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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.
The President’s Competition Order – One Week On
July 20, 2021On July 9, 2021, President Biden issued an “Executive Order on Promoting Competition in the American Economy” (the “Order”). The Order responds to what the President characterizes as a “failed experiment” in lax antitrust enforcement that he believes has led to undue concentration of businesses throughout the economy. It appears that the analytically-fuzzy era of “big is bad” may be returning to Washington. In the first week following the Order’s issuance, the federal antitrust enforcement agencies have begun actively gearing up for new enforcement initiatives and wholesale changes in the standards of antitrust review.
Related Practice(s): Antitrust, Global Litigation
Related Office(s): New York
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Marketplace Lending Update #10: OCC’s True Lender Rule Is Repealed
July 16, 2021On June 30, 2021, President Biden signed a joint resolution of Congress under the Congressional Review Act (“CRA”) to disapprove the OCC’s True Lender Rule. As a result, the True Lender Rule is now repealed.
Related Practice(s): Financial Regulation, Securitization & Asset Based Finance, White Collar Defense and Investigations
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Securities Litigation Update: Courts of Appeals Weigh in on American Pipe Tolling and the Affiliated Ute Presumption of Reliance
July 15, 2021Last month, the U.S. Courts of Appeals for the Third and Ninth Circuits issued decisions interpreting two significant doctrines affecting federal securities law litigants: (1) American Pipe tolling—a doctrine that suspends (or “tolls”) the running of the statute of limitations applicable to the claims of potential class members while a putative class action is in progress, and (2) the Affiliated Ute presumption of reliance—a substitute at the motion to dismiss and class certification stages for the otherwise required direct proof of reliance in claims asserted under Section 10(b) of the Securities and Exchange Act of 1934 (Exchange Act) involving “primarily a failure to disclose.”
Related Practice(s): Corporate & Financial Services Litigation & Regulation, Global Litigation
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Blasius Is Alive and Well in Delaware: Delaware Supreme Court Chides Chancery for Turning Away Stockholder’s Claims Without Considering Whether Board’s Interference with Stockholder Vote Triggered Blasius’s Compelling Justification Test
July 13, 2021Despite being one of the more well-known doctrines in corporate law, the rule articulated in Blasius—that directors who act with the primary purpose of interfering with a stockholder vote must have a compelling justification for their conduct—has received little attention from the Delaware Supreme Court. Delaware’s highest court has not mentioned the Blasius test in over a decade and has not held that a board’s conduct triggered the Blasius test since 2003.
Related Practice(s): Corporate & Financial Services Litigation & Regulation, Global Litigation
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COVID-19 Update: Supreme Court Denies Request to Lift CDC’s Eviction Moratorium
July 01, 2021On June 29, 2021, the Supreme Court denied an application by a group of real estate agents and associations to lift the eviction moratorium issued by the Centers for Disease Control and Prevention (the “CDC”). Originally issued on September 4, 2020, the CDC’s order temporarily banned evictions of residential tenants in an effort to mitigate the spread of COVID-19.
Related Practice(s): Real Estate
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Goldman Sachs Group, Inc. v. Arkansas Teacher Retirement System: Supreme Court Vacates Class Certification Order in Decade-Long Class Action, Clarifying That Courts May Consider the Materiality of Alleged Misstatements in Applying Fraud-on-the-Market Presumption
June 30, 2021On June 21, 2021, the United States Supreme Court issued a decision in Goldman Sachs Group, Inc. v. Arkansas Teacher Retirement System, vacating a decision of the Second Circuit that affirmed certification of a securities fraud class action against The Goldman Sachs Group, Inc. The Court directed the Second Circuit to consider the “generic” nature of Goldman’s alleged misrepresentations in assessing whether Goldman had successfully rebutted the fraud on the market presumption of reliance for purposes of plaintiff’s claim under Section 10(b) of the Securities Exchange Act of 1934, and therefore, whether class certification is appropriate.
Related Practice(s): Corporate & Financial Services Litigation & Regulation, Global Litigation
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Securities Litigation Update: Eighth Circuit Endorses Striking Class-Action Allegations on the Pleadings, Setting Appellate-Level Precedent for Early Termination of Putative Securities Class Actions
June 11, 2021On June 3, 2021, in Donelson v. Ameriprise Financial Services, Inc., a panel of the U.S. Court of Appeals for the Eighth Circuit ordered class-action allegations in a putative securities fraud class action stricken on the pleadings under Rule 12(f) of the Federal Rules of Civil Procedure, and directed the matter to arbitration. The decision is significant not only for its broad application of an arbitration clause to federal securities fraud claims, but as a rare appellate-level endorsement for striking class allegations under Rule 12(f)—which permits a court to strike from a pleading “an insufficient defense or any redundant, immaterial, impertinent, or scandalous matter”—prior to class discovery and a motion for class certification.
