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Clients & Friends Memos
COVID-19 Resource Center
Access our latest insights on the impact of COVID-19 to help you navigate this unprecedented environment.
Justice Department Revises Merger Remedies Guidelines
September 08, 2020On September 3, 2020, the Department of Justice (“DOJ”) issued a revised Merger Remedies Manual, which sets forth the Division’s framework for implementing remedies to resolve antitrust concerns in merger cases. The new manual updates DOJ’s guidelines for merger remedies for the first time in nearly a decade and reaffirms the Division’s strong preference for structural relief. The Division’s 2004 Policy Guide to Merger Remedies noted that “structural remedies are preferred to conduct remedies in merger cases because they are relatively clean and certain, and generally avoid costly government entanglement in the market.” DOJ eliminated the absolute preference for structural rather than conduct remedies when it issued its 2011 Policy Guidelines to Merger R
Related Practice(s): Global Litigation
Related Office(s): Charlotte, New York
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Private Equity Purchasers and SPACs May Be "Preferred" Divestiture Buyers under New DOJ Guidelines for Merger Remedies
September 08, 2020On September 3, 2020, the Department of Justice (“DOJ”) issued a revised Merger Remedies Manual, which sets forth the Division’s framework for implementing remedies to resolve antitrust concerns in merger cases. The Manual specifically calls out Private Equity firms as potentially preferred buyers in certain situations. We believe the policy behind that announcement applies equally to Special Purpose Acquisition Companies (“SPACs”). For a general description of the revised rules, please see our memo, Justice Department Revises Merger Remedies Guidelines.
Related Practice(s): Global Litigation
Related Office(s): Charlotte, New York
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COVID-19 Update: CDC Order Temporarily Halts Residential Evictions Nationwide until December 31, 2020
September 04, 2020In response to the coronavirus pandemic, the federal government, as well as many States, have enacted eviction and foreclosure moratoriums in an effort to keep homeowners and renters in their homes and slow the spread of Covid-19. One such moratorium was included by Congress in the Coronavirus Aid, Relief, and Economic Securities (CARES) Act, which was enacted earlier this year.
Related Practice(s): Real Estate
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EU Securitisation Regulation Disclosure Templates Published in the EU Official Journal
September 03, 2020The Securitisation Regulation applies to securitisations, the securities of which are issued (or where no securities are issued, the securitisation positions of which are created) on or after 1 January 2019.
On 3 September 2020, Regulations comprising the regulatory technical standards and implementing technical standards specifying the information and the details of a securitisation to be made available by the originator, sponsor and SSPE in a securitisation transaction subject to the Securitisation Regulation (the “Reporting Templates RTS”) were published in the Official Journal of the European Union. Publication means that the Reporting Templates RTS will be effective on 23 September 2020, after twenty calendar days has elapsed from the date of publication.
Related Practice(s): CLOs, Financial Regulation, Securitization & Asset Based Finance
Related Office(s): London
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Second Circuit’s Lehman Flip Clause Decision Continues the Expansion of the Bankruptcy Code Safe Harbors
September 02, 2020On August 11, 2020, the United States Court of Appeals for the Second Circuit affirmed lower court decisions rejecting Lehman Brothers Special Financing Inc.’s (“LBSF”) attempt to recover nearly $1 billion in payments to noteholders and enforcing certain Priority Provisions (defined below) that subordinated payments otherwise payable to LBSF under related swap transactions.
Related Practice(s): Financial Restructuring
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SEC Adopts Amendments to Modernize Risk Factor Disclosure Requirements
August 28, 2020On August 26, 2020, the Securities and Exchange Commission (the “SEC”) announced the adoption of amendments to modernize the description of business, legal proceedings, and risk factor disclosures that registrants are required to make pursuant to Regulation S-K.
Related Practice(s): Securitization & Asset Based Finance
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SEC Adopts Amendments to Regulation S-K Requirements
August 28, 2020The Securities and Exchange Commission is adopting amendments to the business description, legal proceedings and risk factor disclosures required by registered companies in annual and quarterly reports and registration statements.
Related Practice(s): Corporate
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SEC Adopts Rule Amendments Designed to Expand Access to Private Investment Opportunities
August 27, 2020On August 26, 2020, by a 3-2 vote, the Securities and Exchange Commission (the “SEC”) adopted rule changes that generally expand the scope of the definitions of “accredited investor” in Rule 501(a) of Regulation D and of “qualified institutional buyer” in Rule 144A under the Securities Act of 1933 (the “Securities Act”). The SEC also adopted related changes to Rules 215 and 163B under the Securities Act and to Rule 15g-1 under the Securities Exchange Act of 1934 (the “Exchange Act”). The expanded definitions and other rule changes (the “Amendments”) will increase the number of investors that have access to private investment opportunities.
Related Practice(s): Financial Regulation
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Delaware Court of Chancery Further Clarifies the “Ab Initio” Requirement in Finding That Discussions Between the Controlling Stockholder and a Minority Stockholder Precluded the Application of MFW
August 24, 2020In In re HomeFed Corp. Stockholder Litigation (“HomeFed”), the Delaware Court of Chancery considered on a motion to dismiss whether a squeeze-out merger by a controlling stockholder complied with the procedural framework set forth in Kahn v. M&F Worldwide Corp. (“MFW”). In MFW, the Delaware Supreme Court held that the business judgment rule—rather than the entire fairness standard—applies to a controlling stockholder transaction if the transaction is conditioned “ab initio,” or at the beginning, upon approval of both an independent special committee of directors and the informed vote of a majority of the minority stockholders.
Related Practice(s): Global Litigation
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New York State Supreme Court Temporarily Halts UCC Foreclosure of Mezzanine Loan
August 20, 2020On August 3, 2020, in Shelbourne BRF LLC, Shelbourne 677 LLC v. SR 677 BWAY LLC, the Supreme Court of the State of New York (the “Court”) granted the borrower plaintiffs’ motion for a preliminary injunction and prohibited the lender defendant from proceeding with a UCC foreclosure until October 15, 2020. This is the second decision in New York which halted or delayed a UCC foreclosure as a result of the COVID-19 pandemic.
Related Practice(s): Real Estate
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Recent Enforcement Actions Define the “Person” that Participates in a Partial Tender
August 18, 2020Financial Industry Regulatory Authority (“FINRA”) recently brought enforcement actions against two broker-dealers that violated Rule 14e-4 under the Securities Exchange Act of 1934 (the “SEA”) (generally known as the “partial tender rule”) by, among other things, performing required position calculations at the level of the various aggregation units or individual trading units within the broker-dealer, rather than at the entity level. By calculating their positions in this manner, these broker-dealers did not take account of the position in business units that were short and did not account for these short positions in their SEA Rule 14e-4 calculations.
Related Practice(s): Financial Regulation, White Collar Defense and Investigations
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Illinois Appeals Court Reignites GO Bond Challenge
August 11, 2020On August 6, 2020, an Illinois appellate court ruled that a petition by political activist John Tillman seeking leave to invalidate approximately $16 billion of Illinois’s general obligation bonds (“GO Bonds”) should be permitted to go forward. The Fourth District Appellate Court of Illinois reversed an August 2019 order by Judge Jack D. Davis, II, who had held that the challenged bonds did not violate a provision of the Illinois Constitution requiring long-term debt to be for a “specific purpose” and who had indicated more broadly that the validity of the bond issuances constituted “a non-justiciable political question.”
Related Practice(s): Financial Regulation, Financial Restructuring
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COVID-19 Update: Governor Cuomo Extends Tenant Protections, Including Eviction and Foreclosure Moratorium
August 10, 2020On August 5, 2020, New York State Governor Andrew Cuomo issued Executive Order 202.55 (the “New Order”) to provide additional relief to renters impacted by the COVID-19 pandemic and extended the time periods for certain other protections that had been previously granted to renters and property owners pursuant to Executive Order 202.8, as extended by Executive Order 202.28 and Executive Order 202.48 (the “Prior Orders”).
Related Practice(s): Real Estate
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A Liu Look at Disgorgement: Ninth Circuit Vacates SEC Disgorgement Award
August 10, 2020The U.S. Supreme Court’s landmark decision in Liu v. SEC is less than two months old, yet the ramifications of the decision on the SEC’s enforcement powers are already taking shape.
Related Practice(s): Global Litigation, White Collar Defense and Investigations
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COVID-19 Update: Continued HOPE of a New Commercial Real Estate Preferred Equity Facility
July 30, 2020U.S. Representatives Van Taylor (R-TX) and Al Lawson (D-FL) introduced a bipartisan bill yesterday that would require the Department of the Treasury (the “Treasury”) to establish and administer a facility to guarantee certain preferred equity investments in commercial real estate borrowers affected by the COVID-19 pandemic.
Related Practice(s): Real Estate
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COVID-19 Update: European Commission Proposes Changes to the Securitisation Regulation in Response to COVID-19
July 29, 2020On 24 July 2020, the European Commission (the “Commission”) published its proposed amendments to the current securitisation framework set out in Regulation (EU) 2017/2402 (the “Securitisation Regulation”). The proposed amendments are intended to bolster economic recovery during the COVID-19 pandemic. While the securitisation framework was not due for review until January 2022, the Commission concluded that introducing targeted amendments now could assist the economic recovery in the coming months while not substituting or diminishing the scope of the review planned in 2022.
