Clients & Friends Memos - archive


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SEC Proposes Significant Amendments to Investment Adviser Advertising Rule

December 03, 2019

The Securities and Exchange Commission (the “Commission” or the “SEC”), on November 4, approved the publication of a substantial release (the “Release”) proposing significant amendments to the rules under the Investment Advisers Act of 1940 (the “Advisers Act”) that govern advertising by investment advisers and the solicitation of advisory and fund investments, as well as related recordkeeping and SEC Form ADV disclosure requirements.


Related Attorney(s): Steven Lofchie, Dorothy Mehta, Mark Highman, Nikita Cotton
Related Practice(s): Financial Regulation
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SEC Proposes Significant Amendments to Investment Adviser Solicitation Rule

December 03, 2019

The Securities and Exchange Commission (the “Commission” or the ”SEC”), on November 4, approved the publication of a substantial release (the “Release”) proposing significant amendments to the rules under the Investment Advisers Act of 1940 (the “Advisers Act”) that govern advertising by investment advisers and the solicitation of both advisory accounts and investments into managed funds, as well as related recordkeeping requirements.


Related Attorney(s): Steven Lofchie, Dorothy Mehta, Mark Highman, Nikita Cotton
Related Practice(s): Financial Regulation
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Federal Circuit to Examine the Constitutionality of Prior Inter Partes Review Invalidity Determinations in the Wake of Arthrex

November 26, 2019

On November 9, 2019, the United States Court of Appeals for the Federal Circuit ordered the parties in Polaris Innovations Lt. v. Kingston Technology Company, Inc. to provide supplemental briefing addressing the constitutional questions in the case, specifically the constitutionality of Administrative Patent Judges (“APJs”) in the Patent Trial and Appeal Board (“PTAB”).


Related Attorney(s): Danielle Tully, Dorothy Auth Ph.D., Michael Powell, Jaclyn Hellreich
Related Practice(s): Global Litigation, Intellectual Property
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SPECIAL FUND ALERT: Proposed HSR Rule Amendment: Foreign Today but Not Tomorrow?

November 21, 2019

On November 8, 2019, the Federal Trade Commission (“FTC”) and the Antitrust Division of the U.S. Department of Justice (“DOJ”) proposed changes to the premerger notification rules (“Rules”) relating to how U.S. and foreign entities are defined for purposes of determining reportability under the Hart-Scott-Rodino Antitrust Improvements Act (“HSR Act”).1 As a result of the proposed amendments to the Rules, certain acquisitions of foreign voting securities and assets currently exempt from the HSR Act’s filing requirements would be reportable.


Related Attorney(s): Joel Mitnick, Ngoc Hulbig
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Buyer Beware: FTC Orders Unwinding of a Consummated Transaction

November 07, 2019

On November 6, 2019, the Federal Trade Commission (“FTC”) voted 5-0 to uphold Administrative Law Judge D. Michael Chappell’s initial decision that Otto Bock HealthCare GmbH’s (“Otto Bock”) acquisition of rival Freedom Innovations LLC (“Freedom”) substantially lessened competition in the market for microprocessor-driven prosthetic knees. Finding that the acquisition already has lessened competition and likely will lead to higher prices and less innovation, the Commission ordered Otto Bock to sell the majority of the Freedom assets to an FTC-approved buyer.


Related Attorney(s): Joel Mitnick, Ngoc Hulbig
Related Practice(s): Global Litigation
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2020 Update to the UK Stewardship Code

November 05, 2019

In March 2019, we reported that the UK’s Financial Reporting Council (“FRC”) was consulting on proposed changes to the UK’s Stewardship Code (the “Stewardship Code”) (see our previous memo here). Those consultations have led to an updated 2020 edition of the Stewardship Code, which will come into effect from January 1, 2020.


Related Attorney(s): Richard Brand, Joanna Valentine, Christopher Smith
Related Practice(s): Corporate
Related Office(s): London, New York
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Marketplace Lending Update #7: This and That

October 23, 2019

There have been a handful of recent marketplace lending developments that indicate that the legal uncertainties in the post-Madden world are not going away anytime soon.