Related Practice(s): Corporate & Financial Services Litigation & Regulation, Global Litigation
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DOJ Casts the FCPA Spotlight on Brazil-Related Enforcement
June 11, 2021On May 25, 2021, the U.S. Department of Justice (“DOJ”) unsealed an indictment charging two Austrian citizens, Peter Weinzierl (“Weinzierl”) and Alexander Waldstein (“Waldstein”), for their roles in a scheme to launder hundreds of millions of dollars through the U.S. financial system on behalf of the Brazilian construction conglomerate, Odebrecht S.A. (“Odebrecht”). The indictment alleges that Weinzierl and Waldstein helped Odebrecht funnel money to offshore accounts to pay bribes to government officials in Brazil, Panama, and Mexico.
Related Practice(s): FCPA Enforcement and Compliance, Global Litigation, White Collar Defense and Investigations
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Securities Litigation Update: First Circuit Endorses Broad View of Extraterritorial Reach of the Federal Securities Laws, Cementing Split with the Second Circuit on the Meaning of a “Domestic” Transaction
May 26, 2021On May 10, 2021, in SEC v. Morrone, a panel of the U.S. Court of Appeals for the First Circuit held that the federal securities laws apply to securities transactions as long as “irrevocable liability”—the point at which parties become legally bound to carry out the transaction—occurs in the United States. The Court thus joined the Ninth Circuit in rejecting the Second Circuit’s more defendant-friendly approach to extraterritoriality, under which a defendant may avoid liability by showing that the claims “are so predominantly foreign as to be impermissibly extraterritorial.” Until the Supreme Court resolves this circuit split, plaintiffs asserting securities claims involving foreign transactions likely will steer clear of the Second Circuit, opting for circuits that have rejected such fact-intensive defenses.
Related Practice(s): Corporate & Financial Services Litigation & Regulation, Global Litigation
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Illinois Supreme Court Holds Challenge To GO Bonds Is Barred By Laches, But Avoids Underlying Constitutional Issues
May 26, 2021On May 20, 2021, the Illinois Supreme Court finally put to rest a long-simmering challenge to the validity of around $14 billion of Illinois general obligation bonds. The Supreme Court unanimously affirmed, albeit on different grounds, a trial court’s August 2019 order denying a petition by a prominent political activist to file a lawsuit challenging those bonds. In affirming the trial court’s decision, the Supreme Court also reversed an intermediate appellate court’s August 2020 decision permitting the challenge to go forward.
Related Practice(s): Financial Regulation, Financial Restructuring
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Marketplace Lending Update #9: To Thine Own Self Be True? Not Necessarily
May 21, 2021On May 11, the Senate voted 52-47 (with three Republicans joining 49 Democrats) to pass a joint resolution under the Congressional Review Act (“CRA”) to disapprove of (i.e., rescind) the Office of Comptroller of the Currency’s final rule relating to “National Banks and Federal Savings Associations as Lenders” (the so-called “True Lender Rule”).
Related Practice(s): Financial Regulation, Marketplace Lending and FinTech, Securitization & Asset Based Finance, White Collar Defense and Investigations
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The FCA Consults on UK’s Investor Protection Rules for SPACs
May 19, 2021Until the last month, the market in the U.S. for special purpose acquisition company (“SPAC”) IPOs has been booming. For example, in the first three months of 2021, there were 298 IPOs of U.S. SPACs, which raised in aggregate $87.07 billion. That booming market has not included the UK, where during the same period, there were no SPAC IPOs.
Related Practice(s): Corporate, Financial Regulation
Related Office(s): London, New York
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Corwin Cleansing Denied Again: Delaware Court of Chancery Green Lights Claims Alleging Loyalty Breaches Tainting Company Sales Process in In re Pattern Energy Group Inc. Stockholders Litigation
May 18, 2021On May 6, 2021, Vice Chancellor Zurn of the Delaware Court of Chancery issued a 200-page decision denying a motion to dismiss in In re Pattern Energy Group Inc. Stockholders Litigation, a class action challenging the $6.1 billion go-private, all-cash sale of Pattern Energy Group Inc. (“Pattern Energy” or the “Company”) to Canada Pension Plan Investment Board (“Canada Pension”). The transaction was narrowly approved by 52% of the Pattern Energy stockholders on March 10, 2020, with both ISS and Glass Lewis recommending stockholders vote against the sale. The sale closed on March 16, 2020.
Related Practice(s): Corporate & Financial Services Litigation & Regulation, Global Litigation
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COVID-19 Update: Can't Lose What You Never Had: Court Rejects All Legal Theories Asserted by Retail Tenant
May 18, 2021The United States District Court for the Southern District of New York (the “Court”) decided in Gap Inc. v. Ponte Gadea N.Y. LLC on March 8, 2021, that a retail tenant will not be able to use the COVID-19 pandemic as an excuse for not making rent payments under multiple legal theories.