Related Practice(s): Securitization & Asset Based Finance
Related Office(s): London
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Secrets and Spies: The UK's Proposal for Foreign Agent Registration
July 28, 2020On July 21, 2020, the Intelligence and Security Committee of Parliament published the Russia Report (the Report). The Report found that the UK was one of Russia’s “top Western intelligence targets” and that the UK government had thus far failed to investigate allegations of Russian interference, including potential involvement in the Brexit referendum. One of the underlying issues the Report identified was the lack of adequate legislative powers granted to the intelligence community. It brought attention to the Law Commission’s 2017 consultation, in relation to updating the Official Secrets Acts, and the possibility of creating a new Espionage Act.
Related Practice(s): White Collar Defense and Investigations
Related Office(s): London, New York, Washington
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Proposed Amendments to the European Benchmark Regulation Address “Tough Legacy” IBOR Contracts
July 24, 2020The European Commission has today published a draft regulation to amend the Benchmark Regulation (“BMR”), in respect of (i) the exemption of certain third country foreign exchange benchmarks and (ii) the designation of replacement benchmarks for certain benchmarks in cessation (the “Draft Regulation”). The latter portion of the regulation is modeled on legislation proposed by the ARRC for New York governed contracts.
Related Practice(s): Financial Regulation, LIBOR Preparedness Team
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COVID-19 Update: CFPB Announces New Supervisory and Enforcement Priorities in Light of COVID-19 Pandemic
July 17, 2020On July 16, 2020, the Consumer Financial Protection Bureau (“CFPB”) hosted a webinar outlining, for the first time, the CFPB’s supervisory and enforcement priorities in light of the coronavirus pandemic. Of note, the CFPB announced that it has de-prioritized a good portion of the agency’s existing exam schedule to conduct “prioritized assessments” focused on (i) consumers having trouble making loan payments, and (ii) markets where Congress provided special borrower protections under the CARES Act.
Related Practice(s): Financial Regulation, White Collar Defense and Investigations
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COVID-19 Update: Controversial Rent and Mortgage Payment Relief Bill Introduced
July 16, 2020A new bill canceling rent for residential tenants, and mortgage payments for some qualified homeowners, was announced last week in New York. This new bill calls for the cancellation of residential rental payments, and mortgage payments for primary residences with less than six units, for a period lasting until 90 days after the termination of New York’s state of emergency.
Related Practice(s): Real Estate
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DRANO Revisited: Further Updates on the Doctrine of Clogging the Equity of Redemption
July 16, 2020On June 2, 2020, in HH Mark Twain LP v. Acres Capital Servicing LLC, the Supreme Court of the State of New York (the “Court”) denied the defendant’s motion to dismiss the plaintiff’s “clogging” claim, thereby providing a piece of an answer to a cliffhanger from two years ago regarding whether a lender can safely structure a loan that is secured by both a mortgage and an equity pledge without violating a borrower’s equitable right of redemption.
Related Practice(s): Real Estate
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Director who led merger negotiations, without disclosing details of a lucrative pay package he was offered to lead the post-merger company, must face fiduciary duty claims
July 15, 2020The Delaware courts have not been shy about warning of the dangers that can arise when merger negotiations are handed over to conflicted directors who fail to keep their boards fully informed about their divided loyalties.
Related Practice(s): Global Litigation
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DOJ and SEC Update FCPA Resource Guide for 2020 – What’s New and What Does It Mean?
July 15, 2020On July 3, 2020, the Department of Justice (“DOJ”) and Securities and Exchange Commission (“SEC”) updated their 2012 joint guidance on the Foreign Corrupt Practices Act (“FCPA”) in the SEC and DOJ’s FCPA Resource Guide (“Resource Guide”). The updated 2020 Resource Guide mainly incorporates updated guidance memoranda from both organizations issued since the last update, as well as the results of case law from recent FCPA-related decisions.
Related Practice(s): White Collar Defense and Investigations
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COVID-19 Update: Oregon Law Prohibits Foreclosures During COVID Emergency
July 15, 2020On June 30, 2020, Oregon Governor Kate Brown signed House Bill 4204 entitled “Relating to strategies to protect Oregonians from the effects of the COVID-19 pandemic; and declaring an emergency” (the “Oregon Statute”). In response to the COVID-19 pandemic, the Oregon Statute establishes temporary limitations on lenders’ ability to enforce default remedies during the period of time beginning on March 8, 2020 and ending on September 30, 2020 (which may be extended by executive order no later than September 1, 2020) (the “Emergency Period”).
Related Practice(s): Real Estate
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COVID-19 Update: Draft Legislation Sparks HOPE of a New Commercial Real Estate Preferred Equity Facility by the Department of Treasury
July 12, 2020U.S. Rep. Van Taylor (R-TX) has circulated a draft bill that would require the Department of the Treasury (the “Treasury”) to establish and administer a facility to guarantee certain preferred equity investments in commercial real estate borrowers affected by the COVID-19 pandemic. The bill will be called the “Helping Open Properties Endeavor Act of 2020” or the “Hope Act of 2020” (the “Act”).
Related Practice(s): Real Estate
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Seila Law LLC v. Consumer Financial Protection Bureau: Has the Supreme Court Tamed or Empowered the CFPB?
July 02, 2020On June 29, the Supreme Court issued its long-awaited opinion in Seila Law LLC v. Consumer Financial Protection Bureau, finally resolving the question that has dogged the new agency since its inception: Is the leadership structure of the Consumer Financial Protection Bureau (CFPB) constitutional? Writing for a 5-4 majority, Chief Justice John Roberts ruled that the CFPB structure—“an independent agency that wields significant executive power and is run by a single individual who cannot be removed by the President unless certain statutory criteria are met”—violates the Constitution’s separation of powers.
Related Practice(s): Financial Regulation, White Collar Defense and Investigations
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FTC and DOJ Jointly Issue Vertical Merger Antitrust Guidelines
July 02, 2020The Federal Trade Commission and the U.S. Department of Justice this week announced the final version of their first jointly-issued Vertical Mergers Guidelines (the “Guidelines”). The Guidelines were issued along a party-line vote, with the three Republican FTC Commissioners and the Republican-led DOJ supporting the Guidelines and the two Democratic FTC Commissioners vehemently opposing them.
Related Practice(s): Global Litigation
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The Mark Hotel Borrower Granted Injunction Delaying Mezzanine Lender’s Foreclosure Sale
July 01, 2020On June 23, 2020, the Supreme Court of the State of New York, County of New York: Commercial Division (the “Court”) issued a preliminary injunction in favor of the plaintiff D2Mark LLC (the “Borrower”) enjoining the defendant, OREI VI Investments LLC (the “Mezzanine Lender”) from proceeding with a UCC foreclosure sale of the equity interests in The Mark Hotel for thirty (30) days.
Related Practice(s): Global Litigation, Real Estate
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ARRC Publishes Refreshed Recommended Fallback Language for Syndicated Business Loans for LIBOR Transition Planning
June 30, 2020On June 30, 2020, the Alternative Reference Rates Committee (“ARRC”) published recommendations regarding more robust fallback language for new originations of U.S. dollar-denominated syndicated business loans that reference LIBOR. The ARRC’s recommendations contain refreshed hardwired fallback language (the “Updated Fallback Language”) and an updated user’s guide regarding such hardwired language and potential drafting alternatives (the “Updated User’s Guide”).
Related Practice(s): Financial Regulation, LIBOR Preparedness Team
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Volcker 3.0: The Agencies Relax the Volcker Rule Requirements for Securitizations and Foreign Funds and Grant New Exemptions from the Covered Fund Restrictions
June 26, 2020On Thursday, June 25, 2020, the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Securities and Exchange Commission, and the Commodity Futures Trading Commission (collectively, the “Agencies”) issued final regulations (the “2020 Final Regulations”) revamping the existing regulations implementing the Volcker Rule, a centerpiece of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Related Practice(s): Financial Regulation, Securitization & Asset Based Finance
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Marketplace Lending #8: Colorado Scores in Madden 2020
June 24, 2020On June 9, a Colorado trial court ruled that loans to Colorado consumers originated by Cross River Bank on behalf of Marlette Funding were subject to the Colorado usury rate of 12% -- despite federal law that allows an FDIC-insured bank such as Cross River Bank to “export” its rate of interest from the bank’s home state.
Related Practice(s): Financial Regulation, Global Litigation
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Disgorgement’s Role in SEC Enforcement Actions: An Analysis of the Supreme Court’s Decision in Liu v. SEC
June 24, 2020On June 22, 2020, the U.S. Supreme Court threw the SEC a lifeline in the highly-anticipated decision of Liu v. SEC. In an 8-to-1 decision, the Justices held that the SEC may continue to obtain disgorgement in federal court, albeit in a significantly narrowed fashion.
Related Practice(s): Global Litigation, White Collar Defense and Investigations
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UK Government Proposes Increased Powers for the FCA over the LIBOR Wind-Down Process
June 24, 2020On 23 June 2020, the UK government announced its intent to enact legislation to amend the UK regulatory framework applicable to critical benchmarks, including LIBOR. The proposed amendments would give the UK Financial Conduct Authority (the “FCA”) additional powers in circumstances where LIBOR ceases to be representative of the market it seeks to measure and will not be restored to representativeness. The UK government has recognized that this scenario may occur in the lead-up to the cessation of the LIBOR rate (scheduled for the end of 2021), as panel banks will no longer be compelled to take part in the LIBOR calculation process.
