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Clients & Friends Memos
ARRC Publishes LIBOR Legacy Playbook
July 11, 2022On July 11, 2022, the Alternative Reference Rates Committee (the “ARRC”) published a “Playbook” to assist market participants in transitioning their legacy LIBOR contracts to an alternative rate by June 30, 2023. The Playbook is primarily focused on legacy cash products, which the ARRC estimates will total approximately $5 trillion.
Related Practice(s): Corporate Finance, Financial Regulation, Global Litigation, LIBOR Preparedness Team, Securitization & Asset Based Finance, White Collar Defense and Investigations
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Sanctions Watch: UK Authority Outlines Powers to Impose Strict Liability Civil Penalties
June 13, 2022From 15 June 2022, the Office of Financial Sanctions Implementation (“OFSI”) has the power to issue monetary penalties for breaches of financial sanctions on a strict liability basis. The newly-published Guidance sets out how OFSI will apply these civil penalties. Release of the Guidance follows the implementation of the Economic Crime Act in March 2022, the legislation which grants OFSI such powers.
Related Practice(s): White Collar Defense and Investigations
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SEC Commissioner Signals Need to Fulfill Mandate of Sarbanes-Oxley Act and Develop “Minimum Standards” for Lawyers Practicing Before the Commission
June 02, 2022In remarks on March 5, 2022 on PLI’s Corporate Governance webcast, Commissioner Allison Herren Lee of the Securities and Exchange Commission stated that, 20 years after its enactment, it is time to revisit the “unfulfilled mandate” of Section 307 of the Sarbanes-Oxley Act of 2002 and establish minimum standards for lawyers practicing before the Commission.
Related Practice(s): Corporate, Corporate & Financial Services Litigation & Regulation, Global Litigation
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Fifth Circuit Bombshell on SEC ALJs Raises Questions about DEA ALJs
June 01, 2022In a decision that likely will reverberate throughout the administrative state, a three-judge panel of the United States Court of Appeals for the Fifth Circuit recently held in Jarkesy v. Securities and Exchange Commission that the Securities and Exchange Commission’s use of its in-house administrative law judges (“ALJs”) to adjudicate securities fraud actions seeking the imposition of monetary penalties was unconstitutional for three independent reasons.
Related Practice(s): White Collar Defense and Investigations
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Junior Creditors Beware: Third Circuit Awards Damages for Breach of Turnover Provision
May 26, 2022On April 13, 2022, the Court of Appeals for the Third Circuit ruled in CoFund II LLC v. Hitachi Capital America Corp. that a junior creditor breached a turnover provision in an intercreditor agreement when it applied a senior creditor’s collateral to satisfy the junior creditor’s claims before the senior creditor’s claims had been fully paid. The Third Circuit also affirmed a judgment that awarded the senior creditor damages for the misapplication of such collateral proceeds in violation of the intercreditor agreement’s turnover provision.
Related Practice(s): Financial Restructuring
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Lombard v Skyjets: Key Takeaways for Lenders and Restructuring Professionals
May 24, 2022The recent English High Court decision of Lombard North Central Plc v European Skyjets Ltd [2022] EWHC 728 (QB) provides some important guidance for lenders and restructuring professionals when communicating with distressed borrowers. Actions will speak louder than words – whether in the form of a “no waiver” provision in a contract or an express reservation of rights – when a court is considering a lender’s response to a borrower’s default on its financing arrangements. While there are no massive surprises to emerge from Foxton J’s decision, the breadth and creativity of some of the arguments advanced by the borrower’s lawyers nonetheless provided the Court with the opportunity to provide additional certainty to market participants.
Related Practice(s): Corporate Finance, Financial Restructuring, Private Equity
Related Office(s): London
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What’s in a Name?: “Defense Stocks” Highlight the Challenges for Asset Managers in Navigating Sustainability Taxonomies as They Characterize Investments as ESG-Compliant
May 19, 2022It is hardly news that ESG investing is a significant aspect of the asset management industry. According to Barron’s, $400 billion was invested in U.S. mutual funds and assets that have an ESG orientation in 2021. However, it remains a challenge for issuers, asset managers, regulators and other industry participants to determine whether a particular business, industry, or product promotes or is harmful to ESG considerations.
