Cadwalader lawyers author timely memoranda on significant developments in the law in order to keep our clients and friends apprised as to what these developments may mean for their business. |
|
FERC Commissioners Receive ISO/RTO Gas-Electric Coordination Reports at Open Meeting, Significant Issues Remain
|
As natural gas prices have decreased in the United States, electricity market operators’ reliance on gas-fired generation to serve consumers’ needs has steadily increased. This increased reliance has sharpened the focus on significant impediments resulting from a somewhat disjointed relationship between the electric and natural gas industries. These impediments, in concert with weather events and maintenance scheduling, have resulted in generator unavailability during times of system stress due to, among other reasons, a lack of consistent fuel supply. There has been no shortage of finger-pointing on this front among system operators, natural gas pipelines and suppliers, and generators with capacity obligations.
|
May 20, 2013 |  Download
|
|
Derivative Product Companies: A Comparison of New Rating Agency Guidelines
|
Derivative product companies (“DPCs”) are structured financial entities that act as intermediaries for, or guarantors of, an affiliated entity (the “Sponsor”) under interest rate or FX derivatives with a non-affiliated counterparty (a “Counterparty”). In a typical intermediation structure, a DPC will enter into a trade with a Counterparty and simultaneously enter into an offsetting mirror transaction with the Sponsor. In such manner, the DPC hedges its market risk while retaining the credit risk of its Counterparty.
|
May 10, 2013 | Download
|
|
What's Next for the Basel Securitisation Framework?
|
Comments have now been received by the Basel Committee on Banking Supervision (the “Basel Committee”) in response to its consultative paper entitled “Revisions to the Basel Securitisation Framework”, published in December 2012 (the “Consultation Paper”). The Consultation Paper contains important proposals for revisions to the regulatory capital requirements in relation to securitisation exposures. Many of the respondents expressed concern about various aspects of the proposals and the potential consequences for the securitisation industry.
|
May 9, 2013 | Download
|
|
Treasury and the IRS Propose Regulations on $500,000 Compensation Deduction Limit for Health Insurers
|
On April 2, 2013, the Treasury Department and the IRS issued proposed regulations under section 162(m)(6) of the Internal Revenue Code, which generally imposes an annual $500,000 limitation on the amount that certain health insurers and their affiliates (“Covered Health Insurance Providers” or “CHIPs”) may deduct for compensation paid to an employee. This limitation is contained within section 162(m) of the Code, which historically has governed the deductibility of compensation paid by public companies to certain of their senior executive officers. However, the $500,000 limitation in subpart (6) of section 162(m) is much broader in scope and applies to all CHIPs, whether public or private, and to all of a CHIP’s current or former officers, directors, employees and related service providers.
|
May 8, 2013 | Download
|
|
OIG Releases Updated Provider Self-Disclosure Protocol
|
On April 17, 2013, the Office of Inspector General (“OIG”) of the United States Department of Health and Human Services released a revised Self-Disclosure Protocol that updates previous guidance for how health care providers can voluntarily disclose and resolve instances of potential fraud involving Federal health care programs such as Medicare and Medicaid. This guidance supersedes the original guidance provided in 1998, which has been updated various times over the years.
|
May 3, 2013 | Download
|
|
Tempting Fate: Two Recent Federal Decisions Apply Fairness Test to Protect Attorney-Client Privilege in Face of Extrajudicial Disclosures
|
On February 25 and March 26, 2013, two federal district courts refused to find a broad waiver of the attorney-client privilege in the face of extrajudicial disclosures of privileged communications. In both decisions, the courts reasoned that extrajudicial disclosures of privileged communications should result in a waiver of the attorney-client privilege only where fairness compels such a result. A fairness inquiry, however, is highly fact-specific and subjective, and there is no guarantee that a court will find an absence of waiver. (In each case, the courts ultimately concluded that fairness did not warrant a waiver beyond the materials that actually were disclosed because they were not offered in the underlying actions.) The lesson learned, of course, is that companies should avoid the issue altogether by guarding against extrajudicial, or other, disclosures of their privileged communications in the first instance.
|
April 18, 2013 | Download
|
|
CFTC Issues Final Exemption Order for RTO/ISO Transactions
|
The Commodity Futures Trading Commission (“CFTC” or “Commission”) on March 28, 2013, issued its final order exempting certain regional transmission organizations and independent system operators (“RTO/ISOs”) and specified transactions in their respective markets, from all but the general anti-fraud and anti-manipulation authority, and scienter-based prohibitions of the Commodity Exchange Act (“CEA”) and CFTC regulations thereunder (“Final Order”). The Final Order was issued in response to a request for exemption filed pursuant to Section 4(c) of the CEA by the California Independent System Operator Corporation (“CAISO”), Electric Reliability Council of Texas, Inc. (“ERCOT”), ISO New England, Inc. (“ISO-NE”), Midwest Independent Transmission System Operator, New York Independent System Operator, and PJM Interconnection, LLC (“Requestors”).
|
April 3, 2013 | Download
|
|
Court Holds that Stockton is Eligible to File for Chapter 9
|
On April 1, 2013, the U.S. Bankruptcy Court for the Eastern District of California ruled that the City of Stockton qualified to file for protection under chapter 9 of the Bankruptcy Code. The court’s decision on this issue serves as an important milestone for chapter 9 jurisprudence, clarifying the requirements for “good faith” negotiations and being “insolvent” as conditions to filing for chapter 9 protection. Significantly, the court held that a municipal debtor need not negotiate with all of its creditors, only those that it intends to impair.
|
April 3, 2013 | Download
|
|
Third Time's A Charm?: New York State Agencies Release Latest Revision of Proposed Regulations Restricting Executive Compensation and Administrative Costs of State-Funded Providers
|
On March 13, 2013, the New York State Department of Health (“DOH”) along with 12 other State agencies released yet another iteration – the third version – of proposed regulations limiting the use of State funds for executive compensation and administrative expenses of health care providers and managed care plans (“Proposed Regulations (Version 3)”). The proposed regulations would implement Executive Order No. 38 (the “Executive Order”), issued by Governor Andrew Cuomo last year, on January 18, 2012. The Proposed Regulations (Version 3) supersede two earlier versions of the proposed regulations issued by DOH on October 31, 2012 (the “Proposed Regulations (Version 2)”) and May 30, 2012 (the “Proposed Regulations (Version 1)”). A full copy of the text of the Proposed Regulations (Version 3) is available on the DOH web site. Comments are due 30 days from issuance, or April 12, 2013.
|
March 28, 2013 | Download
|
|
Ninth Circuit’s Harkonen Decision Does Not Undermine Recent Second Circuit Precedent Establishing That Truthful Promotion Of Approved Drugs For Off-Label Use Is Protected By The First Amendment
|
On March 4, 2013, the United States Court of Appeals for the Ninth Circuit affirmed the conviction of W. Scott Harkonen (“Harkonen”), who had been tried and convicted of wire fraud for issuing a fraudulent press release regarding the results of a clinical trial. In its unanimous, unpublished decision, the Ninth Circuit held that the jury’s finding that Harkonen had engaged in fraudulent speech was supported by sufficient evidence, and therefore the press release at issue was not protected by the First Amendment. Since the Ninth Circuit found that Harkonen’s statements were false and misleading, it was not required to and did not address the Second Circuit’s recent decision in United States v. Caronia, 703 F.3d 149 (2d Cir. 2012), where the court held that the government’s prosecution of a pharmaceutical sales representative for truthful promotion of an approved drug for off-label uses violated the First Amendment.
|
March 22, 2013 | Download
|
|
UK Budget 2013 – Key Tax Measures
|
The Chancellor of the Exchequer’s fourth Budget, held on 20 March 2012, continued the prevailing taxation themes in recent Budgets of balancing between stimulus and business incentives on the one hand, and anti-avoidance initiatives on the other. However, perhaps more than recent Budgets, the balance this time seemed materially weighted towards anti-avoidance legislation and initiatives, with the stimulus package being quite narrowly focused towards the UK fund management industry. Allied with the sombre tone of the prevailing macro-economic news (including a revision of UK GDP growth down to 0.6 per cent. for 2013), the focus on counteracting tax avoidance and numerous damning comments from the Chancellor on tax avoiders and abusers contributed to a Budget which was devoid of much sunlight. In short, a Budget to match the notoriously gloomy UK weather experienced so far in 2013.
|
March 21, 2013 | Download
|
|
SEC Issues Proposed Regulation SCI to Enhance its Regulatory Oversight of Exchanges, Plan Processors, ATSs, and other Key Market Participants
|
The SEC has issued a release (the “Release”) proposing Regulation Systems Compliance and Integrity (“Regulation SCI”). The Release would impose a variety of requirements upon key market participants, e.g., exchanges and certain alternate trading systems (“ATSs”), clearing agencies, FINRA, the MSRB, and “plan participants,” with respect to automated systems that directly support trading, clearance and settlement, order routing, market data, regulation or surveillance.
|
March 18, 2013 | Download
|
|
Jury Rejects Chinese Vitamin C Maker’s Foreign Compulsion Defense
|
A jury has returned a verdict against vitamin C manufacturer Hebei Welcome Pharmaceutical and its parent, North China Pharmaceutical Group, for violating American antitrust law. In finding for the plaintiffs, the jury rejected the Chinese companies’ defense that their conduct had been compelled by the Chinese government. The jury found that the plaintiffs had sustained damages of $54.1 million, which was trebled under U.S. antitrust law for a total award of $162.3 million. Prior to the jury verdict, three of the original five defendants reached a settlement with the plaintiffs, with two of them reportedly agreeing to pay the plaintiffs $22.5 million.
|
March 15, 2013 | Download
|
|
Revised Proposals for a European Union Financial Transactions Tax
|
This memorandum considers the revised proposal made by the European Commission for a European Council Directive on financial transaction tax (the “FTT”) to be introduced under the EU’s enhanced cooperation procedure by 11 participating Member States: Belgium, Germany, Estonia, Greece, Spain, France, Italy, Austria, Portugal, Slovenia and Slovakia (the “FTT-zone”).
|
March 12, 2013 | Download
|
|
Two Birds with One Stone: In Action Involving Civil RICO, Second Circuit Provides Defenses Against Mail Fraud and FLSA Allegations
|
On March 1, 2013, in Lundy v. Catholic Health System of Long Island, Inc., the United States Court of Appeals for the Second Circuit affirmed the dismissal of civil mail fraud claims asserted under the Racketeer Influenced and Corrupt Organizations ("RICO") statute and alleged violations of the Fair Labor Standards Act ("FLSA"). In doing so, the court reached at least two notable conclusions: (a) mail fraud claims, including under civil RICO, must fail if the alleged mailings made the alleged fraud easier to detect; and (b) the FLSA does not provide a claim for "gap time." The mail fraud conclusion could have a far-reaching impact; the mail fraud statute has broad reach in federal criminal and civil enforcement including in civil RICO actions, and in other federal civil actions such as those involving the Financial Institutions Reform, Recovery, and Enforcement Act of 1989 ("FIRREA").
|
March 6, 2013 | Download
|
|
Chinese Companies Accused of Participating in Vitamin C Cartel Nearing Trial (English & Chinese)
|
The trial of four Chinese vitamin C producers accused of participating in a cartel began this week. The trial, which is expected to last two to three weeks, is likely to focus on the companies’ defense that the Chinese government compelled them to engage in the alleged anticompetitive behavior. Under American law, in some circumstances companies may avoid antitrust liability if a court finds that their involvement in anticompetitive behavior was compelled by a foreign government. Cases in which companies assert this defense can put American courts in the difficult position of attempting to interpret foreign law.
|
February 27, 2013 | Download
|
|
Antitrust Division Enters Into First Deferred Prosecution Agreement (English, Japanese and Chinese)
|
In a first for the Department of Justice (“DOJ”) Antitrust Division, the Division entered into a Deferred Prosecution Agreement (“DPA”) with a financial institution for its involvement in an alleged LIBOR-rate manipulation scheme. As part of the agreement, the company’s Japanese subsidiary agreed to plead guilty to wire fraud in connection with the alleged LIBOR rate-rigging.
|
February 27, 2013 | Download
|
|
DOL Provides Important ERISA Guidance Regarding Cleared Swaps
|
On February 7, 2013, the U.S. Department of Labor (the “DOL”) issued an advisory opinion concerning the application of the fiduciary and prohibited transaction provisions of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) to certain “cleared swap” transactions conducted pursuant to the provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”).
|
February 26, 2013 | Download
|
|
Supreme Court Rules Phoebe Putney's Acquisition is Not Immune Under the State-Action Doctrine
|
On February 19, 2013, the U.S. Supreme Court unanimously reversed the U.S. Court of Appeals for the Eleventh Circuit’s decision in FTC v. Phoebe Putney Health System. The Eleventh Circuit had affirmed a district court ruling that Phoebe Putney Health System’s acquisition of Palmyra Medical Center was immune from FTC antitrust scrutiny under Georgia law. In a decision penned by Justice Sonia Sotomayor, the Court, in its first application of the state-action doctrine to Section 7 of the Clayton Act, held that Georgia had not “clearly articulated and affirmatively expressed” a state policy of displacing the federal antitrust laws that would otherwise apply to Phoebe Putney’s planned acquisition of Palmyra Hospital. As a result, the Supreme Court held that “state-action immunity” did not apply.
|
February 21, 2013 | Download
|
|
Federal Court Finds that FDA Drug Approval is not Complete Defense to False Claims Act Allegation Involving On-Label Promotion
|
On January 30, 2013, in United States ex rel. v. Bristol Myers Squibb Company & Sanofi-Aventis U.S., LLC et al., Civ. No. 11-00246 (S.D. Ill.) (“BMS & Sanofi-Aventis”), the Court denied a motion to dismiss the relator’s second amended False Claims Act (“FCA”), 31 U.S.C. § 3729 et seq. complaint alleging the defendants made false efficacy claims regarding Plavix, even though the United States Food and Drug Administration (“FDA”) approved Plavix for the promoted uses.
|
February 21, 2013 | Download
|
|
State Review Team Finds Financial Emergency in City of Detroit. What is Next for the City of Detroit?
|
On February 19, 2013, the six-person Review Team appointed by Michigan’s Governor to conduct a detailed financial review of the City of Detroit delivered its report to the Governor. The Report concludes that a financial emergency exists in the City.
As a result of the Review Team’s conclusion, the Governor is required to take action under Michigan’s emergency financial manager law by no later than March 21, 2013.
|
February 19, 2013 | Download
|
|
Criminal Antitrust Whistleblower Act Reintroduced
|
On January 22, 2013, Sens. Patrick Leahy (D-VT) and Chuck Grassley (R-IA) reintroduced legislation to the Senate Judiciary Committee that would extend whistleblower protections to employees who provide information to federal prosecutors in criminal antitrust investigations. If passed, the Criminal Antitrust Anti-Retaliation Act of 2013 (“Act”) would allow employees to file a complaint with the U.S. Department of Labor about suspected retaliation for cooperating with the Department of Justice.
|
February 8, 2013 | Download
|
|
"Worthless Services" Can Be Costly: Nursing Facilities Enter Into CIA and Settle False Claims Act Suit Over Quality Issues
|
This past December, GGNSC Holdings LLC and six of its affiliated nursing homes (“Golden Living”) entered into a Corporate Integrity Agreement (“CIA”) with the Office of Inspector General of the U.S. Department of Health and Human Services (“OIG”) and agreed to pay $613,300 to settle a Federal and state False Claims Act (“FCA”) action brought by the U.S. Department of Justice (“DOJ”) and the State of Georgia. The settlement resolved the FCA claims based on allegations that two of the nursing facilities had provided inadequate and “worthless” wound care to its residents. The Golden Living case represents only the latest installment of DOJ’s aggressive use of the FCA to pursue “worthless services” actions, and is a sober reminder to providers and managed care plans that quality of care – both individual and systemic deficiencies – must be treated as a compliance priority.
|
February 6, 2013 | Download
|
|
The Final FATCA Regulations: Applications to Foreign Investment Vehicles
|
On January 17, 2013, the Internal Revenue Service issued final regulations that provide guidance on the “FATCA” provisions of the Internal Revenue Code. This memorandum summarizes the aspects of the final regulations that are most relevant to foreign hedge funds and their foreign “blockers,” foreign private equity funds, foreign “collateralized loan obligation” issuers, and “catastrophe bond” issuers.
|
January 31, 2013 | Download
|
|
City of Stockton: Bankruptcy Court Holds that Rule 9019 Does Not Apply to Chapter 9 Debtors
|
On January 30, 2013, Judge Christopher Klein of the Bankruptcy Court for the Eastern District of California held that, pursuant to section 904 of the Bankruptcy Code, a municipal debtor is not required to seek court approval to enter into settlements with and make settlement payments to prepetition creditors during the pendency of its chapter 9 case. The decision demonstrates the broad scope of section 904 and the free reign that a municipal debtor enjoys under that section during the pendency of its chapter 9 case. In re City of Stockton, Cal., Case No. 12-32118 (Bankr. E.D. Cal. Jan. 30, 2013).
|
January 31, 2013 | Download
|
|
Energy Tax Provisions in the American Taxpayer Relief Act of 2012
|
On January 1, 2013, Congress passed the American Taxpayer Relief Act of 2012 (the “Act”), which averted the “fiscal cliff.” The Act contains several significant energy-related tax provisions.
|
January 15, 2013 | Download
|
|
HSR Thresholds Increased for 2013
|
The Federal Trade Commission’s (“FTC”) annual revisions to the dollar jurisdictional thresholds in
the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (the “HSR Act”), will
become effective on February 11, 2013. These changes increase the dollar thresholds necessary
to trigger the HSR Act’s premerger notification reporting requirements. The FTC also increased the
thresholds for interlocking directorates under Section 8 of the Clayton Act.
|
January 14, 2013 | Download
|
|
The Japan Fair Trade Commission's Report on Corporate Compliance Programs (English & Japanese)
|
The Japan Fair Trade Commission (JFTC) recently published a report titled "Survey on Corporate
Compliance Efforts with the Antimonopoly Act (Summary)." The report comes at a time that
Japanese corporations are facing greater scrutiny at home and abroad for anticompetitive conduct.