Related Practice(s): Financial Regulation, LIBOR Preparedness Team, Securitization & Asset Based Finance
Related Office(s): London, New York
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COVID-19 Update: PPP Oversight Efforts May Impact Lenders
June 22, 2020Recent press coverage concerning transparency and oversight with respect to the Paycheck Protection Program (“PPP”) has largely focused on PPP borrowers and the ability of Congress and federal inspectors general to obtain PPP borrower data from the Small Business Administration (“SBA”). The SBA has announced that it will release certain information about the loans PPP lenders issued.
Related Practice(s): Financial Regulation, White Collar Defense and Investigations
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EU Parliament Adopts Sustainability Taxonomy Regulation to Fight Greenwashing
June 22, 2020On 18 June 2020, the European Parliament formally adopted the EU’s Sustainability Taxonomy Regulation. The aim of the Regulation is to provide an EU-wide framework for classifying economic activity as environmentally sustainable (an overview of the Regulation can be found in our memo on the subject). Adopting a consistent framework is expected to reduce “greenwashing”, where financial products are marketed as environmentally sustainable without sufficient factual basis for their claims, improving the efficiency with which private investment can be made in sustainable projects.
Related Practice(s): Corporate, Financial Regulation
Related Office(s): London
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Time to Revisit Your Company’s Compliance Culture: A Checklist for Evaluating Corporate Compliance Programs under DOJ’s June 2020 Compliance Guidance Updates
June 15, 2020On June 1, 2020, DOJ updated the guidance that its prosecutors use to evaluate corporate compliance programs. The guidance is critical to companies subject to the FCPA and other corporate criminal liability, as it informs prosecutors’ charging and settlement decisions, as well as how to assess monetary penalties, and whether ongoing compliance obligations (including monitorships) are necessary. The update emphasizes the importance of a dynamic, adaptable compliance program and the centrality of a data-driven approach to compliance.
Related Practice(s): Global Litigation, White Collar Defense and Investigations
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Kirschner Decision—Implications for CLOs and Syndicated Loans
June 08, 2020On May 22, 2020, Judge Paul G. Gardephe of the U.S. District Court for the Southern District of New York granted a motion to dismiss in Kirschner v. JPMorgan Chase Bank, N.A., finding, inter alia, that the syndicated loans at issue in Kirschner are not securities for purposes of state securities laws by applying the “family resemblance” test set forth in Reves v. Ernst & Young.
Related Practice(s): Financial Regulation, Global Litigation, Securitization & Asset Based Finance
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COVID-19 Update: Mayor DeBlasio Signs Legislation Intended to Limit the Enforcement of Personal Liability Provisions in Commercial Leases in New York City
May 29, 2020On May 26, 2020, New York City Mayor Bill DeBlasio signed into effect a law (the “New Law”) that amends the administrative code of New York City to prohibit the enforcement of provisions in a commercial lease or other rental agreement that provide for personal liability of a natural person who is not the tenant (i.e., a guarantor) for certain charges under the agreement in cases where the tenant has been impacted by the COVID-19 pandemic.
Related Practice(s): Real Estate
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SEC Adopts Amendments to Disclosure Requirements for Acquired and Disposed Businesses
May 29, 2020On May 21, 2020, the Securities and Exchange Commission (the “SEC”) adopted amendments to its disclosure requirements for acquired and disposed businesses. The amendments, which are effective January 21, 2021 (the “Amendments”), are intended to assist registrants in making more meaningful determinations of whether an acquired or disposed business or subsidiary is significant, reduce the complexity and burden of producing required financial information in connection with acquisitions and dispositions and improve the quality of financial information for investors.
Related Practice(s): Corporate
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ARRC Releases Best Practices for Orderly LIBOR Transition
May 28, 2020On May 27, 2020, the Alternative Reference Rates Committee (“ARRC”) published recommended best practices for preparing for the end of USD LIBOR (the “Best Practices”). The Best Practices aim to provide appropriate target milestones and timelines to minimize market disruption for the end of USD LIBOR.
Related Practice(s): Financial Regulation, LIBOR Preparedness Team
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COVID-19 Update: Updated FAQs and MLSA Released by the Federal Reserve Provides Additional Details on Eligible ABS, Eligible Borrowers and Financing Terms under TALF
May 27, 2020On Wednesday, May 20, 2020, the Federal Reserve announced the first loan subscription date for the Term Asset-Backed Securities Loan Facility (“TALF”) and published the Master Loan and Security Agreement (the “MLSA”) and an expanded set of Frequently Asked Questions, providing further details on the terms and conditions that will apply to borrowings under TALF. On Tuesday, May 26, 2020, the Federal Reserve released another updated set of Frequently Asked Questions with additional clarifications applicable to TALF and an updated form of issuer and sponsor certification. The Updated FAQs follow the release on May 12, 2020 by the Federal Reserve of its initial set of Frequently Asked Questions for the TALF program (the “Initial FAQs”).
Related Practice(s): Securitization & Asset Based Finance
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“Caveat Emptor”: New York Bankruptcy Court Disallows Bankruptcy Claims Purchased from Recipients of Avoidable Transfers; Is Enron Going, Going, . . . ?
May 26, 2020A recent Bankruptcy Court decision, In re Firestar Diamond, Inc., out of the Southern District of New York (“SDNY”) by Bankruptcy Judge Sean H. Lane, disallowed creditors’ bankruptcy claims purchased from sellers who allegedly received (and had not repaid) avoidable preferences and fraudulent transfers from the debtors. Judge Lane provides a cogent warning to claims purchasers that they bear the risk of Bankruptcy Code section 502(d) disallowance.
Related Practice(s): Financial Restructuring
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COVID-19 Update: NYSE and Nasdaq Adopt Temporary Exceptions to Certain Shareholder Approval Requirements
May 22, 2020The NYSE and Nasdaq continue to provide temporary relief from certain of their listing and corporate governance requirements amid the market disruption caused by COVID-19. In March and April, the NYSE suspended its minimum market capitalization requirement and provided relief from its shareholder approval requirements for 20% issuances and for transactions with related persons, in each case through June 30, 2020.
Related Practice(s): Corporate
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The Law’s Long Reach: Recent Actions Show Federal Enforcement Agencies Are Not “Locked Down” by Social-Distancing and Quarantine Orders
May 19, 2020For federal law enforcement agencies – like the rest of government and society at large – the COVID-19 pandemic has ushered in a host of interrupted routines, unforeseen challenges, and new priorities. For businesses, understanding how these agencies are adapting and focusing their resources is critical to navigating a fast-changing regulatory environment. This article examines the response to COVID-19 of three key federal agencies: the Department of Justice (“DOJ”), the Securities and Exchange Commission (“SEC”), and the Office of Foreign Assets Control (“OFAC”).
Related Practice(s): Global Litigation, White Collar Defense and Investigations
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COVID-19 Update: An End to Temporary Restrictions on Short Selling in the European Union
May 19, 2020Further to our Clients and Friends Memorandum of 22 April 2020, on 18 May 2020 the European Securities and Markets Authority (“ESMA”) issued a press release on the non-renewal of and termination of short selling bans by the following national competent authorities (“NCAs”): Austria's Finanzmarktaufsicht (FMA) Belgium's Financial Securities and Markets Authority (FSMA); France's Autorité des Marchés Financiers (AMF); Greece's Hellenic Capital Market Commission (HCMC); Italy's Commissione Nazionale per le Società e la Borsa; and Spain's Comisión Nacional del Mercado de Valores (CNMV).
Related Practice(s): CLOs, Corporate, Financial Regulation, Securitization & Asset Based Finance
Related Office(s): London
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Crime in the Time of Covid-19: The Progress of UK White-Collar Investigations and Trials During Lockdown
May 19, 2020Regulators and enforcement agencies in the United Kingdom, while not immune to the effects of the Covid-19 pandemic, have proved to be relatively adaptable with a continued appetite for enforcement. As their counterparts in the United States, there is an emphasis on facilitating the government’s efforts to stabilise the market, and provide guidance for businesses and individuals while being vocal about a zero-tolerance policy for any pandemic-related fraud.
Related Practice(s): Global Litigation, White Collar Defense and Investigations
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COVID-19 Update: Federal Reserve Issues New TALF Term Sheet and Responses to Frequently Asked Questions
May 15, 2020As part of a number of liquidity measures announced in response to the COVID-19 pandemic, the Federal Reserve re-established the Term Asset-Backed Securities Loan Facility (“TALF”) on March 23, 2020. On April 9, 2020, the Federal Reserve released a term sheet (the “April Term Sheet”) that expanded the range of “eligible collateral” to include certain commercial mortgage-backed securities (“CMBS”) and collateralized loan obligations (“CLOs”) and clarified which businesses would qualify as “eligible borrowers.”