Related Practice(s): Real Estate
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7-Eleven/Speedway: Bumps on the Road to Closing: Are Conventional Closing Conditions Sufficient to Protect Buyer Interests?
May 17, 2021In an extraordinary, perhaps unprecedented, action, parties to a proposed deal that had been under investigation for about nine months closed the transaction almost immediately upon expiration of the Hart-Scott-Rodino (“HSR”) waiting period—which had been extended four times by mutual agreement of the parties and the Federal Trade Commission (“FTC”)—leading to public recriminations among the sitting FTC Commissioners for botching what could have been a successful settlement agreement with substantial divestitures that instead ended in a “mess.”
Related Practice(s): Antitrust, Global Litigation
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The UK’s National Security & Investment Act
May 12, 2021The UK’s National Security and Investment Act 2021 received Royal Assent on 29 April 2021 and is expected to “commence” at the end of 2021, with retrospective application to transactions occurring since 12 November 2020. The Act provides the UK Government with the statutory power to review and potentially block or unwind M&A transactions based on national security. Investments over 25% in businesses within 17 specified sensitive sectors will be void unless notified and approved. The Secretary of State will have broad powers to review other transactions posing a national security concern for up to 5 years after closing, while parties to those transactions will have the right to make a voluntary notification (reducing the period within which the transactions may be reviewed to 6 months).
Related Practice(s): Corporate, Financial Regulation
Related Office(s): London
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COVID-19 Update: Decision Striking Down CDC Federal Eviction Moratorium Temporarily Stayed
May 11, 2021On May 5, 2021, the United States District Court for the District of Columbia (“DC Court”) vacated a nationwide eviction moratorium order issued by the Centers for Disease Control (“CDC”) to help mitigate the spread of COVID-19 in Alabama Association of Realtors, et al. v. United States Department of Health and Human Services, et al. (the “Decision”). The DC Court found that the CDC exceeded its authority in issuing such moratorium on nationwide evictions of rental properties and that the CDC Order should be set aside. The Decision was immediately appealed by the Justice Department on behalf of the CDC and the ruling has been stayed pending such appeal.
Related Practice(s): Real Estate
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COVID-19 Update: Governor Cuomo Extends Eviction and Foreclosure Moratorium until August 31
May 05, 2021On May 5, 2021, New York Governor Andrew Cuomo signed a bill that extends the moratorium on evictions and foreclosures for residential tenants and small businesses to August 31, 2021. The previous moratorium expired May 1, 2021.
Related Practice(s): Real Estate
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Securities Litigation Update: Eighth Circuit Closes the Door on Securities Class Action Alleging Violation of Broker’s Duty of Best Execution, Highlighting Class Certification Challenges in Atypical Fraud Cases
April 29, 2021On April 23, 2021, in Ford v. TD Ameritrade Holding Corp., a panel of the U.S. Court of Appeals for the Eighth Circuit reversed a district court order certifying a class action alleging that TD Ameritrade committed securities fraud by failing to comply with the duty of best execution in executing customer orders. The decision deals a blow to securities class actions based on violations of a broker’s best execution obligation and highlights the difficulties investors face in certifying securities fraud claims outside a typical disclosure-based stock-drop case.
Related Practice(s): Corporate & Financial Services Litigation & Regulation, Global Litigation
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Securities Litigation Update: Southern District of New York Dismisses Putative Securities Class Action Alleging Sale of Unregistered Cryptocurrency, But Risk Remains for Crypto-Issuers and Exchanges
April 23, 2021On April 16, 2021, in In re Bibox Group Holdings Ltd. Securities Litigation, Judge Denise Cote of the U.S. District Court for the Southern District of New York dismissed a putative class action alleging registration violations under securities laws against a cryptocurrency issuer and exchange, holding that the plaintiff lacked standing to assert class claims based on crypto-assets he did not purchase and did not timely file suit.
Related Practice(s): Corporate & Financial Services Litigation & Regulation, Global Litigation
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To Vote or Not to Vote: Court Holds That “Out of Money” Junior Creditor Barred from Objecting to Plan
April 22, 2021On March 31, 2021, the U.S. Bankruptcy Court for the District of Kansas held in In re Fencepost Productions Inc. that even though an assignment of voting rights provision in a subordination agreement was not enforceable in a bankruptcy proceeding, a subordinated creditor nevertheless was barred from participating in proceedings related to a chapter 11 plan and disclosure statement on the basis that the subordinated creditor lacked prudential standing.
Related Practice(s): Financial Restructuring
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The Government is Launching a Consultation on Reforming the UK’s Audit and Corporate Governance Regime
April 13, 2021On 18 March 2021, the Department for Business, Energy & Industrial Strategy launched a consultation on its proposals for wide-ranging reforms to modernise the UK’s audit and corporate governance regime. The reforms proposed in the consultation would implement the recommendations of three previous independent reviews commissioned in the wake of a series of large-scale company failures, such as Carillion, Thomas Cook and BHS, which have been laid at the door of poor internal governance and external review at those companies.
