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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

9th Circuit: Investors Could Not

Posted on July 30, 2009
9th Circuit: Investors Could Not Rely on Market IntegrityThe Affiliated Ute and fraud on the market reliance presumptions were unavailable to a plaintiff class making market manipulation claims, according to a 9th Circuit panel. The court also found no error in the decision by the district court not to recognize a presumption of reliance based on manipulations that allegedly destroyed the efficiency of the market and the reliability of the market?s price...

DC Circuit Sends SEC Back to the

Posted on July 30, 2009
DC Circuit Sends SEC Back to the Drawing Board on Fixed Indexed AnnuitiesBy Rodney Tonkovic, Wolters Kluwer Associate Writer-Analyst, and N. Peter RasmussenA D.C. Circuit appellate panel remanded the SEC's fixed index annuity rule, Securities Act Rule 151A, to the Commission for reconsideration...

House Passes Legislation Allowing

Posted on July 30, 2009
House Passes Legislation Allowing SEC to Sanction SRO OfficialsThe House has passed legislation, HR 2623, expressly authorizing the SEC to bring actions against persons formerly associated with a regulated or supervised entity, such as an investment company or an SRO, for misconduct that occurred during that association...

Expert Testimony Not Needed to

Posted on July 29, 2009
Expert Testimony Not Needed to Show Accountant Acted UnreasonablyThe SEC acted properly in suspending a former audit firm partner from practice before the Commission under Rule 102(e). Gregory Dearlove was the engagement partner in charge of the 2000 audit of Adelphia Communications Corp...

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House Committee Approves Corporate

Posted on July 29, 2009
House Committee Approves Corporate Governance Legislation with Say-on-Pay MandateThe House Financial Services Committee has approved legislation mandating shareholder advisory votes on executive compensation as part of the overall reform of financial regulation...

IASB Proposes New Fair Value Standard,

Posted on July 28, 2009
IASB Proposes New Fair Value Standard, While FCAG Says Fair Value Not Pro-CyclicalThe IASB has proposed significant changes to its fair value accounting standard that would essentially require all financial instruments that do not have basic loan features to be measured at fair value...

Backdated Stock Options Are Not

Posted on July 28, 2009
Backdated Stock Options Are Not Performance-Based Compensation under 162(m) Says IRS Chief CounselBackdated stock options are not qualified performance-based compensation under IRC �162(m), according to memo from the IRS Chief Counsel, even if, before or after exercise, the executive reimburses the company for the discount or the option is ?repriced? based on the fair market value on the actual date of grant...

House Leaders Sponsor Legislation

Posted on July 28, 2009
House Leaders Sponsor Legislation Allowing PCAOB to Share Information with Foreign Audit RegulatorsLegislation allowing the PCAOB to share confidential information with regulators of foreign firms has been introduced by House Financial Services Chair Barney Frank...

German Bundestag Approves Legislation

Posted on July 27, 2009
German Bundestag Approves Legislation Reforming Executive CompensationAs the US House of Representaives prepares to pass corporate governance reform, the German federal parliament, Deutshcr Bundestag, has approved legislation reforming corporate executive compensation...

Former SEC Staff Accountant Named

Posted on July 27, 2009
Former SEC Staff Accountant Named IASB Member; Strong Defender of Fair Value AccountingFormer SEC staff accountant Patrick Finnegan has been appointed a member of the IASB to a term that expires in 2014. Mr. Finnegan was also previously CFA Managing Director for the Financial Reporting Policy Group...

State Enforcement Action Was Not

Posted on July 27, 2009
State Enforcement Action Was Not Removable Under SLUSAA federal district court (E.D. Mo.) has held that an enforcement action brought by a state in state court was not removable to federal court under the Securities Litigation Uniform Standards Act of 1998 (SLUSA)...

SEC Acts to Curb Abusive Short

Posted on July 27, 2009
SEC Acts to Curb Abusive Short Selling and Enhance TransparencyThe SEC made permanent a temporary rule reducing the potential for abusive naked short selling and acted to enhance the public availability of short sale information. Rule 204T was made permanent and new Rule 204 requires broker-dealers to promptly purchase or borrow securities to deliver on a short sale...

Kentucky Revises Rule 506 Policy

Posted on July 27, 2009
Kentucky Revises Rule 506 Policy to Include Electronic FilingThe filing requirements to make a Rule 506 offering in Kentucky were revised. Issuers must submit within 15 calendar days from the date of first sale in Kentucky, a Form D, Form U-2, Uniform Consent to Service of Process, statement from an authorized official that a federal filing was made or will be made contemporaneously, and a $250 check made payable to the Kentucky State Treasurer...

Entire 1st Circuit Will Re-Consider

Posted on July 25, 2009
Entire 1st Circuit Will Re-Consider the Issue of What Constitutes a "Statement" Under 10b-5The 1st Circuit vacated a panel finding in favor of the SEC in SEC v. Tambone. The enforcement action concerned misrepresentations made by two senior executives of the primary underwriter of a mutual fund to investors about excessive trading and market timing...

Senate Legislation Would Align

Posted on July 24, 2009
Senate Legislation Would Align Option Accounting Standards with Tax Code and Make Options Part of 162(m) Salary CapBipartisan Senate draft legislation would bring stock option accounting rules and the federal tax code into alignment by requiring that the stock option tax deduction be no greater than the stock option expenses shown on the corporate books each year...

