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

Washington State Proposes Dodd-Frank Accredited Investor Definition

Posted on August 17, 2010
Washington State's "accredited investor" definition was proposed for amendment to exclude to the value of an investor's primary residence from the $1 million net worth calculation to reflect the modification in the federal "accredited investor" definition under the Dodd-Frank Act.

Citing Express and Pervasive SEC Enforcement Powers, Ninth Circuit Rejects Implied Private Right of Action for Sec. 13(a) of Investment Company Act

Posted on August 17, 2010
A Ninth Circuit panel ruled that there is no implied private cause of action to enforce the provisions of Section 13(a) of the Investment Company Act, which requires an investment company to obtain shareholder approval before deviating from the investment policies contained in the company?s SEC-filed registration statement...

Senator Levin Explains Intent of Dodd-Frank Conflict of Interest Provision for Firms Profiting from Failure of Securities They Packaged

Posted on August 16, 2010
The intent of Section 621 of the Dodd-Frank Act is to prohibit underwriters, sponsors, and others who assemble asset-backed securities, from packaging and selling those securities and profiting from the securities? failures. Given the unique control that firms packaging and selling asset-backed securities have over transactions involving those securities, Section 621 of Dodd-Frank protects purchasers by prohibiting those firms from engaging in transactions involving or resulting in material conflicts of interest...

Dodd-Frank Sets Process for SEC and CFTC to Resolve Jurisdictional Status of Novel Derivatives Products

Posted on August 16, 2010
The Dodd-Frank Act establishes a new process for the CFTC and SEC to resolve the status of novel derivative products. In the past, said Senator Blanche Lincoln, these types of novel and innovative products have gotten caught up in protracted jurisdictional disputes between the agencies, resulting in delays in bringing products to market and placing U...

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Senator Lincoln Details Protections for Retail Commodities Customers in Dodd-Frank Act

Posted on August 15, 2010
Section 742 of the Dodd-Frank Act includes several important provisions to enhance the protections afforded to customers in retail commodity transactions. Senator Lincoln highlighted such provisions. First, Section 742 clarifies the prohibition on off-exchange retail futures contracts that has been at the heart of the Commodity Exchange Act throughout its history...

Iowa Proposes Broker-Dealer, Agent and Investment Company Rule Changes

Posted on August 13, 2010
Rule changes proposed by the Iowa Securities Bureau would include amending broker-dealer registration requirements, increasing agent fees and mandating investment companies to submit their notice filings electronically.Public comments. Interested persons may submit written comments to Rosanne Mead, Assistant Insurance Commissioner, at the Iowa Insurance Division, 330 Maple Street, Des Moines, Iowa 50319; fax (515) 281-3059...

Senator Merkley Explains the Workings of Dodd-Frank Volcker Rule Banning Bank Sponsoring of Hedge Funds

Posted on August 13, 2010
Sections 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act codifies the Volcker Rules and broadly prohibits bank proprietary trading and bank sponsoring of hedge funds, while nevertheless permitting certain activities that may technically fall within the definition of proprietary trading but which are, in fact, safer, client-oriented financial services...

Legislation Would Narrow SEC Dodd-Frank FOIA Exemption as Key Senators Urge SEC to Act

Posted on August 12, 2010
Leading members of the Senate Judiciary Committee introduced legislation (S 3717) to strike Freedom of Information Act (FOIA) exemptions for the SEC that were included in the recently enacted Dodd-Frank Wall Street Reform and Consumer Protection Act....

Sen. Merckley Explains Limited Prime Brokerage Exception to Dodd-Frank Volcker Provisions

Posted on August 11, 2010
Section 619 of the Dodd-Frank ACT allows a very limited exception from the prohibition on banks sponsoring hedge funds for the provision of limited services under the rubric of prime brokerage between a bank and a third party advised fund in which the fund managed, sponsored, or advised by the bank has taken an ownership interest...

UK Appeals Court Says Hedge Funds? Client Money in Lehman Should Be Pooled Equally

Posted on August 10, 2010
The pool of hedge funds? client money held by Lehman Brothers International when it entered bankruptcy administration includes not only segregated monies in segregated accounts but also all identifiable client money in the firm's house accounts, ruled a panel of the UK Court of Appeals, and that such pool should be distributed on a claims basis...