In 2012 thus far, the U.S. Department of Justice (DOJ) has already secured over $800 million in
fines against Japanese defendants. This record number continues the upward trend in U.S.
enforcement against Japanese companies over the past decade. At the same time, Japanese
authorities have been increasing their competition enforcement activity, with the JFTC having issued
over $400 million in surcharge payment orders to 290 enterprises for "unreasonable restraints of
trade" in 2011.
|
January 11, 2013 | Download
|
|
FERC Grants CAISO Declaratory Order Request and Accepts Reliability Must-Run Agreement
|
On January 4, 2013, FERC granted a petition for declaratory order filed by the California
Independent System Operator Corporation (“CAISO”) in late November asking FERC to find that
consent by BE CA, LLC, a subsidiary of JP Morgan Ventures Energy Corporation (collectively, “JP
Morgan”), is unnecessary for certain plant conversions at a generation facility owned by AES
Huntington Beach LLC (“AESHB”), or for a related reliability must-run (“RMR”) agreement between
CAISO and AESHB to become effective. FERC determined that certain agreements at issue in this
case form an integrated agreement within FERC’s jurisdiction. FERC also determined that such
agreements do not establish the consent rights JP Morgan claims exist. By separate order, FERC
also conditionally accepted the RMR agreement between CAISO and AESHB, effective January 9,
2013.
|
January 10, 2013 | Download
|
|
Important Court Decision For No-Fault Insurers: Federal Court Rejects Limitation on State Farm v. Mallela
|
We are pleased to inform you that our firm has obtained a very favorable and significant decision for no-fault insurers on an important issue of first impression. Specifically, on January 7, 2013, in the case of Allstate Ins. Co. v. Elzanaty, the United States District Court for the Eastern District of New York (Honorable Arthur D. Spatt) rejected the defendants’ attempt to limit the ability of insurers to seek affirmative recovery for fraud and the verification of compliance with licensing requirements from health care providers licensed pursuant to Article 28 of the New York Public Health Law(“Article 28 Facilities”). The decision is significant because it is the first time a court has extended the reach of State Farm v. Mallela to health care providers other than professional medical corporations.
|
January 9, 2013 | Download
|
|
U.S. Department of Labor Proposes New Criteria for Which Entities Would Qualify as "Rating Agencies" in Connection with the Underwriter Exemptions
|
On December 28, 2012, the U.S. Department of Labor (the “DOL”) published a proposed amendment to the so-called “Underwriter Exemptions,” which provide relief from certain of the prohibited transaction provisions of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). The Underwriter Exemptions are a group of individual prohibited transaction exemptions (“PTEs”) and EXPRO final authorizations that permit employee benefit plans subject to ERISA or Section 4975 of the Internal Revenue Code (“Plans”) to, among other things, purchase certain securities representing interests in asset-backed or mortgage-backed investment pools.
|
January 8, 2013 | Download
|
|
The American Taxpayer Relief Act of 2012
|
On January 1, 2013, Congress passed the American Taxpayer Relief Act of 2012 (the “Act”), which averted the “fiscal cliff.” This memorandum summarizes some of the more significant provisions of the Act. Section I discusses the provisions that apply to individuals, and section II discusses the provisions that apply to businesses.
|
January 7, 2013 | Download
|
|
Second Circuit’s Caronia Decision Striking Down On First Amendment Grounds The Criminal Conviction Of A Pharmaceutical Sales Representative For Off-Label Promotion Could Have Broad Implications
|
On December 3, 2012, the United States Court of Appeals for the Second Circuit vacated the conviction of Alfred Caronia (“Caronia”), who had been tried and convicted of participating in an unlawful conspiracy to introduce a misbranded drug into interstate commerce in violation of the U.S. Food, Drug and Cosmetic Act (the “FDCA”). In its 2-1 decision, the Second Circuit held that the government’s prosecution of Caronia for engaging in truthful promotion of an approved drug, albeit for off-label uses, violated Caronia’s right of free speech under the First Amendment. As discussed below, this decision could have far-reaching consequences on the ways in which pharmaceutical companies market and sell prescription drugs, as well as the government’s continued efforts to restrict off-label promotional practices.
|
January 4, 2013 | Download
|
|
CEOs and CFOs Beware: Court Endorses SEC's Aggressive Use of Section 304 of Sarbanes-Oxley To Clawback Compensation of Executives Who Did Not Engage in Misconduct
|
Executive pay is under fire again. According to a recent district court decision in the Western District of Texas interpreting section 304 of the Sarbanes-Oxley Act of 2002, corporate executives could lose their bonuses and other incentive compensation if their company is required to revise its financial statements as a result of misconduct, even when the executives did nothing improper. On November 13, 2012, the court in SEC v. Baker, No. A-12-CA-285-SS, 2012, WL 5499497 (W.D. Tex. Nov. 13, 2012), agreed with the Securities and Exchange Commission’s view that section 304 requires chief executive officers and chief financial officers to return bonuses and certain other compensation received in years in which the corporation restated its financials, even in the absence of misconduct by the executive.
|
January 2, 2013 | Download
|
|
Recent Actions by Supreme Court and U.S. Antitrust Authorities Illustrate Continued Focus on Antitrust Issues in the Health Care Sector
|
A few developments in the past month by the Supreme Court and the U.S. antitrust agencies serve as reminders that regulators continue to focus on antitrust enforcement in the health care sector. These recent actions, of course, are occurring during the health care reform process, which has spurred increased horizontal and vertical integration in the health care space.
|
December 12, 2012 | Download
|
|
UK Chancellor’s Autumn Statement 2012: Key Taxation Aspects
|
The Autumn Statement of the UK Chancellor of the Exchequer, presented to Parliament on 5 December 2012, was delivered with attention to three main themes: protecting the UK economy, growth and fairness. Within the overall strategy of combining deficit reduction with stimulating economic recovery, the UK taxation features of the Autumn Statement make interesting reading. The taxation provisions outlined in the Autumn Statement can be divided into those focused on “growth” and those which are more concerned with “fairness”. At a time when short-term economic forecasts have been downgraded by the Office for Budget Responsibility and the Government’s austerity programme has been extended until 2018, it is perhaps unsurprising that the taxation provisions relating to “fairness” (or, in other words, ensuring that tax evasion and tax avoidance is firmly counteracted) feature more than tax-stimulus measures to propel growth.
|
December 6, 2012 | Download
|
|
Federal Reserve Governor Tarullo Calls for Increased U.S. Regulation of Foreign Banking Organization
|
In a speech delivered last week to the Yale School of Management, Federal Reserve Governor Daniel K. Tarullo signaled that the Board of Governors of the Federal Reserve System (FRB) is now considering major changes to the regulation of foreign banks and their affiliates in the United States. These regulatory changes suggested by Governor Tarullo would substantially expand the authority of the Federal Reserve to regulate capital, liquidity, and risk management of the U.S. operations of foreign banking organizations, and would result in the creation of a new form of Fed-regulated vehicle, the “intermediate holding company” (IHC). In that regard, he is suggesting a very substantial re-thinking of the manner in which the U.S. operations of global financial institutions are regulated, as well as increasing the cost of foreign banks conducting business in the U.S.
|
December 3, 2012 | Download
|
|
First Circuit Set to Weigh in on Significant Circuit Split Involving False Claims Act First to File Rule
|
Early next year, the United States Court of Appeals for the First Circuit will likely issue a significant False Claims Act (“FCA”) ruling in United States ex rel. Heineman-Guta v. Guidant Corp. The Guidant Court will become the latest federal appeals court to determine whether a previously filed, but legally insufficient, FCA complaint satisfies the “first-to-file rule.” Regardless of how the Guidant Court rules, but especially if it reverses the district court, its decision will only deepen an existing circuit split, and will increase the odds of the Supreme Court ultimately resolving this issue.
|
November 23, 2012 | Download
|
|
First Ever Admission of Violation in FERC Manipulation Action
|
On November 19, 2012, FERC approved a settlement agreement between its Office of
Enforcement and Gila River Power LLC (“Gila River”) addressing market manipulation claims
related to activity in California. As part of the settlement agreement, Gila River admits to violating
both FERC’s anti-manipulation rule, as well as FERC’s regulations against providing inaccurate
information. This is the first case in which a market participant has admitted to violating FERC’s
anti-manipulation rule in an energy trading case. In prior FERC enforcement cases resulting in
settlement, market participants have neither admitted nor denied the alleged violations.
|
November 20, 2012 | Download
|
|
The Consumer Financial Protection Bureau Completes A Hat Trick With Two More Large Settlements With Financial Services Firms and Provides Warnings For the Road Ahead
|
The Consumer Financial Protection Bureau (“CFPB”) recently announced its latest round of multi-hundred million dollar settlements of enforcement actions, all against major credit card issuers. Since July, three enforcement actions led by the CFPB have resulted in restitution payments and penalties in excess of $536 million payable to more than five and a half million customers, the CFPB, and other coordinating federal agencies. On September 24, 2012, the CFPB and the Federal Deposit Insurance Corporation (“FDIC”) agreed to a joint settlement with Discover Bank (“Discover”) to resolve enforcement actions. Pursuant to the Consent Order, Discover agreed to refund $200 million to three and a half million customers who purchased its credit card “add-on” products and to pay a $14 million fine, half payable to the CFPB’s Civil Penalty Fund and half going to the FDIC.
|
November 20, 2012 | Download
|
|
Revisions to CFTC Cross Border Guidance Discussed by Global Regulators at GMAC Meeting
|
The U.S. Commodity Futures Trading Commission (CFTC) is considering revised staff proposals relating to the definition of “U.S. Person”, the availability of “substituted compliance” and the cross border aggregation of swaps, each modifying the initial proposed cross-border guidance dated June 29, 2012. At the meeting of the Global Markets Advisory Committee (GMAC) in Washington, DC on November 7, 2012, Commissioner Gensler announced his intent to issue the revised guidance before year end. However, the revised guidance is subject to further review by the CFTC Commissioners and, as their views on these issues do not appear to be in unison, the final form of the guidance and the timing of its issuance remains uncertain.
|
November 12, 2012 | Download
|
|
Round Two: Revised Proposed New York State Regulations Restricting Executive Compensation and Administrative Costs of State-Funded Providers Clarify Require
|
Five months after initially promulgating regulations, the New York State Department of Health (“DOH”) on October 31, 2012 released revised proposed regulations (the “Revised Proposed Regulations”) superseding the proposed regulations published on May 30, 2012 (the “Initial Proposed Regulations”) to implement Executive Order No. 38 (the “Executive Order”), issued by Governor Andrew Cuomo on January 18, 2012, limiting use of State funds for executive compensation and administrative expenses paid or incurred by the State’s health care providers. Notice of the Revised Proposed Regulations was published in the New York State Register on October 31, 2012 and a full copy of the text is available on the DOH web site. All thirteen state agencies that had issued proposed regulations last May promulgated revised regulations, with all except one providing a 30-day comment period ending November 30, 2012.
|
November 8, 2012 | Download
|
|
Second Circuit Requires Argentina to Pay Defaulted Sovereign Debt Under “Equal Treatment” Clause
|
On 26 October 2012, the United States Court of Appeals for the Second Circuit upheld permanent injunctions designed to remedy Argentina’s breach of a promise to pay certain bondholders after a 2001 default on its sovereign debt. Relying on an “equal treatment” clause which provided that payment of the bonds ranked at least equally with Argentina’s other present and future bond issuances, the court held that Argentina could not discriminate against the defaulted bonds in favour of bonds issued in its 2005 and 2010 sovereign debt restructurings. Accordingly, the court enjoined Argentina from making payments on the 2005 and 2010 bonds without making comparable payments on the defaulted bonds.
|
November 5, 2012 | Download
|
|
Announcement 2012-42 Provides Transitional FATCA Relief for Foreign Financial Institutions
|
On October 24, the Internal Revenue Service issued Announcement 2012-42, which (i) delays
gross proceeds withholding under the “Foreign Account Tax Compliance Act” provisions contained in sections 1471-1474 of the Internal Revenue Code (“FATCA”), (ii) grandfathers (i.e., exempts from FATCA withholding) obligations that give rise only to foreign-source income or will give rise to
U.S.-source dividend-equivalent payments under future section 871(m) regulations, and collateral arrangements that relate only to grandfathered swaps and other grandfathered “notional principal contracts,” and (iii) extends the deadlines under FATCA for completing due diligence with respect
to counterparties and financial account holders.
|
November 2, 2012 | Download
|
|
English Supreme Court Refuses to Enforce U.S. Bankruptcy Avoidance Action Judgment
|
The recent judgment of the Supreme Court in the joined cases of Rubin and another v Eurofinance SA and others and New Cap Reinsurance Corporation (in liquidation) and another v A E Grant and others [2012] UKSC 46, issued on 24 October 2012, established that judgments avoiding pre-bankruptcy transactions (“avoidance judgments”) made by non-EU foreign courts (including U.S. bankruptcy courts) have no special enforceability status in England and Wales compared to ordinary judgments.
|
October 29, 2012 | Download
|
|
FATCA May Open a Pandora's Box of Civil and Criminal Tax Liability for U.S. Persons Who Have Not Timely Paid Their U.S. Taxes or Filed Returns—Now Is a Critical Time to Consider Voluntary Disclosure
|
The Foreign Account Tax Compliance Act (“FATCA”), signed into law on March 18, 2010, was enacted to combat tax evasion by United States citizens and residents who have offshore accounts and assets. Under FATCA, beginning in 2014, the U.S. Internal Revenue Service (“IRS”) will receive annual reports (“FFI Reports”) from certain foreign financial institutions (“FFIs”) – including foreign banks and foreign investment funds – that disclose information regarding accounts and investments held or owned at the FFI by U.S. citizens and residents, including lawful permanent residents who hold U.S. “Green Cards” (“U.S. Persons”).
|
October 22, 2012 | Download
|
|
ESMA’s Final Report on Draft Technical Standards under EMIR: Non-Financial Counterparties and Risk Mitigation for Non-Cleared OTC Derivative Contracts
|
Regulation (EU) No 648/2012 of the European Parliament and of the Council of 4 July 2012 on OTC Derivatives, Central Counterparties and Trade Repositories (“EMIR”) was introduced to provide a framework to improve the functioning of the OTC derivatives markets in the European Union. EMIR requires the European Securities and Markets Authority (“ESMA”) to develop draft regulatory and implementing technical standards in relation to several key provisions of EMIR. On 27 September 2012, ESMA published its final report (the “Final Report”) on such standards.
|
October 16, 2012 | Download
|
|
The Application of Commodity Pool Rules to Insurance Linked Securities
|
The Dodd-Frank Act’s expansion of the definition of “commodity pool” to include any form of enterprise operated for the purpose of trading in “swaps,” coupled with the Commodity Futures Trading Commission (“CFTC”) and the Securities and Exchange Commission (“SEC”) recently adopting an expansive definition of the term “swap” for purposes of the Dodd-Frank Act and the Commodity Exchange Act creates uncertainty regarding whether issuers of insurance linked securities are commodity pools that would require the registration of commodity pool operators (“CPO”) and commodity trading advisors (“CTA”) with the CFTC.
|
October 15, 2012 | Download
|
|
EPA Petitions DC Circuit for Rehearing of EME Homer City Generation, L.P. Decision
|
On Friday, October 5, 2012, the United States Environmental Protection Agency petitioned the full U.S. Court of Appeals for the D.C. Circuit for rehearing en banc of the decision in August 2012 by a three-judge panel of the Court to vacate the Agency’s Cross-State Air Pollution Rule (CSAPR) in EME Homer City Generation, LLP v. EPA, No. 11-1302 (“EME”).
|
October 15, 2012 | Download
|
|
The Rockefeller Letter and the Cybersecurity Debate
|
On September 19, 2012, Senator John D. Rockefeller IV (D-WV), Chairman of the Senate Committee on Commerce, Science, and Transportation, wrote directly to the CEOs of the Fortune 500 companies regarding cybersecurity. He solicited their views “without the filter of beltway lobbyists” and requested that they provide by October 19, 2012, answers to eight questions pertaining to their companies’ cybersecurity practices and their concerns, if any, with certain aspects of the Cybersecurity Act of 2012 that failed to pass the Senate.
|
October 12, 2012 | Download
|
|
Fifth Circuit Finds that an Electricity Requirements Contract Is a “Forward Contract” Exempt from Bankruptcy Code’s Avoidance Powers
|
On August 2, 2012, the United States Court of Appeals for the Fifth Circuit held that a requirements contract for electricity is a forward contract for purposes of section 546(e) of the Bankruptcy Code and, therefore, settlement payments made under the contract are exempt from avoidance as preferences. Claude Lightfoot v. MXEnergy Electric, Inc. (MBS Management Services, Incorporated), 690 F.3d 352 (5th Cir. 2012). The Fifth Circuit’s ruling is a boon to electricity providers that receive payments from counterparties that are insolvent at the time of payment and file for bankruptcy protection shortly thereafter.
|
October 11, 2012 | Download
|
|
Proposed Regulations Relax the Circular 230 Rules for Tax Practitioners
|
On September 17, 2012, the Department of Treasury and the Internal Revenue Service proposed regulations that would significantly relax Circular 230, which governs the conduct of tax practitioners and accountants.
|
October 4, 2012 | Download
|
|
European Commission and China Sign Memorandum of Understanding on Antitrust Cooperation
|
On 20 September 2012, the European Commission Directorate-General for Competition and China’s National Development and Reform Commission (“NDRC”) and State Administration for Industry and Commerce (“SAIC”) signed a Memorandum of Understanding to increase their cooperation and coordination on antitrust matters between the EU and China. The MOU provides a framework for cooperation and coordination relating to “legislation, enforcement and technical cooperation regarding cartels, and other restrictive agreements and the abuse of dominant market positions."
|
October 4, 2012 | Download
|
|
S&P’s New Counterparty Risk Criteria for Structured Finance Securities Offer Additional Flexibility for Derivative Transactions
|
On May 31, 2012, Standard & Poor’s (“S&P”) published an article entitled “Counterparty Risk Framework Methodology and Assumptions”, which outlines S&P’s updated criteria for managing counterparty risk relating to certain structured finance transactions and covered bonds (the “2012 Criteria”). The 2012 Criteria replace prior criteria contained in the following S&P publications: (i) ”Counterparty And Supporting Obligations Methodology And Assumptions” (published December 6, 2010), (ii) “Counterparty And Supporting Obligations Update” (published January 13, 2011), (iii) “Expanding The Scope of Counterparty Criteria To Corporate And Government Ratings” (published June 21, 2011) and (iv) “Global Counterparty And Supporting Obligations Framework For Classifying Currencies” (published June 28, 2011) (collectively, the “2010 Criteria”). The 2012 Criteria became effective upon their publication and apply to all new and existing relevant transactions.
|
September 28, 2012 | Download
|
|
The Sixth Circuit Rules in United States v. Quality Stores, Inc. that Severance Payments Paid to Terminated Employees as a Direct Result of a Work Force Reduction Are Not Subject to FICA Tax
|
Downsizing is a fact of life in the recent U.S. economy. Over the past several decades, employers have involuntarily terminated large numbers of employees and made severance payments totaling hundreds of millions of dollars to the departing workers. The Internal Revenue Service (the "IRS") and courts agree that severance payments are income to the employees and subject to federal income tax. However, the employment tax statutes, FICA for non-railroad employees and RRTA for railroad employees, impose employer and employee taxation on only one subset of "income": "wages" under FICA and "compensation" under RRTA, both of which are generally defined as remuneration received for services rendered.
|
September 28, 2012 | Download
|
|
IRS Issues New Regulations Defining ‘Publicly Traded Property’ for Purposes of Determining the Issue Price of Debt Instruments That Are Significantly Modified in a Restructuring or Issued for Property
|
On September 12, 2012, the IRS issued new regulations defining when property is “publicly traded” for purposes of determining the issue price of a debt instrument that is issued for property or treated as issued for property, as is the case when a debt instrument is “significantly modified” in a restructuring. The new regulations largely follow proposed regulations issued on January 6, 2011, which significantly expanded the definition of publicly traded property. As a result, the new regulations generally increase the situations in which issuers will realize “cancellation of debt” (“COD”) income upon a debt restructuring.
|
September 26, 2012 | Download
|
|
United States and United Kingdom Sign Intergovernmental Agreement under FATCA
|
On September 14, the United States and the United Kingdom entered into an intergovernmental agreement that, if ratified by the U.K. parliament, would provide financial institutions that are resident in the United Kingdom, and branches of financial institutions that are located in the United Kingdom, with an alternative withholding regime to that imposed under the "Foreign Account Tax Compliance Act" ("FATCA") provisions contained in sections 1471 through 1474 of the Internal Revenue Code. The U.S.-U.K. intergovernmental agreement is substantially similar to the "reciprocal" model agreement released by the U.S. Treasury Department on July 26, under which each country exchanges information with the other.
|
September 20, 2012 | Download
|
|
Record $1 Billion Fine and 10-Year Prison Sentences Recommended by Department of Justice for Taiwanese Corporation in Antitrust Case
|
The Department of Justice recommended Tuesday that a California judge impose a $1 billion fine on AU Optronics, a Taiwanese LCD screen manufacturer convicted of price-fixing in May. The DOJ also asked that the judge sentence former AUO president Hsuan Bin Chen and former executive vice president Hui Hsiung to 10 years in prison, and levy individual fines of $1 million against each of them.