Related Practice(s): Corporate
Related Office(s): London
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CFPB Suit Against Student Loan Trusts Dismissed
April 01, 2021On March 26, 2021, Judge Maryellen Noreika of the U.S. District Court for the District of Delaware dismissed a lawsuit brought by the Consumer Financial Protection Bureau (“CFPB”) in Consumer Financial Protection Bureau v. The National Collegiate Master Student Loan Trusts, finding, inter alia, that the CFPB’s suit was constitutionally defective due to the CFPB’s untimely attempt to ratify the prosecution of the litigation in the wake of the Supreme Court’s decision in Seila Law LLC v. Consumer Financial Protection Bureau.
Related Practice(s): CLOs, Financial Regulation, Global Litigation, Securitization & Asset Based Finance, White Collar Defense and Investigations
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Interest in SPACs—Special Purpose Acquisition Companies—is booming…and so is the risk of litigation.
March 31, 2021If 2020 was the “year of the SPAC,” 2021 may be the year of SPAC litigation. SPACs—Special Purpose Acquisition Companies—are publicly traded companies launched as vehicles to raise capital to acquire a target company. Often called blank-check companies, SPACs are companies in which shareholders buy shares without knowing which company the SPAC will target and acquire. Investors place their faith in the sponsor: the entity or management team that forms the SPAC.
Related Practice(s): Corporate, Global Litigation, Special Purpose Acquisition Companies (SPACs)
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Supreme Court to Weigh in on Presumption of Reliance in Securities Class Actions: Goldman Sachs v. Arkansas Teacher Retirement System
March 30, 2021On March 29, the United States Supreme Court heard oral argument in Goldman Sachs Group, Inc., et al. v. Arkansas Teacher Retirement System, et al., No. 20-222. The closely-watched case raises a host of important issues concerning the substantive and procedural requirements for certifying a securities fraud class action.
Related Practice(s): Global Litigation
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European Regulators Publish Joint Opinion on the Jurisdictional Scope of the EU Securitisation Regulation
March 29, 2021On 26 March 2021, the European Supervisory Authorities (the “ESAs”) published a Joint Opinion (the “Opinion”) on the jurisdictional scope of the obligations of the non-EU parties to securitisations under the Regulation (EU) 2017/2402 (the “EU Securitisation Regulation”). References in this memo to articles refer to articles of the EU Securitisation Regulation.
Related Practice(s): CLOs, Financial Regulation, Securitization & Asset Based Finance
Related Office(s): London
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UK Anti-Money Laundering Legislation in a Post-Brexit Landscape
March 16, 2021Following months of uncertainty, on Christmas Eve a Brexit agreement was finally reached between the United Kingdom (“UK”) and the European Union (“EU”). The European Union (Future Relationship) Act 2020 (the “Act”) received Royal Assent on 30 December 2020. While the agreement signalled an early Christmas present for many, for others it failed to offer the certainty that they long hoped such an arrangement would provide. One of the areas on which the Act fails to offer much guidance is money laundering and terrorist financing.
Related Practice(s): Global Litigation, White Collar Defense and Investigations
Related Office(s): London
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Pharmaceutical Mergers: U.S. Antitrust Agencies Join Global Working Group
March 16, 2021The Federal Trade Commission (“FTC”) announced today a multilateral working group to share best practices and build a new approach to pharmaceutical mergers. Initiated by the FTC, the working group will include the Canadian Competition Bureau, the European Commission Directorate General for Competition, the UK’s Competition and Markets Authority, the Antitrust Division of the U.S. Department of Justice, and Offices of the State Attorneys General.
Related Practice(s): Antitrust
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COVID-19 Update: Governor Cuomo Extends Eviction Protections for Small Businesses That Demonstrate a Financial Hardship
March 15, 2021In December, New York Governor Andrew Cuomo signed the COVID-19 Emergency Eviction and Foreclosure Prevention Act of 2020, which provided a moratorium on residential eviction and foreclosure proceedings until May 1, 2021
Related Practice(s): Real Estate
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ESMA Proposes Rules for Taxonomy-Alignment of Non-Financial Undertakings and Asset Managers
March 10, 2021Further to our Clients & Friends Memo of 22 June 2020, the Sustainability Taxonomy Regulation (2020/852) (the “Regulation”) was published in the Official Journal on 22 June 2020 and entered into force on 12 July 2020. The Regulation established an EU-wide framework for classifying economic activity as environmentally sustainable and aims at (1) reducing “greenwashing”, where financial products are marketed as environmentally sustainable without sufficient factual basis for their claims and (2) improving the efficiency of private investment in sustainable projects.