Related Attorney(s): Scott Cammarn, Jonathan Watkins, Marshall Jones
Related Practice(s): Corporate, Corporate & Financial Services Litigation & Regulation
Related Office(s): Charlotte, New York
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European Commission Adopts Disclosure Templates for EU Securitisation Reporting

October 21, 2019

The 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 16 October 2019, the European Commission adopted a Regulation comprising the  regulatory technical standards specifying the information and the details of a securitisation to be made available by the originator, sponsor and SSPE (the “Reporting Templates RTS”).


Related Attorney(s): Suzanne Bell, Robert Cannon, Stephen Day, Claire Puddicombe, David Quirolo, Nick Shiren, Daniel Tobias, Michael Sholem, Jake Lindsay
Related Practice(s): CLOs, Financial Regulation, Securitization & Asset Based Finance
Related Office(s): London
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The Delaware Court of Chancery Enforces Clear and Unambiguous Terms of Merger Agreement in Finding Termination Fee Provision Did Not Afford Exclusive Remedy for Termination

September 26, 2019

The Delaware Court of Chancery’s recent decision, Genuine Parts Company v. Essendant Inc., provides a helpful reminder that Delaware courts will enforce the clear and unambiguous terms of a merger agreement, and will consider contractual interpretation issues on a motion to dismiss when it finds the contractual terms to be clear and unambiguous.  In Essendant, the Court denied the defendant’s motion to dismiss and found that: (i) Genuine Parts Company (“GPC”) adequately pled that the termination fee in the merger agreement was not the exclusive remedy for termination or a breach of the agreement; (ii) GPC did not waive its breach of contract claim by accepting the termination fee; and (iii) GPC pled sufficient facts to support a reasonably conceivable claim that the exclusivity provision in the merger agreement between the parties was a material term of the agreement which could be the basis for a breach of contract claim.  


Related Attorney(s): Jason Halper, Nathan Bull, Jared Stanisci, Sara Bussiere, Audrey Curtis
Related Practice(s): Global Litigation
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SEC Proposes Amendments to Modernize Disclosure Requirements

September 18, 2019

The Securities and Exchange Commission has proposed amendments to the business description, legal proceedings and risk factor disclosures required by registered companies in annual and quarterly reports and registration statements. The proposal is meant to modernize disclosure requirements, including by eliminating certain duplicative disclosure requirements and improving the usability of filings for investors. If adopted, the proposed amendments could reduce the amount of repetitive or non-material disclosure in SEC filings, but in some instances, registrants may be required to add disclosure to their SEC filings.


Related Attorney(s): William Mills, Erica Hogan, Matthew Dolloff
Related Practice(s): Corporate, Securitization & Asset Based Finance
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European Banking Authority Publishes Question and Answer Relating to Originator Risk Retention Holders in Securitisations

September 17, 2019

On 13 September 2019, the European Banking Authority (the “EBA”) updated its guidance in respect of the Securitisation Regulation by publishing an answer to a question submitted to it in November 2018 by the Association for Financial Markets in Europe (“AFME”) in relation to Article 9(3) of the Securitisation Regulation.  The EBA’s answer provides guidance on how those undertaking securitisations may satisfy Article 9(3).


Related Attorney(s): Suzanne Bell, Robert Cannon, Stephen Day, Claire Puddicombe, David Quirolo, Nick Shiren, Daniel Tobias, Michael Sholem
Related Practice(s): Financial Regulation, Securitization & Asset Based Finance
Related Office(s): London
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Hart-Scott-Rodino Annual Report for Fiscal Year 2018: Decreases in Second Requests but Increased Likelihood of Challenged Deal Where Second Request Issued

September 17, 2019

On September 16, 2019, the Federal Trade Commission (“FTC”) and the Antitrust Division of the U.S. Department of Justice (“DOJ”) released the agencies’ 41st Annual Hart-Scott-Rodino Report, which summarizes FTC and DOJ actions conducted under the Hart-Scott-Rodino Antitrust Improvements Act (“HSR Act”) during fiscal year 2018, covering October 1, 2017, to September 30, 2018. This memo highlights key statistical findings of the report and analyzes trends over the previous five years of enforcement activity under the HSR Act.