|
September 17, 2012 | Download
|
|
The Consumer Financial Protection Bureau, the Controversial New Regulator, Begins with an Aggressive Enforcement Settlement Against a Financial Services Company
|
On July 17, 2012, the Consumer Financial Protection Bureau ("CFPB") reached a groundbreaking $165 million settlement with a credit card issuer in its first enforcement action, ordering Capital One Bank (USA), N.A. to refund $140 million to two million customers who purchased its credit card "add-on" products and to pay a $25 million fine into the CFPB's Civil Penalty Fund. The CFPB is a powerful regulatory agency that was created by the Dodd-Frank Wall Street Reform and Consumer Protection Act to implement and enforce federal consumer financial laws and to promote fair, transparent and competitive and accessible markets for consumer financial services and products. After a quiet first year, the CFPB now has aggressively asserted its vast enforcement powers and levied significant financial penalties in its regulation of the marketing and sale of consumer financial products.
|
August 29, 2012 | Download
|
|
The DC Circuit Court Vacates Cross-State Air Pollution Rule
|
Today, in a 2-1 decision, the U.S. Court of Appeals for the D.C. Circuit issued its decision vacating the Environmental Protection Agency’s (EPA) Cross-State Air Pollution Rule (CSAPR), which requires significant reductions in emissions from power plants in certain states that contributed to "downwind" ozone or fine particle pollution in other states.
|
August 21, 2012 | Download
|
|
New York Federal Court Refuses to Dismiss Chinese Company From U.S. Price-Fixing Case
|
In a decision filed on August 7, 2012, in a federal court in New York, a judge ruled that a Chinese company could not evade jurisdiction of the U.S. courts and must face the prospect of a trial for colluding to fix the price of vitamin C exported from China into the United States. Two Chinese subsidiaries of the company, however, were dismissed for lack of personal jurisdiction. The court demonstrates the challenges Chinese companies face as they increase their level of activity and scope of operations in the United States.
|
August 17, 2012 | Download
|
|
U.S. Treasury Department Releases Model FATCA Intergovernmental Agreements
|
On July 26, the U.S. Treasury Department released two model intergovernmental agreements that will provide residents of signatory countries with an alternative withholding and reporting regime to that imposed under the "Foreign Account Tax Compliance Act" ("FATCA") provisions contained in sections 1471 through 1474 of the Internal Revenue Code. One model is "reciprocal"—that is, each country exchanges information with the other; the other is "nonreciprocal"—that is, only the signatory country provides information. Simultaneously with the release of the model agreements, France, Germany, Italy, Spain, the United Kingdom, and the United States issued a joint statement endorsing the model agreements. Over forty other countries have been reported to be interested in entering into similar agreements with the United States, including Australia, Brazil, Canada, the Cayman Islands, Ireland, Luxembourg, the Netherlands, New Zealand, Japan, and Russia.
|
August 10, 2012 | Download
|
|
U.S. District Court Denies Dismissal of Constitutional Challenge to Maryland Public Service Commission Orders
|
On August 3, 2012, the United States District Court for the District of Maryland denied two
motions to dismiss plaintiffs' complaint in PPL Energyplus, LLC v. Douglas R. M. Nazarian. The complaint seeks to enjoin the Maryland Public Service Commission (“PSC”) from enforcing certain of its orders that require Maryland-based public utilities to contract with CPV Maryland, LLC (“CPV”) for capacity and energy in the PJM control area. Members of the PSC (named in their official capacity (“PSC Defendants”)) and CPV filed the motions to dismiss.
|
August 9, 2012 | Download
|
|
U.S. Court of Appeals for D.C. Circuit Affirms Exclusion From Federal Health Care Programs Under "Responsible Corporate Officer" Doctrine
|
On July 27, 2012, in the closely watched case of Michael Friedman, et al. v. Kathleen Sebelius, et al., the United States Court of Appeals for the D.C. Circuit held that pharmaceutical corporate executives found guilty of misdemeanor "misbranding" under the "responsible corporate officer doctrine" ("RCO doctrine") had committed a "misdemeanor relating to fraud" pursuant to 42 U.S.C. § 1320a-7(b)(1), thereby subjecting them to exclusion from Federal health care programs. As described further below, before the D.C. Circuit, the executives argued that misdemeanor misbranding did not relate to fraud because, among other reasons, they were convicted under the RCO doctrine, which is a strict liability offense that does not require proof of intent.
|
August 6, 2012 | Download
|
|
The Dodd-Frank Act May Require Registration as a “Commodity Pool Operator” and a “Commodity Trading Advisor” for Entities Associated with Securitization Transactions
|
Upon effectiveness of the U.S. Commodity Futures Trading Commission (“CFTC”) final rules defining “swaps” under the Dodd-Frank Act, entities associated with securitization transactions may be required to register as commodity pool operators (“CPOs”) and/or commodity trading advisors (“CTAs”). Absent exemptive relief, these registration requirements will apply irrespective of whether the “swaps” are subject to mandatory clearing under the Dodd-Frank Act.
Based on the Dodd-Frank Act and current CFTC regulations, certain entities associated with public and certain private securitization transactions are not exempt and may have to register as CPOs and/or CTAs.
|
July 23, 2012 | Download
|
|
A “Hat Trick” of Heightened False Claims Act Risks for Health Care Providers
|
At the risk of stating the obvious, fighting and prosecuting health care fraud are top priorities for the Federal Government, and the False Claims Act (“FCA”) is its weapon of choice in the battle. In a speech in June, Stuart Delery, the Acting Assistant Attorney General for the Department of Justice (“DOJ”) Civil Division, stated the DOJ has recovered over $11 billion under the FCA, including over $7.4 billion in health care fraud. The Federal Government has a willing and motivated ally: more than 630 qui tam matters were filed with the DOJ, over two-thirds of which allege false claims to government health care programs. These numbers represent the greatest number of lawsuits ever filed within a year in the 150-plus year history of the FCA. In only the latest example of the Department’s aggressive pursuit of FCA claims, on July 2, 2012, GlaxoSmithKline LLC (“GSK”) agreed to pay $3 billion to the Federal Government to settle FCA allegations.
|
July 19, 2012 | Download
|
|
CFTC Adopts Final Rules and Interpretations Further Defining Products and Final End-User Clearing Exception Rule; Proposes Clearing Exception for Swaps Entered into by Certain Cooperatives
|
The Commodity Futures Trading Commission held an open meeting yesterday, July 10, 2012, to consider Final Rules and Interpretations (i) further defining the terms "swap," "security-based swap," "security-based swap agreement,"(ii) regarding mixed swaps, and (iii) governing books and records for security-based swap agreements pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act. The CFTC promulgated the Final Product Rules jointly with the Securities and Exchange Commission. The CFTC also voted to adopt the Final Rule on End-User Exception to Mandatory Clearing of Swaps. Finally, the CFTC issued a proposed rule to exempt from the mandatory clearing requirement, certain swaps executed by cooperatives that are financial entities with assets in excess of $10 billion.
|
July 11, 2012 | Download
|
|
Cloud Computing in China: Implications of a Complex Environment
|
In the past decade, physical servers and computer hardware have struggled to keep up with the astronomical amount of data that companies and individuals have created. Cloud computing has been introduced as a solution to harness large amounts of information for public and private access through flexible online “cloud” services.
|
July 11, 2012 | Download
|
|
5-4 Supreme Court Upholds the Affordable Care Act, Rules the Individual Mandate a Constitutional "Tax"
|
Speaking for the 5-4 majority, U.S. Supreme Court Chief Justice John Roberts, joined by Justices Ginsburg, Breyer, Sotomayor, and Kagan, held that the most hotly contested provision of the federal Patient Protection and Affordable Care Act, the Individual Mandate, was a proper exercise of Congress’s taxing power under the Constitution. The Supreme Court did not uphold it under the Commerce Clause, the principal ground advanced by the Obama Administration in defense of the constitutionality of the statute. The Court also found the expansion of the Medicaid program to be constitutional under the Spending Clause so long as the federal government does not bar states from continuing to participate in the existing Medicaid program on condition that they agree to the expanded coverage.
|
June 29, 2012 | Download
|
|
Proposed Regulations Limiting Executive Compensation of State-Funded Service Providers: "One Size Fits All" Gives Way to More Nuanced Approach
|
On May 16, 2012, the New York State Department of Health ("DOH") and twelve other State agencies that fund for-profit and not-for-profit service providers released proposed regulations (the "Proposed Regulations") to implement Executive Order No. 38, issued by Governor Andrew Cuomo on January 18, 2012, limiting the use of State funds for executive compensation and administrative expenses. The Proposed Regulations were published in the New York State Register on May 30, 2012, with a 45-day public comment period until July 16, 2012.
|
May 31, 2012 | Download
|
|
New NDRC Proclamation Renders Some RMB Funds and the QFLP Pilot Program Unattractive to Foreign GPs and LPs
|
On April 23, 2012, the National Development and Reform Commission ("NDRC"), China's national agency for economic planning, made an announcement uniformly clarifying its policy with respect to RMB-denominated funds ("RMB Funds") that contain foreign-sourced RMB as investment capital.
The NDRC issued a proclamation that outlined its views towards RMB Funds, specifically citing an RMB Fund in Shanghai managed by the Blackstone Group L.P. In its proclamation, the NDRC stated that unless all of the capital in an RMB Fund comes from domestic (i.e. local China-based) investors, that the fund will be classified as "foreign" ("NDRC Proclamation") and is subject both to Ministry of Commerce ("MOFCOM") rules and regulations including the Guidance Catalogue of Industries for Foreign Investment("MOFCOM Catalogue").
|
May 21, 2012 | Download
|
|
SDNY Bankruptcy Court Interprets Section 546(e)’s Safe Harbors in Lehman-JPMorgan Dispute
|
On April 19, 2012, the U.S. Bankruptcy Court for the Southern District of New York granted in part and denied in part JPMorgan Chase, N.A.'s motion to dismiss an adversary complaint filed by Lehman Brothers Holdings Inc. ("LBHI") and its Official Committee of Unsecured Creditors. The Complaint seeks to recover approximately $8.6 billion in prepetition transfers made by LBHI to JPMorgan in the days leading up to LBHI's bankruptcy. JPMorgan filed a motion to dismiss the Complaint, arguing that it acted reasonably in requiring additional collateral at a time of great financial risk, and that the transfers that the Plaintiffs sought to unwind are immunized by the safe harbor protections of section
546(e) of the Bankruptcy Code.
|
May 3, 2012 | Download
|
|
FERC Confirms It Lacks Jurisdiction over Unbundled Renewable Energy Certificate Sales
|
On April 20, 2012, the Federal Energy Regulatory Commission (“FERC”) issued an order accepting proposed revisions to the WSPP Agreement addressing sales of renewable energy certificates (“RECs”) made pursuant to that agreement. In the course of issuing this order FERC confirmed something participants in the U.S. energy markets had long suspected: that FERC’s jurisdiction extends to sales of RECs made in conjunction, or “bundled,” with a sale of wholesale electric power, but does not extend to sales of RECs alone, which FERC refers to as “unbundled” REC sales. The WSPP Agreement is a form of agreement used by hundreds of sellers of electric energy along the West Coast of the U.S. and Canada, and amendments to that agreement are subject to FERC approval.
|
April 30, 2012 | Download
|
|
Delaware’s Not So Safe Harbors: Third Circuit Bankruptcy Court Declines to Rule that a Payment on a Letter of Credit is an Avoidance-Proof “Settlement Payment”
|
On March 26, 2012, Judge Mary F. Walrath of the United States Bankruptcy Court for the District of Delaware refused to rule that, as a matter of law, payments made to satisfy a debtor’s obligations under a letter of credit constitute “settlement payments” protected from avoidance under section 546(e) of the Bankruptcy Code. EPLG I, LLC v. Citibank, National Association et al. (In re Qimonda Richmond, LLC, et al.), No. 09-10589, 2012 Bankr. LEXIS 1264 (Bankr. Del. March 26, 2012). Although the decision helps to clarify the scope of one of the Bankruptcy Code’s most important safe harbor provisions, it has also left some important questions unanswered regarding the scope of section 546(e).
|
April 17, 2012 | Download
|
|
The Sun Never Sets on Dodd-Frank
|
When Dodd-Frank (more formally, the Wall Street Reform and Consumer Protection Act) was adopted, the legislation was advertised as a legal blueprint that, although proudly stamped "Made in America," would serve as a light of financial safety as to derivatives, bank activities, and like matters for the entire world. The global commercial and financial community was assured that a cooperative, consistent, and rational scheme of regulation would be adopted in financial capitals across the world, from Afghanistan to Zimbabwe, all based closely (maybe even word-for-word!) on translations of Dodd-Frank.
|
April 17, 2012 | Download
|
|
FERC Issues Orders on MISO Net Zero Interconnection Service
|
On March 30, 2012, the Federal Energy Regulatory Commission ("FERC") issued two orders related to the Midwest Independent System Operator, Inc.'s ("MISO") policies and procedures for the interconnection of generation facilities, which are set forth in Attachment X of MISO’s tariff.
|
April 13, 2012 | Download
|
|
What is a Swap? Maybe (Almost) Everything? You Gotta Problem with That?
|
It has now been almost two years since Dodd-Frank was enacted in order to provide comprehensive regulation of those transactions the legislation calls "swaps." In a world regulated by common sense, "what is a swap" would have been the first question answered by the regulators—indeed, the term should have been clearly defined by the statute. After all, how can the regulators adopt rules that govern a group of transactions where the regulators themselves do not know the transactions to which the rules will apply? How can businesses comment as to whether the proposed rules are sensible, or even feasible, as applied to a set of transactions that is boundless?
|
April 12, 2012 | Download
|
|
English Court of Appeal Interprets the ISDA Master Agreement
|
Last week the Court of Appeal of England and Wales handed down its decision in four appeals which raise a number of questions of construction in relation to derivatives in the form of interest rate swaps and forward freight agreements documented under the International Swaps and Derivatives Association Inc. Master Agreement (the “ISDA Master Agreement”). In particular, the decision focuses on the interpretation of section 2(a)(iii) of the ISDA Master Agreement.
|
April 12, 2012 | Download
|
|
New Pan-European Restrictions on Short Selling
|
On 24 March 2012, the European Parliament's Regulation on "short selling and certain aspects of credit default swaps" came into force.
|
April 10, 2012 | Download
|
|
FERC Finds “More Credible” a Postage Stamp New Transmission Cost Allocation for PJM
|
On March 30, 2012, the Federal Energy Regulatory Commission ("FERC" or "Commission")issued an Order on Remand finding that the flow-based cost-allocation methodology used by PJM Interconnection, L.L.C. ("PJM") is inadequate to determine and allocate costs associated with new high voltage transmission lines. Finding that PJM's current static flow-based model for allocating these costs is unjust and unreasonable, FERC further found that a system-wide "postage stamp"
method of cost allocation is a "more credible basis" on which to base rates. Importantly, FERC emphasized that its determination is limited to this case, and "should not be construed as preventing PJM and its stakeholders from developing other cost allocation methodologies in response to Order No. 1000 or other relevant stakeholder processes."
|
April 9, 2012 | Download
|
|
EPA Proposes CO2 Emissions Standards for New Fossil Fuel-Fired Power Generators
|
On March 27, 2012 the Environmental Protection Agency ("EPA") submitted for publication in the Federal Register a notice of proposed rulemaking that would set standards of performance for CO2 gas emissions for new fossil fuel-fired electric utility generating units ("EGUs") with a base load rating of more than 73 MW (the "proposed rule"). In 2009 the EPA concluded that "by causing or contributing to climate change, [greenhouse gases] endanger both the public health and the public welfare of current and future generations," and on this basis proposes to require new EGUs to limit their CO2 emissions pursuant to the EPA’s authority under Section 111 of the Clean Air Act. The EPA's proposed CO2 emissions output standard is based on the demonstrated CO2 emissions of natural gas combined cycle generation units.
|
April 3, 2012 | Download
|
|
ISDA March 2012 Supplement and Protocol: Updating Muni CDS
|
As of April 3, 2012, the documentation and industry standards for municipal CDS transactions (“Muni CDS”) will be brought in line with the corporate and sovereign CDS market through several initiatives lead by ISDA and related publications by Markit. Cadwalader represented ISDA and Markit on these initiatives, which include the following features to enhance liquidity and transparency for Muni CDS: determinations Committee for the Americas Region will decide on Credit Events and other matters, mandatory auction settlement, rolling “look-backs” for Credit Events and Succession Events, Standardized Fixed Rate and full 3-month initial Calculation Periods, recovery assumption of 75%, changes to “Accreting Obligation” and “Accreted Amount” definitions and other Muni CDS-specific provisions, automatic trigger for “Restructuring Credit Event,” new or revised templates for many types of Muni CDS transactions.
|
March 28, 2012 | Download
|
|
Conference Series to Address Competition Issues in China and Globally
|
Cadwalader, Wickersham & Taft LLP, will host a series of conferences in Beijing, Hong Kong, Shanghai and Taipei, addressing several important competition-related issues, including review of mergers and joint ventures under China’s newly-enacted Antimonopoly Law (“AML”), litigation under the AML, cartel investigations impacting Chinese companies, and the intersection of intellectual property and competition laws in China and elsewhere.
|
March 27, 2012 | Download
|
|
UK Budget 2012 – Key Tax Measures
|
The Chancellor of the Exchequer's third budget, held on 21 March 2012, might well be remembered in future years for a balancing act (at least in a taxation context) between stimulus and incentive on the one hand, and austerity and anti-avoidance on the other. A number of the Chancellor's provisions focused on enterprise incentives and were accompanied by an additional 1 per cent. reduction in the main rate of UK corporation tax from April 2012. While these announcements will be welcomed, they were balanced against a very tough message on tax avoidance – particularly in the areas of stamp duty land tax planning and income tax avoidance.
|
March 22, 2012 | Download
|
|
Senator Stabenow's Alternative Energy Tax Incentive Measure Fails to Pass Senate
|
On March 13, an amendment to the "Moving Ahead for Progress in the 21st Century Act" (which is also known as the "Surface Transportation Act") that would have reestablished and extended several tax incentives for alternative energy, failed to garner the required 60 votes for approval. However, the amendment, which was introduced by Senator Debbie Stabenow (D-MI), did secure 49 votes, which suggests that similar measures may be introduced in the future. This memorandum discusses the application of the Stabenow amendment to production tax credits, investment tax credits, and the cash grant program.
|
March 19, 2012 | Download
|
|
Opportunity to Invest in China’s Securities Market: The Accelerated Approval Process for Foreign Financial Institutions
|
Foreign investors are permitted to invest in China’s stock markets , provided that an investor is a Qualified Foreign Institutional Investor (“QFII”). Previously, applying for QFII status took as long as one to two years, and in some cases the entire process took even longer. However, recent reforms and policy adjustments will reduce this processing time to approximately six (6) months or less if the application is prepared correctly. Therefore, this policy change provides foreign financial institutions with a window of opportunity to qualify as a QFII and to deploy capital to invest in China’s burgeoning stock market when the timing is right.