Related Practice(s): Corporate & Financial Services Litigation & Regulation, Environmental, Social & Governance (ESG), Global Litigation
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Spring Cleaning: CFPB Dusts Off “Dormant” Authority to Supervise “Risky” Conduct by Nonbanks
May 04, 2022On April 25, 2022, the Consumer Financial Protection Bureau (CFPB) announced plans to revitalize its authority to examine “nonbank” financial companies that pose risks to consumers. Though the CFPB has held this authority since its creation in 2010, the agency has rarely invoked it, leaving it largely “dormant.” The CFPB’s announcement marks a possible reversal of that trend.
Related Practice(s): Consumer Financial Services Enforcement and Litigation, White Collar Defense and Investigations
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U.S. Court of Appeals for the Third Circuit Agrees to Hear Interlocutory Appeal in CFPB Enforcement Action against Student Loan Trusts
May 03, 2022On April 29, 2022, the U.S. Court of Appeals for the Third Circuit granted a petition for permission to appeal in Consumer Financial Protection Bureau v. The National Collegiate Master Student Loan Trusts filed by defendants The National Collegiate Student Loan Trusts (the “Trusts”) and certain interveners in the action. The Third Circuit agreed to hear two certified questions from the district court in the appeal: (1) whether, under the Consumer Financial Protection Act (“CFPA”), the Trusts are “covered persons” subject to the CFPB enforcement authority; and (2) whether, after Collins v. Yellen, the CFPB was required to ratify the enforcement action before the three-year statute of limitations ran out.
Related Practice(s): Consumer Financial Services Enforcement and Litigation, Global Litigation, Securitization & Asset Based Finance, White Collar Defense and Investigations
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Seventh Circuit Provides Rare Guidance On “Statutory Liens”
May 03, 2022On April 21, 2022, the U.S. Circuit Court of Appeals for the Seventh Circuit issued a decision interpreting the Bankruptcy Code’s definitions of “statutory lien” and “judicial lien,” holding that a lien imposed by the Chicago Municipal Code was “judicial” rather than “statutory” because it arose partly as the result of a “quasi-judicial” process rather than “solely by force of a statute.”
Related Practice(s): Financial Regulation, Financial Restructuring
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ESG Enforcement Watch: SEC Files Fraud Complaint against Brazilian Miner, Vale, over False Safety Claims prior to Environmental Disaster
May 02, 2022In an important development, on April 28, 2022, the Securities and Exchange Commission (SEC) commenced an action in the United States District Court for the Eastern District of New York in which it asserted that Vale S.A., a publicly-traded Brazilian mining company and one of the world’s largest iron ore producers, knowingly made false and misleading claims about the safety of its dams in the years leading up to the January 2019 Brumadinho disaster.
Related Practice(s): Environmental, Social & Governance (ESG), Global Litigation, White Collar Defense and Investigations
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The EBA Publish Final Draft RTS Relating to Risk Retention Under the EU Securitisation Regulation
April 26, 2022On 12 April 2022, the European Banking Authority (the “EBA”) announced the publication of its final draft Regulatory Technical Standards (“RTS”) specifying the requirements for originators, sponsors and original lenders in relation to risk retention. Regulation (EU) 2017/2402, as amended (the “Securitisation Regulation”), established the requirements concerning the retention of a material net economic interest in securitisations and empowered the EBA to prepare draft RTS in this area. There has been a long wait for these final drafts, given the EBA submitted an initial version to the European Commission in July 2018 (the “2018 RTS”), and then consulted on further changes in June 2021.
Related Practice(s): CLOs, Financial Regulation, Securitization & Asset Based Finance
Related Office(s): London
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Further Developments in Mezzanine Foreclosures
April 26, 2022The New York State Supreme Court, New York County Commercial Division (the “Court”) decided in U.S. Bank, N.A. v. 342 Property LLC, on February 14, 2022, that a mezzanine lender that is not a party to loan documents that evidence a concurrent mortgage loan does not have standing and, therefore, no basis, to preclude a mortgage lender’s motion for summary judgement in a foreclosure action against a mortgage borrower that is an affiliate of a mezzanine borrower.
Related Practice(s): Mezzanine Finance, Real Estate
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Securities Litigation Update: Courts of Appeal Address the Exchange Act’s Exclusive-Jurisdiction and Non-Waiver Provisions, the Duty to Disclose, and Scienter
April 14, 2022In the first quarter of 2022, federal appellate courts issued a number of thought-provoking (albeit not monumental) decisions addressing the reach of the federal securities laws and, in some cases, highlighting potentially powerful defenses for litigants.