Related Practice(s): Corporate, Financial Regulation
Related Office(s): London
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COVID-19 Update: Federal Eviction Moratorium Struck Down
March 05, 2021On February 25, 2021, the United States District Court in the Eastern District of Texas (“Texas Court”) granted summary judgment in favor of the plaintiffs in Lauren Terkel et al. v. Centers for Disease Control and Prevention et al., holding that a nationwide eviction moratorium issued by the Centers for Disease Control and Prevention (“CDC”) to mitigate the spread of COVID-19 exceeded the constitutional authority granted to the CDC.
Related Practice(s): Real Estate
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UK Listing Review Publishes Recommendations
March 05, 2021In November 2020, the UK launched a review of its Listing Rules, led by Lord Jonathan Hill, with a specific goal to recommend changes that would improve the UK’s competitiveness as a global listing centre, particularly for high growth and “new economy” businesses. On 3 March 2021, the report, containing 15 recommendations, was published.
Related Practice(s): Corporate
Related Office(s): London
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Delaware Court of Chancery Allows Merger-Based Breach of Fiduciary Duty Claims to Proceed Against Target Company CEO, Financial Advisor, and Acquirer Stemming from Sale of Presidio, Inc.
March 01, 2021On January 29, 2021, Vice Chancellor Laster of the Delaware Court of Chancery refused to dismiss a shareholder class action stemming from the 2019, $2.2 billion sale of Presidio, Inc., an IT solutions provider specializing in digital infrastructure and cloud and security solutions, to BC Partners Advisors L.P. (“BCP”), a private-equity firm. In Firefighters’ Pension System of the City of Kansas City v. Presidio, Inc., a shareholder of Presidio filed suit against Presidio’s CEO, its board of directors, Apollo Global Management LLC (Presidio’s controlling shareholder, owning approximately 42% of its outstanding common stock), LionTree Advisors, LLC (financial advisor to both Presidio and Apollo), and the acquiror, BCP.
Related Practice(s): Global Litigation
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Unwelcome Intrusion: Reckoning with the Impact of Economic Sanctions on Derivatives Transactions
March 01, 2021The United States, along with the United Kingdom and European Union, has increasingly wielded economic sanctions against major commercial actors and financial transactions, sometimes roiling global markets in the process. It is now common for sanctions to target not only rogue regimes, terrorists, and drug traffickers, but also major corporations that are deeply integrated into international financial markets – including derivatives markets. For evidence of this trend, one need look no further than the November 12, 2020 Executive Order (“E.O.”) “on Addressing the Threat from Securities Investments that Finance Communist Chinese Military Companies.” The Order prohibits transactions by U.S. persons in the securities of identified Communist Chinese military companies (“CCMCs”), including “any securities that are derivative of, or are designed to provide investment exposure to such securities.”
Related Practice(s): Economic Sanctions, Financial Regulation, White Collar Defense and Investigations
Related Office(s): London, New York, Washington
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When “Six Eyes” Just Aren’t Enough
February 25, 2021On February 16, 2021, the United States District Court in the Southern District of New York (the “Court”) issued a decision In Re Citibank August 11, 2020 Wire Transfers that upheld the “discharge for value” doctrine and ruled that certain lenders (the “Defendants”) were entitled to retain funds erroneously sent by the administrative agent (the “Plaintiff”) under a credit facility to which the Defendants were a party.
Related Practice(s): Real Estate
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The UK Serious Fraud Office’s Extraterritorial Powers Are Clarified
February 24, 2021After three years of uncertainty over the Serious Fraud Office’s (“SFO”) powers to obtain documents located overseas, the UK Supreme Court has clarified the extraterritorial effect of the legislation facilitating that power domestically. The Supreme Court held that KBR, Inc., the U.S. engineering, procurement and construction company, was not required to provide the SFO with documents that were located overseas during a criminal investigation into its UK subsidiary, KBR Ltd.
Related Practice(s): White Collar Defense and Investigations
Related Office(s): London, Washington
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New York Assembly Sponsored Legislation Proposes New Tax on Mezzanine Debt and Preferred Equity
February 09, 2021Assembly Bill A3139 was introduced by Assembly Member Harvey Epstein on January 22, 2021. The bill is currently in committee but, if enacted, it will amend New York’s Real Property Law and Tax Law to require the recording of mezzanine debt and preferred equity investments and subject it to the mortgage recording tax. These amendments will force borrowers and lenders to reconsider the economic costs of mezzanine financing.
Related Practice(s): Mezzanine Finance, Real Estate
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FTC Announces 2021 Thresholds for Merger Control Filings under HSR Act and Interlocking Directorates under the Clayton Act
February 04, 2021For the first time since 2010, the Federal Trade Commission (“FTC”) has decreased the dollar jurisdictional thresholds necessary to trigger the reporting requirements in the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (“HSR Act”); the revised thresholds were published in the Federal Register on February 2, 2021, and will become effective on March 4, 2021.