Related Attorney(s): Joel Mitnick, Ngoc Hulbig
Related Practice(s): Global Litigation
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The Same, Only Better: Eighth Circuit Affirms Peabody Chapter 11 Plan Backstopped Rights Offering Despite Alleged Disparate Creditor Treatment Under Peabody Plan

September 10, 2019

On August 9, 2019, in a unanimous decision (written by a former bankruptcy judge), the Eighth Circuit Court of Appeals affirmed the confirmation of the Peabody Energy Chapter 11 plan (“Plan”) with a prominent backstopped rights offering component.


Related Attorney(s): Ingrid Bagby, Michele Maman, Eric Waxman, Casey Servais, Richard Solow
Related Practice(s): Financial Restructuring
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Delaware Court of Chancery Confirms Market-Based Factors Constitute the Best Indicators of Fair Value

September 06, 2019

Three recent Delaware Court of Chancery appraisal decisions offer a wealth of guidance not only regarding the determination of a merger partner’s fair value, but also regarding elements that potentially undermine a quality sale process and strategic considerations for litigating valuation and sale process issues.


Related Attorney(s): Jason Halper, Nathan Bull, Sara Bussiere, Monica Martin
Related Practice(s): Global Litigation
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Illinois Judge Holds That Courts Cannot Rule Retroactively on Validity of State Debt

September 05, 2019

On August 29, 2019, an Illinois court denied a petition by a political activist and a hedge fund seeking leave to file a lawsuit claiming that approximately $16 billion of Illinois’s general obligation bonds were issued in violation of the state constitution.


Related Attorney(s): Ivan Loncar, Ingrid Bagby, Lary Stromfeld, Michele Maman, Jed Miller, Casey Servais
Related Practice(s): Corporate & Financial Services Litigation & Regulation, Financial Regulation
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Volcker 2.0

August 23, 2019

On August 20, 2019, the Office of the Comptroller of the Currency (“OCC”) and the Federal Deposit Insurance Corporation (“FDIC”) adopted final regulations (the “Amended Final Regulations”) revamping the regulations implementing the Volcker Rule, a centerpiece of the Dodd-Frank Act.


Related Attorney(s): Scott Cammarn
Related Practice(s): Financial Regulation
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CFIUS Unbound: Foreign Investor Deals Continue to Draw Intense National Security Scrutiny

August 01, 2019

The national security implications of corporate deals involving foreign investors continues to be a headline-grabbing topic. Last summer, President Trump signed into law the Foreign Investment Risk Review Modernization Act of 2018, which expanded the types of transactions subject to national security review by the Committee on Foreign Investment in the United States.


Related Attorney(s): Jodi Avergun, Andrew Alin, Joshua Apfelroth, Keith Gerver
Related Practice(s): Corporate, White Collar Defense and Investigations
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State Attorneys General Jolt Antitrust Enforcement – Cadwalader Expands A.G. Practice

July 23, 2019

Over the past year, State Attorneys General have stepped into what they describe as a void of antitrust enforcement at the federal level.  AGs have commenced investigations and brought antitrust actions across industry segments, including financial services, healthcare, telecommunications, technology and others.


Related Attorney(s): Joel Mitnick, Douglas Gansler, Monica Martin
Related Practice(s): Global Litigation, State Attorneys General Practice, White Collar Defense and Investigations
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Blurring the Lines: Dolan v. Altice Demonstrates the Potentially Unexpected and Significant Impact that “Boilerplate” Provisions Can Have on Merger Agreement Interpretation

July 16, 2019

In a recent decision arising out of the sale of Cablevision, the Delaware Court of Chancery issued important guidance regarding the interplay between what are commonly regarded as boilerplate merger agreement provisions and “bespoke” provisions that are drafted specifically for the transaction at issue.