Related Practice(s): Corporate & Financial Services Litigation & Regulation, Global Litigation, White Collar Defense and Investigations
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What Can Public Companies Do Now to Prepare for the SEC’s New Proposed Rules on Climate-Related Disclosures?
April 07, 2022On March 21, 2022, the U.S. Securities and Exchange Commission (the “SEC”) proposed far-reaching amendments to Regulation S-K and Regulation S-X that would mandate significant additional climate-related disclosures for public companies. A summary of the new disclosure requirements is available in our Clients & Friends Memo dated March 23, 2022. In brief, the proposed rules would require a public company to make significant additional disclosures regarding, among other things, its board and management’s oversight of climate-related risks; its processes for identifying, assessing and managing climate-related risks; and its climate-related targets and goals.
Related Practice(s): Corporate, Corporate & Financial Services Litigation & Regulation, Environmental, Social & Governance (ESG), Global Litigation, Securitization & Asset Based Finance
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SEC Proposes Climate-Related Changes to Regulation S-K and Regulation S-X
March 23, 2022On March 21, 2022, the U.S. Securities and Exchange Commission (the “SEC”) proposed far-reaching amendments to Regulation S-K and Regulation S-X that would mandate significant additional climate-related disclosures. If adopted as proposed, the amendments would impose burdensome requirements on registrants (both in financial terms and in terms of managerial time and attention). Although the SECs proposal made clear that asset-backed securities issuers are not covered by the proposed rules, the SEC indicated that they are continuing to consider whether and how to apply similar regulations to asset-backed securities issuers.
Related Practice(s): Corporate & Financial Services Litigation & Regulation, Environmental, Social & Governance (ESG), Securitization & Asset Based Finance
Related Office(s): Charlotte, New York
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Privacy and Suspect Rights - UK Supreme Court Confirms an Individual’s Right to Privacy When Under Criminal Investigation
March 17, 2022In a recent judgment (Bloomberg LP v ZXC [2022] UKSC 5), the UK Supreme Court confirmed that suspects subject to a criminal investigation are entitled, as a general rule, to a reasonable expectation of privacy regarding information relating to the investigation until they are charged. The ruling is consistent with established principles relating to suspect rights, similar decisions from lower courts and published police guidance.
Related Practice(s): White Collar Defense and Investigations
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Executive Order on Ensuring Responsible Development of Digital Assets: The Intersection of Climate Change and Cryptocurrencies
March 16, 2022On March 9, 2022, President Biden issued an Executive Order on Ensuring Responsible Development of Digital Assets (the “Executive Order”) that sets in motion a “whole-of-government” strategy to address the impacts of the rise of digital assets—including cryptocurrencies—on consumers, the economy, national security, and climate change. In so doing, the Executive Order reiterated that “digital mines” create tangible climate risk.
Related Practice(s): Blockchain and Digital Assets, Corporate & Financial Services Litigation & Regulation, Environmental, Social & Governance (ESG), Global Litigation
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Taking Stock: A Survey of the New Russia Sanctions Landscape
March 10, 2022Moscow’s invasion of Ukraine has – as promised by US President Joseph R. Biden and other world leaders – provoked “unprecedented” economic sanctions against Russia. The United States, the United Kingdom, and the European Union, together with other allies and partners, have imposed far-reaching prohibitions on Russia’s largest banks and corporations, sovereign debt, foreign reserves, and some of its wealthiest and most powerful individuals – among them Russian President Vladimir Putin himself.
Related Practice(s): Financial Regulation, White Collar Defense and Investigations
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Made for TV: The SEC’s Regulatory Posture on Climate Risk
March 01, 2022Climate change-related risks to the U.S. financial system are attracting increasing public attention in recent years and are raising questions about how U.S. financial regulators, including the U.S. Securities and Exchange Commission (the “SEC”), will address such risks. The SEC is on the precipice of issuing a proposed new rule regarding climate risk disclosures by public companies.
Related Practice(s): Environmental, Social & Governance (ESG), Securitization & Asset Based Finance
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Caremark and “Mission-Critical” ESG Company Operations
February 28, 2022Companies are increasing pressure to address environmental, social, and governance (“ESG”) issues. ESG topics have taken center stage in boardrooms, with regulatory agencies, and in the media.