Hagan-Lincoln Colloquy Advises SEC and CFTC in Defining Major Swap and Security-Based Swap Participants

Posted on August 10, 2010
A colloquy between Senator Hagan and Senator Lincoln revealed that, when the CFTC and SEC are making the determination as to whether a person dealing in swaps is a major swap participant or major security-based swap participant, it is the intent of Congress that both the CFTC and the SEC focus on risk factors that contributed to the recent financial crisis, such as excessive leverage, under-collateralization of swap positions, and a lack of information about the aggregate size of positions...

Dodd-Lincoln Colloquy Reveals Equal Treatment for Branches of Foreign Banks under Bank Swap Push Out Provisions

Posted on August 10, 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...

SEC Upholds PCAOB Revocation of Audit Firm?s Registration for Failure to Produce Records

Posted on August 09, 2010
The SEC has sustained the PCAOB?s barring of an auditor from practice and permanently revoking his firm?s registration for violating a Board rule requiring the production of records at the request of Board inspection staff. The auditor?s violative conduct involved a failure to meet multiple production deadlines over a period of months...

NYSE Will Seek to Amend Rule 452 in Light of Dodd-Frank Provision

Posted on August 09, 2010
The Dodd-Frank Wall Street Reform and Consumer Protection Act, in Section 957, requires each national securities exchange to amend its rules to prohibit member organizations from voting shares without specific client instructions on matters related to executive compensation...

IAASB Proposes Revision of Audit Standard on Use of Internal Audit by the Outside Audit Firm

Posted on August 08, 2010
In order to reflect the evolving role of the internal auditor in the independent outside audit of a company?s financial statements, the IAASB proposes to revise the existing standard on the use of internal audit work, IAS 610, which was last revised in 1994...

Senator Lincoln Explains How Position Limits Work in Derivatives Provisions of Dodd-Frank

Posted on August 07, 2010
The Dodd-Frank Act grants broad authority to the Commodity Futures Trading Commission to once and for all set aggregate position limits across all markets on non-commercial market participants. Senator Blanche Lincoln believes that the adoption of aggregate position limits, along with greater transparency, will help bring some normalcy back to the financial markets and reduce some of the volatility we have witnessed over the last few years...

SEC Chair Schapiro Asks for Recommendations in Filling PCAOB Seats

Posted on August 06, 2010
In a letter to senior federal officials, consumer, investor and business groups, and auditing associations, SEC Chair Mary Schapiro asked for recommendations as she leads the search to identify qualified candidates for the Chair and two members of the PCAOB...

Key Senators Advise SEC and Fed on Implementation of Volcker Provisions of Dodd-Frank

Posted on August 05, 2010
In a letter to federal financial regulators, including the SEC and the Fed, Senators Jeff Merkley and Carl Levin urged the strong implementation of the Volcker provisions of the Dodd-Frank Act, particularly provisions limiting conflicts of interest and high-risk proprietary trading...

Oregon First State to Propose Change to Accommodate Dodd-Frank

Posted on August 05, 2010
Oregon's "accredited investor" definition was proposed for amendment to exclude to the value of an investor's primary residence from the $1 million net worth calculation to reflect the modification in the federal "accredited investor" definition under the Dodd-Frank Act.

Sen. Dodd Concerned About Global Regulatory Arbitrage, Particularly in Derivatives Area

Posted on August 05, 2010
In recent remarks at an Atlantic Council forum, Senate Banking Committee Chair Christopher Dodd said that the passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act is only the beginning of a process that will include regulations and international harmonization...

