected of SEC and CFTC REgarding Block Trades

Posted on August 24, 2010
Block trades are transactions involving a very large number of shares or dollar amount of a particular security or commodity and which transactions could move the market price for the security or contract, and are very common in the securities and futures markets...

Sen. Lincoln Explains Derivatives Clearing Provisions of Dodd-Frank

Posted on August 24, 2010
The mandatory clearing and trading of swaps and security-based swaps, along with real-time price reporting, is at the heart of swaps market reform. Under the Act, swaps and security-based swaps determined to be subject to the mandatory clearing requirement by the SEC and CFTC would also be required to be traded on a designated contract market, a national securities exchange, or new swap execution facilities or security-based swap execution facilities...

SIFMA Provides Best Practices on Dodd-Frank Provision Requiring Broker Notification of Short-Sales

Posted on August 22, 2010
The Dodd-Frank Act, Sec, 929X, requires brokers to provide notice to their customers that they may elect not to allow their fully paid securities to be used in connection with short sales. And a broker using a customer?s securities in connection with short sales must provide notice to its customer that the broker may receive compensation in connection with lending the customer?s securities...

Sen. Collins Explains Intent of Dodd-Frank Leverage Requirements

Posted on August 20, 2010
According to Senator of Susan Collins, author of Section 171, it is the intent of Section 171(b)(7) to require the federal banking agencies, subject to the recommendations of the Financial Stability Oversight Council, to develop capital requirements applicable to insured depository institutions, depository institution holding companies, and nonbank financial companies supervised by the Federal Reserve Board that are engaged in activities that are subject to heightened standards under Section 120 of the Act...

Dodd-Lincoln Colloquy Says US Branches of Foreign Banks Treated the Same under Bank Push Out Provisions

Posted on August 20, 2010
In the rush to complete the House-Senate conference on the Dodd-Frank Act, there was a significant oversight made in finalizing section 716 as it relates to the treatment of uninsured U.S. branches of foreign banks. Under section 716, insured depository institutions must push out all swaps and security-based swaps activities except for specifically enumerated activities, such as hedging and other similar risk mitigating activities directly related to the insured depository institution?s activities...

Sen. Lincoln Says that Dodd-Frank Bank Push Out Provision Includes Mini-Volcker Rule

Posted on August 20, 2010
The bank push out provisions of Section 716 of the Dodd-Frank Act essentialy require banks to divest types of derivatives activities considered to carry the greatest risk, while allowing banks to retain the majority of thier low-risk derivatives activities on behalf of customers...

Delaware Supreme Court Orders Defunct Hedge Fund to Provide Names and Addresses of Limited Partners to Fund Investor

Posted on August 19, 2010
The Delaware Supreme Court has ruled that a limited partner of a defunct hedge fund had the right to obtain a list of the names and addresses of its fellow limited partners and that federal privacy regulations did not preempt this right. Thus, the en banc Court affirmed a Chancery Court order to the hedge fund to produce the list...

Key Senators Urge the SEC to Adopt Regulations Enhancing Off-Balance Sheet Disclosures

Posted on August 18, 2010
Six key Democratic Senators have urged the SEC to use its existing authority under Sarbanes-Oxley to require that companies write detailed descriptions of all their off-balance sheet activities in their annual Form 10-K reports and not just descriptions of those activities that are reasonably likely to affect the firm?s financial condition, as the regulations currently state...

Legislative History Clarifies Dodd-Frank Derivatives End User Exemption

Posted on August 17, 2010
The Dodd-Frank Act derivatives end user exemption gives commetcial end users the option, but not the obligation, to clear or not clear their swaps and security-based swaps that have been determined to be required to clear, as long as those swaps are being used to hedge or mitigate commercial risk...

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