Related Practice(s): Financial Regulation, Securitization & Asset Based Finance, TALF Task Force
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COVID-19 Update: Federal Reserve Provides Additional Guidance on Inclusion of CLOs in New TALF Term Sheet and Responses to Frequently Asked Questions
May 13, 2020As part of a number of liquidity measures announced in response to the COVID-19 pandemic, the Federal Reserve re-established the Term Asset-Backed Securities Loan Facility (“TALF”) on March 23, 2020. On April 9, 2020, the Federal Reserve released an updated term sheet that expanded the range of “eligible collateral” to include certain legacy commercial mortgage-backed securities and newly-issued, static collateralized loan obligations (“CLOs”) and clarified which businesses would qualify as “eligible borrowers.”
Related Practice(s): CLOs, Securitization & Asset Based Finance, TALF Task Force
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COVID-19 Update: Governor Cuomo Extends Eviction and Foreclosure Moratorium and Allows Tenants to Apply Security Deposits to the Payment of Rent
May 13, 2020On May 7, 2020, New York State Governor Andrew Cuomo issued Executive Order 202.28 (the “New Order”) to provide additional relief to renters impacted by the COVID-19 pandemic and extended the time periods for certain other protections that had been previously granted to renters and property owners pursuant to Executive Order 202.8 (the “March 20 Order”).
Related Practice(s): Real Estate
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The European Banking Authority has Published its Final Guidelines on WAM
May 12, 2020On 4 May 2020, the European Banking Authority (“EBA”) published a final report containing guidelines (EBA/GL/2020/04) (the “Guidelines”) on the use of the weighted average maturity approach (“WAM”) instead of the final legal maturity approach when calculating contractual payments due under the tranche of a securitisation transaction. This is relevant for institutions using the internal, or the external, rating-based approach for the calculation of their capital requirements under the EU Capital Requirements Regulation ((EU) 575/2013), as amended by the CRR Amending Regulation ((EU) 2017/2401) (“CRR”). CRR currently provides for tranche maturity as an additional parameter to calculate the capital requirement in respect of securitisation positions.
Related Practice(s): CLOs, Financial Regulation, Securitization & Asset Based Finance
Related Office(s): London
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COVID-19 Update: Antitrust Enforcement Remains Robust Despite COVID-19
May 07, 2020Many clients have asked about the state of federal antitrust enforcement during the current pandemic. We can tell you this: the Agencies are taking longer to clear or challenge deals, but the level of antitrust enforcement, for both merger and conduct cases, remains robust despite the investigating staff operating from home offices and kitchen tables.
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COVID-19 Urgent Update: SBA Extends Safe Harbor Date to Return PPP Loans to May 14 and Other Guidance
May 06, 2020The Small Business Administration (“SBA”), in consultation with the Treasury Department, issued FAQ #43 on May 5, 2020 extending by a week the time within which a borrower has to repay a previously issued SBA loan under the Paycheck Protection Program (“PPP”) in order to take advantage of a presumption that a borrower certified necessity for the loan in good faith at the time of the loan application. This memo updates Cadwalader’s recent Clients & Friends Memo that provided the guidance below outlining criteria that a borrower should consider in deciding whether to return PPP funds as well as proactive steps that borrowers can take to document analysis performed in making the necessity certification whether or not funds are returned by the safe harbor deadline.
Related Practice(s): Financial Regulation, White Collar Defense and Investigations
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COVID-19 Update: Meet the Special Inspector General for Pandemic Recovery
May 06, 2020The Senate Banking Committee reconvened in person and by video on Tuesday, May 5, 2020, to hold a hearing on President Trump’s nomination of Brian D. Miller to serve as the Special Inspector General for Pandemic Recovery (“SIGPR”). Mr. Miller, a former prosecutor and Inspector General for the General Services Administration, has served as Senior Associate Counsel and Special Assistant to President Trump since December 2018. However, upon Senate confirmation, Mr. Miller will undertake an immense new role: providing independent oversight of more than $500 billion in Treasury Department funding aimed at supporting businesses and municipalities impacted by the COVID-19 pandemic.
Related Practice(s): Financial Regulation, White Collar Defense and Investigations
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COVID-19 Update: Paycheck Protection Program – Secondary Market Restrictions on Whole Loan Transfers Partially Lifted
May 05, 2020Last week, the federal government implemented two measures designed to facilitate the financing of Paycheck Protection Program (“PPP”) loans through whole loan sales. These two measures fall on the heels of guidance issued by the Small Business Administration (“SBA”) the week earlier, partially lifting existing SBA restrictions on participation transactions involving PPP loans.
Related Practice(s): Financial Regulation, Securitization & Asset Based Finance
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Booking.com – Justices Persevere through First-Ever Conference Call Oral Argument to Hear Arguments as to Registrability of .Com Trademarks
May 05, 2020On Monday, May 4, 2020, for the first time in its 231-year history, the Supreme Court heard oral arguments through a telephone conference call, allowing the attorneys to present arguments while complying with shelter-in-place orders. The case, U.S. Patent and Trademark Office v. Booking.com, No. 19-46, is also historically significant, given that it is the first time the Supreme Court has heard arguments on the issue of generic trademarks since the enactment of the Lanham Act in 1946.
Related Practice(s): Global Litigation, Intellectual Property
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COVID-19 Update: The European Commission Proposes Urgent Amendments to the EU Capital Requirements Regulation
May 04, 2020On 28 April 2020, the European Commission (the “Commission”) proposed a new Regulation to make targeted amendments to the EU Capital Requirements Regulation (575/2013) (“CRR”) and the CRR II Regulation ((EU) 2019/876) (“CRR II”) in response to the COVID-19 pandemic. Subject to the EU legislative process operating as anticipated, it is expected that these changes will apply in the UK until the end of the Brexit transition period (currently scheduled to end on 31 December 2020), although these changes will also be reflected in the UK “onshored” version of CRR which will apply after the end of the transition period.
Related Practice(s): CLOs, Financial Regulation, Securitization & Asset Based Finance
Related Office(s): London
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COVID-19 Update: These Are Not the Droids You’re Looking For: The “Wrong” Type of PPP Borrowers May Need to Repay Their Loans or Prepare for an Audit
May 04, 2020On this May the Fourth (Be With You), many Paycheck Protection Program (“PPP”) borrowers may be grappling with a difficult question: At the time of loan application, was the company the type of borrower the Small Business Administration (“SBA”) was looking for? Specifically, given that the Treasury Department’s prior guidance on the standards for obtaining a PPP loan were at best vague and at worst inconsistent with current guidance, was the borrower’s certification that the PPP loan was “necessary” made in good faith?
Related Practice(s): Financial Regulation, White Collar Defense and Investigations
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COVID-19 Update: Prudential Regulatory Treatment of UK Business Interruption Loan Schemes (CBILS & CLBILS)
May 01, 2020On 27 April 2020, the UK Prudential Regulation Authority (“PRA”) published a statement (the “statement”) on whether the guarantees provided by the UK Government (through the British Business Bank) under the Coronavirus Business Interruption Loan Scheme (“CBILS”) and the Coronavirus Large Business Interruption Loan Scheme (“CLBILS”) are eligible for recognition as unfunded credit risk mitigation (“CRM”) under the EU Capital Requirements Regulation (the “CRR”). The CRR continues to apply in the UK until the end of the Brexit transition period (currently scheduled to end on 31 December 2020).
Related Practice(s): Financial Regulation, Securitization & Asset Based Finance
Related Office(s): London
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COVID-19 Update: The Paycheck Protection Program and the Concept of “Necessity”
April 30, 2020In response to Cadwalader’s recent Clients & Friends Memo, Federal Investigators Prepare to Investigate and Prosecute Fraud in Emergency Loan Programs, Cadwalader has heard from a number of borrowers under the CARES Act’s Paycheck Protection Program (PPP) who are now questioning whether the loan they took was “necessary.” This Clients & Friends Memo lays out the state of play regarding loan “necessity” under the PPP and steps companies can take to reduce their risk of audit and investigation.
Related Practice(s): Financial Regulation, White Collar Defense and Investigations
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European Commission Consultation on the Renewed Sustainable Finance Strategy
April 28, 2020On 8 April 2020 the European Commission published a consultation paper on its renewed sustainable finance strategy (the “Sustainability Strategy”). The Sustainability Strategy is a policy framework forming a key part of the European Green Deal, the EU’s roadmap to making the EU’s economy sustainable, including reducing net greenhouse gas emission to zero by 2050. Despite the inevitable recent shift of focus to measures dealing with the COVID-19 crisis, this remains a top EU priority and the outcome of this consultation may significantly affect the corporate law applicable to European businesses, investors and directors in the near term.
Related Practice(s): Corporate, Financial Regulation
Related Office(s): London
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COVID-19 Update: The Paycheck Protection Program – Loan Participation Transactions
April 26, 2020On Friday, April 24, 2020, the Small Business Administration (“SBA”) addressed some of the confusion regarding secondary market transactions involving Paycheck Protection Program (“PPP”) loans, at least with respect to participation transactions. In a Procedural Notice to SBA and PPP lenders, the SBA announced that it was lifting certain restrictions on participation transactions involving such PPP loans.