This alert summaries the QFII statutory framework, and gives a comparison between the old timetable and the now revised timetable.
|
March 16, 2012 | Download
|
|
Retrospective Change of Law Announced for UK Debt Buybacks
|
In a Written Ministerial Statement, delivered on 27 February 2012, the UK Government has announced measures to counteract two tax avoidance schemes entered into by a UK bank, the UK Bank being a signatory to the Code of Practice on Taxation for Banks.
|
March 7, 2012 | Download
|
|
The Consumer Financial Protection Bureau: The New, Powerful Regulator of Financial Products and Services
|
The Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank") created the Consumer Financial Protection Bureau ("CFPB") to oversee a broad array of financial products and services. Creation of the CFPB marked the first time in decades that Congress had formed a new federal agency. The political debate over who would lead the new agency initially overshadowed the more significant legal and policy concerns about the manner in which the CFPB was intended to operate. But now, after the procedurally controversial appointment of former Ohio Attorney General Richard Cordray on January 4, 2012, these broader concerns will be tested, both as a matter of governance and very possibly in the courts.
|
March 6, 2012 | Download
|
|
European Short Selling Bans Lifted
|
Amid growing evidence that short selling bans function, at best, as very temporary circuit breakers with no long term effect on volatility, several European regulators have lifted their bans on short selling as of February 2012. The bans, imposed in August 2011, have followed the trajectory set out below (along with a summary of the disclosure regime still in force in the UK and the on-going position in Greece). In all cases, while the regulators have lifted outright bans, disclosure requirements and various restrictions on naked short selling remain in place.
|
March 5, 2012 | Download
|
|
CMS Issues Proposed Regulations to Guide Providers and Suppliers in Complying with Mandate to Report and Return Medicare Overpayments
|
Signed into law on March 23, 2010, the Patient Protection and Affordable Care Act ("PPACA"), or federal health care reform act, included a provision (the "Report and Refund Mandate"), broadly requiring health care providers, suppliers and managed care organizations that have received an "overpayment" from the Medicare or Medicaid program to report and return the overpayment within 60 days of the date when the overpayment was "identified."
|
March 5, 2012 | Download
|
|
Supreme Court Gives Protection to All UK Client Money
|
On 29 February, the Supreme Court of the United Kingdom handed down its judgment on the treatment of client money that had not been segregated, or was improperly segregated, as at the date Lehman Brothers International (Europe) (“LBIE”) entered administration.
|
March 2, 2012 | Download
|
|
Clean Energy Standard Legislation Introduced in Senate
|
On March 1, 2012 Senate Energy and Natural Resources Committee Chairman Jeff Bingaman (D-NM) introduced the Clean Energy Standard Act of 2012, legislation that seeks to reduce greenhouse gas emissions and encourage low-carbon energy sources through the establishment of a federal clean energy standard (CES). The legislation builds off of past renewable energy standard (RES) proposals, such as the RES program included in the heavily debated, and ultimately defeated, cap-and-trade legislation of 2009. Although similar to past proposals, the legislation takes a broader view as to the types of energy that can be used to meet the CES, including not only renewables such as wind and solar, but also other low-emission sources such as natural gas, nuclear power, and certain "clean" coal carbon-capture technology.
|
March 2, 2012 | Download
|
|
Application of Proposed FATCA Regulations to Foreign Investment Vehicles
|
On February 8, the Internal Revenue Service issued proposed regulations that provide guidance on the “FATCA provisions” contained in sections 1471-1474 of the Internal Revenue Code. The purpose of FATCA is to reduce U.S. tax evasion by requiring "foreign financial institutions" and certain other foreign entities to provide information to the IRS about U.S. holders of their debt and equity interests and other "financial accounts," or else be subject to a 30% withholding tax.
|
February 17, 2012 | Download
|
|
SEC Issues No-Action Letter Addressing Registration Requirements for Certain Advisory Affiliates
|
The staff of the Securities and Exchange Commission (the "Commission") issued a no-action letter on January 18, 2012 to the American Bar Association's Subcommittee on Hedge Funds clarifying the registration requirements for certain related entities under the Investment Advisers Act of 1940, as amended (the "Advisers Act"). The letter reaffirms and clarifies the Commission's previously existing position that registered advisers to private funds may file a single Form ADV that includes special purpose vehicles ("SPVs") established to function as general partners or managing members of a fund. In addition, the letter explains the conditions under which a group of related advisers organized as separate legal entities, but operating as a "single advisory business," may elect to file a single Form ADV.
|
February 13, 2012 | Download
|
|
FERC Staff Seeks Comments on Its Proposal for a Process to Advise the EPA
|
On January 30, 2012, the Federal Energy Regulatory Commission ("FERC" or "Commission") staff issued a White Paper explaining staff’s proposal on advising the Environmental Protection Agency ("EPA") in responding to requests for an extension of time to comply with EPA’s Mercury and Air Toxics Standards ("MATS"). FERC staff is seeking comments on its proposal.
|
February 3, 2012 | Download
|
|
New Proposed and Temporary Regulations Address U.S. Withholding Tax on Cross-Border Equity Derivatives
|
On Thursday, August 30, 2012, the IRS issued temporary regulations that extend the current U.S. federal withholding tax regime under section 871(m). The temporary regulations
extend the current section 871(m) withholding tax rules until January 1, 2014, instead of January 1, 2013, as indicated in this memorandum.
|
January 25, 2012 | Download
|
|
China’s New 2011 Catalogue of Industries for Guiding Foreign Investment: Implications for Foreign Direct Investment in China
|
Recent changes in China’s legal regime will make it easier for foreign investors to access China’s markets. The starting point for any foreign investor interested in participating in the Chinese market is the Catalogue of Industries Guiding Foreign Investment (the “Catalogue”).
The Catalogue provides the underlying legal basis for all foreign investment in China, and regulates the scope of foreign investment in different sectors of the Chinese economy. The Catalogue is jointly promulgated by the National Development and Reform Commission (“NDRC”) and the Ministry of Commerce (“MOFCOM”), China’s governing bodies on
economic development and trade and investment policy, respectively.
|
January 17, 2012 | Download
|
|
Time to Roll the Dice on Online Gaming?
|
On December 23, 2011, the U.S. Department of Justice Office of Legal Counsel (“OLC”) issued a memorandum opinion dated September 20, 2011, eliminating one of the federal barriers to legalizing internet gambling and opening the door for the possibility of a regulatory regime shift. In the OLC Opinion, the Department of Justice addressed an apparent conflict between the Wire Act and UIGEA and concluded that “interstate transmissions of wire communications that do not relate to a sporting event or contest” fall outside the reach of the Wire Act. Finding that the Federal Wire Act does not prohibit the use of out-of-state transaction processors to sell in-state lottery tickets over the internet or the transmission of lottery data across state lines, the OLC Opinion reverses the long-held position that the Wire Act applied to all interstate gambling, whether sports-related or not.
|
January 12, 2012 | Download
|
|
Harrisburg: A Case Study in State Law Barriers to Chapter 9
|
On November 23, 2011, the Bankruptcy Court for the Middle District of Pennsylvania dismissed Harrisburg, Pennsylvania's Chapter 9 bankruptcy petition because, shortly before the filing, the state legislature expressly prohibited Harrisburg from seeking relief under Chapter 9. Harrisburg's failed attempt to remain in Chapter 9 highlights the political factors and state law constraints that municipalities must consider prior to seeking bankruptcy relief. This article will discuss the origins of Harrisburg's debt crisis, the Harrisburg City Council's attempt to file for Chapter 9 without the Mayor's approval, the legal obstacles placed in the path of the City Council's bankruptcy filing, and the lessons that other distressed municipalities and creditors can learn from Harrisburg's experience.
|
January 10, 2012 | Download
|
|
Contingent Convertible Bonds and the Impact of Basel III
|
In January 2011, the Basel Committee on Banking Supervision (the “Basel Committee”) set out rules to supplement Basel III regulations on capital adequacy and liquidity. The Basel III reforms aim to improve the quality and level of capital within firms.
|
December 20, 2011 | Download
|
|
Duke-Progress Merger Delayed by FERC Ruling; Implementing Tariffs Also Rejected Without Prejudice
|
On December 14, 2011, the Federal Energy Regulatory Commission ("FERC") determined that,although conditionally authorizing the proposed merger on September 30, 2011 subject to approval of appropriate market power mitigation, it cannot approve the merger of Duke Energy Corp. ("Duke") and Progress Energy Inc. ("Progress", collectively, "Applicants") because the Applicants’ proposed mitigation plan1 is inadequate to remedy their merger’s harmful effects on competition. The merger remains conditionally authorized and the Applicants may offer a revised plan to address FERC’s market power concerns.
|
December 19, 2011 | Download
|
|
First Time for Everything: Finding Unduly Discriminatory Treatment of Wind Generators and Compelling Circumstances, FERC Exercises Its Section 211A Authority to Order BPA to Change Its Ways
|
On December 7, 2011, the Federal Energy Regulatory Commission (FERC) determined that Bonneville Power Administration's (BPA) use of environmental redispatch to address excess water supply and low load by curtailing renewable and thermal generators in favor of federal hydropower providers unfairly discriminated against wind generators. This decision will have broad jurisdictional and alternative energy implications, given that FERC has exercised for the first time its Federal Power Act (FPA) section 211A authority to order BPA, an unregulated transmitting utility, to file changes to or replace its voluntarily-filed Open Access Transmission Tariff (OATT) to address undue discrimination regarding access to its transmission system.
|
December 13, 2011 | Download
|
|
A Critical Analysis of the Potential Impact of the Volcker Rule on Municipal Bonds
|
Federal regulators recently issued a notice of proposed rulemaking (the 'Proposal') under Section 619 of the Dodd-Frank Act, commonly known as the 'Volcker Rule.' If the Proposal were to be adopted in its present form, the regulators' narrow interpretation of the types of government securities exempted from the Volcker Rule would prohibit banking entities from proprietary trading in over half of the municipal bonds outstanding in the markets. Likewise, by the regulators' narrow interpretation, banking entities would be effectively prohibited from sponsoring or acquiring an ownership interest in municipal tender option bond ('TOB') trusts and from entering into the liquidity facilities that are an essential feature of TOB trusts.
|
December 12, 2011 | Download
|
|
FERC Office of Enforcement Issues 2011 Report on Enforcement
|
On November 17, 2011, the Federal Energy Regulatory Commission (FERC) Office of Enforcement issued its 2011 Report on Enforcement (Report). The annual Report provides an overview of and statistics regarding FERC’s enforcement activities during the fiscal year 2011 (FY2011) within the Office of Enforcement’s three divisions: the Division of Investigations, the Division of Audits and the Division of Energy Market Oversight. The Report provides information regarding the Office of Enforcement’s non-public activities and priorities during FY2011.
|
November 22, 2011 | Download
|
|
FERC Issues Order Denying Hunter Rehearing Request on Alleged Market Manipulation
|
On November 18, 2011, the Federal Energy Regulatory Commission (FERC) denied former Amaranth Advisors LLC trader Brian Hunter’s (Hunter) rehearing request of FERC's Order Affirming Initial Decision and Ordering Payment of Civil Penalty issued on April 21, 2011. In the Affirming Order, FERC found that the record supported the administrative law judge's (ALJ) determination that "Hunter’s trading practices [in the natural gas futures market during the settlement periods] on expiration days were fraudulent or deceptive, undertaken with the requisite scienter, and carried out in connection with FERC-jurisdictional natural gas transactions" in violation of FERC’s Anti-Manipulation Rule and directed Hunter to pay a $30 million civil penalty. Hunter has sixty days to appeal FERC's decision to the U.S. Court of Appeals.
|
November 22, 2011 | Download
|
|
European Commission Announces Revisions to the Transparency Directive
|
Under the headline “More responsible businesses can foster more growth in Europe”, the European Commission (the “Commission”) unveiled proposals for directives to amend several legislative measures on 25 October 2011, including a directive to amend the Transparency Directive (the “Amendment Directive”).
|
November 16, 2011 | Download
|
|
Final Rule for Accountable Care Organizations Addresses Major Provider Concerns: Will Long Term Care Providers Dive In?
|
On October 20, 2011, the Federal Centers for Medicare and Medicaid Services ("CMS") released the final regulations to establish the Shared Savings Program for Accountable Care Organizations ("ACOs") in accord with Section 3022 of the Patient Protection and Affordable Care Act (the "Final Rule"). The same day, the Office of Inspector General (
("OIG") within the Department of Health and Human Services ("HHS"), CMS, the Department of Justice ("DOJ"), the Federal Trade Commission ("FTC"), and the Internal Revenue Service ("IRS") released final regulatory guidance explaining how the federal laws within their respective jurisdictions would be waived or interpreted to promote the formation and operation of ACOs ("Final Regulatory Guidance").
|
November 14, 2011 | Download
|
|
MF Global UK Enters Special Administration Regime
|
The Financial Services Authority (“FSA”) has confirmed that MF Global UK Limited (“MF Global UK”) has entered the Special Administration Regime created under the Investment Bank Special Administration Regulations 2011 (“Regulations”). MF Global UK is the first investment bank to enter the Special Administration Regime. The decision to apply for special administration was initiated by the board of MF Global UK.
|
November 3, 2011 | Download
|
|
The Volcker Rule's Impact on Financial Institutions' Ownership and Sponsorship of Structured Finance and Securitization Transactions
|
The three federal banking agencies and the SEC recently approved for comment a proposed
regulation implementing Section 619 of the Dodd-Frank Wall Street Reform and Consumer
Protection Act (the 'Act'), more generally known as the 'Volcker Rule.' The 298-page proposal has yet to be published in the Federal Register, but the agencies have already agreed to an extended comment period for the proposal - running until January 13, 2012 - given the subject matter's significance.
|
November 3, 2011 | Download
|
|
SAFE Circular 19: Revised SAFE Rules Concerning Round-Trip Investments
|
Recent changes in China's regulatory landscape may facilitate Round-Trip Investments (defined below) and should make it easier for foreign investors to invest in China. The State Administration of Foreign Exchange ("SAFE") issued new guidelines ("Circular 19") on July 1, 2011 and introduced significant changes to the implementation of Circular 75 ("Circular 75") which local PRC companies must follow to establish offshore Special Purpose Vehicles ("SPV"). In short, Circular 19 addresses foreign exchange registration by SPVs established by PRC residents, newly-established foreign-invested enterprises, and offshore direct investments by entities in the PRC.
|
November 1, 2011 | Download
|
|
MiFID and MiFIR on Algorithmic Trading – and – Provision of Services AND Establishment of Branches by Third Country Firms
|
This is the sixth in our series of briefings on MiFID and MiFIR. In this alert, we describe new obligations set out in MiFID that apply to investment firms engaging in algorithmic trading to have in place risk control measures, and authorisation requirements for third country firms providing services into or establishing a branch within the European Union as set out in MiFID and MiFIR.
|
October 31, 2011 | Download
|
|
The SEC Approves Final Version of Form PF
|
The Securities and Exchange Commission (the "SEC") held an open meeting on Wednesday, October 26, 2011, regarding the adoption of a rule requiring certain registered investment advisers to hedge funds and other private funds to report information on Form PF for use by the Financial Stability Oversight Council ("FSOC") in monitoring systemic risk to the U.S. financial system. The new rule, Rule 204(b)-1 under the Investment Advisers Act of 1940, would implement sections 404 and 406 of the Dodd-Frank Act and was initially proposed, along with the Form PF, on January 26, 2011.
|
October 28, 2011 | Download
|
|
MiFID and MiFIR on Supervision of Products – and – Circuit Breakers
|
This is the fifth in our series of briefings on MiFID and MiFIR. In this alert, we describe new powers of product intervention granted to ESMA and local regulators under MiFIR and new obligations set out in MiFID for regulated markets to have in place measures to ensure systems’ resilience, including circuit breakers and controls over algorithmic trading.
|
October 28, 2011 | Download
|
|
European Commission Unveils Plans to Boost Energy Networks in Europe
|
On 19 October 2011, the European Commission (the “Commission”) published a proposal to fund €50 billion worth of investment in the European Union’s (“EU”) transport, energy, and digital networks for the period from 2014 to 2020, with a view to strengthening links across Member State borders. Amongst the measures that were adopted by the Commission are a draft regulation to establish the Connecting Europe Facility (the “CEF”), the terms for the Europe 2020 Project Bond Initiative (the “Project Bond Initiative”), and a proposal for a regulation on guidelines for trans-European energy infrastructure (the “Energy Infrastructure Guidelines Regulation”).
|
October 27, 2011 | Download
|
|
MiFID on Client Categorisation and Transactions with ‘Eligible Counterparties’ – and – Organised Trading Facilities
|
This is the fourth in our series of briefings on MiFID and MiFIR. In this alert, we describe the proposed changes to the current client classification regime, and in particular, amendments to the regime for transactions with ‘eligible counterparties’. We will also discuss the introduction of a new concept of regulated ‘organised trading facilities’.
|
October 27, 2011 | Download
|
|
Proposals for a European Union Financial Transactions Tax
|
The proposals made by the EU Commission on 28 September 2011 regarding an EU directive on a common system of financial transaction taxation in the 27 Member States of the EU have been debated widely in the three weeks since they were presented. The presentation of the proposed Directive (the "Directive"), together with proposals to amend Directive 2008/7/EC concerning indirect taxes on the raising of capital, represent the latest stage in a series of announcements by EU authorities directed towards ensuring that the European financial sector should "contribute more fairly" towards the costs of addressing and rectifying the current European financial crisis. A series of conclusions from the European Council, communications addressed to the European Parliament and EU Commission staff working papers and consultations throughout 2010 and 2011 have created a platform upon which the relative merits of various options for taxing the financial sector have been analysed.
|
October 26, 2011 | Download
|
|
MiFIR on Pre and Post-Trading Transparency for Equities, Equity-Like Instruments, Structured Products, Bonds, Emission Allowances and Derivatives
|
This is the third in our series of briefings on MiFID and MiFIR. In this alert, we describe new obligations set out in MiFIR to make certain pre and post-trade information publicly available in relation to equities, equity-like instruments, certain structured products, bonds, emission allowances and derivatives.
|
October 26, 2011 | Download
|
|
MiFID and MiFIR on the Obligation to Trade Derivatives on Regulated Markets and Revisions to the Best Execution Regime
|
This is the second in our series of briefings on MiFID and MiFIR. In this alert, we describe new obligations to trade certain derivatives on regulated markets, MTFs or OTFs and the Commission’s proposals for the best execution regime.
|
October 25, 2011 | Download
|
|
Montana Consumer Counsel v. Federal Energy Regulatory Commission
|
On October 13, 2011, the U.S. Court of Appeals for the Ninth Circuit held that the market-based rate policy embodied in Order Nos. 697 and 697-A does not exceed FERC's authority as conferred by the FPA. Under Order 697, which became effective in September 2007, sellers who apply for market-based rates must be pre-screened by FERC and show that they lack (or have adequately mitigated) both horizontal and vertical market power. FERC bases its market power determination primarily on the seller's share of capacity in the relevant markets, and also considers whether the seller can limit competition through its control of transmission, erect barriers to entry, or engage in abuse of affiliate relationships.
|
October 25, 2011 | Download
|
|
MiFID AND MiFIR on Position Limits and Position Reporting for Commodities Derivatives and Emissions Trading
|
The first in a series of short briefings on radical changes proposed for the regulation and conduct of investment business set out in the European Commission’s revised Markets in Financial Instruments Directive (MiFID) and Markets in Financial Instruments Regulation (MiFIR). This Client & Friends Alert outlines the “highlights” of the Commission’s proposals for the imposition of position limits and position reporting requirements for commodities derivatives and emissions trading.
|
October 24, 2011 | Download
|
|
Adoption of New Regulation on Wholesale Energy Market Integrity and Transparency (REMIT)
|
On 10 October 2011, the Council of the European Union adopted a regulation on wholesale energy market integrity and transparency (the “Regulation”). The Regulation is expected to be published in the Official Journal towards the end of November 2011 and its provisions will come into force in each Member State 20 days after publication. The Regulation establishes rules prohibiting abusive practices affecting the wholesale energy markets in the European Union (the “EU”).
|
October 21, 2011 | Download
|
|
CFTC Chairman Discusses Derivatives Reform in London
|
On Thursday 13 October, the Chairman of the Commodity Futures Trading Commission (the “CFTC”), Gary Gensler, spoke on the topic of “Global Reform for Derivatives Markets” at the London School of Economics.
|
October 21, 2011 | Download
|
|
Position Limits Rumors Become Reality: CFTC Adopts Final Position Limits Rule Under Dodd-Frank
|
On October 18, 2011, the Commodity Futures Trading Commission ("Commission") adopted, by a vote of 3 to 2, a final rule regarding position limits for certain physical commodity derivatives ("Final Rule") pursuant to the Commodity Exchange Act ("CEA"), as amended by the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank Act").
|
October 19, 2011 | Download
|
|
The Volcker Rule's Significant Impact on a Foreign Banking Organization's Proprietary Trading Activities
|
This week, the three federal banking agencies and the SEC approved for comment a proposed regulation implementing Section 619 of the Dodd-Frank Act, more generally known as the 'Volcker Rule.' The 298-page proposal has yet to be published in the Federal Register, but the agencies have already agreed to an extended comment period for the proposal - running until January 13, 2012 - given the subject matter's significance.
