Corporate & Securities Law

Louisiana Sets Forth Schedule for

Posted on July 27, 2010
Louisiana Sets Forth Schedule for Inspecting BD and IA FirmsBroker-dealers and state-registered investment advisers doing business in Louisiana will be subject to inspections by the Office of Financial Institutions. Broker-dealers and state-registered investment advisers domiciled in Louisiana will receive their initial visit from the Office no later than one month after the firm?s registration effective date to review policies and procedures and ensure proper commencement of the firm?s business...

Hong Kong Legislation Provides for Electronic Company Filings and Expanded Derivative Actions

Posted on July 27, 2010
Legislation recently passed by the Hong Kong Legislative Council allows for the electronic filing of company registration statements and other corporate documents. Similarly, the legislation authorizes Hong Kong companies to make use of electronic means, including company websites, to communicate with their shareholders...

Government Proposes Historic Overhaul of UK Financial Regulation Architecture

Posted on July 27, 2010
The new UK Government has unveiled a legislative proposal to end the current financial regulatory regime centered on the unitary Financial Services Authority and erect a new regulatory architecture of macro and prudential regulation revolving around the central bank alongside a new market regulation authority...

SEC Responds Quickly to Concerns Over Dodd-Frank Nullification of Securities Act Rule 436(g)

Posted on July 26, 2010
Effective July 22, 2010, Section 939G of the Dodd-Frank Act provides that Securities Act Rule 436(g) will have no force or effect, which effectively removes the ``expert?? exemption for credit ratings included in a registration statement, As a result, disclosure of a rating in a registration statement requires inclusion of the consent by the rating agency to be named as an expert...

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Dodd-Frank Volcker Provisions Wisely Leave Details to Regulators Says UK FSA Chair

Posted on July 26, 2010
The Volcker Rule clauses of the Dodd-Frank Wall Street Reform and Consumer Protection Act wisely leave it to regulators to apply the rules in practice, noted Financial Services Authority Chair Adair Turner, because drawing a legislative distinction between proprietary trading and customer facilitation is close to impossible in a world where securitized credit will still play a significant role...

Dodd-Boxer Colloquy Says Volcker Rule Exempts Venture Capital Investments

Posted on July 22, 2010
According to Senate Banking Chair Christopher Dodd, the purpose of the Volcker rule, which is in Section 619 of the Dodd-Frank Act, is to eliminate excessive risk taking activities by banks and their affiliates while at the same time preserving safe, sound investment activities that serve the public interest...

Dodd-Lincoln Colloquy Clarifies Scope of Family Office Exemption from Advisers Act

Posted on July 22, 2010
Section 409 of the Dodd-Frank Act excludes family offices from the definition of investment adviser under the Investment Advisers Act. The SEC is directed to define the term family offices and provide exemptions that recognize the range of organizational, management, and employment structures and arrangement employed by family offices...

Lincoln-Feinstein Colloquy Reveals that CFTC Should Prohibit Event Derivatives Contracts as Against the Public Interest

Posted on July 22, 2010
In a colloquy with Senator Diane Feinstein on Section 745 of Dodd-Frank, which authorizes the CFTC to prevent the trading of derivatives contracts that are contrary to the public interest, Senator Blanche Lincoln agreed that Section 745 should be broadly construed to prevent derivatives that exist predominantly to enable gaming through event contracts, such as the Super Bowl, and serve no commercial or hedging purpose...

President Signs Legislation Overhauling US Financial Regulation

Posted on July 21, 2010
President Obama today signed the Dodd-Frank Wall Street Reform and Consumer Protection Act, calling it the strongest consumer financial protection legislation in history. Transparency is a hallmark of the Act, he said, with ordinary investors, like seniors, being able to receive more information about the costs and risks of mutual funds and other investment products, so that they can better make financial decisions that work for them...

Federal Appeals Court Vacates SEC Rule on Fixed Index Annuities; Dodd-Frank Has Impact

Posted on July 20, 2010
Against the backdrop of a Dodd-Frank Act provision exempting indexed annuity products from SEC regulation, a federal appeals court has ruled that an SEC regulation on fixed index annuities, while reasonably adopted, did not take into account its effect on efficiency, competition and capital formation...

Legislation Would Align Financial Accounting for Stock Options with Federal Tax Code

Posted on July 20, 2010
Bi-partisan legislation would align the GAAP treatment of stock options under FASB financial accounting standards with how options are treated under the Internal Revenue Code. FASB rules value stock options on their grant date, while and the Code values stock options on their exercise date, two numbers that rarely match...