Related Practice(s): Corporate & Financial Services Litigation & Regulation, Environmental, Social & Governance (ESG), Global Litigation
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Senate Banking Committee Considers the Nomination of Sarah Bloom Raskin for Vice Chair of Supervision at the Federal Reserve: How Her Confirmation May Affect Climate-Related Banking Regulations
February 17, 2022On February 3, 2022, the U.S. Senate Committee on Banking, Housing, and Urban Affairs (the “Committee”) considered President Biden’s nomination of Sarah Bloom Raskin for Vice Chair for Supervision and a Member of the Board of Governors of the Federal Reserve System (the “Federal Reserve”), along with the nominations of Dr. Lisa Cook and Dr. Philip Jefferson to be members of the Board of Governors.
Related Practice(s): Consumer Financial Services Enforcement and Litigation, Corporate & Financial Services Litigation & Regulation, Environmental, Social & Governance (ESG), Global Litigation, White Collar Defense and Investigations
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District Court Grants Interlocutory Appeal in CFPB Enforcement Action against Student Loan Trusts and Stays Case Pending Appellate Review
February 16, 2022On February 11, 2022, the U.S. District Court for the District of Delaware granted a motion for interlocutory appeal in Consumer Financial Protection Bureau v. The National Collegiate Master Student Loan Trusts filed by defendants The National Collegiate Student Loan Trusts (the “Trusts”) and certain interveners in the action. The district court certified two questions for review by the U.S. Court of Appeals for the Third Circuit: (1) whether, under the Consumer Financial Protection Act (“CFPA”), the Trusts are “covered persons” subject to the CFPB enforcement authority; and (2) whether, after Collins v. Yellen, the CFPB was required to ratify the enforcement action before the three-year statute of limitations ran out.
Related Practice(s): Consumer Financial Services Enforcement and Litigation, Corporate & Financial Services Litigation & Regulation, Financial Regulation, Global Litigation, Securitization & Asset Based Finance, White Collar Defense and Investigations
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Is Sustainability En Vogue or the Newest Staple? What New York’s Proposed Fashion Sustainability and Social Accountability Act Could Mean for the Fashion and Other Industries
February 11, 2022In anticipation of New York Fashion Week, lawmakers remind us that this season’s haute couture is not the only thing heating up right now. After years of global warming and environmental, social and governance (ESG) topics making headlines, New York lawmakers are taking sustainability to the runway, intent on greening the fashion industry. If passed, New York’s Fashion Sustainability and Social Accountability Act (“Fashion Act”), announced earlier this year, would be the first of its kind in the country in attempting to impose sustainability-related obligations on the biggest brands in fashion.
Related Practice(s): Corporate & Financial Services Litigation & Regulation, Environmental, Social & Governance (ESG), Global Litigation
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The End of the Temporary Transitional Power: Securitisation Reporting
February 10, 2022On 31 January 2020, the UK ceased to be a member of the EU. Following a transition period, EU law ceased to be applicable in the UK with effect from 11 p.m. on 31 December 2020. Directly applicable EU legislation, such as the EU Securitisation Regulation and associated technical standards, was ‘onshored’ into UK domestic law as of that date. Such onshored financial services legislation was subject to changes which reflected, among other things, the changed relationship between the UK and the EU, the replacement of EU authorities and regulators with their UK equivalents, and differing regulatory priorities in the EU and UK.
Related Practice(s): CLOs, Financial Regulation, Securitization & Asset Based Finance
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“Climate Risk Is Investment Risk”: The Asset Management Industry Confronts The Challenges and Opportunities Presented By Climate Change Transition
February 02, 2022The asset management industry has been sounding the alarm for some time about the risks and opportunities posed by climate change.
Related Practice(s): Corporate & Financial Services Litigation & Regulation, Environmental, Social & Governance (ESG), Global Litigation
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The Development of a Bank Regulatory Framework for Fintech and Digital Assets: OCC’s Approval of Full Charter for a Fintech Company Continues the Movement of Fintech within the U.S. Bank Regulatory Perimeter
January 28, 2022The Office of the Comptroller of the Currency (“OCC”) continues along its cautious course of allowing fintech and digital asset firms into the so-called “regulatory perimeter,” not through any special or novel charter, but through traditional national bank charters. The OCC is working with the other federal banking agencies to address the potential opportunities and risks associated with the growing interest in fintech and crypto issues. This memorandum summarizes some of the recent actions related to fintech issues, the most recent of which is the approval of a full, deposit-taking charter for a fintech lender.
