Cleary Gottlieb discusses Framework for Treatment of Prepaid Variable Forward Contracts

The Second Circuit Court of Appeals’ 2014 ruling in Chechele v. Sperling[1], which addressed an issue of first impression among the Courts of Appeals regarding the application of Section 16 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), to prepaid variable forward contracts (“PVFCs”), is the most recent attempt by the courts to fill in gaps in the analytical framework governing the application of Section 16 to complex derivatives. The Sperling case, which has received scant attention from commentators, is an important decision that should mitigate concern over the risk of … Read more