The last couple of weeks of 2022 brought several key announcements and developments in the U.S. and UK, and now, with the holidays and celebrations behind us, we have the opportunity to take a deep dive into what this all means and what to do about it.

Looking ahead, it's anyone's guess what the new year will bring. But we are committed to continue to bring you our take on key developments in the financial regulatory space ... starting with some important analysis in today's issue.  

So have a good read. Any comments or questions? Just drop me a note here.

Daniel Meade 
Editor, Cabinet News and Views

By Mercedes Kelley Tunstall

Partner | Financial Regulation

On the first business day of the year, January 3, 2023, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation and the Office of the Comptroller of the Currency, the nation’s primary banking regulators, came together to issue a Joint Statement on Crypto-Asset Risks to Banking Organizations. Striking in its tone and issued “given the significant risks highlighted by the recent failures of several large crypto-asset companies,” the purpose of the statement is to ensure that banks do what they can to ensure “that risks to the crypto-asset sector that cannot be mitigated or controlled do not migrate to the banking systems.”

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By Lary Stromfeld

Partner | Financial Regulation

By Jeffrey Nagle

Partner | Corporate Finance

By David Burkholder

Partner | Securitization & Asset Based Finance

On December 16, 2022, the Board of Governors of the Federal Reserve System adopted a final rule to implement the Adjustable Interest Rate (LIBOR) Act. The Final Rule follows the Board’s publication of a proposed rule in July 2022 and invitation for public comment. The Final Rule addresses many of the comments received on the Proposed Rule and sets forth the Board’s final decision on a number of substantive and technical issues related to the planned cessation of USD LIBOR on a representative basis. The Final Rule will become effective 30 days after publication in the Federal Register.

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By Peter Y. Malyshev

Partner | Financial Regulation

In its last regulatory action for 2022, on December 23, the U.S. Commodity Futures Trading Commission published its staff no-action letter No. 22-21 allowing commodity brokers – Futures Commission Merchants – to invest their customer funds in investment instruments that contain an adjustable rate of interest that is benchmarked to Secured Overnight Financial Rate instead of London Interbank Offered Rate. This NAL expanded CFTC’s previous similar relief to also apply to Derivatives Clearing Organizations investing customer funds. 

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The UK’s Financial Conduct Authority and Prudential Regulation Authority have together fined a leading bank a total of £48,650,000 for IT failures that left customers unable to access their accounts. The fine would have been £69,500,000 were it not for a 30% discount for early settlement.

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By Michael Newell

Partner | Financial Services

On 21 December 2022, ESMA published a final report in relation to draft technical standards for cross-border fund management activities and the cross-border marketing of investment funds within the EEA under the UCITS and AIFM directives. This follows a consultation paper ESMA had published on 17 May 2022. The EU Commission is now expected to adopt the draft technical standards within three months from the publication date.

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By Daniel Meade

Partner | Financial Regulation

On December 22, just before many of us may have started turning to our holiday breaks, the Federal Reserve Board, Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency issued an extension of the no-action relief they had previously given. 

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By Michael Ena

Counsel | Financial Services

By Ivan Loncar

Partner | Financial Services

On January 13, 2022, the Securities and Exchange Commission proposed several rule and form amendments to address potentially abusive practices relating to the use of Rule 10b5-1 plans, grants of options and other similar equity instruments, and gifts of securities. After considering numerous comment letters on the Proposed Rules, on December 14, 2022, the SEC adopted amendments to Rule 10b5-1 under the Securities Exchange Act of 1934, as amended, and new disclosure requirements intended to strengthen investor protections regarding insider trading. Unlike the Proposed Rules, the final amendments do not apply to trading activities of issuers. The Final Rules impose the additional conditions on the availability of the affirmative defense provided by Rule 10b5-1(c)(1).

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