Related Practice(s): FinTech, Financial Regulation
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The Development of a Bank Regulatory Framework for Fintech and Digital Assets: Reviewing U.S. Prudential Regulators’ Recent Digital Asset Actions
January 28, 2022As we note in our companion memorandum, the Office of the Comptroller of the Currency (“OCC”) continues along its cautious course of allowing fintech and digital asset firms into the so-called “regulatory perimeter.” The most recent action along this course is the approval of a full, deposit-taking charter for a fintech lender. The charter approval last week has prompted us to review some of the recent actions by federal prudential regulators related to fintech and digital asset issues. In this memorandum we focus primarily on digital assets, while our companion memo looks more closely at fintech issues.
Related Practice(s): Blockchain and Digital Assets, FinTech, Financial Regulation
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FTC Sues to Block Lockheed’s Proposed Acquisition of Aerojet Rocketdyne in Milestone Defense Industry Vertical Challenge
January 26, 2022The Federal Trade Commission (“FTC”) filed suit yesterday to block Lockheed Martin Corporation’s proposed $4.4 billion acquisition of Aerojet Rocketdyne Holdings Inc., announced back in December 2020.
Related Practice(s): Antitrust, Mergers & Acquisitions
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FTC Announces 2022 Thresholds for Merger Control Filings under HSR Act and Interlocking Directorates under the Clayton Act
January 24, 2022The Federal Trade Commission (“FTC”) has increased 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 will become effective on February 23, 2022. The FTC also increased the thresholds for interlocking directorates under Section 8 of the Clayton Act, effective as of January 24, 2022. The maximum civil penalty dollar amounts for HSR violations also were increased, effective January 10, 2022.
Related Practice(s): Antitrust, Mergers & Acquisitions
Related Office(s): Charlotte, New York
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Securities Litigation Update: Federal Courts Allow Section 10(b) Claims Based on Non-Fraudulent “Channel Stuffing” and Hyped COVID-19 Vaccine Candidate
January 19, 2022Federal courts closed out 2021 with a flurry of securities decisions in the month of December. In this update, we discuss two decisions involving claims under Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5 based on (i) alleged “channel stuffing”—a company’s practice of shipping excessive product to its distributors, and recognizing revenue at the time of and on such shipments, when it believes the distributors will not be able to sell all such product in the particular period—and (ii) an allegedly over-hyped COVID-19 vaccine candidate.
Related Practice(s): Corporate & Financial Services Litigation & Regulation, Global Litigation, White Collar Defense and Investigations
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FTC and DOJ Announce Project to Develop Progressive Merger Guidelines
January 19, 2022On January 18, 2022, the Federal Trade Commission (“FTC”) and the Justice Department’s Antitrust Division (“DOJ”) (together, the “Agencies”) jointly announced plans to “review,” “modernize” and “strengthen” horizontal merger enforcement guidelines (“Guidelines”), which may lead to stricter scrutiny of certain deals in the future.
Related Practice(s): Antitrust, Mergers & Acquisitions
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Delaware Bankruptcy Court Rules that Unsecured Creditors of a Solvent Debtor Are Entitled to Post-Petition Interest at the Federal Judgment Rate, Not the Default Interest Rate
January 14, 2022On December 22, 2021, Judge Mary Walrath of the Bankruptcy Court for the District of Delaware held in In re The Hertz Corp. that redemption premiums may potentially qualify as unmatured interest, and that, to the extent that such redemption premiums are unmatured interest on unsecured debt, then creditors would only be entitled to receive the federal judgment rate, not the contractual rate of interest.
Related Practice(s): Financial Restructuring
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Delaware Chancery Court Signals Heightened Scrutiny of SPAC Boards and Sponsors
January 13, 2022The Delaware Chancery Court has issued a decision with major implications for sponsors and directors of Delaware incorporated special purpose acquisition companies (SPACs).
Related Practice(s): Corporate, Global Litigation, Special Purpose Acquisition Companies (SPACs)
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HM Treasury Report on its Review of UK Securitisation Regulation (UK Securitisation Risk Retention and Disclosure Requirements)
December 16, 2021On 24 June 2021, the UK Treasury (“HMT”) launched a call for evidence on the functioning of the UK Securitisation Regulation (“UKSR”). Article 46 of the UKSR required HMT to review the functioning of the legislation in relation to eight specified areas prior to 1 January 2022. In a report published on 13 December 2021 (the “Report”), HMT has given its feedback on the responses received in the call for evidence and set out its general intentions in relation to the eight policy areas specified in Article 46. In addition, the call for evidence sought views on the definition of “institutional investor” in the UKSR as it relates to certain non-UK Alternative Investment Fund Managers (“AIFMs”), the jurisdictional scope of the UKSR and the capital and liquidity treatment of securitisations.
