On Monday, December 16th, Morrison Foerster released what may be a first-of-its-kind regulatory reform glossary. The glossary, which is not comprehensive, is intended to serve as a helpful summary of neologisms and other acronyms (e.g., SIFI), nicknames (e.g., repo), and definitions (e.g., private funds), that have become frequently used in the industry.
The following is the SEC’s press release and fact sheet on the adoption of the Volcker Rule, originally available here. The adopting release and text of the final rule is available here. Public statements from each of the five SEC Commissioners, including two dissents, are available here.
Five federal agencies on Tuesday issued final rules developed jointly to implement section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Volcker Rule”).
The final rules prohibit insured depository institutions and companies affiliated with insured depository institutions (“banking entities”) from engaging in short-term proprietary trading of … Read more
The following is based on a memo from Debevoise & Plimpton, published on November 1, 2013, which is available here. The original memo contains a useful graphic representation of the LCR equation which has been omitted from this post.
On October 24, the Federal Reserve, followed on October 30 by the Federal Deposit Insurance Corporation (the “FDIC”) and the Office of the Comptroller of the Currency (the “OCC”) (collectively, the “Agencies”), released a proposed rule (the “Proposed Rule”) that would apply a Liquidity Coverage Ratio (the “LCR”) to certain
The following comes to us from the Honorable Judge Jed S. Rakoff, who sits in the U.S. District Court for the Southern District of New York. Judge Rakoff is also an adjunct professor at Columbia Law School and will be speaking on a panel today at Columbia on Securities Regulation and Enforcement (see here).
Five years have passed since the onset of what is sometimes called the Great Recession. While the economy has slowly improved, there are still millions of Americans leading lives of quiet desperation: without jobs, without resources, without hope.
Who was to blame? Was it simply … Read more
In my article, The Pension System and the Rise of Shareholder Primacy, which has recently appeared in the Seton Hall Law Review, I explore the influence of the pension system on corporate governance, particularly shareholder primacy and the relationship between corporations and their employees. Today it is widely accepted among business managers, scholars of corporate law and financial economists that the objective of corporate law and corporate governance should be to promote shareholder wealth (as opposed to a wider community of interests, including employees, creditors, suppliers, customers and local communities). Shareholder capitalism is, however, a relatively recent development. Large, … Read more
Federal Reserve Issues Interim Final Rules Addressing Application of New Basel III-Based Capital Framework for Purposes of the 2013-2014 Capital Plan and Stress Test Cycle
The Federal Reserve recently issued two interim final rules that clarify how covered companies must incorporate the new U.S. Basel III-based final capital rules (the “Basel III Capital Rules”) into their capital plan submissions and Dodd-Frank Act stress tests for the upcoming 2013-2014 cycle.
To address and clarify the potential issues created by the interaction of the overlap of the nine-quarter planning horizon of the Federal Reserve’s current version of the capital plan
The Basel Committee on Banking Supervision (“BCBS”) and the International Organization of Securities Commissions (“IOSCO”) jointly issued a final policy framework (the “Policy Framework”) establishing minimum standards for margin requirements for non-centrally cleared derivatives. The Policy Framework is a result of a 2011 G20 agreement calling upon BCBS and IOSCO to develop, for consultation, global standards for margin requirements for non-centrally cleared derivatives; BCBS and IOSCO released two consultative versions prior to releasing the current final version of the Policy Framework.
The Policy Framework requires the exchange of both initial and variation margin between so-called “covered entities” that engage in … Read more
Shuanghui International Holdings Limited (“Shuanghui”) and Smithfield Foods, Inc. (“Smithfield”) announced on Friday that the companies have received notice from the Committee on Foreign Investment in the United States (“CFIUS”) that its national security review of the proposed acquisition by Shuanghui of Smithfield is complete. Although the CFIUS process has concluded, the acquisition, which would be the largest acquisition of a U.S. company by a Chinese investor to date, remains subject to other conditions to closing, including the approval of Smithfield shareholders.
Shuanghui, a Hong Kong-based company that owns a variety of businesses in the food and logistics sectors, including
The following post is based on a recent Gibson Dunn memo, available here, that was originally published on August 27, 2013.
This post provides a brief summary of a number of recent developments and trends in corporate governance and executive remuneration in the UK, including changes resulting from EU regulation or guidance. It also covers recent EU and UK-specific initiatives to increase board diversity.
Part A: UK Corporate Governance Updates
Updates to the UK Corporate Governance Code
The UK Corporate Governance Code (the “Governance Code”), which applies to UK Premium-listed companies (but not Standard-listed or AIM companies), was updated
Beyond the general aspects of the U.S. Securities and Exchange Commission (SEC)’s new JOBS Act rules previously discussed in this series of articles, issuers who rely on new Rule 506(c) for an onshore offering and Regulation S and foreign private placement rules for a simultaneous offshore offering need to consider the impact of solicitation and advertising activities on the Regulation S exemption and on the private placement exemption under pertinent foreign rules.