Related Practice(s): Antitrust, Global Litigation
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First Circuit Case Doesn’t Move the Line on the Future of State Authorized Sports Betting
February 01, 2021The First Circuit’s recent decision in New Hampshire Lottery Commission v. Rosen holds that the Wire Act’s prohibitions on interstate activity apply only to sports betting, and not to all types of bets and wagers, such as online lotteries, poker, and other gaming for dollars. State lotteries and non-sports betting vendors cheered the decision, but for the sports betting industry, the decision is disappointing because their business still potentially runs afoul of federal law.
Related Practice(s): Sports Law, White Collar Defense and Investigations
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You Can Run But You Can’t Hide: The Corporate Transparency Act
January 27, 2021In December 2020, as part of the larger National Defense Authorization Act, the Corporate Transparency Act (the “Act”) was enacted. The Act requires that anonymous shell companies, most notably limited liability companies and partnerships, disclose their ultimate beneficial ownership and control in an effort to combat corruption, money laundering and financing of terrorism, among other things, in the United States.
Related Practice(s): Real Estate
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COVID-19 Update: CFPB Announces Results of its Prioritized Assessments of CARES Act and Other Borrower Protections in Light of COVID-19 Pandemic
January 27, 2021On January 19, 2021, the Consumer Financial Protection Bureau (CFPB or Bureau) published a special edition of its Supervisory Highlights focused on its COVID-19 Prioritized Assessments. As Cadwalader previously wrote, the CFPB announced in July 2020 that it had sent targeted information requests to supervised financial institutions regarding the consumer risks posed by the pandemic, including how institutions were implementing the special borrower protections under the Coronavirus Aid, Relief, and Economic Security (CARES) Act.
Related Practice(s): Financial Regulation, White Collar Defense and Investigations
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Stand Pat, Don’t Act: Supreme Court Holds That Mere Retention of Debtor Property Does Not Violate Section 362(a)(3) of the Bankruptcy Code’s Automatic Stay Provision
January 22, 2021On January 14, 2021, the U.S. Supreme Court issued an opinion addressing a split among circuit courts on whether an entity violates Section 362(a)(3) of the Bankruptcy Code’s automatic stay provision by passively retaining possession of a debtor’s property after a bankruptcy petition is filed. Section 362(a)(3) prohibits “any act . . . to exercise control over property” of the bankruptcy estate.
Related Practice(s): Financial Restructuring
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The Anti-Money Laundering Act of 2020: New Challenges for Financial Institutions, Their Employees and Customers, and (Nearly) Everyone Else
January 15, 2021On January 1, 2021, Congress enacted the Anti-Money Laundering Act of 2020 (the “Act”). As part of the National Defense Authorization Act for Fiscal Year 2021, the Act creates a broad range of new anti-money laundering (“AML”) obligations for banks and other financial institutions, certain private investment structures, and even federal regulators.
Related Practice(s): Anti-Money Laundering Investigations and Compliance, Financial Regulation, Real Estate, White Collar Defense and Investigations
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DOJ Brings First Criminal “No-Poach” and “Wage-Fixing” Prosecutions; New Focus on Labor Market Prosecutions
January 14, 2021The Department of Justice’s Antitrust Division (“DOJ”) announced that, on January 5, 2021, a federal grand jury returned a two-count indictment charging Surgical Care Affiliates LLC and its related entity (together, “SCA”), which own and operate outpatient medical care centers across the country, for agreeing with competitors not to solicit senior-level employees.
Related Practice(s): Antitrust, Global Litigation
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COVID-19 Update: Can’t Lose What You Never Had: New York State Court Rejects Argument that a Pledge of the Equity Interests in an Entity that Owns Real Property Requires Foreclosure under RPAPL Article 13
January 13, 2021During the COVID-19 pandemic, New York State courts have granted a number of preliminary injunctions enjoining UCC foreclosures for a period of time. For example, in D2 Mark LLC vs. Orei VI Investments LLC and Shelbourne BRF LLC, Shelbourne 677 LLC v. SR 677 BWAY LLC, the courts found that elements of the UCC foreclosures were not commercially reasonable as a result of the pandemic and temporarily prevented the UCC foreclosures. However, not all borrowers have had the same success with preliminary injunctions.
Related Practice(s): Real Estate
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COVID-19 Update: Governor Cuomo Extends Residential Eviction and Foreclosure Moratorium
January 11, 2021Since declaring a State of Emergency on March 7, 2020 in response to the COVID-19 pandemic, New York Governor Andrew Cuomo has issued a number of Executive Orders providing protections for both commercial and residential tenants and mortgagors. On March 20, 2020, Governor Cuomo issued Executive Order 202.8 prohibiting the enforcement of an eviction of any residential or commercial tenant or a foreclosure of any residential or commercial property for period of ninety days. Most recently, Executive Order 202.66 extended the residential moratorium through January 1, 2021, and Executive Order 202.81 extended the commercial moratorium through January 31, 2021.