Related Practice(s): CLOs, Financial Regulation, Securitization & Asset Based Finance
Related Office(s): London
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New Enforcement Director Outlines Priorities for “Robust” Enforcement at SEC
December 16, 2021On December 15, 2021, the D.C. Bar hosted a one-hour conversation with Gurbir S. Grewal, the SEC’s new enforcement director. Mr. Grewal spoke about his prosecutorial background and preparedness to lead the agency’s Division of Enforcement, as well as his top priorities.
Related Practice(s): Global Litigation, White Collar Defense and Investigations
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Federal Court Holds That Student Loan Trusts Are Subject to CFPB Enforcement Authority: What This Means for Consumer Securitizations and Other Whole Loan Buyers
December 15, 2021On December 13, 2021, Judge Stephanos Bibas, visiting judge in the U.S. District Court for the District Delaware from the U.S. Court of Appeals for the Third Circuit, denied a motion to dismiss a lawsuit brought by the Consumer Financial Protection Bureau (“CFPB” or the “Bureau”) in Consumer Financial Protection Bureau v. The National Collegiate Master Student Loan Trusts, allowing the enforcement action to proceed directly against The National Collegiate Student Loan Trusts (the “Trusts”).
Related Practice(s): Consumer Financial Services Enforcement and Litigation, Global Litigation, Securitization & Asset Based Finance, White Collar Defense and Investigations
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Securities Litigation Update: Second Circuit Opines on Pleading Standards and Statutory Standing for Claims Under Section 10(b) of the Securities Exchange Act of 1934
December 08, 2021On November 24, 2021, the U.S. Court of Appeals for the Second Circuit issued a pair of decisions addressing threshold requirements for securities fraud claims under Section 10(b) of the Securities Exchange Act of 1934 and Rule 10b-5: (i) pleading a material misstatement or omission, and (ii) demonstrating standing to sue as a “purchaser” or “seller” of a security.
Related Practice(s): Corporate & Financial Services Litigation & Regulation, Global Litigation
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“Sustainable” Companies Face Increased Pressure to Justify the Sustainability Label Amid Investor Challenges and Demands for Greater Risk Assessment and Disclosure
December 01, 2021The recent IPO for Rivian Automotive Inc., the electric pick-up truck manufacturer whose shares increased 29% on the day following the offering, resulting in an enterprise valuation of more than $86 billion – more than the market values of every other automaker except Tesla, Toyota, and Volkswagen – is evidence that investors may place a significant premium on certain companies that are at the forefront of addressing (and potentially seizing opportunities resulting from) climate change and related sustainability issues.
Related Practice(s): Environmental, Social & Governance (ESG), Global Litigation, White Collar Defense and Investigations
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What’s in a Name? Court Holds That Despite Its Title, a Security Agreement Also Subordinated Junior Creditor’s Rights to Payment
November 30, 2021On October 29, 2021, Judge Laura Taylor Swain, the presiding judge in the Puerto Rico bankruptcy case, ruled that approximately $2 billion in intragovernmental loan claims were subordinated to bonds issued by the Puerto Rico Highway and Transportation Authority (“HTA”) pursuant to an assignment and security agreement. The Court’s opinion provides guidance on several important issues regarding subordination agreements, including the distinction between payment and lien subordination, the importance of including certain provisions in drafting such agreements, and the operation of a tiered subordination structure.
Related Practice(s): Corporate & Financial Services Litigation & Regulation, Financial Restructuring, Global Litigation
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You Win Some, You Lose Some: The Second Circuit Affirms Dismissal of Landlords’ Free Speech Challenge to Harassment Laws and Reverses Dismissal of Landlords’ Contract Clause Challenge to Guaranty Law
November 16, 2021On October 28, 2021, the United States Court of Appeals for the Second Circuit ruled on Melendez v. City of New York, in which the plaintiffs, who are New York City landlords, alleged that certain laws enacted in response to the COVID-19 pandemic were unconstitutional.