Effective July 21, 2012, the Volcker Rule restricts proprietary trading activities and investing in or sponsoring of private equity funds by 'banking entities' -defined by statute to include FDIC-insured depository institutions, bank holding companies, savings and loan holding companies, other entities that control an FDIC-insured depository institution, and foreign banks that are regulated as if they are bank holding companies under the International Banking Act.
|
October 13, 2011 | Download
|
|
Bankruptcy Court for Southern District of New York Prohibits Triangular Setoff Provided for in Safe Harbored Contract
|
On October 4, 2011, the United States Bankruptcy Court for the Southern District of New York ruled that a contractual right of a triangular (non-mutual) setoff was unenforceable in bankruptcy, even though the contract was safe harbored. In re Lehman Brothers, Inc., No. 08-01420 (JMP), 2011 WL 4553015 (Bankr. S.D.N.Y. Oct. 4, 2011). In doing so, Judge Peck followed prior decisions by the Delaware bankruptcy and district courts in In re SemCrude, L.P., 399 B.R. 388 (Bankr. D. Del. 2009), aff’d, 428 B.R. 590 (D. Del. 2010) and his own decision in In re Lehman Brothers Holdings Inc., 433 B.R. 101 (Bankr. S.D.N.Y. 2010) (“Swedbank”).
|
October 12, 2011 | Download
|
|
The Proposed Revision of the Market Abuse Directive
|
In September 2011, an unofficial draft of the European Commission’s (the Commission) proposals for a new market abuse regime covering insider dealing and market manipulation (MAD II), was received by certain market participants. MAD II is intended to amend and update the existing Market Abuse Directive 2003/6/EC (MAD).
|
October 7, 2011 | Download
|
|
SEC Proposes a New Rule Prohibiting Conflicts of Interest in Securitizations
|
On September 19, 2011, the Securities and Exchange Commission (the "SEC") issued a release (the "Release") proposing new rule 127B (the "Proposed Rule") under the Securities Act, which would prohibit "material conflicts of interest" in securitizations. The Proposed Rule is intended to implement Section 621 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"), codified as Section 27B ("Section 27B") of the Securities Act of 1933, as amended (the "Securities Act"). Subject to certain exceptions, Section 27B prohibits certain participants in asset-backed securities ("ABS") transactions from engaging in transactions within a designated time period that would involve or result in any material conflict of interest. Disclosure of such material conflicts of interest would not otherwise permit such prohibited transactions.
|
October 4, 2011 | Download
|
|
Recent Amendments to Rule 14a-8 and the Implications for the 2012 Proxy Season
|
This memorandum discusses recent amendments to Exchange Act Rule 14a-8 that will require companies to include in their proxy materials, under certain circumstances, shareholder proposals that seek to establish a procedure for shareholders to include director nominees in the company's proxy materials. This memorandum also identifies certain actions companies should consider for the 2012 proxy season.
|
September 28, 2011 | Download
|
|
Living Wills: FDIC Modifies, Finalizes Rules
|
On September 13, 2011, the Federal Deposit Insurance Corporation approved the final rule governing the implementation of the "living will" provision found in the Dodd-Frank Wall Street Reform and Consumer Protection Act. The rule continues to require covered companies to submit to the Board of Governors of the Federal Reserve System, the FDIC and the Financial Stability Oversight Council annual plans for the rapid and orderly resolution of their business in the event of material financial distress. The rule must still be approved by the Federal Reserve (which is expected to approve the rule shortly) It will then become effective 30 days after its publication in the Federal Register.
|
September 23, 2011 | Download
|
|
Final SEC Rule Regulating Large Trader Reporting
|
On July 27, 2011, the Securities and Exchange Commission (the "SEC") adopted Rule 13h-1 ("Rule 13h-1" or the "Large Trader Rule") and related Form 13H as directed by Section 13(h) of the Securities Exchange Act of 1934 ("Exchange Act"). Rule 13h-1 requires each "Large Trader" (as defined in the Large Trader Rule) (i) to identify itself by filing and periodically updating Form 13H with the SEC and (ii) to disclose to each SEC-registered broker-dealer, through which it trades its large trader identification number ("LTID") and all accounts to which that LTID applies.
|
September 22, 2011 | Download
|
|
MOFCOM’s National Security Review Process for Mergers and Acquisitions of Chinese Domestic Enterprises by Foreign Investors Explained
|
Cross-border mergers and acquisitions (“M&A”) are an important aspect of foreign investment in China. Government regulators have recently heightened their scrutiny of cross-border M&A
transactions (each, a “Transaction”) to assess their possible impact on China’s national security.
|
September 22, 2011 | Download
|
|
Proposed Treasury Regulations Regarding Swaps and Other Notional Principal Contracts
|
On Thursday, September 15, the Treasury Department and the Internal Revenue Service issued proposed regulations that affect swaps and other notional principal contracts. The proposed regulations are proposed to be effective for contracts entered into on or after the date the final regulations are published in the Federal Register.
|
September 21, 2011 | Download
|
|
UK Corporate Tax Reform Update
|
While the UK Government’s blue-print for corporation tax reform was put forward in June 2010, key elements of the reform programme have become much clearer during the course of the Summer of 2011. The long awaited detailed and extensive consultation documents on the reform of the UK controlled foreign companies rules and the UK Patent Box have been published, alongside a consultation on changes to the UK debt cap rules and extensive guidance on the foreign branch tax exemption which was enacted in the Finance Act 2011.
|
September 20, 2011 | Download
|
|
SEC Seeks Public Comment On Treatment of Asset-Backed Issuers under the Investment Company Act
|
The Securities and Exchange Commission (the "SEC") recently issued an advance notice of proposed rulemaking (the "ANPR") requesting public comment on the treatment of asset-backed issuers under Rule 3a-7 under the Investment Company Act of 1940 (the "Investment Company Act").
|
September 13, 2011 | Download
|
|
Investment in Alternative Energy After the End of Cash Grants
|
The cash grant program for renewable energy expires at the end of this year. When cash grants end, renewable energy projects will once again rely on 'tax equity investors' to offer lower-cost financing in exchange for the tax credits and accelerated depreciation that are available to investments in renewable energy.
Will lenders and investors continue to drive growth in the renewable energy sector after the cash grant program expires? Tax equity investing has been the bedrock of renewable power development for a decade. Although the economy continues to face rough times, there are investors with sufficient tax liability to benefit from renewable tax credits and depreciation, without cash grants. While financial institutions have traditionally been the predominant tax equity investors,
there also are new, significant investors in the renewable tax equity market that could continue to support renewable projects and infrastructure development in the United States.
|
September 6, 2011 | Download
|
|
UPDATE: MOFCOM's New Security Review Measures (Announcement No. 53): Increased Scrutiny of VIE Structures Operating in Areas of PRC National Concern
|
Recent PRC regulations have increased both the number and complexity of requirements imposed on foreign investors looking to acquire enterprises or assets in China. These new regulations raise questions regarding the validity of common transaction structures used by Chinese companies looking to list overseas. In March 2011, the General Office of the State Council ("State Council") issued the Notice on Establishing a Security Review System for Acquisition of Domestic Enterprises by Foreign Investors ("Circular 6").
|
September 2, 2011 | Download
|
|
SEC Re-Proposes Shelf Eligibility Conditions for Asset-Backed Securities
|
On July 26, 2011, the Securities and Exchange Commission (the "SEC") re-proposed rules (the "Re-Proposal") regarding new shelf eligibility requirements for asset-backed securities ("ABS"). In April 2010, the SEC had proposed rules that would revise the disclosure, reporting and offering process for ABS (the "2010 Proposal"), and the Re-Proposal is being made in light of changes mandated by the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act") as well as to address certain comments that the SEC received on the 2010 Proposal.
|
August 16, 2011 | Download
|
|
Corporate Repatriation of Renminbi
|
One of the biggest concerns foreigners have when doing business or investing in China involves China’s foreign exchange laws which make it difficult to bring money into and out of the country. Foreign investors typically invest in China by establishing various kinds of foreigninvested entities (“FIEs”), including wholly foreign-owned enterprises (“WFOE”) and Sinoforeign joint ventures (“JV”). However, foreign investors cannot easily repatriate the profits earned by these entities, even though they are established, and their profits are generated, in compliance with applicable law.
|
August 15, 2011 | Download
|
|
Understanding the VIE Structure: Necessary Elements for Success and the Legal Risks Involved
|
The 'variable interest entity' structure (the 'VIE Structure') has been the investment structure of choice for foreign investors to navigate through the grey areas of PRC law on foreign direct investment ('FDI') for over a decade. The VIE Structure was first made famous by Sina.com in its 2000 listing on NASDAQ as a workaround structure in the value-added telecom services sector ('Class II Telecommunications Services'), where FDI is subject to substantial PRC regulatory restrictions. Since then, foreign investors have replicated the VIE Structure in many other sectors of China's economy where FDI is either restricted or prohibited under PRC law.
|
August 10, 2011 | Download
|
|
SEC Re-proposal of Shelf Eligibility Conditions for Asset-Backed Securities and Applicability to Insurance-Linked Securities
|
On July 26, 2011 the Securities and Exchange Commission (the 'SEC') issued a release (the 'Proposing Release') revising and re-proposing certain rules (the 'Proposed Rules') initially proposed in April 2010 related to asset-backed securities in light of the provisions added by the Dodd-Frank Wall Street Reform and Consumer Protection Act (the 'Dodd-Frank Act') and comments received on the 2010 ABS Proposals. Among other things, the 2010 ABS Proposals propose amendments to the safe harbor for exempt offerings and resales for 'structured finance products' in reliance on Securities Act Rule 144A, which would include many Insurance-Linked Securities ('ILS') such as CAT bonds. Under the Proposing Release, the SEC has requested additional comment on these proposals relating to exempt offerings.
|
August 4, 2011 | Download
|
|
FTC/DOJ Announce Significant Changes to HSR Premerger Notification Form
|
On July 7, 2011, the Federal Trade Commission ("FTC") and the Antitrust Division of the U.S. Department of Justice ("DOJ") announced significant changes to the Hart-Scott-Rodino ("HSR") Premerger Notification Rules and the Premerger Notification and Report Form ("HSR Form") that may substantially increase the burden placed on filing parties. The new HSR rules were published in the Federal Register on July 19, 2011, and will take effect on August 18, 2011. Any transactions notified to the agencies on or after that date must use the amended form.
|
August 2, 2011 | Download
|
|
FDIC Approves Rule Making With Respect to Orderly Liquidation Authority; Defers Ruling on Living Wills
|
On July 6, the FDIC approved a final rule implementing the Orderly Liquidation Authority. The FDIC had been expected to issue a final rule on the 'Living Will' requirements July 6 as well. However, the FDIC tabled this matter until its August 6 meeting.
The rule on the Orderly Liquidation Authority is promulgated under Title II of the Dodd-Frank Act, which authorizes the FDIC to create an orderly liquidation mechanism for systemically important financial institutions, which are referred to in the rule as covered financial companies. The final rule defines key terms, creates a priority structure, and delineates the procedure for filing a claim. The final rule will become effective August 15, 2011.
|
July 28, 2011 | Download
|
|
Tax Aspects of the 'Gang of Six' Plan to Reduce the Deficit
|
On Tuesday, July 19, the 'Gang of Six' senators who have been negotiating a bipartisan plan to reduce the budget deficit presented their proposal to a closed-door meeting of forty-nine senators. The plan was immediately praised by members of both parties and President Obama. The plan borrows heavily from the report issued in December by President Obama's National Commission on Fiscal Responsibility.
This memorandum summarizes the tax proposals of the Gang of Six plan and compares the Gang of Six proposals to the analogous proposals made by the Deficit Reduction Commission (and a previous proposal made by the Deficit Reduction Commission's co-chairs, Senator Alan Simpson and Erskine Bowles).
|
July 22, 2011 | Download
|
|
IRS Issues Proposed Regulations to Clarify Application of Section 162(m)
|
New proposed regulations clarifying perceived ambiguities in the application of the $1 million limit on deductible compensation for covered employees, including the transition rule applicable to privately held corporations that become publicly held, were recently published by the Internal Revenue Service. Companies should review their incentive compensation arrangements to determine whether these proposed regulations, once finalized, will affect such arrangements, and, if so, how such arrangements may need to be modified in order to comply with Section 162(m).
|
July 19, 2011 | Download
|
|
EPA Finalizes Long-Awaited Transport Rule to Replace CAIR
|
On July 6, 2011, the U.S. Environmental Protection Agency ("EPA") issued its final Cross-State Air Pollution Rule ("CSAPR" or "Final Rule") pursuant to Section 110(a)(2)(D)(i)(I) of the Clean Air Act, 42 U.S.C. § 7410(a)(2)(D)(i)(I). The CSAPR requires significant reductions of emissions of sulfur dioxide ("SO2") and nitrogen oxide ("NOx") from power plants in 27 states in the eastern half of the U.S. that, according to the EPA, contribute to "downwind" ozone or fine particle pollution in other states. The EPA estimates that the CSAPR will achieve a 73% reduction in SO2 and a 54% reduction in NOx power plant emissions from 2005 levels in the covered states. The CSAPR is available on the EPA’s website, but has not yet been published in the Federal Register.
|
July 18, 2011 | Download
|
|
Stern v. Marshall: How Big Is It?
|
On June 23, 2011, the Supreme Court ruled 5-4, in an opinion by Chief Justice Roberts, that a Bankruptcy Judge lacked constitutional authority to issue a final ruling on state law counterclaims by a debtor against a claimant. This is the latest round of a well-known case involving the estate of former model Anna Nicole Smith and the estate of her late husband, wealthy oil magnate J. Howard Marshall.
|
July 14, 2011 | Download
|
|
American Electric Power Co. v. Connecticut: The Supreme Court Bars Tort Lawsuits Challenging Greenhouse Gas Emissions
|
On June 20, 2011, the U.S. Supreme Court unanimously held that the Clean Air Act, and the authority it confers on the U.S. Environmental Protection Agency (EPA) to regulate emissions of carbon dioxide and other greenhouse gases, "displaces" any federal common law right of state, municipal and private plaintiffs to assert tort claims in the federal courts seeking injunctive relief for alleged harm from greenhouse gas emissions. American Electric Power Co. v. Connecticut, No. 10-174, (2011).
|
July 14, 2011 | Download
|
|
SEC Proposed Rules Regarding Third-Party Due Diligence Disclosure
|
On June 8, 2011, the Securities and Exchange Commission (the "SEC") issued a release (the "Proposing Release") describing proposed rules (the "Proposed Rules") implementing the portion of Section 932 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act") relating to third-party due diligence. The Proposed Rules describe i) the obligations of issuers and underwriters to disclose the findings and conclusions of third-party due diligence reports and ii) the form this disclosure should take.
|
July 8, 2011 | Download
|
|
Global Trade Associations Warn of Potential Pitfalls of New Derivatives Regulations
|
Eight international trade associations, including the International Swaps and Derivatives Association, the European Banking Federation and the Futures and Options Association, have sent a joint letter to Michel Barnier, the EU Internal Markets Commissioner, and Timothy Geithner, the Secretary of the US Treasury Department, urging them to focus on greater international coordination in the preparation and implementation of the new regulations on derivatives to be introduced across the G20 jurisdictions.
|
July 6, 2011 | Download
|
|
Possible PRC Import Tariff Cut on Luxury Goods and the Recent Textile Tariff Cuts
|
On June, 27, 2011, a spokesman from the Ministry of Commerce ("MOFCOM") stated that China's reduction of the import tariff on luxury goods is only "a matter of time". Other news sources reported that the China government is going to cut the import tariff for luxury products, and some even speculated such an import tariff cut as early as October, 2011. However, as of July 5, 2011, neither the reports nor the schedule for these reductions has been officially confirmed. Furthermore, the controlling department of tariff policies, the Ministry of Finance (the "MOF"), currently holds a different position on this issue.
|
July 5, 2011 | Download
|
|
The Bribery Act 2010: Are You Ready?
|
The Bribery Act 2010 (the “Act”) enters into force tomorrow and with it comes some of the most far-reaching anti-bribery laws in the world, surpassing the previous benchmark set by the U.S. Foreign Corrupt Practices Act (the “FCPA”). The Act will change profoundly the approach to business transactions and internal investigations of public and private companies.
|
June 30, 2011 | Download
|
|
A Primer on Foreign Investments, Investment Structures & Special Development Zones in China
|
China's economic strength continues to attract a growing number of first-time China investors. This memorandum presents a general introduction to: investments by foreign investors in China; the various investment structures that may be utilized by such foreign investors; and China's special development zones and their significance for foreign investors.
|
June 27, 2011 | Download
|
|
The Dodd-Frank Act: How It Impacts Specific Institutions, Entities and Transactions
|
The Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Act") was signed into law
by President Obama on July 21, 2010. The Act consists of sixteen distinct Titles on a wide variety of topics. Once implemented by the required regulations, the Act will significantly alter the U.S. financial regulatory system. All financial institutions will be directly and materially affected by the
Act’s accompanying regulations, and non-financial institutions that use regulated financial products will be indirectly affected. Additionally, the Act’s amendments to Sarbanes-Oxley and broad changes to executive compensation and corporate governance rules will impact all U.S. public
companies.
|
June 22, 2011 | Download
|
|
Commodity Markets' Enforcement Landscape to Shift With Federal Trade Commission's Launch of First Crude Oil Investigation Under 2007 Law
|
Yesterday, Senator Jay Rockefeller announced that the Federal Trade Commission (FTC) has agreed to start an investigation into oil and gasoline markets and the impact on retail prices. In a letter to Senator Rockefeller announcing the investigation, the FTC indicated that it was attempting to determine "whether certain oil producers, refiners, transporters, marketers, physical or financial traders, or others (1) have engaged or are engaging in practices that have lessened or may lessen competition – or have engaged or are engaging in manipulation – in the production, refining, transportation, distribution, or wholesale supply of crude oil or petroleum products; or (2) have provided false or misleading information related to the wholesale price of crude oil or petroleum products to a federal department or agency."
|
June 21, 2011 | Download
|
|
Payment Business Permits: New Requirements for Payment Servicing Companies
|
New Measures issued by the People’s Bank of China (the “PBOC”) require that all nonfinancial institutions providing payment services within the People’s Republic of China (“PRC” or “China”) apply for a special payment business permit (“Payment Business Permit”). These New Measures apply to all non-financial institutions currently providing payment services, as well as all new entrants into the market. By requiring that all financial intermediaries undergo this additional permitting process, the New Measures will have a significant impact on those companies seeking to enter the payment services sector. This is especially true for nonfinancial institutions looking to enter China’s burgeoning online payment sector. Foreign investors should note that the New Measures are silent on the issue of whether foreign-invested or owned companies will continue to be allowed to operate within these areas, or whether they will be subject to more stringent requirements than their domestic counterparts.