Regulation S under the Securities Act of 1933 (the Securities Act) establishes an exemption from U.S. securities registration for certain offerings targeting non-U.S. investors. It provides an exemption … Read more
The Commodity Futures Trading Commission (CFTC) caused quite a stir in 2012 when it changed its rules to require investment advisers to mutual funds that invest to any significant degree in derivatives, to register as “Commodity Pool Operators” (CPOs). The CFTC’s actions drew the ire of the mutual fund industry to such an extent that industry groups challenged the rules in court.
Notwithstanding widespread industry opposition, the CFTC stuck to its guns, perceiving a need to regulate mutual funds employing increasingly complex derivatives strategies. At the same time, the CFTC recognized that the application of its rules could create overlapping … Read more
On 17 July 2013, the European Securities and Markets Authority (“ESMA”) published a consultation paper (the “Consultation Paper”)1 on draft regulatory technical standards (“RTS”) aimed at implementing certain provisions of the European Markets Infrastructure Regulation2 (“EMIR”) relating to (a) the extraterritorial application of EMIR, and (b) preventing the evasion of EMIR’s provisions.
EMIR was adopted on 4 July 2012 and entered into force on 16 August 2012. EMIR introduces provisions to improve transparency, establish common rules for … Read more
Charles Michael is a partner at Brune & Richard LLP in New York and is the editor of the SDNY Blog, available here.
In an opinion Monday, Judge Jed Rakoff of the U.S. District Court for the Southern District of New York became the second federal judge to endorse a broad interpretation of the Financial Institutional Reform, Recovery, and Enforcement Act (“FIRREA”) that will make it easier for the federal government to pursue bank misconduct.
FIRREA was adopted in the wake of the savings and loan scandals of the late 1980s, and allows the federal government to pursue … Read more
Federal District Court Expresses Skepticism That Dodd-Frank Extraterritorial
Jurisdiction Provision Overturns Morrison in Government Enforcement Actions
In a memo we wrote on the day the Dodd-Frank Act was signed into law, we discussed a provision in that law seemingly intended to render the Supreme Court’s decision in Morrison v. National Australia Bank inapplicable to cases brought by the SEC or the Justice Department. We noted that this “extraterritorial jurisdiction” provision, Section 929P(b), contains a significant drafting error, one that likely makes it a practical nullity. Since then, much academic commentary has concurred in our view. Last week, a federal … Read more
On July 22, 2013, the Alternative Investment Fund Managers Directive (“AIFMD”) is due to be implemented in every member state in the European Union. One of the most immediate areas where the AIFMD will have an impact on the activities of U.S. asset managers is through the changes that the AIFMD applies to private placement rules throughout the European Union.
In this alert, we answer some key questions that will help U.S. asset managers prepare for the changes in regulation, which are imminent.
Nothing is changing, right?
Unfortunately not. The AIFMD mandates that each European Union member state makes changes … Read more
On July 12, 2013, the CFTC adopted long-anticipated final cross-border guidance (the “Final Guidance”) that provides guidelines for the application of the CFTC’s swap regulatory regime to cross-border swap activities. At the same time, the CFTC adopted a phase-in compliance schedule (the “Exemptive Order”) that extends, with material changes, the cross-border exemptive order issued by the CFTC in January 2013 (the “January Order”).
The Final Guidance and the Exemptive Order address several important topics, including:
- the final definition of U.S. person for purposes of the CFTC’s swap regulatory regime;
- guidance on which swaps a non-U.S. person must include in, and
The CLS Blue Sky Blog presents the final part of the second installment of our new series, entitled “The Marketplace of Ideas.” Parts I, II, III, and IV can be found here, here, here, and here. Earlier installments are available here. The intent is to present different perspectives on the same subject by two or more authors.
The subject is Professor Katharina Pistor’s Legal Theory of Finance (LTF). For a short description of her theory and the format of the commentary we are releasing, please see here. In the final release, LTF – The … Read more
Discussing the Legal Theory of Finance (LTF) on the Marketplace of Ideas has been a great experience. I want to thank my colleague Kathryn Judge for coming up with the idea and for writing an inspiring blog post that raises important questions about the content and boundaries of the theory’s core features. The response to the call for blog posts from practitioners and academics was equally uplifting – and I am extremely grateful to the contributors for their engagement with LTF and the critiques they offered. Thanks also to Jason Parsont who manages the CLS Blue Sky Blog and kept … Read more
The CLS Blue Sky Blog presents Part IV of the second installment of our new series, entitled “The Marketplace of Ideas.” Parts I, II, and III can be found here, here, and here. Earlier installments are available here. The intent is to present different perspectives on the same subject by two or more authors.
In A legal theory of finance, Katharina Pistor outlines a theory designed to deal with the law-finance paradox, that is, the observation that when “the full force of law is relaxed or suspended to take account of changes in circumstances” – precisely to avoid bringing down the financial system –, “the credibility law lends to finance in the first place is undermined” (Pistor, 2013: 323). In building her argument, Pistor advances the concept of law’s elasticity, which she defines as “the probability that ex ante legal commitments will be relaxed or suspended in the future” (2013: 320). The … Read more