Lincoln-Stabenow Colloquy Clarifies Captive Finance Affiliate Derivatives Risk Hedging Exemption in Dodd-Frank

Posted on July 19, 2010
In a colloquy with Senator Stabenow on the day the Senate passed the Dodd-Frank Act, Senator Blanche Lincoln confirmed that the legislation ensures that clearing and margin requirements would not be applied to captive finance or affiliate company transactions that are used for legitimate, non-speculative hedging of commercial risk arising from supporting their parent company's operations...

Senator Reed Will Fight to Place

Posted on July 19, 2010
Senator Reed Will Fight to Place Gustafson Fix in Future LegislationSenator Jack Reed has vowed to continue to try in future legislation to correct the investor protection problem associated with the US Supreme Court ruling in Gustafson v. Alloyd, 513 US 561 (1995), where the Court held that Section 12(2) of the Securities Act does not extend to a private sale contract, since a contract, and its recitations, that are not held out to the public are not a "prospectus" as the term is used in the 1933 Act...

Senator Johnson Clarifies Compromise on Broker Duty of Care

Posted on July 18, 2010
The current regulatory regime treats brokers and advisers differently and subjects them to different standards of care even though the services they provide investors are very similar and investors view their roles as essentially the same. This regime was established during the New Deal and, although amended many times since, remains rooted in the last century...

Congress Approves Historic and Sweeping Overhaul of US Financial Regulation

Posted on July 15, 2010
After nearly two years of extensive hearings and intense legislative negotiations, Congress has passed and sent to the President a sweeping overhaul of the regulation of US financial services and markets. The Dodd-Frank Wall Street Reform and Consumer Protection Act overhaul of the US financial regulatory system is based on the themes of regulating systemic risk, enhancing transparency and disclosure, sound corporate governance and executive compensation linked to long-term value creation, expanding consumer protection, and preventing regulatory arbitrage...

Historic Reform of US Financial Regulation Nearing Legislative Finish Line

Posted on July 14, 2010
When the Senate passes the Dodd-Frank Wall Street Reform and Consumer Protection Act later this week and sends this historic overhaul of US financial regulation to President Obama for his signature, it will represent the culmination of an 18-month struggle to enact reform the regulation of US markets in the wake of the greatest financial crisis since the Great Depression...

EU Groups Find Proposed PCAOB Standard

Posted on July 13, 2010
EU Groups Find Proposed PCAOB Standard on Auditor-Audit Committee Communications Overly PrescriptiveWhile applauding the PCAOB?s efforts to align its proposed standard on auditor-audit committee communications with international standards, the Institute of German Chartered Accountants (IDW) said that the standard was overly prescriptive and evinced a check-the-box mentality when compared to IAASB standards...

Audit Firm Memo on Counsel's Tax Opinion on Company Partnerships Could Be Protected Work Product; Govt's Reliance on Arthur Young Misplaced

Posted on July 12, 2010
A memo prepared by a company?s outside audit firm recounting the thoughts of corporate counsel on the prospect of tax litigation over company partnerships could be protected attorney work product. Similarly, the company?s disclosure to the independent auditor of a tax opinion on company partnerships by outside counsel did not constitute a waiver of the work product privilege...

Lynch-Frank Colloquy Deals With Conflict of Interest on Ownership of Derivatives Clearing Houses

Posted on July 12, 2010
There was concern 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. In a colloquy with Rep. Stephen Lynch, House Financial Services Chair Barney Frank agreed that Sections 726 and 765 of the Act require the CFTC and SEC to adopt rules eliminating the conflicts of interest arising from the control of clearing and trading facilities by entities such as swap dealers, security-based swap dealers and major swap participants and major security-based swap participants...

EU Parliament Passes Legislation

Posted on July 10, 2010
EU Parliament Passes Legislation Imposing Curbs on Bonuses at Financial InstitutionsThe European Parliament has passed legislation imposing some of the strictest rules on incentive compensation at financial institutions in an effort to transform the bonus culture that contributed to the financial crisis and end compensation incentives for excessive risk taking...

