Shearman & Sterling discusses Brexit: a Financial Free Zone Within the City

The UK Government recently indicated that it intends to negotiate a unique EU-UK relationship post-Brexit. It is hoped that the arrangements will be appropriate for the UK and London’s position as a leading international financial centre. A number of existing models have been discussed and will no doubt be analysed, with variations, by the Government. This client note sets out a framework for new opportunities which could be developed in the UK post-Brexit, by establishing a “financial free zone” in London. This would enable the UK to take a bifurcated approach to financial services post-Brexit. The UK as a whole … Read more

Skadden Contrasts English And Delaware M&A Law

Skadden and Erskine Chambers recently hosted a series of comparative corporate law events in conjunction with the University of Pennsylvania Law School; Queen Mary University of London School of Law; New York University School of Law; Wachtell, Lipton Rosen & Katz; Slaughter and May; Morris, Nichols, Arsht & Tunnell; and Richards, Layton & Finger.

The mock trials held at Inner Temple, London, offered new insights into contrasting English and U.S. advocacy and judicial opinions on complex cross-border M&A issues. Arguments were made by Richards, Layton & Finger partner Greg Williams and Morris, Nichols partner Bill Lafferty for the Delaware mock … Read more

Kirkland & Ellis Discusses Russia Sanctions Developments

The U.S. Treasury Department’s Office of Foreign Assets Control (“OFAC”) has significantly expanded the number of entities and individuals subject to Russia sanctions and separately censured U.S. insurance and financial institution entities for failing to keep current with OFAC’s sanctions list to prevent transactions with sanctioned parties. Economic sanctions continue to evolve as political situations change in the comprehensively sanctioned jurisdictions of Cuba, Crimea, Iran, North Korea, Sudan and Syria, as well as in countries targeted by more limited but often more complicated sanctions such as those relating to Russia, Burma/Myanmar and many other countries. The recent actions by OFAC … Read more

Gibson Dunn offers 2016 Mid-Year Transnational Litigation Update

Earlier this year, Gibson Dunn published the latest installment of its annual Transnational Litigation Update.  See 2015 Year-End Transnational Litigation Update (February 17, 2016, accessible here).  This Mid-Year Update expands on certain key issues addressed by the 2015 Update, including recent case law related to general jurisdiction, the application of United States statutes to extraterritorial conduct, and cross-border discovery.  This Update also details Chevron’s decisive victory in the U.S. Court of Appeals for the Second Circuit against the perpetrators of an extortionate scheme against the company involving a multibillion-dollar Ecuadorian judgment, a scheme the Wall Street Journal characterized as … Read more

Sullivan & Cromwell Discusses U.S. Tax Consequences of EU State Aid Recoupment

On September 15, the IRS and Treasury Department proposed, in Notice 2016-52 (the “Notice”), new rules that limit the ability of U.S. multinational groups to claim credits against U.S. taxes for significant foreign tax adjustments (i.e., adjustments of more than $10 million).  Foreign assessments within the scope of the Notice include (but are not limited to) those that may arise in connection with the state aid investigations that have been initiated by the European Commission over the last several years.

The Notice describes two categories of transactions that might otherwise allow a U.S. multinational to expedite … Read more

John Coffee Headshot

The Globalization of Securities Litigation

Europe (and much of the rest of the world) have long been skeptical of American-style opt-out class actions in which the plaintiff’s attorney defines the scope of the class.  Similarly, they have prohibited the contingent fee, discouraged punitive damages, insisted on “loser pays” fee shifting, and required opt-in classes to be led by a public agency or an approved not-for-profit body.  All this should seemingly preclude the spread of “entrepreneurial litigation” to Europe or elsewhere.[1]  But it hasn’t!

