K&L Gates Discusses the Border Adjustment Tax

The House Republicans have proposed sweeping changes to the U.S. tax system, specifically that income from the export of goods, services and intangibles will not be subject to federal income tax, and that the cost of such imports into the U.S. will not be deductible. By incentivising exports and deterring imports, the proposed “Border Adjustment Tax” (BAT) is intended to increase domestic production, strengthen the U.S. economy and create new jobs, and deter corporate inversions and erosion of the U.S. tax base. It also is estimated to pay for approximately one-third of the cost of the Republicans’ comprehensive tax reform … Read more

PwC Explores Whether Trump Will Stay the Course on Sanctions

President Trump made many statements during the campaign regarding actions he plans to take to reverse Obama administration sanctions policies.[1] These included revisiting the agreement to ease sanctions on Iran, rolling back the sanctions program against Russia, and reversing the Obama administration’s policy of easing sanctions on Cuba. However, we believe that reversing course on these policies is much easier said than done.

For example, several of the Obama administration’s sanctions policies – including those involving Iran and Russia – were part of multilateral actions rather than unilateral sanctions programs, so breaking from such agreements will be difficult. Iran … Read more

Gibson Dunn Discusses Antitrust in China

China’s antitrust regulators have continued to increase their enforcement of the Anti-Monopoly Law (“AML”) in 2016.  Given the high level of scrutiny in this area and the current legal environment in China, compliance with the AML should be a priority for businesses operating in China.

2016 saw the publication of a number of draft guidelines, outlining the regulators’ proposed approach to many important areas in antitrust enforcement, including leniency, the calculation of fines, and application of the AML to the automotive industry.  Currently, discussions are also under way for highly anticipated draft guidelines on the application of the AML to … Read more

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The Legacy of the Sarbanes-Oxley Act, 15 Years On

What does Sarbanes-Oxley mean? That’s when two members of U.S. Congress fiddle and half a million accountants in Europe start dancing.”[1]

President Donald Trump pledged during his electoral campaign to repeal some of the reforms that came about after the 2008 financial crisis, including the Dodd-Frank Act of 2010[2], declaring that the coming administration would seek to remake the way the U.S. oversees the financial sector. This has led some commenters to go even further back in time and call for the repeal of the Sarbanes-Oxley Act of 2002 (‘Sarbanes-Oxley”).[3]

Sarbanes-Oxley[4] was enacted by … Read more

Paul Weiss Discusses FCPA Enforcement and Anti-Corruption Developments

2016 was, by any measure, an extraordinary year for the enforcement of the Foreign Corrupt Practices Act.  The Department of Justice and the Securities and Exchange Commission assessed a record-shattering total of nearly $2.5 billion in penalties.  But despite those record numbers, open questions remain as to the impact of the Yates Memo, which instructs prosecutors to focus on prosecutions of individuals, and of the FCPA Pilot Program, which encourages corporate self-reporting of wrongdoing.  Looking at anti-corruption developments more broadly, we see notable increases in the extent and sophistication of international cooperation and coordination and in the activities of the … Read more

Claude Lopez
elham

Financial Deregulation: Repeal or Adjust?

While a major overhaul of U.S. financial regulation may be unlikely during the early months of the Trump administration, changes should be expected as his nominees to lead the Treasury Department and financial regulatory agencies are confirmed. This will be the biggest turnover in regulatory leadership since the passage in 2010 of the Dodd-Frank Act, and it may also prove to be a test for Basel III, the macro-prudential policy framework created by the G20 countries in response to the 2007-2008 financial crisis.

Dodd-Frank, which has not been fully implemented, is the legislative vehicle for U.S. integration of Basel III … Read more

Debevoise Looks at UK’s Initial Move to Expand Corporate Criminal Liability

On January 13, the UK Government took a step towards significant reform of the business crime landscape by issuing a formal “call for evidence” in relation to corporate liability for economic crimes such as fraud, false accounting and money laundering. While only the initial step – the next stage will involve a full consultation on a detailed proposal and draft legislation – it potentially heralds a new era of increased corporate exposure to prosecution.