Related Practice(s): Financial Regulation, Securitization & Asset Based Finance
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COVID-19 Update: Federal Investigators Prepare to Investigate and Prosecute Fraud in Emergency Loan Programs
April 24, 2020Emergency COVID-19 relief legislation signed into law by President Trump, including the Coronavirus Aid, Recovery, and Economic Security Act (“CARES Act”), has allocated more than $2 trillion in economic aid to individuals, businesses, non-profits and government entities adversely impacted by the pandemic. Two primary components of the relief legislation are the Paycheck Protection Program (“PPP”) and the Economic Injury Disaster Loan Program (“EIDL”) administered by the Small Business Administration (“SBA”), which have already supported millions of forgivable and low-interest loans to eligible small businesses and non-profits.
Related Practice(s): Global Litigation, White Collar Defense and Investigations
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COVID-19 Update: Don’t Be a Target: What Business Should Know about State Attorney General Reactions to COVID-19
April 24, 2020In any time of crisis, there is heightened risk for fraud and scams. While United States Attorney General Barr has warned of scams and other illegal acts on the federal level, it is with the state Attorneys General (“AGs”) where the rubber hits the road in enforcing social distancing orders, investigating companies for alleged price gouging, continuing ongoing investigations, and overseeing lending relief efforts. As the economy begins to reopen on a state-by-state and sector-by-sector basis, companies must be vigilant in protecting themselves from the next wave of scrutiny by state AGs.
Related Practice(s): Global Litigation, State Attorneys General Practice, White Collar Defense and Investigations
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COVID-19 Update: Restrictions on Short Selling in the UK and European Union - An Update
April 22, 2020Five EU member states have extended their temporary bans on short selling imposed in line with the emergency process permitted by the EU Short Selling Regulation, despite increased pressure from hedge funds to remove the current restrictions. Regulators in Austria, Belgium, France, Greece and Spain have now extended the bans (which were due to expire in the coming days) until mid-May, arguing that the restrictions are necessary to stabilise stock prices. Italy’s ban will also continue until mid-June.
Related Practice(s): Corporate, Financial Regulation
Related Office(s): London, New York
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COVID-19 Update: UK Government Launches Convertible Loan Scheme for Start-Ups; Announces Additional Funding for Innovate UK
April 22, 2020On 20 April 2020, the UK Treasury announced a support package aimed at helping start-ups whose businesses are facing financial difficulties due to the COVID-19 pandemic. “Future Fund” is being created, pursuant to which the government will offer convertible bridging loans of £125,000 - £5 million to eligible high-growth companies, provided the government investment is matched by private money. The total size of the government’s initial commitment to Future Fund is £250 million. It will initially be open from May until the end of September, and the scale of the fund will be kept under review. In addition, £750 million is being added to the existing Innovate UK program, which is a scheme providing grants and loans to small and medium-sized firms focused on R&D.
Related Practice(s): Corporate, Financial Regulation
Related Office(s): London
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Overview of the European Sustainability Taxonomy Regulation
April 21, 2020On 15 April 2020, the Council of the European Union published a press release stating that it had reached political agreement on the regulation on the establishment of an EU-wide framework designed to facilitate sustainable investment through a common classification system for sustainable activity (the “Taxonomy Regulation”).
Related Practice(s): Corporate, Financial Regulation
Related Office(s): London
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COVID-19 Update: The Impact of COVID-19 on Financial Contracts
April 20, 2020The current market volatility arising from the restrictions imposed to reduce the risk of spread of COVID-19 has led many market participants to consider their position under existing contractual relationships, including, assessing their own obligations and whether any potential or actual event of default has occurred in respect of their counterparty. This memo illustrates practical issues to be taken into account by a counterparty to a financial contract in making these considerations using, as an example, a derivative transaction.
Related Practice(s): CLOs, Global Litigation, Securitization & Asset Based Finance
Related Office(s): London
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COVID-19 Update: Banking Agencies Issue Temporary Deferral of Appraisals and Evaluations for Real Estate Transactions
April 17, 2020On April 14, 2020, the Federal Reserve, the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation issued an interim final rule to temporarily defer real estate appraisals and evaluations under interagency appraisal rules.
Related Practice(s): Financial Regulation, Real Estate
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COVID-19 Update: FCA Sends “Dear CEO” Letter to UK Banks on Lending to SMEs and Responsibilities of Senior Managers
April 17, 2020On 15 April 2020, the UK Financial Conduct Authority (“FCA”) published a “Dear CEO” letter sent to the leaders of UK banks on lending to small and medium-sized enterprises (“SMEs”) during the COVID-19 pandemic.
Related Practice(s): CLOs, Financial Regulation, Securitization & Asset Based Finance
Related Office(s): London
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COVID-19 Update: Federal Reserve Announces Main Street Lending Program
April 16, 2020On April 9, 2020, the Federal Reserve established a $600 billion lending program to aid small and medium-sized businesses affected by the COVID-19 pandemic. The new initiative—the Main Street Lending Program—will purchase qualifying loans from lenders that lend to U.S. businesses with up to 10,000 employees or up to $2.5 billion in 2019 annual revenues. Firms that have taken advantage of the Small Business Administration’s previously announced Paycheck Protection Program are eligible to participate in the Main Street program.
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COVID-19 Update: Revisiting Pre-Negotiation Agreements in the Era of Covid-19
April 16, 2020While the ramifications of the Covid-19 pandemic for real estate lenders and borrowers will unfold over time, at this point we know that lenders and borrowers will be communicating frequently and extensively regarding potential loan modifications and other accommodations. Lenders are well advised to insist on a pre-negotiation agreement, often referred to as a “PNA,” as a prerequisite to these communications.
Related Practice(s): Real Estate
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COVID-19 Update: Anticipating Securities Litigation in Response to the Pandemic
April 16, 2020As COVID-19 has continued to spread globally, U.S. and foreign markets have been dramatically impacted, leading to the largest declines in stock prices since the 2008 credit crisis. Given the extreme market volatility associated with the ongoing COVID-19 pandemic, a significant rise in stock-drop securities litigation seems likely. This is particularly so given the pre-existing trend of increased securities class action filings, even before the onset of COVID-19. Indeed, investors already have filed at least two civil suits alleging that a public company violated the federal securities laws by making misleading public statements concerning COVID-19. Others almost surely will follow.
Related Practice(s): Global Litigation
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COVID-19 Update: COVID-19 and the Courts: Part II How Appellate Court Procedures Are Changing and What May Be Here to Stay
April 15, 2020In the second of our series of articles examining emergency procedures in the wake of the COVID‑19 pandemic (“pandemic”), we examine the emergency procedures put into place in Federal Appellate Courts and explore which changes may disappear as the pandemic wanes and which are likely to stick around.
Related Practice(s): Global Litigation, Intellectual Property
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COVID-19 Update: Federal Reserve Announces Municipal Liquidity Facility
April 15, 2020The Federal Reserve has announced the Municipal Liquidity Facility (the “MLF”) to provide liquidity to state and local governmental authorities affected by the COVID-19 pandemic. The MLF, which is established pursuant to the Federal Reserve’s emergency lending authority under Section 13(3) of the Federal Reserve Act, will lend up to $500 billion to “Eligible Issuers” through September 30, 2020, subject to extension.
Related Practice(s): Financial Regulation
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COVID-19 Update: FCA Publishes Final Guidance on Temporary Financial Relief for Consumer Credit Customers Affected by COVID-19
April 15, 2020As discussed in a previous clients and friends memorandum, on 2 April 2020, the UK Financial Conduct Authority (“FCA”) proposed a number of temporary measures designed to support users of certain consumer credit products during the adverse economic conditions in the UK generated by the COVID-19 pandemic. Following a very short consultation period, the FCA published its final guidance for firms on 9 April 2020.
Related Practice(s): CLOs, Financial Regulation, Securitization & Asset Based Finance
Related Office(s): London
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COVID-19 Update: The Paycheck Protection Program and the Secondary Market
April 13, 2020Last week, the Board of Governors of the Federal Reserve System (the “Federal Reserve”), the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation (collectively, the “Banking Agencies”) adopted two measures to facilitate aid to small business employees under the CARES Act.
Related Practice(s): Financial Regulation, Securitization & Asset Based Finance
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COVID-19 Update: IRS Issues Securitization Guidance on Coronavirus-Related Forbearances
April 13, 2020On April 13, 2020, the Internal Revenue Service issued a helpful revenue procedure that permits loans that are subject to certain forbearances and related modifications as a result of the COVID-19 pandemic to be contributed to, and held in, real estate mortgage investment conduits (REMICs) and grantor trusts without jeopardizing these vehicles’ U.S. tax status.
Related Practice(s): Tax
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COVID-19 Update: ISS Provides Policy Guidance on Limited Duration Poison Pills to Address the Impact of COVID-19
April 10, 2020On April 8, 2020, Institutional Shareholder Services (“ISS”) published guidance on its voting policies in light of the market-wide effects of the COVID-19 pandemic. While ISS maintains that its existing policies are sufficiently flexible to take into account the impact of COVID-19 on a case-by-case basis, ISS provided more specific guidance on certain issues, including shareholder rights plans, stating that plans with a duration of less than one year will likely be justified in most cases given the impact of the pandemic on stock prices.
Related Practice(s): Corporate
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COVID-19 Update: Federal Reserve Broadens Range of Eligible Collateral for Term Asset-Backed Securities Loan Facility (TALF)
April 09, 2020On April 9, 2020, the Federal Reserve unveiled an array of additional programs to bolster the U.S. economy in response to the COVID-19 pandemic. One of those programs is aimed at expanding the coverage of the Federal Reserve’s previously announced Term Asset- Backed Securities Loan Facility (TALF). TALF is a facility intended to help lenders meet the credit needs of households and U.S. businesses by supporting the issuance of asset-backed securities.