|
June 21, 2011 | Download
|
|
Regulatory Issues For European Funds: Updates on Synthetic ETFs and the Implementation of UCITS IV
|
A recent Financial Stability Board note (“Potential financial stability issues arising from recent trends in Exchange-Traded Funds (ETFs)” ) has raised, not for the first time, the risks to investors supposedly inherent in synthetic ETFs and whether or not those risks require active management by regulatory authorities. Given the focus on counterparty risk post-Lehman, and on the need to protect retail investors investing in “complex” products, the question is being asked again as to whether or not the particular risks generated by these funds require special mitigating measures and restraints.
|
June 20, 2011 | Download
|
|
SAFE Regulations Affecting Inbound and Outbound Payments in Cross-border M&A Transactions within the People's Republic of China
|
Recently, the Chinese government tightened its policies on foreign exchange and taxes with respect to cross-border mergers and acquisitions ("M&A") transactions. Local government authorities with oversight over foreign currency issues are now given discretion to deny applications to properly register funds designated for M&A transactions in China. In addition, a tax certificate is now required before funds can be remitted offshore. As a result, we believe it will generally take more time to complete M&A transactions and that those not in compliance with the requisite foreign exchange and tax laws in China will be more frequently subject to fines and hurdles in the M&A process. In addition to complying with all PRC government regulations on foreign exchange and taxes, we recommend that parties to an M&A transaction in China consult with legal counsel to mitigate any potential negative effects the heightened regulatory environment will have on a proposed M&A deal.
|
June 14, 2011 | Download
|
|
Living Wills: A User's Guide To Dodd-Frank's Bequest to Banks
|
In 2010, Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act. While many of its provisions have received greater publicity — such as the Orderly Liquidation Authority of Title II and the swap provisions of Title VII — the so-called "living will" provisions of Dodd-Frank are now receiving more focused attention. Section 165(d) of Dodd-Frank requires "systemically significant" financial institutions to periodically report to the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Company and the Financial Stability Oversight Counsel a plan for the rapid and orderly resolution of their business in the event of material financial distress.
|
June 13, 2011 | Download
|
|
Two Dodd Frank Problems: the Effective Date and the Definitions; Contingency Planning in the Absence of a Regulatory Structure
|
This memorandum first explains the July 16, 2011 problem that will arise because the Dodd Frank derivatives legislation (Title VII of the statute) goes into effect without either a ready regulatory plan or an operating market structure. The effective date problem is made worse because of drafting problems in Dodd Frank, including the flawed definition of the single most important term in all of the statute: "swap."
|
June 13, 2011 | Download
|
|
S.D.N.Y. Bankruptcy Court Continues to Construe Bankruptcy Code's Safe Harbor Provisions Narrowly
|
In two recent decisions, the United States Bankruptcy Court for the Southern District of New York has interpreted narrowly certain of the Bankruptcy Code's safe harbor provisions.
|
June 7, 2011 | Download
|
|
Joint Agencies’ Proposed Rules Governing Incentive-Based Compensation at Covered Financial Institutions
|
The Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Act") requires seven Federal agencies (the "Agencies") to jointly prescribe regulations or guidelines with respect to incentive-based compensation practices at covered financial institutions. On April 14, 2011, the government published proposed rules governing such incentive-based compensation arrangements at covered financial institutions (the "Proposed Rules").
|
June 1, 2011 | Download
|
|
The Dodd-Frank Whistleblower Provisions: Considerations for Effectively Preparing for and Responding to Whistleblowers
|
As part of the Dodd-Frank Act ("Dodd-Frank" or the "Act"), Congress created powerful incentives to encourage persons to report (i) potential violations of the federal securities laws to the Securities and Exchange Commission ("SEC") and (ii) potential violations of the Commodity Exchange Act (the "CEA") to the Commodity Futures Trading Commission (the "CFTC"). While the Sarbanes-Oxley Act ("SOX") encouraged up-the-ladder reporting by employees and allowed for self-policing and self-reporting by companies of potential violations, the Dodd-Frank Act’s whistleblower provisions will incentivize external reporting to the regulators that may hamper a company’s ability to self-police and self-report.
|
May 26, 2011 | Download
|
|
CFTC Sues Three Firms for Manipulation of 2008 Crude Oil Prices
|
On May 24, 2011, the U.S. Commodity Futures Trading Commission (CFTC) filed a civil complaint in the United States District Court for the Southern District of New York alleging that three speculators, Parnon Energy Inc. (Parnon) of California, Arcadia Petroleum Ltd. (Arcadia Petroleum) of the United Kingdom, Arcadia Energy (Suisse) SA (Arcadia Suisse) of Switzerland, including two individuals, James T. Dyer of Australia and Nicholas J. Wildgoose of California, manipulated (and attempted to manipulate) the price of the New York Mercantile Exchange (NYMEX) West Texas Intermediate (WTI) futures contract in January 2008 and March 2008. The price of the NYMEX WTI futures contract is based on the price of crude oil delivered to Cushing, Oklahoma and is a crucial benchmark for crude oil prices around the world.
|
May 25, 2011 | Download
|
|
China Establishes National Security Review Procedures for Acquisitions of Domestic Enterprises and Assets by Foreign Investors
|
As China continues its rapid pace of economic development, there is increasing interest among foreign investors to acquire local Chinese enterprises and assets. Control of local enterprises and assets by foreign investors may involve matters of national security for China. As a result, the Chinese government has issued a set of procedures designed to strengthen its review of acquisitions by foreign investors in sensitive sectors which may significantly increase the amount of
time it takes for foreign investors to get a transaction approved by the Chinese government. If the Chinese government finds that a transaction has national security implications, the procedures
grant it broad powers to amend the terms of the transaction or even cancel it.
|
May 23, 2011 | Download
|
|
New Laws In China Regarding “State Secrets” and Related Issues: Uncertainties, obstacles, and the need to strengthen internal compliance procedures
|
This memorandum presents an introduction to China’s new state secrets law and other related laws with respect to trade secrets and bribery. This new law is significant, as it impacts the day-to-day operations of all foreign companies operating in China.
|
May 6, 2011 | Download
|
|
The Proposed Regulations on Accountable Care Organizations and the Role of Long Term Care, Home Care, and Other Providers Across the Continuum
|
Enacted by Congress in March 2010, the Patient Protection and Affordable Care Act ("PPACA") required the Federal Centers for Medicare and Medicaid Services ("CMS") to establish a Shared Savings Program, under which Accountable Care Organizations ("ACOs") would assume responsibility for the cost and quality of care for Medicare fee-for-service ("FFS") beneficiaries and share in the savings achieved in accord with financial and clinical benchmarks set by CMS. In our November 30, 2010, Clients & Friends Memo, "National Health Care Reform Promotes Accountable Care Organizations", we discussed some of the legal and regulatory issues surrounding ACOs posed by PPACA. We also noted that many key issues related to ACO formation, governance, operation, and financial incentives would be addressed in the regulations.
|
May 4, 2011 | Download
|
|
FERC Orders Trader to Pay $30 Million for Market Manipulation
|
On April 21, 2011, the Federal Energy Regulatory Commission (FERC) ruled that former Amaranth Advisors LLC trader Brian Hunter violated FERC’s Anti-Manipulation Rule and ordered Hunter to pay a $30 million civil penalty. This is the first litigated case involving FERC’s enhanced anti-manipulation authority under section 4A of the Natural Gas Act, which prohibits manipulation in connection with FERC-jurisdictional transactions. FERC’s order, which affirmed a previous decision by a FERC Administrative Law Judge (ALJ), found that “Hunter’s trading practices [in the natural gas futures market during the settlement periods on] expiration days were fraudulent or deceptive, undertaken with the requisite scienter, and carried out in connection with FERC-jurisdictional natural gas transactions.”
|
April 22, 2011 | Download
|
|
The Dodd-Frank Act's Impact on Affiliate Transactions
|
The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) contains several provisions that will tighten the restrictions that govern transactions between banks and their affiliates – Sections 23A and 23B of the Federal Reserve Act – beginning in July 2012. These new provisions will (i) significantly increase the cost and burden of certain types of transactions between a bank and its nonbank affiliates, in particular, derivatives, securities lending/borrowing, and repo transactions; (ii) expand the scope of “affiliates” subject to Sections 23A and 23B; and (iii) increase the collateral burdens applicable to extensions of credit. As a result, banks should review, and may be required to modify, existing business arrangements with affiliates (as newly redefined) to comply with the new requirements.
|
April 21, 2011 | Download
|
|
CFTC, Prudential Regulators Propose Margin Rules for Non-Cleared Swap
|
On April 12, 2011, the Commodity Futures Trading Commission (“CFTC”) voted 4-1 to issue proposed rules establishing minimum initial and variation margin requirements for non-cleared swaps entered into by CFTC-regulated swap dealers and major swap participants. Later the same day, the Federal Reserve Board, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Farm Credit Administration and the Federal Housing Finance Agency(collectively, “Prudential Regulators”) jointly issued their own rules establishing margin requirements for swap dealers and major swap participants that are subject to their respective prudential regulation.
|
April 13, 2011 | Download
|
|
The MiFID Review and What it Means For Commodities
|
The European Commission’s December 2010 consultation paper on wholesale revisions to MiFID has focused on commodities derivatives as an area for regulatory intervention and oversight. The proposals, outlined as follows, are likely to lead to significant infrastructure changes for firms that trade commodities derivatives, particularly those firms that now rely on exemptions for own account and “ancillary” trading. The proposals place unregulated and non-financial firms into a financial regulatory context by requiring trading authorisation and imposing capital requirements, conduct of business and operational requirements.
|
April 12, 2011 | Download
|
|
Proposed Credit Risk Retention Requirements for Asset-Backed Securities Transactions
|
The Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Act") was signed into law by President Obama on July 21, 2010. On March 28, 2011, the Federal banking agencies (the Office of the Comptroller of Currency, the Federal Deposit Insurance Corporation and the Board of Governors of the Federal Reserve System), the Securities and Exchange Commission ("SEC"), the Department of Housing and Urban Development ("HUD"), and the Federal Housing Finance Agency ("FHFA") (collectively, the "Agencies") released a joint notice of proposed rulemaking (the "NPR") containing proposed rules ("Proposed Rules") to implement the credit risk retention requirements of Section 941(b) of the Act, codified as Section 15G ("Section 15G") of the Securities Exchange Act of 1934 (the "Exchange Act").
|
April 6, 2011 | Download
|
|
In Matrixx Decision the Supreme Court Rejects Bright-Line Materiality Test for Motions to Dismiss Securities Fraud Claims
|
On March 22, 2011, the United States Supreme Court, in a unanimous decision written by Justice Sonia Sotomayor, stated that the "materiality" element of a claim for securities fraud under Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 promulgated thereunder, "is satisfied when there is 'a substantial likelihood that the disclosure of the omitted fact would have been viewed by the reasonable investor as having significantly altered the 'total mix' of information made available,'" and held that materiality "cannot be reduced to a bright-line rule." The Court ruled that on a motion to dismiss, a court must assess – on a case by case basis – the totality of available information and not focus solely on the presence or absence of a single type of information.
|
April 6, 2011 | Download
|
|
Hospital and Nursing Home Ethics Committees Face Significant New Responsibilities
|
On June 1, 2010, the Family Health Care Decisions Act (the "FHCDA" or the "Act") became effective in New York State. Proposed by the New York State Task Force on Life and the Law in 1992, the Act effects sweeping changes to New York State's laws on treatment decisions for patients in hospitals and nursing homes. Specifically, the FHCDA establishes a new Article 29-CC of the Public Health Law that covers treatment decisions, including decisions to forgo life-sustaining measures, for adults who lack the capacity to decide for themselves and have not signed an advance directive. The Act also covers decisions to forgo life-sustaining treatment for children.
|
April 4, 2011 | Download
|
|
The UK Budget 2011 – Spotlight on Insurance
|
On 23 March 2011, the Chancellor of the Exchequer announced a number of measures that will both directly and indirectly affect the UK tax treatment of insurers.
While the UK insurance sector will likely welcome the reduction in April 2011 of the main rate of corporation tax, there are a number of sector-specific areas in which further changes have been announced.
|
March 30, 2011 | Download
|
|
UK Budget 2011: Key Taxation Aspects
|
The Chancellor of the Exchequer’s second budget, held on 23 March 2011, was perhaps most notable for the attention placed on fiscal neutrality, coupled with plans for the stimulation of economic growth. The technical tax developments and announcements echoed this approach. One document described a “coherent framework” within which HMRC could tackle perceived tax avoidance, an approach supplemented by the closure of a number of loopholes and schemes and a general focus on measures to “shut down the open abuses that have been allowed to continue for too long”. Other provisions focused on encouraging investment in UK enterprise and in developing the competitiveness of the UK economy.
|
March 24, 2011 | Download
|
|
SEC Launches FCPA Probe of Financial Services Industry's Interactions with Sovereign Wealth Funds
|
The U.S. Securities and Exchange Commission ("SEC") has, to our understanding, delivered letters of inquiry to at least 10 hedge funds, banks, and private equity firms requesting information about the firms’ interactions with sovereign wealth funds ("SWF"). That list may expand to include other financial institutions. The investigation appears to be driven by: (i) the SEC's opinion that SWF employees are foreign government officials for purposes of the Foreign Corrupt Practices Act ("FCPA"); and (ii) reports that certain hedge funds, banks, and private equity firms may have paid bribes to those government officials to attract or retain business.
|
March 18, 2011 | Download
|
|
New York State Supreme Court Upholds Springing Guaranty in Granting Summary Judgment
|
On March 8, 2011, in a decision enforcing a springing guaranty in a commercial real estate loan, the Supreme Court of the State of New York granted a motion for summary judgment in lieu of complaint pursuant to CPLR 3213. In UBS Commercial Mortg. Trust 2007-FL1, Commercial Mortg. Pass-through Certificates, Series 2007-FL1 v. Garrison Special Opportunities Fund L.P., the court not only found that such springing guaranty was an instrument for the payment of money only, thus entitling Plaintiffs to move for summary judgment in lieu of complaint, but the court also found that such springing guaranty was neither an unenforceable penalty nor against public policy.
|
March 16, 2011 | Download
|
|
The Beijing Administration for Industry and Commerce Temporarily Suspends the Acceptance of Applications for Modifying the Registration Records of Business Enterprises
|
All business enterprises within China are subject to an annual review carried out by the division of the State Administration of Industry and Commerce (the “SAIC”) located where the enterprise is domiciled. Within the Municipality of Beijing, the office which conducts this review is the Beijing Administration for Industry and Commerce the (“BAIC”). The review process begins in March and ends in June. Usually, business enterprises have until mid-March to prepare and gather all of the documents necessary for their annual review.
|
March 8, 2011 | Download
|
|
Third Circuit Upholds Use of Discounted Cash Flow Method Under Bankruptcy Code Section 562 in In re American Home Mortgage Holdings, Inc., et al.
|
On February 16, 2011, the United States Court of Appeals for the Third Circuit ruled that a discounted cash flow analysis constituted "a commercially reasonable determinant[] of value" for purposes of section 562(a) of the United States Bankruptcy Code. In so doing, the court upheld the United States Bankruptcy Court for the District of Delaware decision sustaining the objection of American Home Mortgage Holdings, Inc. (the "Debtors") to the $478.5 million claim of Calyon New York Branch for damages related to the termination of a mortgage loan repurchase agreement. Calyon had taken the position that no commercially reasonable determinants of value existed on the termination date, and, in reliance on section 562(b) of the Code, calculated its claim based on the "market value" of the specific loans at issue one year after the termination date.
|
March 2, 2011 | Download
|
|
SEC Finalizes Rules Regarding Shareholder Approval of Executive Compensation and Golden Parachute Arrangements
|
On January 25, 2011, the Securities and Exchange Commission (the “SEC”) adopted final rules (the “Final Rules”) to implement the provisions of Section 951 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which requires publicly traded companies to provide for non-binding shareholder votes on executive compensation (“say-on-pay votes”), the frequency of say-on-pay votes (“say-when-on-pay votes”), and golden parachute packages of named executive officers (“say-on-golden-parachute votes”). The Final Rules become effective on April 4, 2011 and are largely similar to proposed rules (the “Proposed Rules”) that the SEC issued on October 18, 2010, discussed here. This Clients & Friends Memo supplements our previous discussion of the Proposed Rules by summarizing some of the substantive differences between the Proposed and Final Rules.
|
March 1, 2011 | Download
|
|
Final Regulations Issued with Respect to FBAR Filing Requirements
|
On Wednesday, February 23, the Financial Crimes Enforcement Network (“FinCEN”), a bureau of the Treasury Department, issued final regulations (the “Final Regulations”) describing the individuals and entities that are required to file Form TD F 90-22.1 – Foreign Bank and Financial Accounts Report (“FBAR”), and the foreign financial accounts that they must report. The Final Regulations
are substantively identical to the proposed regulations that were issued on February 26, 2010 (the “Proposed Regulations”). Most significantly, the Final Regulations continue to reserve on whether equity interests in foreign hedge funds, private equity funds, and other non-mutual company investment funds are treated as financial accounts subject to FBAR reporting.
|
February 28, 2011 | Download
|
|
Changes to the Rules on Client Assets: Implications For Prime Brokers and Funds
|
On 1 March 2011, a series of amendments to the FSA’s Client Assets Sourcebook (“CASS”) come into force that will require the repapering of relationships between prime brokers and their fund customers as well as a review of any liens granted in custody agreements.