Any changes that are enacted are broadly likely to take the form of corporate offenses similar to section 7 of the Bribery Act 2010 (failure to … Read more

K&L Gates Discusses the Border Adjustment Tax

Thanks to the Republican sweep of the White House and the Congress, all the talk in recent years about tax reform is on the verge of turning into action.  What many dismissed as idle chatter before Election Day suddenly became very real as the prospect of passing tax reform by using the budget reconciliation mechanism requiring only 51 votes in the Senate turned from a pipedream into reality.  But, with so many tax reform options on the table, how do you know what to focus on?   What ideas are worth explaining to the C Suite, running diagnostics, and spending resources … Read more

K&L Gates Discusses Trump’s Plan to Make Mexico Pay for the Wall

One of the most significant post-election questions for the financial-services industry—particularly global financial institutions that move money across borders—is, what is the status of President Trump’s proposal to tax electronic remittances to Mexico to pay for the wall between Mexico and the United States?

Mr. Trump’s Proposal

During the 2016 Republican presidential primaries, Mr. Trump laid out various ways to force Mexico to pay for a wall along the U.S.-Mexico border in a two-page memo[1] to The Washington Post,[2] which is now linked to the immigration section of Mr. Trump’s transition website.  The first proposal listed is … Read more

Debevoise Explores Expanded Civil Liability for Terrorism

On September 28, 2016, the U.S. Congress expanded civil liability for foreign countries and international businesses by enacting the Justice Against Sponsors of Terrorism Act (“JASTA”), overriding President Obama’s veto for the first time in his Presidency. While Congress ostensibly directed JASTA at claims brought by victims of the September 11 attacks, the law’s effect could be far broader and reach a wide array of actors. As a result, companies may wish to consider adding anti-terrorism screening to their regular due diligence and compliance procedures.

JASTA makes two major changes to existing federal law. It withdraws the sovereign immunity protection … Read more

Cleary Gottlieb Explores What’s Next in UK Corporate Governance Reform

On November 29, 2016, Prime Minister Theresa May’s government issued a green paper[1] (the “Green Paper”) to canvass opinion on proposed reforms to the UK’s corporate governance framework.

A green paper is a government consultation document that invites feedback from interested parties (both within Parliament and outside it) on legislative proposals. The document does not form part of the legislative process and is non-binding in nature, and the government has stressed that it is not currently advocating any one proposal. Therefore, while the content of the Paper provides some guidance as to the government’s current thinking on … Read more

Weil Discusses International Trade

International trade figures prominently among the top priorities of the incoming Administration. Candidate Trump railed against U.S. trade policy during the campaign, promising to withdraw the United States from the recently concluded (but not yet entered into force) Trans-Pacific Partnership agreement, renegotiate the North American Free Trade Agreement (NAFTA) and ramp up enforcement of trade rules in various unspecified ways.

The incoming President appears to have big plans for revamping U.S. trade policy as signaled by early decisions like his creation of a White House-based National Trade Council to coordinate the trade-related actions of various Executive Branch agencies. But in … Read more

hoopes001
robinson
slemrod

The Impact of Publicly Disclosing Company Tax Returns

The tax affairs of large corporations have recently come under intense scrutiny. One symptom of this scrutiny has been increasing disclosure requirements, both to the public and to taxing authorities. One form of increased disclosure includes putting more information about the firm’s tax affairs in the hands of the public. For instance, public release of tax data in the form of public country-by-country reporting is a possibility in the U.S. and all European Union member states by 2018.  In 2013, the Australian legislature began debating making public certain tax-return data that were previously available only to the taxing authority. Amid … Read more

Sullivan & Cromwell Discusses Sovereign Debt Litigation

In a December 22, 2016, decision in the long-running Argentine debt litigation, the United States District Court for the Southern District of New York spelled out significant limitations on prior rulings it had issued that were based on the pari passu clause in Argentina’s defaulted bonds.  In those earlier rulings, the court had imposed injunctions barring Argentina from performing on new debt unless it likewise paid the defaulted debt.  Those injunctions were lifted earlier last year in a settlement with most of the holdout creditors.  In the new decision, the court held that Argentina’s payments to creditors who participated in … Read more