Related Practice(s): Securitization & Asset Based Finance, TALF Task Force
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COVID-19 Update: NYSE Temporarily Waives Certain Shareholder Approval Requirements
April 09, 2020In order to provide temporary relief to listed companies that may have urgent liquidity needs as a result of the market disruption caused by COVID-19, the New York Stock Exchange has (i) partially waived its shareholder approval requirement for issuances of stock to a “related party” when the number of new shares to be issued is more than 1% of total share volume or voting power and (ii) expanded the existing exception to its shareholder approval requirement for transactions involving the issuance of 20% or more of the company’s outstanding common stock or 20% of the voting power outstanding before such issuance, other than a public offering for cash. The waivers are effective immediately and will remain in effect through June 30, 2020.
Related Practice(s): Corporate
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COVID-19 Update: When Computers Invent: How the Use of Artificial Intelligence to Treat COVID-19 Highlights Novel Inventorship Issues
April 08, 2020Technology and medical companies around the world are rising to meet the challenges created by the COVID-19 pandemic, in many cases turning to artificial intelligence (“AI”) and super computers in their efforts to develop life-saving treatments for the disease as quickly as possible. In late March, the White House announced the launch of the COVID-19 High Performance Computing Consortium to bring together industry leaders in AI with national laboratories and academics to “significantly advance the pace of scientific discovery in the fight to stop the virus.”
Related Practice(s): Global Litigation, Intellectual Property
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COVID-19 Update: COVID-19 and the Courts How Court Procedures Across the Country Are Changing and What May Be Here To Stay
April 07, 2020Americans are no stranger to calamitous events—whether human-induced (e.g., the 2008 financial crisis) or nature-induced (e.g., Superstorm Sandy)—and the immediate, and often long-term, changes which result. Currently, we face a disastrous pandemic not experienced by generations of Americans and it is causing profound changes in virtually every facet of life—health, personal mobility, business disruption, financial hardship, etc. The aim of this series of articles is to explore the numerous and varied procedural changes occurring in the legal system and to attempt to project those that may persist, even if in modified form, once the emergency is declared over.
Related Practice(s): Global Litigation, Intellectual Property
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COVID-19 Update: FCA Proposals on Temporary Financial Relief for Consumer Credit Customers Affected by COVID-19
April 07, 2020On 2 April 2020, the UK Financial Conduct Authority (“FCA”) proposed a number of temporary measures designed to support users of certain consumer credit products during the adverse economic conditions in the UK generated by the COVID-19 pandemic. These proposals provide guidance to FCA regulated providers of credit cards, retail revolving credit facilities, arranged overdrafts and personal loans. The FCA decided to consult for an unusually short period on these proposals, with the consultation closing at 9:00 a.m. on 6 April 2020. The FCA intends for these measures to come into effect on 9 April 2020.
Related Practice(s): CLOs, Financial Regulation, Securitization & Asset Based Finance
Related Office(s): London
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COVID-19 Update: The SBA’s Paycheck Protection Program Explained
April 03, 2020On March 27, 2020, the President signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act (the “Act”) into law following the Act’s approval by both chambers of Congress. The Act amends Section 7(a) of the Small Business Act to include a new guaranteed, unsecured loan program (the “Paycheck Protection Program”). The Paycheck Protection Program is an expansion of the Small Business Administration (the “SBA”) Economic Injury Disaster Loan program. The program provides for $349 billion to support loans to a broader segment of small businesses than those that would otherwise be eligible to receive SBA 7(a) loans.
Related Practice(s): Financial Regulation, Real Estate, Securitization & Asset Based Finance
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COVID-19 Update: Cybersecurity and Data Privacy Best Practices Remain Critical During the Coronavirus Pandemic
April 03, 2020With much of the nation’s workforce transitioning to telework for the foreseeable future, hackers and scammers are lurking to take advantage of technical vulnerabilities and anxious targets. As companies amass—and create new repositories of—personal and health information for employees and customers as a result of the coronavirus (COVID-19) pandemic, adherence to cyber and data privacy best practices remains critically important. Companies, firms, employees, and consumers are increasingly relying on home networks, virtual workspaces, videoconferencing, and other forms of remote work practices, further opening the door to cyber concerns.
Related Practice(s): Global Litigation, White Collar Defense and Investigations
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COVID-19 Update: What Are the Effects on the SEC’s Enforcement Program?
April 03, 2020In response to the COVID-19 crisis, the SEC has sought to reassure investors and the financial industry that it is maintaining its investor protection and enforcement efforts. In a statement setting out the Commission’s initial response to the crisis, issued on March 20, the SEC pledged that its enforcement and examination programs will continue to execute their missions and are fully operational.
Related Practice(s): Global Litigation, White Collar Defense and Investigations
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COVID-19 Update: Litigation, Incarceration, and Investigation in the Time of COVID-19
April 03, 2020In ways unimagined less than three weeks ago, the face of in-court litigation in civil and criminal matters transformed seemingly overnight and continue at near breakneck speed. The following article describes the key changes trial lawyers and their clients are likely to experience as the impact of COVID-19 continues to increase unabated.
Related Practice(s): Global Litigation, White Collar Defense and Investigations
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COVID-19 Update: Extraordinary Measures in Extraordinary Times: The Federal Reserve Responds to the Coronavirus Pandemic
April 03, 2020The Federal Reserve has established a number of programs to provide targeted support to the corporate credit, asset-backed securities, money market and commercial paper markets in light of the evolving coronavirus disease 2019 (COVID-19) pandemic. In broad strokes, these temporary programs backstop markets through the purchase or financing of highly rated securities. In this memorandum, we review the mandate and key terms of each program.
Related Practice(s): Financial Regulation, Securitization & Asset Based Finance, TALF Task Force
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COVID-19 Update: Practical Guide to Electronic Signatures
April 01, 2020The COVID-19 pandemic has unexpectedly required lawyers and, in many circumstances, judges to attempt to operate in a remote work environment. This abrupt change has heightened the importance of relying on electronic signatures and notarization, in lieu of traditional “wet ink.” This article discusses the applicable laws and practical guidance for ensuring valid e-signatures and notarizations.
Related Practice(s): Global Litigation
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COVID-19 Update: Are You For Real? Due Diligence in the Age of Coronavirus
April 01, 2020In the context of COVID-19, there are significant challenges involved in conducting due diligence: hard-copy documents are inaccessible, in-person meetings have moved online, and on-site visits may be impossible. Companies nonetheless can and should continue to comply with the law by adjusting policies and procedures, mitigating new risks that arise through the use of alternative diligence methods, and by staying abreast of changing regulatory expectations.
Related Practice(s): Global Litigation, White Collar Defense and Investigations
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COVID-19 Update: Competitor Collaborations in the time of COVID-19
April 01, 2020The Antitrust Division of the U.S. Department of Justice (“DOJ”) and the Federal Trade Commission (“FTC”) jointly announced on March 24, 2020, an expedited antitrust review process for proposed collaborative efforts aimed at protecting the health and safety of Americans during the COVID-19 pandemic. The agencies have committed to reviewing all proposed collaborations submitted to the DOJ’s Business Review Letter procedure and the FTC’s Staff Advisory Opinion procedure within seven calendar days of receiving all necessary information (both processes generally take several months). The DOJ and FTC also pledged to&
Related Practice(s): Global Litigation
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COVID-19 Update: Protecting Trade Secrets In The Midst Of The COVID-19 Pandemic
April 01, 2020Millions of Americans and others around the globe have been told to work from home in order to blunt the spread of COVID-19. In short order, companies have been faced with unprecedented strain on internal networks and demands from employees to access confidential business information from home. While the COVID-19 Pandemic presents serious challenges to public health and the economy, the extraordinary access of confidential business information at home should present a lurking concern for companies, since employees themselves are typically the largest source of trade secret misappropriation. Moreover, cybercriminals may prey on employees inexperienced with working from home and those who fail to follow proper cyber-hygiene.
Related Practice(s): Global Litigation, Intellectual Property
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COVID-19 Update: NYSE and Nasdaq Consider Impact of COVID-19
March 31, 2020In light of the market-wide declines caused by the COVID-19 pandemic, on March 19, 2020, the New York Stock Exchange filed with the Securities and Exchange Commission a proposed suspension of its listing requirement that companies must maintain an average global market capitalization over a consecutive 30 trading-day period of at least $15 million (the “Market Cap Standard”). On March 20, 2020, the SEC granted NYSE’s proposed suspension of the Market Cap Standard until June 30, 2020, and also designated the suspension operative upon NYSE’s filing, thereby waiving the standard 30-day operative delay of proposed rule changes. Additionally, on March 26, 2020, the Nasdaq Stock Market announced that it will consider the effects of COVID-19 in its review of requests for financial viability exceptions to Nasdaq’s shareholder approval rules.
