On February 9, 2015, the U.S. Securities and Exchange Commission (SEC) issued a proposed rule related to the disclosure of hedging policies applicable to board members, officers, and other employees. The proposed rule would implement one of the remaining requirements adopted as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act).
The proposed rule would amend Item 407 of Regulation S-K to require companies to disclose whether they permit directors, officers, and other employees to hedge the company’s securities, including any equity securities of the company’s parent, subsidiaries, or any subsidiary of any parent of … Read more
A nuance in margin rules proposed by the CFTC and other federal financial regulators threatens to undermine a carefully struck balance in Dodd-Frank. As background, Title VII of Dodd-Frank subjected U.S. derivatives markets to a host of new regulations. Broadly speaking, regulations promulgated by the CFTC under Title VII require that certain types of swaps be centrally cleared through a clearinghouse and a subset of those swaps be executed on a swap execution facility (SEF) or designated contract market (DCM). The clearing mandate helps mitigate credit risk in the derivatives market through interposing the credit … Read more
The following post is taken from an address by CFTC Commissioner J. Christopher Giancarlo before the ABA Business Law Section, Derivatives & Futures Law Committee Winter Meeting and is dated January 23, 2015. Commissioner Giancarlo’s address may be accessed here.
Thank you for the kind introduction.
Let me begin with the disclaimer that my remarks today reflect my own views and do not necessarily reflect the views of the Commodity Futures Trading Commission (CFTC or Commission), my fellow Commissioners or the CFTC staff.
It is an honor to speak to you today. I see so many truly distinguished members … Read more
There was perhaps no issue of greater importance to the financial regulatory reforms of 2010 than the resolution, without taxpayer assistance, of large financial institutions. The rescue of firms such as AIG shocked the public conscience and provided the political force behind the passage of the Dodd-Frank Act. The force is reflected in the fact that Titles I and II of Dodd-Frank relate to the identification and resolution of large financial entities, and Title VIII relates to the resolution of financial market utilities. How the tools established in Titles I, II and VIII are implemented is paramount to the success … Read more
Global banking has entered a new era in which every region, product, and legal entity is going to be closely regulated.
To assess the current status and future effects of regulatory reform, we have classified the entire spectrum of regulatory reforms, grouping them into three clusters: financial stability, prudent operations, and resolution and separation. (See Exhibit 1.)
Financial Stability: Expectations Exceed Regulators’ Intent
Since the crisis began, establishing and safeguarding global and local financial stability have been regulators’ highest priorities. As a result, financial stability is the most developed area of reform. Fundamental requirements have been revised or reinstated, primarily … Read more
The following post comes from Elizabeth Howell, a doctoral student in law at the University of Oxford and a visiting scholar at Columbia Law School in the Fall Semester 2014. It is related to her paper, ‘Short Selling Reporting Rules in the EU and the US: A Greenfield Area’ that is forthcoming in the European Company Law Journal. Further details are available here http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2536523.
Short selling reporting obligations can be helpful to regulators, particularly in relation to deterring abusive behavior. Following the recent financial crisis, the European Short Selling Regulation (the ‘Regulation’) introduced a common framework for short … Read more
On December 17th, the FDIC issued guidance for the 2015 resolution plans of the covered insured depository institutions (CIDIs) of large bank holding companies (BHCs). The guidance (applicable to 36 CIDIs) adds welcome clarification around regulatory expectations, but also raises the bar – in some cases quite significantly – on the nature and depth of required plan content.
In addition to the BHC resolution plans required under Dodd Frank Section 165(d) , the FDIC requires a separate CIDI resolution plan for US insured depositories with assets of $50 billion or more. Most of the largest, most complex BHCs are subject … Read more
These remarks were made by Commissioner Mark P. Wetjen before the Futures Industry Association Asia Derivatives Conference
Thank you for that kind introduction, and my thanks as well to the Futures Industry Association for having me here to speak at this year’s Asia Derivatives Conference. I am honored to be with you in Singapore. I want to give a special thanks to my good friend, Walt Lukken, who has shown tremendous leadership in his role at the FIA.
While traveling in Asia this week and meeting with members of the derivatives community, I’ve been struck by both the vastness and … Read more
On November 18, 2014, the Federal Deposit Insurance Corporation (the “FDIC”) published a final rule (the “Final Rule”) modifying certain elements of its deposit insurance assessment system for insured depository institutions (“IDIs”). The Final Rule amends the FDIC’s 2011 revised methodology for determining insurance assessment rates both for large institutions and for highly complex institutions (the “2011 Assessments Rule”)—the so-called “scorecard” method that is currently used to calculate assessment rates for these institutions. The Final Rule indicates that it is intended to align the deposit insurance assessment system for all IDIs—including advanced approaches banking organizations—with the standardized approach (the “Standardized … Read more
Proxy research and advice entities Institutional Shareholder Services Inc. (“ISS”) and Glass, Lewis & Co., LLC (“Glass Lewis”) recently updated the guidelines each service will use to inform their voting recommendations for the 2015 proxy season. The updates address topics such as amendments to governing documents, director and executive compensation, board leadership structures, and certain shareholder proposals included in proxy materials. We summarize the most notable updates to these guidelines, below.