Debevoise & Plimpton Discusses Prudential Regulation in an Age of Protectionism

The regulation of bank capital and liquidity has been in sharp focus ever since the financial crisis of 2008-09. The Basel Committee on Banking Supervision (“BCBS”) has led the work internationally to develop a revised set of capital and liquidity standards to update the then existing Basel II accord. These standards, dubbed Basel III, have to a large extent been adopted and enacted in the world’s major jurisdictions, including the United States and the European Union.

The development of Basel III did not complete the mandate given to the BCBS by the G20 to overhaul bank capital and liquidity. As … Read more

Gibson Dunn Discusses Trade Under Trump

While it remains too early to predict with any certainty, both allies and adversaries alike are anxiously scanning statements from the campaign and Trump’s past for any clues as to the policy directions his administration is likely to take.  In this update, we offer our initial expectations regarding the impact a Trump Presidency will have on economic sanctions and export controls.

Economic Sanctions

During the presidential campaign, Trump extensively criticized President Obama’s policies with respect to Iran, Russia, and Cuba – all policies in which the imposition or the easing of sanctions have played a key part.  Though it is Read more

Kirkland & Ellis Discusses President Obama Blocking a Chinese Takeover of a German Semiconductor Company

On December 2, 2016, President Obama issued an executive order (the “Order”) blocking the proposed acquisition of German semiconductor manufacturer Aixtron SE’s (“Aixtron”) U.S. business (“Aixtron U.S.”) by a group of Chinese investors led by Fujian Grand Chip Investment Fund LP (the “Buyers”).  This marks only the second time that a president has blocked a transaction since 2007, when CFIUS’s authority was codified by the Foreign Investment and National Security Act of 2007 (“FINSA”).[1]

In pertinent part, the Order declares that “credible evidence exists” that control of Aixtron U.S. by the Buyers would threaten to impair U.S. … Read more

Latham & Watkins Discusses How DOJ Credits Self-Disclosure of Export Controls and Sanctions Violations

The National Security Division (NSD) of the U.S. Department of Justice (DOJ) recently issued “Guidance Regarding Voluntary Self-Disclosures, Cooperation, and Remediation in Export Control and Sanctions Investigations Involving Business Organizations” (the Guidance). The Guidance articulates NSD’s policy for granting credit to companies that voluntarily self-disclose and/or cooperate with respect to potential criminal conduct under U.S, sanctions or export control laws. The Guidance defines the key factors that NSD considers when assessing whether and to what extent a company should receive cooperation and mitigation credit. These circumstances include: (1) voluntary self-disclosure, (2) full cooperation, (3) timely and appropriate remediation and (4) … Read more

weidemaier

Adventures in Sovereign Debt: Enforcing Russia’s Loan to Ukraine

In December 2015, Ukraine defaulted on a $3 billion loan made two years previously by the Russian government. Governments lend to one another all the time, but this loan was extraordinary, and so were the events that followed in its wake.

Like most government-to-government loans, this one had political motivations. For Russia, these included the desire to reward President Victor Yanukovych for backing out of an Association Agreement that would have deepened Ukraine’s ties to the European Union. The structure, however, was unusual for a government-to-government loan. Whereas governments typically lend funds directly, the Russian loan took the form of … Read more

Shearman & Sterling Discusses U.S. Election’s Effect on International Sanctions

The election on November 8 has significant implications for international sanctions, particularly with respect to Iran, Cuba, and Russia. Although we do not want to be unduly alarmist, President-elect Trump’s statements on the campaign trail, should they be carried through to policy in his Administration, certainly suggest a U-turn in US policy. With respect to Iran and Cuba, the possibility of such a change in direction will need to be taken into account by persons and companies who have begun to enter into commercial arrangements with those countries in the expectation that the recent easing of sanctions would continue. With … Read more