“What does Sarbanes-Oxley mean? That’s when two members of U.S. Congress fiddle and half a million accountants in Europe start dancing.”
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, 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”).
Sarbanes-Oxley was enacted by … Read more
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
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
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
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
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 to The Washington Post, which is now linked to the immigration section of Mr. Trump’s transition website. The first proposal listed is … Read more
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
On November 29, 2016, Prime Minister Theresa May’s government issued a green paper (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
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
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
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
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
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.
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
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”).
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
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
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
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
Small and medium-size enterprises (SMEs) play a significant role in the global economy, accounting for a substantial portion of employment and domestic production. According to some estimates, SMEs’ contribution to gross domestic product exceeds 51 percent in high-income countries, consistent with the general consensus that SMEs are “engines” of economic growth. With an increasing number of SMEs engaging in international transactions, their influence on the volume of international trade has increased as well. In the U.S alone, SMEs represented 97 percent of all importers and 98 percent of all exporters, and accounted for 31 percent and 33 percent of imported … Read more
As sovereign borrowers and their creditors know all too well, the legal framework governing their respective rights and obligations (the so-called international financial architecture) lacks an effective means to enforce payment in most circumstances or to modify payment obligations when the debtor is unable to honor the original terms of its debts. The recent case of Argentina exemplifies both of these shortcomings. Venezuela’s debt instruments and debt management techniques developed over time nonetheless hold out the promise that the country may forge a path to a successful rearrangement of its debts when a government committed to sound economic policies and … Read more
On October 14, 2016, the U.S. Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) and the Department of Commerce’s Bureau of Industry and Security (“BIS”) announced revisions to the Cuban Assets Control Regulations (“CACR”) and the Export Administration Regulations (“EAR”), respectively, continuing the incremental easing of the U.S. embargo on Cuba. Simultaneously, the President announced a new Presidential Policy Directive for U.S.-Cuba normalization (“Cuba PPD”), which aims to underpin the Obama Administration’s vision for normalizing relations with Cuba with government-wide guidance. However, the vision remains in important respects aspirational; statutory constraints on Cuba policy continue to limit the … Read more