Major securities class actions for record or near record amounts have recently settled in the Netherlands and Japan, and an even … Read more

Morrison & Foerster Covers the Highlights of World Economic Forum’s Blockchain Report

The World Economic Forum threw a knockout punch last month when it released its report, “The Future of Infrastructure: An Ambitious Look at How Blockchain Can Reshape Financial Services.”[1] When Giancarlo Bruno, the World Economic Forum’s Head of Financial Services Industries, stated powerfully and unequivocally, “Rather than to stay at the margins of the finance industry, blockchain will become the beating heart of it,”[2] the world felt the impact.

Like so many other things that we know are important to do, but which we may struggle to find the time for, reading the roughly 130-page World … Read more

Ropes & Gray reviews the Implications of the UK’s Brexit Referendum

From a legal perspective, nothing has changed following the Brexit Referendum. The UK remains a member of the EU and applicable  EU  law  remains in force. Although the outcome  of the Referendum is not legally binding on the UK government1 (it is merely advisory), it appears highly unlikely that the UK Parliament will  ignore the decision of the electorate. Consequently, this note sets out some of the potential legal implications which may affect businesses upon Brexit2.

There were various immediate economic  consequences  following the Referendum, including an initial fall in sterling and a decline in the stock market, but the … Read more


Income Tax in the Brave New World of Zero Interest Rates

The time value of money, measured by the interest rate at which an entity can borrow or invest, plays an incredibly important role in income tax. Every tax teacher emphasizes the value of deferral to taxpayers, explaining that paying a dollar of tax  10 years in the future is worth much less than paying a dollar of tax today, because the taxpayer can invest less than a dollar today, earn interest for 10 years, and then pay the tax obligation.

But, as I explain in my recent short article, “How to Think About and Teach Income Tax When Interest Rates … Read more

Yvan Allaire and Francois Dauphin

Should Say-on-Pay Votes Be Binding?

The practice of allowing shareholders to cast non-binding say-on-pay votes has spread quickly and broadly throughout the world. It seemed that investors would finally get the opportunity to express their dissatisfaction with outrageous or ill-conceived compensation packages.

The practice was, at first, voluntary, with companies having the option of submitting their compensation policies to a vote. As the number of volunteers remained small, though, investors submitted proposals for requiring companies to carry out the non-binding votes.

In some jurisdictions like the United States, non-binding say-on-pay votes were made mandatory. In Canada, say-on-pay votes are not required, but 80 percent of … Read more

Ropes & Gray discusses EU Third-Country Passport for Alternative Investment Funds

The European Securities and Markets Authority (“ESMA”) published on July 19, 2016 its final advice to the European Commission (the “Commission”) on the extension of the marketing passport under the Alternative Investment Fund Managers Directive (“AIFMD”)1 to twelve non-EEA2 countries, including the United States. This note is intended to highlight ESMA’s advice to the Commission and set out the steps firms would need to consider when applying for a third country passport.

The AIFMD envisages the granting of a marketing passport to third country alternative investment fund managers, which are managers established  outside the EEA. Any manager that meets the … Read more


The Downside of Cultural Diversity on Corporate Boards

Diversity in corporate boards is a hot topic. We contribute to the debate on the role of diversity by empirically documenting that greater national cultural diversity in corporate boards leads to lower performance at UK firms accounting for more than 95 percent of the market value of London Stock Exchange-listed companies. The negative impact is economically significant, with a reduction in return on equity of 1.43 percent for firms with higher levels of cultural diversity (those at or above the 75th percentile) versus firms with lower levels of cultural diversity (those at or below the 25th percentile). Why … Read more


Sovereign Debt Restructuring: The Battle of Argentina Is Over. The Battle of Venezuela Is About to Begin.

Most of the lawsuits against Argentina in the New York courts ended in the Spring of 2016 through cash settlements with the major litigants.  The market is still digesting the lessons from this 15 years of bitter litigation.  That assessment may eventually conclude that

  • playing the part of a death-grip holdout in a sovereign debt restructuring will probably pay off handsomely,
  • obtaining a court injunction (a so-called pari passu injunction) preventing the sovereign borrower from paying its other external debt without making a “ratable” payment to holdouts is an essential element to a winning holdout strategy, and
  • creditors prepared

Read more

David Zaring

Financial Reform’s Internationalism

Financial reform has driven many changes in American governance, but the most dramatic one may prove to be the government’s cautious, but wide-ranging, embrace of a revised global regime to regulate international finance. That reform has moved the equilibrium of the separation of powers in foreign affairs towards Congress and uses the informal way that financial regulatory standards spread across the globe to do the work that customary international law used to do.