Dodd-Frank Provision Rebuts Supreme

Posted on July 09, 2010
Dodd-Frank Provision Rebuts Supreme Court Presumption Against Extraterritorial Application of the Federal Securities LawsAccording to Rep. Paul Kanjorski, section 929P of the Dodd-Frank Act authorizing the SEC and the Justice Department to bring civil or criminal enforcement actions involving transnational securities fraud is intended to rebut the recently announced US Supreme Court presumption against extraterritorial application of the federal securities laws...

House Colloquy Clarifies Scope

Posted on July 08, 2010
House Colloquy Clarifies Scope of Volcker Rule in Dodd-FrankSection 619 of Dodd-Frank Act, the Volcker Rule, prohibits firms from investing in traditional private equity funds and hedge funds. Rep. Jim Himes (D-CT), a member of the Financial Services Committee, noted that because the legislation uses the very broad Investment Company Act approach to define private equity and hedge funds, it could technically apply to lots of corporate structures, and not just the hedge funds and private equity funds...

Frank-Moore Colloquy Confirms that SEC-Regulated Brokers and Advisers Are Outside of Consumer Protection Bureau's Regime

Posted on July 07, 2010
A colloquy between House Financial Services Committee Chair Barney Frank and Rep. Dennis Moore on the day the House passed the Dodd-Frank Act confirmed that Congress did not intend to impose the regulatory authority of the new Bureau of Consumer Financial Protection over the activities of broker-dealers and investment advisers otherwise subject to regulation by the SEC and CFTC...

House Ag Chair Peterson Details SEC, CFTC and FERC Jurisdiction over Derivatives in Dodd-Frank Act

Posted on July 06, 2010
In the view of House Agriculture Committee Chair Collin Peterson, the Dodd-Frank Act allocates authority over swaps and security-based swaps as follows. First, the CFTC has exclusive jurisdiction over swaps, including swaps on broad-based security indexes...

Senior House Leaders Provide Legislative History on Sec. 913 of Dodd-Frank

Posted on July 05, 2010
The floor debates and statements on June 30, 2010, the day the House passed the Dodd-Frank Act, yielded two significant statements by two senior members of the Financial Services Committee on Sec 913 of the Act. Particularly important is the part of Rep...

NASAA Opens Registration for 93rd Annual Conference in Baltimore

Posted on July 04, 2010
The North American Securities Administrators Association (NASAA) has now announced the opening of registration for its 93rd Annual Conference, which will be held at the Mariott Waterfront Hotel in Baltimore, Maryland from September 26 through 28. This year's conference, "Charting a Course for the Future of Financial Regulation," will allow participants an opportunity to take advantage of expert insight into the changes on the horizon for regulatory structures and industry practices following a year of congressional action in response to the financial turbulence that roiled through global financial markets and economies...

House Ag Committee Chair Echoes Dodd-Lincoln Position on End User Exemption

Posted on July 02, 2010
Echoing the position of Senators Dodd and Lincoln, House Agriculture Committee Chair Colin Peterson said that Congress focused on creating a regulatory approach in the Dodd-Frank Act that permits end users to continue using derivatives to hedge risks associated with their underlying businesses, whether it is energy exploration, manufacturing, or commercial activities...

New Mexico Adds Late Fees for Rule 506 Notice Filings

Posted on July 02, 2010
Rule 506 issuers filing their Form D notice in New Mexico within 10 days after the due date pay $700, effective July 1, 2010. Issuers filing more than 10 days after the due date pay $1,050. The initial notice filing fee is $350.For more information, please see http://www...

PCAOB Standing Advisory Group to Discuss Audits of Brokers under Dodd-Frank Act

Posted on July 02, 2010
As a sign of the coming rulemakings at financial regulators if the Dodd-Frank Wall Street Reform and Consumer Protection Act becomes law, the Public Company Accounting Oversight Board (PCAOB) has announced that its Standing Advisory Group (SAG) will meet July 15, 2010 to consider, among other things, the auditing standards that the PCAOB will need to adopt in order to handle audits of broker-dealers, as mandated by the Dodd-Frank Act...

Senators Dodd and Lincoln Clarify the End User Exemption in the Derivatives Title of Dodd-Frank

Posted on July 01, 2010
The Dodd-Frank Wall Street Reform and Consumer Protection Act does not authorize regulators to impose margin on end users that use derivatives to hedge or mitigate commercial risk, said Senator Chris Dodd and Senator Blanche Lincoln, who have instructed the SEC and CFTC not to make hedging so costly that it becomes prohibitively expensive for end users to manage their risks...

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