Related Practice(s): Real Estate
Related Office(s): Charlotte, New York
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A New Year’s Booster Shot: Congress Grants the SEC a Statutory Disgorgement Remedy and Extended Statute of Limitations
January 04, 2021Congress opened 2021 by overturning one of President Trump’s vetoes for the first time. By large bipartisan majorities, the House and Senate overturned a presidential veto and enacted the 2021 National Defense Authorization Act (“NDAA”). Tucked away in the $740.5 billion defense bill were provisions granting the U.S. Securities and Exchange Commission (“SEC”) statutory authority to seek disgorgement in federal court and providing a 10-year statute of limitations for that remedy.
Related Practice(s): White Collar Defense and Investigations
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COVID-19 Update: Changes to the EU Securitisation Regulations and the Capital Regulation Reference
December 22, 2020As discussed in our previous Clients and Friends Memo (the “First Update”), on 24 July 2020 the European Commission (the “Commission”) published proposed amendments to the current securitisation framework set out in Regulation (EU) 2017/2402 (the “Securitisation Regulation”) with the intention of bolstering economic recovery from the COVID-19 pandemic. The Council of the EU has now published the final text in respect of those amendments, as agreed with the EU Parliament and the Commission (the “Final Text”). The purpose of this Clients and Friends Memo is to highlight certain new provisions of the Final Text of general significance for the securitisation market.
Related Practice(s): CLOs, Financial Regulation, Securitization & Asset Based Finance
Related Office(s): London
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Supreme Court to Weigh in College Sports: The Intersection of Antitrust and “Amateurism”
December 18, 2020The Supreme Court announced Wednesday that it would hear arguments in the long-running NCAA dispute over student-athlete compensation, granting and consolidating two cases, National Collegiate Athletic Association v. Alston and American Athletic Conference v. Alston, that seek to overturn a May decision by the U.S. Court of Appeals for the Ninth Circuit. The case will be argued in early 2021, with a decision expected by the end of June. This will be the first time in over 35 years that the Court has heard an antitrust matter involving college athletics.
Related Practice(s): Antitrust, Global Litigation, Sports Law
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Don’t Lend No Hand to Raise No Flag Atop No Ship of Fools: Breach of SPE Provisions by Non-Borrower Exposes Non-Borrower to Potential Tort Liability
December 11, 2020A recent decision of New York’s highest court potentially strengthens the ability of lenders to bring suits against third parties for participation in a borrower’s breach of single purpose entity/bankruptcy remote loan document covenants.
Related Practice(s): Real Estate
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SEC Adopts Amendments to Management’s Discussion and Analysis and Other Financial Disclosures
December 08, 2020On November 19, 2020, the Securities and Exchange Commission adopted final amendments to the disclosure rules affecting Management’s Discussion and Analysis (MD&A) and related financial disclosures. The amendments were proposed on January 30, 2020 and are intended to modernize, simplify and enhance certain financial disclosures called for by Regulation S-K and related rules and forms in a manner that reduces the costs and burdens on registrants while continuing to provide material information to investors.
Related Practice(s): Corporate
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COVID-19 Update: We’re All in This Together, but Landlords Are About to Take a Bath – SDNY Upholds Constitutionality of NYC’s Guaranty and Tenant Harassment Laws
December 07, 2020As the COVID-19 pandemic unfolded upon New York City, policymakers grappled with impossible decisions regarding how to protect public health and stave off economic ruin for individuals, businesses and the economy at large. Among a slew of executive orders, administrative orders and statutes enacted at all levels, New York City passed three ordinances that received particular scrutiny.
Related Practice(s): Real Estate
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IBA to Consult on End of USD LIBOR; U.S. and UK Regulators Respond
December 01, 2020On November 30, ICE Benchmark Administration ("IBA"), the administrator of LIBOR, announced a consultation on its intention to cease publishing USD LIBOR (1) in the case of 1-week and 2-month LIBOR, on December 31, 2021; and (2) in the case of overnight, 1-, 3-, 6- and 12-month LIBOR, on June 30, 2023. It was previously expected that IBA would announce their intention to cease publishing all tenors of USD LIBOR on December 31, 2021.
Related Practice(s): Financial Regulation, LIBOR Preparedness Team
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Department of Labor Finalizes Rule Adopting Amendments to the “Investment Duties” Regulation
November 18, 2020On October 30, 2020, the U.S. Department of Labor (“DOL”) published its final rule (“Final Rule”) adopting amendments to its longstanding “investment duties” regulation under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) at 29 C.F.R. Section 2550.404a-1 (“Section 404a-1 Regulation”). The Final Rule mandates, as a general matter, that plan fiduciaries must evaluate and select investments and investment courses of action based solely on the financial considerations applicable to the investment or investment course of action, and may not subordinate return or increase risks to promote non-pecuniary objectives.