Related Practice(s): Real Estate
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Securities Litigation Update: Divided Ninth Circuit Permits Direct-Listing Investors to Assert Securities Act Claims, Despite Inability to Differentiate Between Registered and Unregistered Shares
November 02, 2021On September 20, 2021, in Pirani v. Slack Technologies, Inc., a divided panel of the U.S. Court of Appeals for the Ninth Circuit held that investors who purchase stock in a “direct listing”—in which pre-existing shares are sold to the public without underwriters—may bring claims based on alleged misrepresentations in a registration statement, even if they cannot demonstrate that they acquired registered shares.
Related Practice(s): Corporate & Financial Services Litigation & Regulation, Global Litigation
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UK Autumn Budget 2021 – Key Tax Measures
October 28, 2021The Chancellor of the Exchequer delivered the United Kingdom (“UK”) Autumn Budget for 2021 on 27 October 2021.
The Budget was delivered against the backdrop of the UK’s ongoing recovery from the Covid‑19 pandemic and the evolving relationship between the UK and the rest of the world following Brexit. As with many previous Budgets, eye-catching pieces of good news sit alongside anti-avoidance proposals which – while targeted – cast a slightly cold shadow over the more hopeful items. The same is true in the Autumn Budget 2021, where the positive and potentially game-changing introduction of the new Qualifying Asset Holding Companies regime and helpful changes to the stamp duty treatment of UK securitisation companies are lined up with further measures to be applied to the “willing associates and collaborators” of any offshore promoter of tax avoidance.
Related Practice(s): Tax
Related Office(s): London
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Financial Stability Oversight Council Issues Key Report Declaring Climate Change as an Emerging Threat to U.S. Financial Stability
October 25, 2021On October 21, 2021, the Financial Stability Oversight Council (“FSOC”), established in 2010 by the Dodd-Frank Wall Street Reform and Consumer Protection Act to respond to emerging threats to the stability of the U.S. financial system, released a Report on Climate-Related Financial Risk (the “Report”).
Related Practice(s): Environmental, Social & Governance (ESG), Financial Regulation, Global Litigation
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Can Computer Systems Using Artificial Intelligence Patent their own Inventions?
October 08, 2021Increasingly, companies are using artificial intelligence to invent new methods and products. But can a named inventor be a non-human machine under the law? That depends on which country’s laws are being applied.
Related Practice(s): Global Litigation, Intellectual Property
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Recent Amendments to English Civil Procedure Help Simplify the Issuance of Contractual Claims Against Foreign Defendants—Service of Process Pursuant to CPR 6.33(2B)
September 28, 2021On 6 April 2021, an amendment was introduced to the Civil Procedure Rules 1998 (S.I. 1998/3132) (the “CPR”) at Part 6 concerning service out of the jurisdiction. The change is of interest where at least one or more international businesses/foreign parties (whether EU or non‑EU), otherwise unconnected with the UK, incorporate a choice of court agreement (or “COCA”) in favour of the courts of England & Wales as a means to resolve their contractual disputes. CPR 6.33(2B)(b) now provides that permission of the court is not required to serve out of the jurisdiction a claim where jurisdiction is based on any COCA in favour of the courts of England and Wales. In many cases, this will simplify the procedure for service of international contractual claims on foreign domiciled defendants, by eliminating a preliminary step (i.e. the need to seek permission of the court), which adds cost and delay.
Related Practice(s): Corporate & Financial Services Litigation & Regulation, Global Litigation, International Dispute Resolution
Related Office(s): London
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FTC Rescinds Vertical Merger Guidelines
September 20, 2021Change is the only constant of late at the Federal Trade Commission (“FTC”). Newly confirmed Chair Lina Khan has wasted no time in using her three-Democrat majority to overhaul the Commission’s merger enforcement practices.
Related Practice(s): Antitrust
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Investors and Regulators Turning up the Heat on Climate-Change Disclosures: Attempting to Make Sense of the State of Play in the US, EU, and UK
September 14, 2021As investors’ calls for greater climate-related corporate accountability grow louder, the “E” in ESG—environmental, social and governance—looms larger than ever, particularly from the perspective of directors facing oversight responsibilities and the challenge of providing adequate disclosure.
Related Practice(s): Environmental, Social & Governance (ESG), Global Litigation, White Collar Defense and Investigations
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One-Two Punch: FTC Does About-Face on Treatment of Debt for HSR Purposes and Casts Doubt on Informal Interpretation Program
September 14, 2021In a recent blog post, the Acting Director of the Federal Trade Commission Bureau of Competition announced the reversal of the Federal Trade Commission’s (“FTC”) decades-long position regarding the treatment of debt repayment when determining whether a premerger notification filing under the Hart-Scott-Rodino (“HSR”) Act is required. Effective September 27, 2021, companies and individuals that do not file HSR based on excluding retired debt from the transaction value may face enforcement action.