Both of these developments derive from the way that international financial cooperation has evolved.  The agencies charged with implementing Dodd-Frank have embraced “soft law” in their international … Read more

Shearman & Sterling offers the Lowdown on EU General Data Protection Law

On April, 27 2016, the European Council and Parliament finally adopted a new data protection law: the General Data Protection Regulation (GDPR).  The following is a summary of key issues and a checklist of initial tasks to help you prepare for the new regulation.

 When Will the GDPR Take Effect?

It will apply directly in all EU Member States from May 25, 2018.  It will repeal and replace Directive 95/46EC and its Member State implementing legislation.

Expanded Territorial Scope

The GDPR rules (like the Directive) will apply to both controllers and processors in the EU.

The GDPR will also apply … Read more


A Plea for a Better Response to a Failed Say on Pay Vote

The 2010 Dodd-Frank Act provided shareholders of U.S. public corporations the right to vote on chief executive officers’ compensation, at least every three years. The so–called say on pay vote is advisory but was designed to curb overly generous executive pay packages.

Since 2011, the financial press, consultants and academic scholars have considered how shareholders make use of this right. According to the latest results of Semler Brossy[1], 93 percent of the Russell 3000 companies received say on pay support of more than 70% in 2016, and the failure rate dropped to 1.7 percent, the lowest level since … Read more


Oil Prices and the Global Economy: Is It Different This Time Around?

The positive correlation between oil prices and equity markets over the past few years has been discussed extensively in the media as well as by prominent economists, such as Bernanke and Obstfeld, and has brought into question the generally accepted view that lower oil prices are good for the U.S. and the global economy. However, in a recent study, we illustrate that there has been no stable relationship between real oil prices and equity returns over the last 71 years. Nevertheless, we argue that, as in previous episodes of falling oil prices, lower oil prices improve profit opportunities … Read more

Gibson Dunn explains the New EU-Wide Rules on Cybersecurity

On July 6, 2016, the European Parliament officially adopted the Network and Information Security (NIS) Directive[1] which is expected to fully enter into force in May 2018.  The NIS Directive is the first set of cybersecurity rules to be implemented on the EU level, adding to an already complex array of laws which companies have to comply with when implementing security and breach response plans.  The Directive aims to set a minimum level of cybersecurity standards and to streamline cooperation between EU Member States at a time of growing cybersecurity breaches.

The final text (which took the EU and … Read more


Insider Trading Penalties: An International Study

Insider trading is a serious form of misconduct and can result in defendants receiving lengthy prison sentences and significant monetary sanctions.  Our working paper, ‘Sanctions Imposed for Insider Trading in Australia, Canada (Ontario), Hong Kong, Singapore, New Zealand, the United Kingdom and the United States: an Empirical Study’, provides a detailed analysis of the insider trading enforcement landscape across a range of common law jurisdictions over the seven year period from January 1, 2009 to December 31, 2015. In particular, our study examines custodial sentences, banning orders and pecuniary sanctions imposed for insider trading. The study is based on … Read more

Georges Ugeux

Culture and Conduct: Beyond Regulation and Compliance

“Culture, more than rule books, determines how an organization behaves.” – Warren Buffet[1]

In recent years, there have been ongoing occurrences of serious professional misbehavior, ethical lapses and compliance failures at financial institutions. It was the crisis that exposed systematic mentality errors in finance.[2]

The hope was that post-crisis regulatory reforms would tackle the typical mindset of short-term oriented self-enrichment in finance, considered as one of the origins of the financial crisis. Now, almost ten years after the crash in 2007, the lack of fundamental change raises the question whether there is an endemic issue within the financial … Read more