Related Practice(s): Financial Regulation
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UK Settlement Highlights International Enforcement Linked to “Car Wash” Investigation
November 16, 2020The UK Serious Fraud Office (the “SFO”) has reached a £1.2 million civil recovery settlement with Julio Faerman, a Brazilian national linked to the sprawling “Operation Car Wash” investigation involving the Brazilian state-owned oil company, Petrobras.
Related Practice(s): White Collar Defense and Investigations
Related Office(s): London
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Foreign Direct Investment UK Update
November 13, 2020Foreign investment has been ripe for legislative change in the United Kingdom. We have previously discussed this in our Clients and Friends Memo of 28 July 2020 and our podcast. The latest development came on 11 November 2020, as Prime Minister Boris Johnson announced the National Security and Investment Bill 2020 (the Bill), which overhauls the current merger and acquisition rules in relation to foreign investment.
Related Practice(s): White Collar Defense and Investigations
Related Office(s): London, Washington
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The European Commission Publishes a Consultation on the Review of the AIFMD
November 11, 2020On 22 October 2020, the European Commission (the Commission) published a public consultation (the Consultation) on the review of Directive 2011/61/EU on Alternative Investment Fund Managers (AIFMD).
Related Practice(s): Financial Regulation, Securitization & Asset Based Finance
Related Office(s): London
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An Overview of the ISDA IBOR Fallbacks Supplement and Protocol
October 23, 2020On October 23, 2020, the International Swaps and Derivatives Association, Inc. (“ISDA”) published (1) the ISDA 2020 IBOR Fallbacks Protocol (the “Protocol”) and (2) a supplement to the 2006 ISDA Definitions that adds new IBOR Fallbacks (the “Supplement”). The Protocol and the Supplement are scheduled to become effective on January 25, 2021. Collectively, the two publications represent a very significant step in the move away from the use of LIBOR and other benchmarks.
Related Practice(s): Financial Regulation, LIBOR Preparedness Team
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COVID-19 Update: Executive Order Extending Moratorium on Commercial Evictions until January 1, 2021
October 22, 2020On October 20, 2020, in response to the continued health and economic hardships faced by New York business owners due to the COVID-19 pandemic, Governor Cuomo signed a new executive order extending the Statewide moratorium on commercial evictions until January 1, 2021.
Related Practice(s): Real Estate
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Delaware Supreme Court Reaffirms Primacy of Market Evidence in Determining Fair Value in Appraisal Proceedings
October 19, 2020On July 9 and October 12, 2020, the Delaware Supreme Court added two more opinions to its growing suite of recent appraisal decisions underscoring the prominence of market-based factors in determining fair value.
Related Practice(s): Global Litigation
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Financial Reporting Council Stewardship Code Early Reporting Review
October 06, 2020In November 2019, we reported that the UK’s Financial Reporting Council (the “FRC”) had issued a revised Stewardship Code (the “Stewardship Code”) which came into effect from 1 January 2020 (see our previous memo here). The FRC will publish its first list of signatories to the 2020 Stewardship Code, based on reports for the period 1 January – 31 December 2020 in Summer 2021. On 30 September 2020, the FRC published its early reporting review including guidance for those entities who intend to submit applications to be included in that first list of signatories.
Related Practice(s): Corporate
Related Office(s): London
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ESMA Publishes Final Report on Technical Standards for the Provision of Investment Services by Non-EU Firms
October 02, 2020The European Securities and Markets Authority (ESMA) has published its Final Report (the Final Report) containing draft regulatory and implementing technical standards (RTS and ITS) on the provision of investment services and activities in the European Union (EU) by non-EU firms (known as “third-country” firms (TCFs) in EU parlance) under MiFIR and MiFID II.
Related Practice(s): CLOs, Financial Regulation, Securitization & Asset Based Finance
Related Office(s): London
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Proposed HSR Amendments Will Affect Financial Investors
October 01, 2020On September 21, 2020, the Federal Trade Commission (“FTC”), with the concurrence of the Antitrust Division of the U.S. Department of Justice (“DOJ”), announced a Notice of Proposed Rulemaking and an Advance Notice of Proposed Rulemaking regarding proposed changes to the rules and interpretations implementing the Hart-Scott-Rodino (“HSR”) Act. The amendments proposed by the Notice of Proposed Rulemaking and some of the changes contemplated by the Advanced Notice of Public Rulemaking may greatly affect financial investors.
Related Practice(s): Antitrust
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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): Antitrust, 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): Antitrust, 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): Antitrust, 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, Marketplace Lending and FinTech
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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, Environmental, Social & Governance (ESG) Task Force, 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
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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
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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.
Related Practice(s): Antitrust
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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, Environmental, Social & Governance (ESG) Task Force, 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
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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
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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 Attorney(s): Mary Elizabeth Taylor, Gillian Burns, Bradley Small
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): Antitrust, 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): Antitrust, 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
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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): Antitrust, 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, Environmental, Social & Governance (ESG) Task Force
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): Anti-Money Laundering Investigations and Compliance, 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): Antitrust, 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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