Related Practice(s): Antitrust, Mergers & Acquisitions
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COVID-19 Update: New York Governor Signs New Moratorium Effective until January 15, 2022
September 07, 2021On September 2, 2021, New York Governor Kathy Hochul signed into law a new moratorium on evictions and foreclosures for residential tenants and small businesses. Recently, in the case Chrysafis v. Marks, the U.S. Supreme Court enjoined the enforcement of the previous residential moratorium in New York (which expired August 31), finding that the tenant’s ability to self-declare financial hardship while precluding a landlord from contesting that declaration violated the landlord’s due process rights. Additionally, in the case Alabama Association of Realtors v. Department of Health and Human Services, the U.S. Supreme Court held that the CDC exceeded its statutory authority in issuing its latest residential eviction moratorium and blocked the enforcement of such moratorium. In response, and citing the rise in cases due to the Delta variant of COVID-19, the New York legislature passed a new moratorium, which expires January 15, 2022.
Related Practice(s): Real Estate
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COVID-19 Update: U.S. Supreme Court Holds that CDC Exceeded its Authority in Issuing Eviction Moratorium
August 30, 2021On August 26, 2021, the U.S. Supreme Court issued an order vacating the Centers for Disease Control and Prevention’s latest eviction moratorium.
Related Practice(s): Real Estate
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COVID-19 Update: CDC Issues New Eviction Moratorium while U.S. Supreme Court Grants Injunction against Enforcing the Eviction Moratorium in New York
August 18, 2021On August 3, 2021, the Centers for Disease Control and Prevention issued a new order banning residential evictions in counties where COVID-19 cases are quickly rising.
Related Practice(s): Real Estate
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SEC Approves Nasdaq’s Proposed Rule Changes to Increase Corporate Board Diversity
August 10, 2021On August 6, 2021, the Securities and Exchange Commission (“SEC”) issued an order approving proposed rule changes submitted by The Nasdaq Stock Market LLC (“Nasdaq”) to adopt listing rules related to board diversity.
Related Practice(s): Corporate, Corporate & Financial Services Litigation & Regulation, Corporate Governance, Global Litigation, White Collar Defense and Investigations
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Securities Litigation Update: First Circuit Holds That Future-Focused Risk Disclosures Are Not Misleading Absent “Grand Canyon”-Level Threat to Company
August 09, 2021On July 9, 2021, in Karth v. Keryx Biopharmaceuticals, Inc., the U.S. Court of Appeals for the First Circuit affirmed entry of judgment for the defendants in a putative class action asserting violations of Section 10(b) of the Securities Exchange Act of 1934 based on a pharmaceutical company’s alleged understatement of risks associated with its reliance on a single third-party manufacturer for the only drug it produced. In so ruling, the Court invoked a “Grand Canyon” metaphor for a company’s obligation to describe risks as active or imminent, as opposed to theoretical: “one cannot tell a hiker that a mere ditch lies up ahead, if the speaker knows the hiker is actually approaching the precipice of the Grand Canyon.” In this case, however, the Court held that the defendant’s risk disclosures—which stated that it “could experience a loss of revenue” if its supplier failed to perform—were not misleading
Related Practice(s): Global Litigation
Related Office(s): Charlotte, New York
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August Changes to Fund Distribution in the EEA
August 02, 2021This week sees the introduction of significant changes to the rules and regulations governing the marketing of alternative investment funds (“AIFs”) to investors in the Member States of the European Economic Area (the “EEA”) with both the deadline for implementation of the Cross Border Marketing Directive (the “Directive”) and the Cross Border Marketing Regulation (the “Regulation”) coming into force. For the avoidance of doubt, the EEA no longer includes the United Kingdom.
Related Practice(s): Financial Regulation, Fund Formation, Investment Funds
Related Office(s): London
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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): Consumer Financial Services Enforcement and Litigation, 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): Consumer Financial Services Enforcement and Litigation, 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, Consumer Financial Services Enforcement and Litigation, 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, Environmental, Social & Governance (ESG), 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 Industry, 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): Consumer Financial Services Enforcement and Litigation, 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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