Related Practice(s): Corporate
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COVID-19 Update: Planned Changes to UK Insolvency Laws to Enable Companies to Continue Trading
March 31, 2020On Saturday 28 March 2020, the Business Secretary, Alok Sharma, announced that the UK government would be introducing legislation to make changes to existing insolvency laws in response to COVID-19. The new measures seek to enable companies undergoing a rescue or restructuring process to continue trading and help them avoid insolvency, and include a temporary suspension of wrongful trading provisions retrospectively from 1 March 2020 for three months. This in particular will be welcome to directors who may be weighing the potential for personal liability when considering taking on Government or bank funding. Legislation to introduce these changes will be introduced in Parliament at the earliest opportunity, although the exact timing remains uncertain – Parliament is currently in recess until 21 April 2020.
Related Practice(s): Corporate, Financial Restructuring, Fund Finance
Related Office(s): London
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COVID-19 Update: Coronavirus Bill Radically Overhauls the Use of Video / Telephone Facilities in UK Criminal Proceedings
March 31, 2020The Coronavirus Bill 2020 (the “Bill”) received Royal Assent and passed into law on Wednesday, 25 March 2020. Amongst a wide range of emergency measures, the Bill includes urgently-needed provisions allowing for the greater use of video and telephone communication in UK criminal court proceedings. The Bill updates several pieces of legislation including the Criminal Justice Act 2003, the Crime and Disorder Act 1998 and the Criminal Procedure Rules (“CrimPR”).
Related Practice(s): Global Litigation, White Collar Defense and Investigations
Related Office(s): London
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COVID-19 Update: Banking Agencies Delay CECL Capital Impacts
March 31, 2020On March 27, 2020, the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation (collectively, the “Agencies”) issued an interim final rule that allows banking organizations to mitigate the effects of the “current expected credit loss” (“CECL”) accounting standard in their regulatory capital.
Related Practice(s): Financial Regulation
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COVID-19 Update: Key Provisions of the Coronavirus Aid, Relief, and Economic Security (CARES) Act
March 30, 2020On March 27, 2020, the President signed the Coronavirus Aid, Relief, and Economic Security (CARES) Act (the “Act”) into law following the Act’s approval by both chambers of Congress. The Act is aimed at reducing the economic impact of the novel coronavirus 2019 (“COVID-19”) pandemic and authorizes $2.1 trillion in aid to various sectors of the economy.
Related Practice(s): Corporate, Financial Regulation, Intellectual Property, Securitization & Asset Based Finance, Tax
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COVID-19 Update: The UK Government and Regulators Respond to the COVID-19 Pandemic
March 30, 2020On 25 March 2020, the UK Government published a letter sent by the Chancellor of the Exchequer, the Governor of the Bank of England and the CEOs of the UK Prudential Regulation Authority (“PRA”) and the UK Financial Conduct Authority (“FCA”) to leaders of UK banks (the “Joint Letter”), addressing the impact of COVID-19 on the UK economy and bank lending. The letter highlighted action taken in concert between the UK Government, the regulators and banks to address the economic impact of the COVID-19 pandemic.
Related Practice(s): Corporate, Financial Regulation, Securitization & Asset Based Finance, Tax
Related Office(s): London
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Delaware Supreme Court Rejects Challenge to Federal Forum Provisions Requiring Securities Act Claims to Be Brought in Federal Court
March 30, 2020On March 18, 2020, the Delaware Supreme Court issued its unanimous decision in Salzberg v. Sciabacucchi, authored by Justice Karen L. Valihura, in which it reversed the Court of Chancery and rejected a facial challenge to provisions in the charters of three Delaware corporations that require any claims brought against each company under the Securities Act of 1933 (the “1933 Act”) to be filed in federal court (“federal forum provisions” or “FFPs”).
Related Practice(s): Global Litigation
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COVID-19 Update: Coronavirus-Related REMIC Considerations
March 30, 2020The COVID-19 pandemic has created significant headwinds for mortgage loans. Loan forbearances and workouts raise tax complexities for real estate mortgage investment conduits (REMICs), which are the most common vehicles for securitizing mortgage loans. With careful planning, REMICs can continue to be highly useful during these difficult times. This alert explores the feasibility of continuing to use REMICs to securitize mortgage loans subject to forbearance and potential default as a result of the pandemic.
Related Practice(s): Tax
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COVID-19 Update: Patent Rights in the COVID-19 Pandemic: How will Industries and Governments Respond?
March 27, 2020As the world scrambles to address an ever-expanding wave of COVID-19 infections, new and urgent needs for medical supplies, diagnostics and treatments arise. Shortages of such supplies are plaguing hospitals and care-givers, while doctors and nurses put their lives at risk in their desperate efforts to save COVID-19 patients. Many of these vital supplies, however, are protected by valuable patent rights. The essence behind patents rights is to exclude others from making, using, or selling a patented invention, except by authorization of the patent holder in carefully negotiated license agreements to ensure proper compensation for the efforts and costs invested in developing the patented invention. On the other hand, the U.S. government has rights to forcibly license a patented invention during times of need, in particular when there is a threat to public safety.
Related Practice(s): Global Litigation, Intellectual Property
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En Banc Federal Circuit Declines To Address The Constitutionality Of Administrative Patent Judges And The Constitutional Remedy Of Severance, Potentially Setting Up Supreme Court Review
March 27, 2020On March 23, 2020, the Federal Circuit denied the petitions for rehearing en banc filed in Arthrex v. Smith & Nephew, a decision which found the appointment of Administrative Patent Judges (“APJs”) unconstitutional under the Appointments Clause of the U.S. Constitution, and which severed their employment protections to cure the violation. This denial of en banc review follows a similar denial on January 31, 2020, for en banc review of Polaris v. Kingston another case dealing with the same constitutional questions concerning APJs and the remedy of severance.
Related Practice(s): Intellectual Property
Related Office(s): New York
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COVID-19 Update: DOJ and FTC Launch Expedited Review Process for COVID-19-Related Collaborative Efforts
March 26, 2020The Antitrust Division of the U.S. Department of Justice (the “Division”) and the Federal Trade Commission (“FTC”) have jointly announced an expedited process for the review of proposed collaborative efforts to deal with the COVID-19 pandemic. The March 24 joint statement recognizes that addressing the spread of the virus will require “unprecedented cooperation . . . among businesses to protect America’s health and safety.” Both agencies are “committed to providing individuals and businesses in any sector of the economy that are responding to this national emergency expeditious guidance about how to ensure their efforts comply with the federal antitrust laws.”
Related Practice(s): Global Litigation
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COVID-19 Update: Thoughts on Force Majeure and Impossibility of Performance
March 26, 2020Force majeure clauses are provisions in contracts that either defer or release parties from contractual obligations due to specific circumstances beyond the control of the breaching party. Such clauses allocate the risks of certain unforeseeable events that might result in a party’s nonperformance and in each case are (or at least should be) highly tailored to the nature of the transaction. Qualifying events that constitute force majeure, the contractual obligations to which the clause is applicable, as well as the rights and obligations of the parties upon the occurrence of such an event in order to invoke a force majeure defense, are specifically defined in and limited by the agreed upon terms of the force majeure clause.
Related Practice(s): Real Estate
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COVID-19 Update: DFS Releases Emergency Regulation on Forbearance Actions
March 25, 2020The New York State Department of Financial Services (“DFS”) has issued an emergency regulation on Governor Andrew Cuomo’s Executive Order No. 202.9 from March 21 (the “Executive Order”). As discussed in our memorandum from March 23, the Executive Order temporarily requires, among other things, that banks subject to the jurisdiction of the DFS grant 90-day forbearance relief to “any person or business who has a financial hardship as a result of the COVID-19 pandemic.” The Executive Order has sparked a flurry of questions within the lending market as to the scope of parties and products covered by its terms.
Related Practice(s): Financial Regulation
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COVID-19 Update: Restrictions on Short Selling in the UK and European Union
March 25, 2020Background on the Short Selling Regulation
European Union (“EU”) national regulators have regulated the short selling of shares and certain aspects of credit default swaps (“CDS”) since 1 November 2012, under the EU Short Selling Regulation (“SSR”). The SSR applies to any person undertaking short selling of shares, sovereign debt, sovereign CDS and related instruments that are admitted to trading or traded on an EU trading venue. It also prohibits the entry into uncovered sovereign credit default swaps. The SSR does not relate to repos, securities lending, corporate and convertible bonds, although note that national regulators have powers (under Articles 18 to 21 of the SSR) to impose short selling restrictions on any financial instrument, if there is a serious threat to financial stability or to market confidence.
Related Practice(s): Corporate, Financial Regulation, Securitization & Asset Based Finance
Related Office(s): London
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COVID-19 Update: Federal Reserve Launches TALF (Again)
March 23, 2020Today, the Federal Reserve announced that it was restarting the Term Asset-Backed Securities Loan Facility (“TALF”) to support the issuance of asset-backed securities (“ABS”) collateralized by consumer and commercial loans. Established under Section 13(3) of the Federal Reserve Act, with the approval of the U.S. Treasury Secretary, the TALF will serve as a funding backstop to facilitate the issuance of eligible ABS on or after March 23, 2020 until September 30, 2020, unless extended.