33, 34 Act Claimants Not Incompatible,

Posted on July 24, 2009
33, 34 Act Claimants Not Incompatible, but In-and-Out Traders Are--OutA class including investors making claims under the Exchange Act as well as Securities Act claimants was properly certified, concluded a 2nd Circuit panel. However, the district judge improperly included "in-and-out" traders who sold their shares before any corrective disclosures were made (In re Flag Telecom Holdings, Ltd...

2nd Circuit: Computer Hacking Could

Posted on July 24, 2009
2nd Circuit: Computer Hacking Could Be Deceptive Under 10(b)An individual who allegedly hacked into a corporate computer system and traded on adverse earnings information he obtained before its public release may have engaged in actionable deceptive conduct under Section 10(b)...

UK Regulator Rejects Using Financial

Posted on July 23, 2009
UK Regulator Rejects Using Financial Accounting Standards to Promote StabilityIn an effort to refute the growing global consensus that financial accounting must change because its pro-cyclicality contributed to the financial crisis, the UK accounting overseer said that people proposing to amend accounting rules to make them less pro-cyclical must believe that investors cannot be trusted with the unadjusted numbers produced by the application of accounting standards...

SEC Chair Seeks Enhanced Financial

Posted on July 23, 2009
SEC Chair Seeks Enhanced Financial Stability Council to Work with Systemic Risk RegulatorWhile accepting in principle that the Federal Reserve Board could be the new systemic risk regulator, SEC Chair Mary Schapiro said that the Financial Stability Oversight Council designed to work with the Fed must be strengthened beyond the framework set forth by the Administration?s legislative proposal...

UK Walker Report Urges Limits on

Posted on July 22, 2009
UK Walker Report Urges Limits on Variable Compensation and Stronger Board OversightA blue ribbon committee empanelled by the UK Treasury has recommended sweeping and fundamental changes in executive compensation at financial institutions. While falling short of capping executive pay, the eagerly awaited report of Sir David Walker recommended the significant deferral of bonus schemes and increased public disclosure about the compensation of highly-paid executives...

SEC Chair Endorses Administration

Posted on July 22, 2009
SEC Chair Endorses Administration Legislative ProposalsSEC Chair Mary Schapiro has strongly endorsed Obama Administration legislative proposals to reform the regulation of the US financial markets, including SEC regulation of securities-related OTC derivatives, SEC registration of hedge fund advisers, and bestowing additional enforcement powers on the Commission, such as the imposition of collateral bars...

UK Conservative Party Would Abolish

Posted on July 22, 2009
UK Conservative Party Would Abolish the FSA, Create Consumer Protection Agency, and Make Central Bank Systemic Risk RegulatorNoting that the Obama Administration has proposed legislation creating a new Consumer Financial Protection Agency to ensure that there is a regulator whose primary concern is protecting individuals, the UK Conservative Party said that when it reclaims power it will abolish the Financial Services Authority and create a new Consumer Protection Agency and give the regulation of financial institutions to the Bank of England...

Global Governance Group Supports

Posted on July 21, 2009
Global Governance Group Supports SEC Shareholder Access ProposalA global corporate governance consortium broadly supports the SEC?s recent proposal to facilitate shareholder director nominations, which the group believes will spur boards and shareholders to engage more actively with one another on board composition and effectiveness...

Business Consortium Asks SEC to

Posted on July 21, 2009
Business Consortium Asks SEC to Extend Comment Period on Shareholder Access ProposalA consortium of business groups, including the Chamber of Commerce and the Business Roundtable, has asked the SEC to extend the comment period on the shareholder access proposal beyond the current deadline of August 17, 2009...

Law Professors' Amicus Brief in

Posted on July 21, 2009
Law Professors' Amicus Brief in Cuban Case Stressed that Confidentiality Agreement Not EnoughAn amicus brief filed by a consortium of law professors in an SEC enforcement action emphasized that a confidentiality agreement alone is not enough to create a fiduciary or similar relationship of trust and confidence that could support the misappropriation theory of insider trading liability...

SEC Investment Management Director

Posted on July 20, 2009
SEC Investment Management Director Lauds Hedge Fund LegislationAgainst the backdrop of pending legislation to require the SEC registration of hedge fund advisers, Andrew Donohue, the director of the Division of Investment Management, told the Senate Subcommittee on Securities that the Commission strongly believes that legislative action is needed to increase regulation of hedge funds and other private investment pools...

New Mexico Sets Forth Electronic

Posted on July 20, 2009
New Mexico Sets Forth Electronic Form D Filing RequirementsBeginning March 16, 2009, issuers intending to make a Rule 505 or 506 offering in New Mexico must file an autheticated paper copy of the Form D filed electronically with the SEC, along with a manually signed Form U-2, Uniform Consent to Service of Process, and a $350 fee...

In SEC Enforcement Action: Federal

Posted on July 19, 2009
In SEC Enforcement Action: Federal Court Rules that Agreement Supporting Misappropriation Theory Must Have a Non-Use ComponentIn an SEC enforcement action, a federal judge ruled that the agreement required to invoke the misappropriation theory of insider trading liability must include both an obligation to maintain the confidentiality of the inside information and not to trade on or otherwise use the information...

Securities Industry Supports Legislation

Posted on July 19, 2009
Securities Industry Supports Legislation Imposing Federal Fiduciary Standard on BrokersThe securities industry supports Obama Administration legislation imposing a new federal fiduciary standard for broker-dealers and investment advisers and essentially harmonizing the regulation of brokers and advisers...

House Committee Will Mark Up Corporate

Posted on July 19, 2009
House Committee Will Mark Up Corporate Governance Legislation with Say-on-Pay MandateThe House Financial Services Committee plans to mark up legislation mandating shareholder advisory votes on executive compensation as part of the overall reform of financial regulation...

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