These amendments are set out in FSA Policy Statement 10/16 which also contains new rules to: (i) limit deposits of client monies with other group entities to a maximum of 20% (comes into force on 1 June 2011); (ii) require firms to make a Client Money and Asset Return (“CMAR”) (comes into force on 1 June 2011 ); and (iii) establish a CASS oversight controlled function (comes into force on 1 October 2011).
|
February 25, 2011 | Download
|
|
Del Monte Decision Enjoins Shareholder Vote and Deal Protections; Holds Buyer Potentially Responsible for Aiding and Abetting Seller Board’s Fiduciary Breach
|
In In re Del Monte Foods Company Shareholders Litigation, Consol. C.A. No. 6027-VCL (Del. Ch. Feb. 14, 2011), the Court of Chancery temporarily enjoined a shareholder vote on a high premium, all-cash merger to require an additional 20-day market check based on a preliminary finding that the sale process was potentially tainted by alleged misconduct by Del Monte’s financial advisor and the private equity buyers. The Court also enjoined the parties from enforcing the buyer’s deal protections and left open the door for a monetary damages claim against the buying consortium as an “aider and abettor” of a fiduciary breach by Del Monte’s Board.
|
February 18, 2011 | Download
|
|
Quantitative Investment Models and Compliance Policies and Procedures: the Securities and Exchange Commission Order Involving the AXA Rosenberg Entities
|
A recent order by the Securities and Exchange Commission strongly suggests that registered investment advisers that rely upon quantitative investment models to manage client assets are required by the Investment Advisers Act of 1940 to implement written compliance policies and procedures in order to identify and mitigate the risks associated with their quantitative models.
|
February 17, 2011 | Download
|
|
Tax Proposals in the Obama Administration's Fiscal Year 2012 Revenue Budget
|
On Monday, the Treasury Department released the Obama Administration's Fiscal Year 2012 Revenue Proposals. This memorandum summarizes the tax proposals that are of most interest to U.S. corporate taxpayers, financial institutions, insurance companies, hedge funds, private equity funds, and high-income individuals.
|
February 17, 2011 | Download
|
|
Energy Tax Provisions in the Obama Administration's Fiscal Year 2012 Budget
|
On Monday, the Treasury Department released the Obama Administration's Fiscal Year 2012 Revenue Proposals (the "Greenbook"), which includes several significant energy-related tax proposals. The proposals are all substantially similar to the energy-related tax proposals in last year’s Greenbook, except for a new proposal to provide a tax credit in lieu of a deduction for energy-efficient commercial buildings.
|
February 17, 2011 | Download
|
|
Proposed EU “Bail-in” Measures May Impact Credit Derivatives Framework
|
The European Commission recently launched a consultation on the Technical Details of a Possible EU Framework for Bank Recovery and Resolution (the “Consultation”). The Consultation is designed to be read with the Commission's October 2010 communication (the “Communication”) on an EU framework for crisis management in the financial sector. The Consultation contains technical details which expand on the principles identified in the Communication.
|
February 14, 2011 | Download
|
|
Fed Issues Final Regulations on the Volcker Rule’s Extension Periods
|
On February 9, 2011, the Board of Governors of the Federal Reserve System (the "Federal Reserve Board") issued final regulations implementing the various conformance and extension periods under the Dodd-Frank Act’s "Volcker Rule." These new regulations will be codified as new Subpart K of the Federal Reserve Board’s Regulation Y.
|
February 11, 2011 | Download
|
|
Summary of Proposed Rulemaking Regarding Commodity Options & Agricultural Swaps
|
The Dodd-Frank Wall Street Reform and Consumer Protection Act prohibits swaps in an agricultural commodity unless conducted pursuant to a rule or order under the Commodity Futures Trading Commission’s (“CFTC” or “Commission”) 4(c) exemptive authority. In the CFTC’s Notice of Proposed Rulemaking regarding Commodity Options and Agricultural Swaps, the Commission proposes to adopt new rules that would expressly require eligible parties that enter into swaps in an agricultural commodity to be subject to the same provisions of the CEA and the CFTC’s regulations that apply to all other commodity swaps. In addition, all over-the-counter commodity option transactions, including options on physical commodities, would be subject to the same requirements that apply to commodity swaps.
|
February 8, 2011 | Download
|
|
Circular 253 Requires Private Equity Funds to Register with the NDRC
|
The National Development and Reform Commission (the “NDRC”) has recently mandated that private equity funds based in certain regions of China register with the NDRC, and made the funds subject to ongoing disclosure requirements, including periodic disclosure of annual business reports and annual audited financial statements.
|
February 7, 2011 | Download
|
|
Important Court Decision For No-Fault Insurers; New York Court Grants Summary Judgment To Insurers On Mallela Issue
|
We are very pleased to inform you that on January 28, 2011 our firm, together with our co-counsel Bob Stern of Stern & Montana, obtained a very favorable and significant decision for no-fault insurers from the Commercial Division of the New York County Supreme Court. Specifically, Supreme Court (Honorable Eileen Bransten) found that four radiology providers were ineligible to receive no fault benefits because they had engaged in illegal fee splitting with non professionals and were unlawfully controlled and/or beneficially owned by a non professional. In addition to dismissing all of the providers’ counterclaims against the insurers, the Court granted partial summary judgment in favor of the insurers, and against the providers, the radiologist and the real beneficial owner, on the insurers’ claims for fraud and unjust enrichment.
|
February 2, 2011 | Download
|
|
Foreign Sourced RMB, Domestic Sourced RMB, and the Shanghai Pilot Program
|
Last month, Shanghai regulatory authorities formally announced the Implementation Measures
on the Pilot Program of Foreign-Invested Equity Investment Enterprises ("Shanghai Pilot Program" or "Pilot Program"). Yesterday, the Shanghai Pilot Program took effect. The Pilot Program increases the flexibility with which foreign-invested Reminbi ("RMB") funds and fund
management companies may operate and make investments in China. The Shanghai Pilot
Program marks an important step in China's economic development and liberalization because: (1) it relaxes controls on foreign sourced RMB investments in China's restricted industries; and(2)it loosens restrictions on cross-border capital flows.
|
February 2, 2011 | Download
|
|
SEC Issues Final Rules Regarding Diligence and Disclosure in ABS Offerings
|
The Securities and Exchange Commission (the "SEC") issued final rules (the "Final Rule") on January 20, 2011, implementing the provisions of Section 945 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Act"). Section 945 of the Act directed the SEC to issue rules that require an issuer of publicly offered asset-backed securities ("ABS") to perform a review of the assets underlying an ABS offering and disclose the nature of that review. The Final Rule adopts the SEC’s earlier proposal with one important change, which is the inclusion of a minimum standard of review. The SEC also adopted amendments to Regulation AB that would require an ABS issuer to disclose information regarding assets that deviate from disclosed underwriting criteria.
|
February 1, 2011 | Download
|
|
SEC Issues Final Rules for New Disclosure Requirements Regarding Representations and Warranties in Asset-Backed Securities Offerings
|
The Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Act") was signed into law by President Obama on July 21, 2010. Section 943 of the Act requires the Securities and Exchange Commission (the "SEC") to prescribe regulations on the use of representations and warranties in the market for asset-backed securities. Such regulations must provide for disclosure by "securitizers," as defined in the Act, of fulfilled and unfulfilled repurchase requests across all trusts aggregated by the securitizer. They also require a description by nationally recognized statistical rating organizations ("NRSROs"), in reports accompanying credit ratings of securitization transactions, of the representations, warranties and enforcement mechanisms contained in each transaction and how they differ from those contained in issues of similar securities.
|
February 1, 2011 | Download
|
|
Proposed Regulations Expand the Definition of “Publicly Traded Property” for Purposes of Determining the Issue Price of Debt Instruments That Are Significantly Modified in a Restructuring
|
On January 6, the IRS and the Treasury Department proposed new regulations that, if finalized as proposed, will significantly expand the definition of "publicly traded property" for purposes of determining the issue price of a debt instrument issued for property. The proposed regulations are particularly relevant for distressed debt restructurings.
|
January 12, 2011 | Download
|
|
SEC's First Use of A Non-Prosecution Agreement Shows Potential Benefits For Respondents But Also Demonstrates Potential Pitfalls
|
On December 20, 2010, the Securities and Exchange Commission announced its first use of a non-prosecution agreement ("NPA") to resolve an enforcement investigation under the SEC's new cooperation initiative. The SEC first announced the availability of both NPAs and deferred prosecution agreements almost a year ago. The details of the agreement suggests that NPAs may simply function as a cooperation agreement, and, as anticipated, unlike a traditional settled injunction or administrative proceeding, will have no Commission findings and no sanctions associated with them. Under the right circumstances, an NPA should provide a tangible reward for cooperation. However, the SEC's first NPA also raises issues with respect to the specific scope of the settling party's continuing obligations under NPAs.
|
January 10, 2011 | Download
|
|
OMIG Begins Policing Provider Compliance Programs
|
Last November, New York Medicaid Inspector General, James G. Sheehan, participated in a Webinar entitled "Evaluating Effectiveness of Compliance Programs," in which he described, among other things, OMIG's role in ensuring a provider’s implementation of an effective compliance program, detailing the steps he and OMIG Compliance staff are taking to evaluate a provider's implementation of the eight elements of a compliance program prescribed in the regulations. OMIG has since provided further guidance with respect to OMIG’s oversight of a provider’s compliance program in its 2011 Medicaid Work Plan, issued on December 6, 2010.
|
January 7, 2011 | Download
|
|
Revising the Remuneration Code: Pan-European Requirements Applicable From 1 January 2011
|
On 17 December 2010, the Financial Services Authority (FSA) published final rules expanding on its Remuneration Code in order to implement amendments being brought in by the Capital Requirements Directive (CRD 3) and guidelines on remuneration from the Committee of European Banking Supervisors (CEBS). These new rules expand the scope of application of the FSA’s existing Remuneration Code beyond the 26 larger banks covered by the original Code to include all banks, building societies and CAD investment firms (which will include asset managers, UCITS funds and most hedge fund managers).
|
January 5, 2011 | Download
|
|
High Court Interprets Section 2(a)(iii) of the ISDA Master Agreement
|
Yesterday, the High Court gave its judgment in the case of Lomas and others v JFB Firth Rixson, Inc and others upon application by the Joint Administrators of Lehman Brothers International Europe ("LBIE") for directions as to the construction and effect of five interest rate swap agreements ("Swaps") to which LBIE is a party.
|
December 22, 2010 | Download
|
|
Expert Networks and Insider-Trading Probes: Best Practices in Fostering Compliance and Reducing Legal Risks
|
As recent news reports indicate, federal law enforcement agents are investigating insider trading allegations surrounding expert networks and their use by hedge funds and other institutional investors seeking to gain an informational edge when making investment decisions.
|
December 21, 2010 | Download
|
|
The Directive on Alternative Investment Fund Managers: Implications For Non-European Investment Managers
|
The Directive on Alternative Investment Fund Managers (the “Directive”) is aimed, broadly, at two targets. Firstly, it requires the authorisation and supervision of all alternative investment fund managers (“AIFM”) and imposes investor protection requirements on those authorised AIFM. These requirements include significant obligations to make disclosures to investors, regulators and target companies, obligations to deploy adequate risk management systems, obligations to appoint independent depositaries who bear a degree of legal liability to the investor, and leverage controls. Secondly, the Directive looks to create a truly borderless market across the EU to allow AIFM to “passport” their services throughout Europe once authorised in a single Member State. For the first time, these passports will (eventually) be available to non-EU persons.
|
December 17, 2010 | Download
|
|
The Lincoln Amendment: Banks, Swap Dealers, National Treatment and the Future of the Amendment
|
One of the most contentious provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act") is Section 716 – commonly referred to either as the "Lincoln Amendment" after its principal proponent, Senator Blanche Lincoln of Arkansas, or alternatively by its functional name, the "swaps push-out rule." The Lincoln Amendment effectively forbids FDIC-insured institutions and other entities that have access to Federal Reserve credit facilities – including banks, thrifts, and U.S. branches of foreign banks – from acting as a "swap dealer" except in certain limited circumstances, thus requiring such institutions to "push out" most swap dealing activities into an affiliate that is not FDIC insured and that does not otherwise access Federal Reserve credit facilities. The Lincoln Amendment will become effective in July 2012 and will have a significant, and likely not wholly anticipated, impact on banks and U.S.
|
December 14, 2010 | Download
|
|
Final Report of President Obama's Deficit Reduction Commission
|
Today, President Obama's bipartisan deficit-reduction commission approved its final report proposing sweeping changes to the tax, social security, and health care systems. The vote was 11 out of 18 in favor, which was fewer than the 14 votes that Senate Majority Leader Harry Reid and House Speaker Nancy Pelosi had required for a vote by Congress. Nevertheless, because the report had bipartisan support, it is expected to be influential. The commission's report follows a prior draft proposal circulated by the Co-Chairs of the commission and another report issued by the Debt Reduction Task Force of the Bipartisan Policy Center. This memorandum summarizes and analyzes the significant tax and social security proposals of the three reports.
|
December 3, 2010 | Download
|
|
Important Court Decision For No-Fault Insurers; New York Appellate Court Rejects Limitation On State Farm v. Mallela
|
We are very pleased to inform you that on November 30, 2010 our firm, together with our co-counsel Bob Stern of Stern & Montana, obtained a very favorable and significant decision for no-fault insurers from the Appellate Division, First Department, on an issue of first impression before the New York State appellate courts. This marks the second time in this same case that the Appellate Division has ruled in favor of no-fault insurers on an issue of first impression. In the first instance, the Court confirmed the right of insurers to defend any unpaid claim under State Farm v. Mallela irrespective of whether the services were alleged to be rendered prior to the April 2002 effective date of the new no-fault regulations.
|
December 1, 2010 | Download
|
|
National Health Care Reform Promotes Accountable Care Organizations
|
National health care reform, as enacted by the Patient Protection and Affordable Care Act (“PPACA”), seeks to achieve major changes in the health care delivery system to enhance quality, efficiency, and patient-centered care. PPACA adopted a variety of policy tools to advance these goals that will affect providers across the continuum of care, including: pay-for-performance for long-term care, home care, and other providers; pilot program funding to create medical homes; demonstration programs for bundled payments to providers; and establishment of a Center for Medicare and Medicaid Innovation to study and fund new models of health care delivery.
|
November 30, 2010 | Download
|
|
SEC Proposes New Rules Regarding Shareholder Approval of Executive Compensation and Golden Parachute Arrangements
|
The Securities and Exchange Commission (the "SEC") recently issued proposed rules (the "Proposed Rules") to implement the provisions of Section 951 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Act"). Section 951 of the Act requires publicly traded companies to provide for non-binding shareholder votes on executive compensation ("say on pay" and "say when on pay" votes) and golden parachute packages ("say on golden parachutes") of named executive officers.
|
November 29, 2010 | Download
|
|
S&P Reconsiders De-Linked Rating for Bank-Sponsored Securitizations That Fall Outside FDIC's Final Safe Harbor Rule
|
Standard & Poor's issued an update (the "Update") last week indicating that it could issue a de-linked, asset-based credit rating for securities issued in a securitization sponsored by an insured depository institution ("Bank") that qualifies as a sale under GAAP, even if the transaction fails to comply with the Federal Deposit Insurance Corporation's new securitization safe harbor rule (the "Rule").
The Update modifies S&P's earlier position announced in October 14, 2010, which many had interpreted to mean that all Bank-sponsored securitizations must comply with the Rule, regardless of legal and accounting sale conclusions, in order to obtain a rating based solely on the credit strength of the assets. In the Update, S&P indicates that it could issue a de-linked credit rating under certain circumstances, namely, where the transaction qualifies as a sale under GAAP and the Bank retains no economic interest in the securitized assets.
|
November 22, 2010 | Download
|
|
The SEC Publishes Final Rule Regulating Access to Securities Markets
|
The Securities and Exchange Commission (the "SEC") has adopted Rule 15c3-5 ("Rule 15c3-5" or the "Rule") under the Securities Exchange Act of 1934, restricting trading arrangements commonly called "sponsored access" or "direct market access." Rule 15c3-5 imposes regulatory requirements and restrictions on broker-dealers that are members of a national securities exchange or an alternative trading system ("ATS", and collectively with the exchanges, the "markets") who allow their customers (including customers who are themselves broker-dealers) to access the market under the member’s identification. The provisions of the Rule will apply as well to proprietary transactions for the broker-dealer’s own account and traditional agency transactions, which are routed directly to a market, though the primary focus of the Rule is to regulate the provision of market access to customers.
|
November 15, 2010 | Download
|
|
Important Gift and Generation-Skipping Transfer ("GST") Tax Planning Opportunities
|
It was expected that Congress would enact legislation pertaining to the U.S. Federal estate, gift and GST tax laws for transfers in 2010, and, possibly, make such legislation retroactive to January 1, 2010. To date, Congress has not taken any such action. As matters now stand, there is no U.S. Federal estate or GST tax imposed on transfers in 2010, but the U.S. Federal gift tax still applies. The current state of affairs has given rise to tax planning opportunities that may be available, but only through the end of 2010.
|
November 9, 2010 | Download
|
|
New York State Enacts Prudent Management of Institutional Funds Act
|
On September 17, 2010 New York State enacted the New York Prudent Management of Institutional Funds Act ("NYPMIFA"), joining about 47 other States that have adopted a form of UPMIFA. However, NYPMIFA varies in significant ways from the model act, and imposes unique burdens on directors of not-for-profit institutions and fund managers. This memorandum provides an overview of NYPMIFA, including the provisions of the statute that differ from the model act.
|
November 8, 2010 | Download
|
|
Art. 122a: Risk Retention for Securitisations with European Credit Institution Investors
|
Art. 122a is an article added to the European Union Capital Requirements Directive (“CRD”). The CRD sets out the framework for bank capital rules that apply to over 6,200 credit institutions established in the 30 member states of the European Economic Area (“EEA”). Although Art. 122a applies only to EEA credit institutions, it has implications for originators, issuers and arrangers of securitisations worldwide.
|
October 27, 2010 | Download
|
|
S&P Likely to Refuse De-Linked Ratings for Bank-Sponsored Securitizations That Fail to Meet FDIC’s Final Safe Harbor Rule
|
Standard & Poor's announced recently that it will likely treat as secured loans Bank-sponsored securitizations that constitute sales under GAAP, but fail to comply with the FDIC’s final securitization safe harbor rule (the "Rule"). As secured loans, these transactions may not receive credit ratings linked solely to the credit of the underlying assets, but instead will receive credit ratings linked to those of the insured depository institution (each, a "Bank") that sponsored the securitization. S&P’s announcement follows a conversation it reports to have had with the Federal Deposit Insurance Corporation ("FDIC"). According to S&P, the FDIC suggested it could repudiate any Bank securitization that failed to comply with the Rule. Since the adoption of the Rule last month, rating agencies and other industry players have been grappling with the Rule’s ramifications.
|
October 27, 2010 | Download
|
|
SEC Proposes New Rules Regarding Diligence and Disclosure in ABS Offerings
|
As part of what is expected to be a wave of proposed rulemaking under The Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Act"), the Securities and Exchange Commission (the "SEC") issued proposed rules to implement the provisions of Section 945 and a portion of Section 932 of the Act (the "Proposed Rules"). Section 945 of the Act added Section 7(d) to the Securities Act of 1933, as amended (the “Securities Act”), directing the SEC to issue rules requiring an issuer of asset-backed securities ("ABS") to perform a review of the assets underlying an ABS offering and disclose the nature of that review. Section 932 of the Act added Section 15E(s)(4)(A) to the Securities Exchange Act of 1934, as amended (the “Exchange Act”), which requires an issuer or underwriter of ABS to make publicly available the findings and conclusions of any third-party due diligence report obtained by the issuer or underwriter.
|
October 26, 2010 | Download
|
|
SEC Proposes New Disclosure Requirements Regarding Representations and Warranties in Asset-Backed Securities Offerings
|
The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Act”) was signed into law by President Obama on July 21, 2010. Section 943 of the Act requires the Securities and Exchange Commission (the “SEC”) to prescribe regulations in the use of representations and warranties in the market for asset-backed securities. Such regulations must set forth new disclosure requirements for issuers, originators and depositors and nationally recognized statistical rating organizations (“NRSROs”) in securitization transactions where the transaction documents require the repurchase or replacement of underlying assets in connection with a breach of asset-level representations and warranties.
|
October 18, 2010 | Download
|
|
An Analysis of the Dodd-Frank Act's Volcker Rule
|
On Friday, October 1, 2010, the federal "Financial Stability Oversight Council" ("FSOC" or "Council") convened for the first time. The FSOC, created by Title I of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act" or the "Act"), is comprised of the heads of the federal financial regulatory agencies and two presidential appointees, and is tasked with establishing recommendations regarding certain of the regulations that the financial regulatory agencies are required to adopt under the Dodd-Frank Act. One of the purposes of this initial meeting was to approve the issuance of a Request for Public Input (the "Request") soliciting comment regarding certain definitions contained in, and the general content of, Section 619 of the Dodd-Frank Act, popularly known as the "Volcker Rule." Public comments are due by November 5, 2010.
|
October 15, 2010 | Download
|
|
District Court Grants BNY Leave to Appeal Bankruptcy Court's Interlocutory Order In Lehman, Prohibiting Enforcement Of Ipso Facto Clause In Swap
|
On September 21, 2010, the United States District Court for the Southern District of New York granted BNY Corporate Trustee Services Limited leave to appeal a decision of the Bankruptcy Court in the Lehman Brothers bankruptcy case. The Bankruptcy Court held that a key provision of certain transaction documents constituted an unenforceable ipso facto clause. The District Court granted leave to appeal the Bankruptcy Court decision even though it was interlocutory. The District Court held that the case warranted interlocutory review because the Bankruptcy Court decision represented a controversial question of first impression and because appellate review would advance resolution of the litigation.