Oregon Adopts Fee Increases for UITs, BDs and Salespersons

Posted on August 04, 2010
The following fee increases by the Oregon Division of Finance and Corporate Securities are effective July 1, 2010 for filings received after July 1, 2010:Unit Investment Trusts: Initial and Renewal Notice Filng Fee Per Portfolio, $500 (from $350)Broker-Dealers: Renewal License Fee, $250 (from $200)Broker-Dealer Salespersons: Initial License Fee, $55 (from $50)

Senior SEC Official Details Dodd-Frank Rulemaking Efforts, Particularly with CFTC On Derivatives

Posted on August 04, 2010
At a recent SIFMA seminar on financial reform, Robert W. Cook, Director of the SEC Division of Trading and Markets, said that the SEC has already undertaken extensive implementation planning for the rulemaking mandates in the Dodd-Frank Wall Street Reform and Consumer Protection Act in a Commission-wide effort to prepare for the next phase of financial regulatory reform...

Sir David Walker Espouses Board Risk Committees and Involvement of Institutional Investors

Posted on August 03, 2010
Companies should have a board-level risk committee to advise on risk appetite and tolerance as core elements in the firm?s strategy, according to corporate governance guru Sir David Walker. In an important address to the Cambridge Judge Business School, Sir David rejected as ``seriously misconceived?? the argument that risk matters should be left to executive risk committees because non-executive board members cannot be expected to master the complexities of a large firm...

Corporate Secretaries Society Has Concerns with Proposed PCAOB Auditor-Audit Committee Communications Standard

Posted on August 02, 2010
The Society of Corporate Secretaries & Governance Professionals is concerned that the proposed PCAOB standard on auditor-audit committee communications will create a new auditing expertise test for audit committee members. The Society cautioned that the new proposed requirements may, when taken as a whole, imply a mandate that audit committee members must have expertise in auditing beyond the current financial literacy requirement...

Key Senator Concerned About SEC-FOIA Provision in Dodd-Frank, SEC Chair Says Commission Will Provide Staff Guidance to Carry Out Intent of Congress

Posted on August 01, 2010
Senator Ted Kaufman is concerned that Section 929I of the Dodd-Frank Wall Street Reform and Consumer Protection Act appears to exempt the SEC from any Freedom of Information Act (FOIA) requests for information received by the Commission from registered entities...

SEC Staff Clarifies Dodd-Frank Change to Accredited Investor Test

Posted on July 30, 2010
Under Section 413(a) of the Dodd-Frank Act, the net worth standard for an accredited investor, as set forth in Securities Act Rules 215 and 501(a)(5), is adjusted to delete from the calculation of net worth the value of the primary residence? of the investor...

IMF Praises Dodd-Frank But Laments Failure to Streamline Regulation

Posted on July 30, 2010
While praising the overall financial reforms achieved by the Dodd-Frank Wall Street Reform and Consumer Protection Act, the IMF lamented the Act?s failure to consolidate US financial regulation. Although the Act did eliminate the Office of Thrift Supervision, it left intact the OCC, FDIC, and the Fed with significant and overlapping oversight responsibilities...

Indiana Adopts Rules Coordinating with Indiana Securities Act

Posted on July 29, 2010
Proposed rule amendments, repeals and new rules coordinating with the Indiana Securities Act that took effect July 1, 2008 were adopted by the Indiana Securities Division, effective July 28, 2010. The new rules and existing rule changes pertain to federal covered securities, exemptions, registrations of securities, broker-dealers, agents, investment advisers, investment adviser representatives and administrative hearings but a substantial portion of the existing rule text remains unchanged...

UK Financial Services Secretary Wants Non-Protectionist EU Hedge Fund Legislation

Posted on July 28, 2010
The new Financial Services Secretary reaffirmed the UK position that the pending EU legislation on hedge funds and private equity funds must be proportionate, workable and non-discriminatory. In remarks at a London private equity event, Mark Hoban said that the final legislation must ensure that European and international measures support the government?s private equity initiatives and encourage capital to flow into the UK...

German Legislation Bans Naked Short Selling and Naked Credit Derivatives

Posted on July 28, 2010
German legislation that took effect July 27, 2010 prohibits naked short-selling transactions in shares and certain debt securities as well as naked credit derivatives. The Act on the Prevention of Improper Securities and Derivatives Transactions (Gesetz zur Vorbeugung gegen missbr�uchliche Wertpapier und Derivategesch�fte) would exempt from the ban investment services enterprises engaging in such transactions as market makers, lead brokers, or designated sponsors...

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