The ISS voting policy updates are relevant to shareholder meetings taking place on or after February 1, 2015. The two principal updates highlighted by ISS relate to ISS’s … Read more
A final credit risk retention rule was recently issued with respect to asset-backed securities (ABS) by the prudential bank regulators (the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency) and the Securities Exchange Commission, and, with respect to residential mortgage assets only, the Federal Housing Finance Agency and the Department of Housing and Urban Development. The final rule bears little resemblance to the approach originally proposed in April 2011 but is essentially (i.e., with the exception of a few details) identical to the rule as re-proposed in … Read more
The following post comes to us from Eric L. Talley, The Rosalinde and Arthur Gilbert Foundation Professor of Law at the University of California, Berkeley, School of Law. It is based on a recent working paper, “Corporate Inversions and the Unbundling of Regulatory Competition,” which is available here.
Several prominent public corporations have recently embraced a noteworthy (and newsworthy) type of transaction known as a “tax inversion.” In a typical inversion, a US multinational corporation (MNC) merges with an operating foreign company. The entity that ultimately emerges from this transactional cocoon is invariably incorporated abroad, yet typically remains listed … Read more
The following post comes to us from Jonathan D. Glater, Assistant Professor of Law at the University of California Irvine School of Law. It is based on his recent paper, “Hurdles of Different Heights for Securities Fraud Litigants of Different Types,” which is available here.
When investors buy securities in a private offering, it is presumed that they have the sophistication and expertise to invest in the absence of the formal disclosure requirements that apply to public offerings. When investors claim to have been victims of fraud, they assert that they have fallen victim to deceit. When investors who purchased … Read more
On September 8, 2014, the Securities and Exchange Commission (the “SEC”) published a proposed rule (the “Proposed Rule”) providing that certain communications involving quotes of security-based swaps will not be deemed to constitute offers of such security-based swaps or of any guarantees of such security-based swaps that are securities for purposes of the registration requirements applicable to offers or sales of securities under section 5 of the Securities Act of 1933 (the “Securities Act”), if the security-based swaps may be purchased only by eligible contract participants (“ECPs”) and are traded on or processed through a trading system or platform that … Read more
On September 16, 2014, the United States District Court for the District of Columbia dismissed a broad-based challenge to the interpretive guidance and policy statement issued by the Commodity Futures Trading Commission (“CFTC”) in July 2013 relating to the extraterritorial application of the CFTC’s swaps rules adopted pursuant to Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank” or “Dodd-Frank Act”). The guidance specifically addressed the circumstances under which certain Dodd-Frank requirements, such as the CFTC’s swap reporting rules, mandatory clearing requirement, trade execution requirement, and swap dealer registration and business conduct requirements, would apply … Read more
On August 27, 2014, the Securities and Exchange Commission (the “SEC”) adopted final rules (the “Final Rules”) implementing, among other things, provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) relating to third-party due diligence reports for asset-backed securities (“ABS”). As adopted, the Final Rules will require:
(i) issuers and underwriters of rated ABS, whether or not registered with the SEC, to file with the SEC, at least five business days before the first sale in the ABS offering, a Form ABS-15G containing the findings and conclusions of reports of third-parties who have … Read more
On September 8, 2014, the Securities and Exchange Commission proposed a rule under the Securities Act of 1933 to provide that the publication or distribution of price quotes relating to security-based swaps that may be purchased only by eligible contract participants and are traded or processed through a national securities exchange or a security-based swap execution facility will not be deemed to constitute offers of such security-based swaps (or any guarantees of such security-based swaps), for the purposes of the registration requirements of the Securities Act. Comments on the proposed rule are due on or before 60 days from … Read more
We all know that liquids are both good and bad. We are supposed to drink on average eight glasses of water a day for good health. However, too much alcoholic intake will get us into trouble with the law. Now, the larger banking organizations are required to have a minimum amount of liquidity on their balance sheets fully in place by January 1, 2017.
Background The Federal Reserve Board (“Board”) at its September 3 open meeting finalized a minimum Liquidity Coverage Ratio rule (“LCR”) for covered bank holding companies (“BHCs”), savings and loan holding companies, and depositories. The action was … Read more
The following post comes to us from John M. Conley, William Rand Kenan Jr. Professor of Law at the University of North Carolina School of Law, and Cynthia A. Williams, Osler Chair in Business Law at Osgoode Hall Law School, York University. It is based on their recent paper, “The Social Reform of Banking,” which was published in the Journal of Corporation Law and is available here.
The financial crisis of 2008 led to global demands for reforms that would put the financial services industry on a more sustainable ethical, economic, and legal footing. Thus far, the response to … Read more
On August 5, 2014, the Board of Governors of the Federal Reserve System and the Federal Deposit Insurance Corporation (the “Agencies”) released a Joint Statement identifying common shortcomings and action steps for the 11 largest financial companies that initially filed resolution plans in 2012 (the “First Wave Filers”). Contemporaneously with the Joint Statement, the Agencies sent letters to each of the First Wave Filers in which they identified more detailed and specific shortcomings in individual First Wave Filers’ 2013 resolution plans and additional information required for the 2015 plans (the “Joint Letters”).
In effect, the Joint Statement and the Joint … Read more