|
October 13, 2010 | Download
|
|
FDIC Adopts Final Securitization Safe Harbor Rule
|
On September 27, 2010 the Federal Deposit Insurance Corporation (“FDIC”) adopted its final safe harbor rule (the “Rule”) for securitizations sponsored by insured depository institutions (each, a “Bank”), which replaces the FDIC’s original safe harbor adopted in 2000.
|
October 11, 2010 | Download
|
|
FDIC Approves Final Securitization Safe Harbor
|
On Monday, September 27, 2010, the Federal Deposit Insurance Corporation (the "FDIC") approved its final rule (the "Rule") regarding amendments to its securitization "safe harbor rule." Through adoption of the Rule, the FDIC seeks to use its authority to repudiate contracts when a Bank fails as the basis for comprehensively regulating the issuance and servicing of Bank-related asset backed securities in connection with a securitization or a participation occurring after December 31, 2010.
|
September 28, 2010 | Download
|
|
SEC Releases Timetable for Rulemaking and Reporting for Asset-Backed Securities under the Dodd-Frank Wall Street Reform and Consumer Protection Act
|
The Securities and Exchange Commission has recently published a timetable setting forth a schedule for the release of reports, rule proposals and adoption of final rules under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Act”).
|
September 22, 2010 | Download
|
|
IRS Notice 2010-60: Preliminary Guidance on the "FATCA" Reporting and Withholding Rules
|
On August 27, the Internal Revenue Service issued Notice 2010-60, which gives preliminary guidance on the "FATCA" foreign reporting and withholding regime for payments to foreign financial institutions, foreign hedge funds, foreign private equity funds, foreign CDOs, and other similar foreign vehicles. FATCA was enacted as part of the Hiring Incentives to Restore Employment Act (the "HIRE Act") and comes into effect in 2013.
|
September 7, 2010 | Download
|
|
Recent Developments Concerning ERISA at the Department of Labor
|
This summer has proven to be one of significant activity at the U.S. Department of Labor (the “DOL”) with respect to the refinement of two significant exemptions to the prohibited transaction provisions of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”). In July, the DOL amended Prohibited Transaction Exemption (“PTE”) 84-14, 75 Fed. Reg. 38837 (July 6, 2010) (the “QPAM Exemption”) to permit a qualified professional asset manager (a “QPAM”) to manage an investment fund containing assets of such QPAM’s own employee benefit plan. In July, the DOL published an interim final regulation clarifying the disclosure necessary for plan fiduciaries in concluding whether a contract or arrangement is “reasonable” in order to assist such fiduciaries in deciding whether the statutory exemption contained in Section 408(b)(2) of ERISA is available with respect to services provided by a party in interest to a plan.
|
August 31, 2010 | Download
|
|
UK Tax Summer Update 2010
|
The summer of 2010 has seen a number of important tax developments and initiatives which will set the context of key legislative changes for the remainder of 2010. Foremost among the raft of consultations and discussion documents which have been published by the Government have been the proposals regarding a UK bank levy, a consultation paper on the overseas branches of UK companies and further insight into the proposed anti-avoidance measures to counteract “group mismatch schemes”. We have included a summary of these initiatives in this Clients & Friends Memorandum as well as some important, but perhaps less prominent, changes such as the introduction of a double tax treaty “passport scheme” and a summary of the new guidance on the changes to the complex legislation relating to debt buybacks.
|
August 27, 2010 | Download
|
|
China’s Anti-tax Avoidance Measures for Offshore SPVs
|
In a circular issued on 10 December 2009, the State Administration of Taxation (“SAT”) made clear its intention to target offshore transactions involving the indirect transfer of PRC enterprises (Notice on Strengthening the Management of Enterprise Income Tax Collection of Proceeds from Equity Transfers by Non-Resident Enterprises Guoshuihan [2009] No. 698) (“Circular 698”). Circular 698 has ushered in a new era in the China cross-border transactional landscape, and represents the most recent challenge for offshore holding companies or special purpose vehicle (“SPV”) structures in the PRC.
|
August 24, 2010 | Download
|
|
IRS Guidance on Release of Real Properties Securing Mortgage Loans Held by REMICs
|
On August 17, 2010, the Internal Revenue Service (the “IRS”) released Revenue Procedure 2010-30 (the “Revenue Procedure”), which clarifies Treasury regulations issued in September 2009 (the “Modification Regulations”), concerning changes in the collateral securing mortgage loans held by real estate mortgage investment conduits (“REMICs”).
|
August 18, 2010 | Download
|
|
Changes to the Regulation of Broker-Dealers and Investment Advisers Under Title IX of the Dodd-Frank Wall Street Reform and Consumer Protection Act
|
Part I of this memorandum focuses on Title IX of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Act”) as it relates to the regulation by the Securities and Exchange Commission (“SEC”) of broker-dealers and, to a lesser extent, investment advisers. Part II of this memorandum covers a number of miscellaneous provisions included within Title IX that may affect broker-dealers. Part III describes studies to be conducted by the SEC, the reorganization of the SEC, and a provision that affects current beneficial ownership and short swing profit reporting requirements. Other memoranda prepared by Cadwalader cover the remaining provisions of Title IX, which include (i) significant requirements relevant to credit rating agencies and structured finance products, and (ii) rules related to executive compensation and corporate governance that apply to public companies generally, not merely to those engaged in financial activities.
|
August 12, 2010 | Download
|
|
The Education Jobs and Medicaid Assistance Act of 2010
|
Yesterday, President Obama signed into law the Education Jobs and Medicaid Assistance Act of 2010 (H.R. 1586) (the “Act”). The Act allocates approximately $10 billion to local school districts to prevent teacher layoffs due to state revenue shortfalls, and approximately $16 billion to help states pay rising Medicaid costs without having to lay off public and private sector employees to raise funds.
The Act funds approximately $1.1 billion of the allocations by eliminating the advance payment option for the earned income credit, and approximately $9 billion of the allocations through several changes to the international provisions of the Internal Revenue Code. Part II of this memorandum lists these international tax law changes, and Part III explains them in greater detail.
|
August 11, 2010 | Download
|
|
The EU Commission Proposes Onerous Requirements for Rated Structured Finance Instruments
|
The EU Commission has recently proposed amendments to Regulation (EC) No 1060/2009 (the “CRA Regulation”) of the European Parliament and of the Council of 16 September 2009 on credit rating agencies (“CRAs”), which include a proposal to require all information necessary for the CRA hired by an issuer to determine or monitor the credit rating of a structured finance instrument to be made available to non-hired CRAs.
The stated purposes of the proposal are to reinforce competition between CRAs; to help avoid possible conflicts of interest under the issuer-pays model; to enhance transparency and the quality of ratings; and to promote the issuance of unsolicited ratings . The proposal follows closely the recent amendments to Rule 17g-5 of the Securities Exchange Act of 1934 in the U.S.
|
July 22, 2010 | Download
|
|
Summary of the Titles of the Dodd-Frank Wall Street Reform and Consumer Protection Act
|
This Overview Memorandum is intended to provide a very brief summary of those Titles of the Act that are most significant to our clients. In addition to this Overview Memorandum, Cadwalader has prepared a series of memoranda, each discussing a different aspect of the Act and how it will affect different industries, types of entities and transactions.
|
July 20, 2010 | Download
|
|
Changes to the Regulation of Banks, Thrifts, and Holding Companies Under the Dodd-Frank Wall Street Reform and Consumer Protection Act
|
The focus of this Memorandum is on the material changes to U.S. banking regulation made by the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Act” or the “Dodd-Frank Act”), including the potential regulation by the Board of Governors of the Federal Reserve System of nonbank financial companies deemed systemically significant.
|
July 20, 2010 | Download
|
|
Regulation of Systemically Significant NonBanks Under the Dodd-Frank Wall Street Reform and Consumer Protection Act
|
The focus of this Memorandum is the potential regulation by the Board of Governors of the Federal Reserve System, pursuant to the newly-passed Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Act” or the “Dodd-Frank Act”), of nonbank financial companies designated as “systemically significant” as provided by Titles I and VI of the Act, including the Volcker Rule.
|
July 20, 2010 | Download
|
|
Orderly Liquidation of Financial Companies, Including Executive Compensation Clawback, Under the Dodd-Frank Wall Street Reform and Consumer Protection Act
|
Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“WSRCPA”)
represents Congress’ attempt to address companies considered “too big to fail.” The statute creates a new “orderly liquidation authority” (“OLA”), which allows the Federal Deposit Insurance Corporation (“FDIC”) to seize control of a financial company whose imminent collapse is determined to threaten the financial system as a whole. Commencement of a receivership under the OLA would preempt any proceedings under the Bankruptcy Code. Thus, lenders, rating agencies, and others seeking to transact business with a company, or an affiliate of a company, that could potentially be considered a systemic risk will have to consider the impact on creditors’ rights of both the Bankruptcy Code and the OLA. Further, the OLA is solely a liquidation remedy. Rehabilitation or reorganization is not an option, and the ability of a debtor to stay in possession is eliminated.
|
July 20, 2010 | Download
|
|
Hedge Fund Regulation Under the Dodd-Frank Wall Street Reform and Consumer Protection Act
|
The inevitable heightened regulation of the hedge fund industry has come to fruition, with the passing of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Act”) by the Senate on July 15, 2010. While the Act could be worse – it does not appear to be the operational and expense burden to hedge funds that Sarbanes-Oxley is for corporate America – its ultimate effects remain to be seen, as much of the detailed formulation and implementation of the Act’s largely ambiguous provisions are left to future rulemaking by a wide range of increasingly powerful governmental regulators having tremendous discretionary authority, such as the Securities and Exchange Commission, the Commodity Futures Trading Commission, the Board of Governors of the Federal Reserve System, and the to-be-established Financial Stability Oversight Council.
|
July 20, 2010 | Download
|
|
Insurance Reforms Under the Dodd-Frank Wall Street Reform and Consumer Protection Act
|
On July 15, 2010, the Senate voted in favor of adopting the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Act”). The Act is far reaching in scope and represents the culmination of months of debate and intense lobbying. The Act was precipitated by the financial crisis that began in 2007 and, therefore, its primary goal is to prevent a recurrence. The focus of this Memorandum is Title V – “Insurance” – of the Act.
|
July 20, 2010 | Download
|
|
The New Scheme for the Regulation of Swaps, with Appendices on Retroactivity, Special Entities and Tax, Under the Dodd-Frank Wall Street Reform and Consumer Protection Act
|
Title VII (the “Derivatives Legislation” or the “Legislation”) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Act”) is among the most far reaching and controversial sets of statutory changes included within the Act. The Derivatives Legislation will give primary authority to the Commodity Futures Trading Commission (the “CFTC”) and the Securities Exchange Commission (the “SEC”; and together with the CFTC, the “Commissions”) to regulate the swaps market, both as to transactions and participants, although the various banking regulators (the “Bank Regulators”; and together with the Commissions, the “Regulators”) will retain substantial authority with respect to banks.
|
July 20, 2010 | Download
|
|
Regulation of End Users of Swaps Under the Dodd-Frank Wall Street Reform and Consumer Protection Act
|
The purpose of this memorandum is to provide an overview of the application of Title VII (the “Derivatives Legislation” or the “Legislation”) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Act”) to end users, particularly (i) operating corporations (“Corporates”), such as manufacturing companies, insurance companies and airlines (all of which may be impacted somewhat differently), (ii) state and other municipal entities (“Munis”), and (iii) public and private benefit plans (“Plans”; and collectively with Corporates and Munis, “end users”).
|
July 20, 2010 | Download
|
|
Reforms to the Asset-Backed Securitization Process and the Regulation of Credit Rating Agencies under Dodd-Frank Wall Street Reform and Consumer Protection Act
|
On July 15, 2010, the Senate voted in favor of adopting the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Act”). The Act is far reaching in scope and represents the culmination of months of debate and intense lobbying. To assist our clients in navigating and digesting the portions of the Act that are significant to their lines of business, Cadwalader has prepared a series of Clients & Friends memoranda, each addressing different aspects of the Act. The focus of this Memorandum is Title IX – Subtitle D “Improvements to the Asset-Backed Securitization Process” and Title IX – Subtitle C “Improvements to the Regulation of Credit Rating Agencies”.
|
July 20, 2010 | Download
|
|
Executive Compensation and Corporate Governance Provisions Under the Dodd-Frank Wall Street Reform and Consumer Protection Act
|
The focus of this Memorandum is Title IX – Subtitle E “Accountability and Executive Compensation” and Title IX – Subtitle G “Strengthening Corporate Governance” of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Act”). We note that the Act requires the Securities and Exchange Commission (“SEC”), or other specified federal regulator, to develop rules in order to fully implement many of these compensation and corporate governance provisions. Accordingly, the ultimate impact of such provisions will in large part depend on how such rules are implemented.
|
July 20, 2010 | Download
|
|
Amendments to SOX, Including Section 404(b) Exemption for Nonaccelerated Filers, Under the Dodd-Frank Wall Street Reform and Consumer Protection Act
|
This memorandum is focused on certain provisions of Title IX of the Act that relate to SOX Section 404, including an amendment to SOX Section 404 which exempts nonaccelerated filers from the SOX Section 404(b) requirement to obtain an auditors’ report on management’s assessment of the effectiveness of the company’s internal control over financial reporting.
|
July 20, 2010 | Download
|
|
BP in the Wake of the Deepwater Horizon Incident and the Bankruptcy Implications of Mounting Environmental Liabilities
|
On April 20, 2010, an explosion on the Deepwater Horizon oil drilling rig located off the coast of Louisiana killed eleven crewmen and set off what is now considered the largest offshore oil spill in U.S. history. As a result, BP p.l.c. (“BP”), the parent company of the British Petroleum multi-national corporation, faces mounting liabilities related to the damages caused by the disaster and hundreds of lawsuits that have been filed in numerous U.S. state and federal courts. This memorandum considers how BP may consolidate and address the present and future claims arising from the Deepwater Horizon incident, with particular attention to applicable environmental laws, non-bankruptcy alternatives available to BP, and the issues likely to be raised by a BP bankruptcy filing.
|
July 7, 2010 | Download
|
|
Second Circuit Interpretation of "Absolute and Unconditional Clause" May limit the Effectiveness of Limited Recourse and Similar Provisions Common to Structured Finance Indentures
|
On June 1, 2010, the U.S. Court of Appeals for the Second Circuit decided a case with broad implications for issuers of limited recourse notes. This is particularly applicable in the context of structured finance transactions and notes issued by special purpose entities. In The Bank of New York v. First Millennium, Inc., the Second Circuit found that the holders of notes issued by a trust of which The Bank of New York (BNY) was trustee, in favor of NextBank, N.A. (NextBank) had a valid claim to all assets held in the trust despite a limited recourse provision in the indenture.
|
June 24, 2010 | Download
|
|
The Emergency UK Budget 2010: Key Taxation Aspects
|
On Tuesday 22 June 2010, the ‘Emergency’ Budget of the UK’s new Coalition Government was delivered by the Chancellor of the Exchequer. Given that the Government has decided to achieve its aim of eliminating the bulk of the UK’s public sector structural deficit by 2014/15 through spending reductions (as to 80 per cent.) and tax increases (as to 20 per cent.), the changes announced to the UK’s tax regime appeared relatively mild in comparison and, indeed, in some cases quite encouraging.
|
June 23, 2010 | Download
|
|
Some Concerns with the Regulation of Large Non-Bank Holding Companies
|
The Wall Street Reform and Consumer Protection Act of 2009 (the “House bill”) and the Restoring American Financial Stability Act of 2010 (the “Senate bill”; and together with the House bill, the “Legislation”) both contain a requirement that large financial firms that do not own banks (“NonBHCs”) should be regulated as if they were bank holding companies (“BHCs”).
|
June 3, 2010 | Download
|
|
U.S. Senate Bill Creates New Regime for Orderly Liquidation of Financial Companies That Present Systemic Risk
|
The comprehensive financial reform bill recently passed by the Senate1 creates a new “orderly liquidation authority” (“OLA”) that would allow the Federal Deposit Insurance Corporation (“FDIC”) to seize control of a financial company whose imminent collapse is determined to threaten the financial system as a whole. This measure — which awaits reconciliation with a similar bill passed by the House of Representatives late last year — represents Congress’ attempt to address companies considered “too big to fail.”
|
June 1, 2010 | Download
|
|
The Changing Face of Hedge Fund Regulation
|
May 27, 2010 | Download
|
|
Securitization Reforms: What is the Current State of Play?
|
May 26, 2010 | Download
|
|
U.S. District Court Affirms Delaware Bankruptcy Court Decision in SemCrude Prohibiting Triangular Setoff
|
May 25, 2010 | Download
|
|
FDIC Seeks "Stronger, Sustainable Securitizations" by Imposing Additional Conditions to Eligibility for Securitization Safe Harbor
|
May 21, 2010 | Download
|
|
Lehman Bankruptcy Court Rules Safe Harbors Do Not Override Setoff Mutuality Requirement
|
May 6, 2010 | Download
|
|
Some Concerns with the Derivatives Legislation
|
May 3, 2010 | Download
|
|
Blue Sky Issues of Financial Reform Legislation for Hedge Fund Advisers
|
April 21, 2010 | Download
|
|
SEC Proposes Significant Enhancements to Regulation of Asset-Backed Securities
|
April 20, 2010 | Download
|
|
Posting Independent Amounts under Derivative Transactions: Industry Recommendations for End User Protection
|
April 16, 2010 | Download
|
|
SEC Announces Proposal to Significantly Enhance the Regulation of Asset-Backed Securities
|
April 7, 2010 | Download
|
|
Cadwalader Files Amici Brief in Peter Cooper Village Foreclosure on Behalf of LNR and American Capital
|
March 31, 2010 | Download
|
|
New U.S. Covered Bond Legislation Introduced
|
March 25, 2010 | Download
|
|
UK Budget 2010: Key Taxation Aspects
|
March 25, 2010 | Download
|
|
The Hiring Incentives to Restore Employment Act
|
March 22, 2010 | Download
|
|
Interim Final Rule Interpreting The Helping Families Save Their Homes Act of 2009 Takes Effect
|
March 5, 2010 | Download
|
|
Recent Changes to SEC Rating Agency Reform Impose Burdensome Requirements on Structured Products Participants
|
March 3, 2010 | Download
|
|
Proposed Regulations Issued With Respect to FBAR Filing Requirements
|
March 1, 2010 | Download
|
|
The Securities and Exchange Commission Approves Nasdaq Rule on Sponsored Access and Proposes a Rule to Prohibit Naked Sponsored Access; Issues Concept Release on Market Structure
|
February 9, 2010 | Download
|
|
First State AG in the Nation Sues to Enforce HIPAA
|
February 8, 2010 | Download
|
|
House Regulatory Reform Bill May Impose Further Burdens On Large Funds
|
February 4, 2010 | Download
|
|
The Obama Administration’s Fiscal Year 2011 Revenue Proposals
|
February 3, 2010 | Download
|
|
Lehman Court Finds Payment Priority Provision Is Unenforceable Ipso Facto Clause, And Must Be Part Of Swap For Safe Harbor Protection
|
January 29, 2010 | Download
|
|
U.S. Federal Estate, Gift and Generation Skipping Transfer (“GST”) Taxes
|
January 29, 2010 | Download
|
|
CFTC Proposes to Set Position Limits in the Energy Futures Market
|
January 28, 2010 | Download
|
|
IRS Proposes Reporting Requirements for Uncertain Tax Positions Under FIN 48
|
January 28, 2010 | Download
|
|
|
View Archives |