Related Practice(s): Financial Regulation, Securitization & Asset Based Finance, TALF Task Force
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COVID-19 Update: SEC Guidance on Shareholder Meetings and Filing Deadline Extensions in Light of COVID-19 Concerns
March 23, 2020In light of the recent COVID-19 global outbreak, on March 13, 2020, the Securities and Exchange Commission provided guidance to assist issuers, shareholders and other market participants affected by COVID-19 with meeting their obligations under the federal proxy rules. Additionally, on March 4, 2020, the SEC issued an order that, subject to certain conditions, provides publicly traded companies with an additional 45 days to file certain disclosure reports that otherwise would have been due between March 1 and April 30, 2020. On March 25, 2020, the SEC issued an order modifying the filing deadline extensions to cover filings due on or before July 1, 2020.
Related Practice(s): Corporate
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COVID-19 Update: New York Governor Issues Executive Order on Forbearance Actions
March 23, 2020On March 21, New York State Governor Andrew Cuomo signed an executive order declaring that, in light of the COVID-19 pandemic, any bank that is subject to the jurisdiction of the New York State Department of Financial Services (“DFS”) shall be deemed to be engaging in an “unsafe and unsound business practice” under Section 39 of the New York Banking Law if the bank fails to grant a 90-day forbearance to any person or business with a financial hardship as a result of the pandemic. The executive order is already effective and extends through April 20, 2020.
Related Practice(s): Financial Regulation
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COVID-19 Update: The Effects of COVID-19 on U.S. Antitrust Merger Clearance and Potential Delays in Transaction Closings
March 23, 2020As businesses and government agencies continue to take measures in response to the new coronavirus, one area of notable change is the federal merger clearance process. On March 13, the Department of Justice (“DOJ”) and the Federal Trade Commission (“FTC”) implemented a temporary e-filing system for premerger notification documents and announced that, beginning on March 16, (1) they no longer would accept hard-copy filings and (2) early termination would not be granted for any filing as long as the e-filing system remained in place. As part of these efforts to limit the further spread of the coronavirus, the FTC also canceled a workshop on its vertical merger guidelines.
Related Practice(s): Global Litigation
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UK’s Financial Conduct Authority Consults on New Climate-Related Disclosure Requirements following TCFD Recommendations
March 17, 2020In March 2020, the UK’s Financial Conduct Authority (the “FCA”) released a consultation paper entitled: “Proposals to enhance climate-related disclosures by listed issuers and clarification of existing disclosure obligations” (“CP20/3”).
Related Practice(s): Corporate
Related Office(s): London
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UK Gambling Commission Cracks Down in Respect of Money Laundering Failures
March 16, 2020On 12 March 2020, the UK Gambling Commission announced that it will fine online gambling business Betway Limited (“Betway”) £11.6 million for failures in respect of its anti-money laundering controls and handling of seven of its “VIP” high-spending customers.
Related Practice(s): Global Litigation, White Collar Defense and Investigations
Related Office(s): London
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UK Budget 2020 - Key Tax Measures
March 12, 2020The Chancellor of the Exchequer delivered the United Kingdom (“UK”) Budget for 2020 on 11 March 2020. The Budget was delivered against a backdrop that very few people could have anticipated at the commencement of the year. The Government’s long term focus of re-orienting the UK away from the European Union, as a result of Brexit, is now overshadowed by the global pandemic of Covid-19. Despite this dramatic political environment, the measures in the Budget relating to taxation are, by contrast, almost reassuringly down-to-earth. Those measures deliver a consistent message of the UK being a top-tier jurisdiction in which investment can be made efficiently, alongside a careful eye being kept on the competitiveness of the UK’s tax policy environment.
Related Practice(s): Tax
Related Office(s): London
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The Federal Circuit’s Polaris Decision Provides Insights Into The Constitutionality Of Inter Partes Reviews
February 14, 2020As previously reported here, Judges Reyna, Hughes, and Wallach ordered additional briefing in Polaris Innovations Ltd. v. Kingston Technology Company—an inter partes review appeal—regarding the constitutionality of Administrative Patent Judges (“APJs”) that oversee patent validity challenges at the Patent Trial and Appeal Board (“PTAB”).
Related Practice(s): Global Litigation, Intellectual Property
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Final Regulations on Expanded Authority of CFIUS to Review Foreign Investor Transactions Go into Effect
February 13, 2020Eighteen months after President Trump signed the Foreign Investment Risk Review Modernization Act (“FIRRMA”) which broadened the power of the Committee on Foreign Investment in the United States (“CFIUS”) to review foreign investments in the United States, final regulations to implement CFIUS’s expanded authority become effective on February 13, 2020.
Related Practice(s): Corporate, Global Litigation, White Collar Defense and Investigations
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2019 Year in Review: Securities Litigation and Enforcement
February 10, 2020There was abundant federal securities litigation activity in 2019. Plaintiffs not only continued to file securities lawsuits at record numbers, but repeatedly secured victories in cases on significant issues of law.
Related Practice(s): Global Litigation, White Collar Defense and Investigations
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Google v. Oracle: Will Software Be Free?
February 07, 2020Referred to as “the copyright case of the century,” the Supreme Court could determine the fate of software protection in Google v. Oracle, namely that of Java. At its core, the case asks whether software programmers may copy functional names present in software code (known as a software interface; e.g., the “print” function) so long as they do not copy the underlying source code implementing the function.
Related Practice(s): FinTech, Global Litigation, Intellectual Property
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Volcker 3.0: The Agencies Propose Relief for Securitizations and Foreign Funds and New Exemptions from the Volcker Rule’s Covered Fund Restrictions
February 05, 2020On January 30, 2020, the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Securities and Exchange Commission, and the Commodity Futures Trading Commission (collectively, the “Agencies”) issued proposed regulations (the “Proposed Regulations”) revamping the regulations implementing the Volcker Rule, a centerpiece of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Related Practice(s): Financial Regulation, Securitization & Asset Based Finance
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2019 Year in Review: Securitization Litigation and Regulation
January 30, 2020There were significant developments in 2019 as courts continued to issue important decisions in this space and significant legislation impacting the residential mortgage-backed securities (“RMBS”) market came into effect. A number of cases have called into question firmly rooted practices in the securitization market.
Related Practice(s): Global Litigation, Securitization & Asset Based Finance
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Delaware Court of Chancery Finds No Showing of Actionable Claim Required to Inspect Books and Records
January 29, 2020In Lebanon County Employees’ Retirement Fund, et al. v. AmerisourceBergen Corporation, the Delaware Court of Chancery ordered the inspection of the books and records of AmerisourceBergen Corporation, one of the leading opioid distributors in the country, for the purpose of investigating potential mismanagement or breaches of fiduciary duty in connection with the company’s distribution of opioids.
Related Practice(s): Global Litigation
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FTC Announces 2020 Thresholds for Merger Control Filings Under HSR Act and Interlocking Directorates Under the Clayton Act
January 28, 2020The Federal Trade Commission (“FTC”) has announced its annual revisions to the dollar jurisdictional thresholds in the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (“HSR Act”); the revised thresholds will become effective on February 27, 2020. 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, effective as of January 21, 2020.
Related Practice(s): Global Litigation
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SEC Proposes Rule Amendments Designed to Expand Access to Private Investment Opportunities
January 22, 2020By a 3-2 vote, the Securities and Exchange Commission (the “SEC”) approved the publication of a release on December 18, 2019, generally expanding the scope of the definitions of “accredited investor” in Rule 501(a) of Regulation D and “qualified institutional buyer” in Rule 144A under the Securities Act of 1933 (the “Securities Act”) to increase accessibility to private investment opportunities. The Release also proposed related changes to Rules 215 and 163B under the Securities Act and Rule 15g-1 under the Securities Exchange Act of 1934 (the “Exchange Act”).
Related Practice(s): Financial Regulation
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CFTC Codifies Registration and Reporting Relief for Commodity Pool Operators and Commodity Trading Advisors
January 17, 2020The Commodity Futures Trading Commission (the “CFTC”) approved the publication of two releases (the “Final Rules”) on November 25, 2019, adopting final amendments to Part 4 of the CFTC Rules which codify and expand a number of interpretative notices and no-action letters granting relief from the registration and reporting obligations applicable to various categories of Commodity Pool Operators (“CPOs”) and Commodity Trading Advisors (“CTAs”). The CFTC first proposed the amendments in a release published on October 18, 2018 (the “Proposed Rulemaking”).
Related Practice(s): Financial Regulation
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The Delaware Court of Chancery Rejects Termination of Merger Agreement Based on Material Adverse Effect
January 08, 2020In Channel Medsystems, Inc. v. Boston Scientific Corporation, the Delaware Court of Chancery rejected an attempt by Boston Scientific to terminate and thus avoid consummating a merger agreement with Channel on the grounds that a material adverse effect as defined in the parties’ agreement had occurred.
Related Practice(s): Corporate, Global Litigation
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No, You’re a Customer: Recent Second Circuit Decision Circumscribes Merit and Preempts State Law Impairment of Safe Harbor Protections in the Wake of a Failed LBO
January 07, 2020On December 19, 2019, the United States Court of Appeals for the Second Circuit (the “Second Circuit”) affirmed a ruling of the United States District Court for the Southern District of New York (the “District Court”) dismissing constructive fraudulent conveyance claims brought by representatives of certain unsecured creditors of Chapter 11 debtor Tribune Company (“Tribune”) against Tribune’s former shareholders on the ground that the fraudulent conveyance claims were barred by Bankruptcy Code section 546(e)’s safe harbor provision.
Related Practice(s): Financial Restructuring
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