Related Attorney(s): Jason Halper, Jared Stanisci, Tianyin Luo
Related Practice(s): Global Litigation
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A Tale of Two Continents - European CMBS v U.S. CMBS & CRE CLOs

July 11, 2019

U.S. CMBS issuance equalled approximately $171 billion during 2018.  In the same period, European CMBS issuance equalled approximately €4 billion which, whilst not close to the issuance levels of the U.S. CMBS market, represents a significant increase for the European market compared to any other period since the financial crisis.  Issuance of U.S. CRE CLOs during 2018 equalled approximately $14.5 billion.  The activity levels in 2019 for all of these products continue at a strong pace reflecting the global demand for commercial mortgage backed securities.


Related Attorney(s): Sabah Nawaz, Joo Kim, David Burkholder, Stuart Goldstein, David Quirolo, Y. Jeffrey Rotblat, Nick Shiren, Fredric Altschuler, Suzanne Bell, Robert Cannon, Holly Chamberlain, Jeremy Cross, Stephen Day, Michael Gambro, David Gingold, Steven Herman, Melissa Hinkle, Kahn Hobbs, Duncan Hubbard, Robert Kim, Henry LaBrun, Alan Lawrence, William McInerney, Jed Miller, Bonnie Neuman, Kurt Oosterhouse, Lisa Pauquette, Frank Polverino, Greg Prindle, Matthew Robertson, Gary Silverstein, Nathan Spanheimer
Related Practice(s): Real Estate, Securitization & Asset Based Finance
Related Office(s): Charlotte, London, New York
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The Bank of England’s Discussion Paper on Collateral Referencing LIBOR

July 08, 2019

The Bank of England (“BoE”) has initiated a review of its own exposure to LIBOR, and in particular, the exposure to the collateral that banks and other financial firms are asked to provide when borrowing from the BoE under the Sterling Monetary Framework (“SMF”), where the BoE only lends against collateral of sufficient quality and quantity, in order to protect itself from counterparty credit risk.


Related Attorney(s): Suzanne Bell, Robert Cannon, Stephen Day, Claire Puddicombe, David Quirolo, Nick Shiren, Daniel Tobias, Assia Damianova, Michael Sholem
Related Practice(s): Financial Regulation, LIBOR Preparedness Team, Securitization & Asset Based Finance
Related Office(s): London
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A 24% stockholder of seller and seller’s board must face fiduciary duty claims due to flawed sales process and inadequate merger-related disclosures: Another merger challenge demonstrates the limits of Corwin

July 08, 2019

In its October 2015 decision in Corwin v. KKR Financial Holdings, LLC, the Delaware Supreme Court held that, under most circumstances, approval of a transaction by a majority of fully informed, uncoerced stockholders invokes deferential business-judgment-rule review, notwithstanding that absent such approval a heightened level of scrutiny would apply.


Related Attorney(s): Jason Halper, Nathan Bull, Jared Stanisci, Victor Bieger
Related Practice(s): Corporate & Financial Services Litigation & Regulation, Global Litigation
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FTC Issues Reminder Regarding Interlocking Directorates

July 02, 2019

The FTC recently reminded market participants to take steps to avoid violating the per se prohibition on interlocking directorates under Section 8 of the Clayton Act. The FTC referred to its previous post on Section 8, which urged firms to monitor market developments to ensure changes in the market do not create unexpected interlocks, and then highlighted two common transaction scenarios where Section 8 issues may arise: mergers and spin-offs.


Related Attorney(s): Ngoc Hulbig, Joel Mitnick
Related Practice(s): Global Litigation
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Commission Interpretation – Standard of Conduct for Investment Advisers

July 01, 2019

The Securities and Exchange Commission (the “SEC”) on June 5, 2019 released an interpretation of the standard of conduct required by the Investment Advisers Act of 1940 (the “Advisers Act”) of investment advisers as fiduciaries to their clients. The Release affirmed the  SEC’s long–standing view that the scope of an adviser’s obligations must be based on overarching principles, as opposed to a laundry list of specific obligations. However, the Release does provide some useful examples of the application of an adviser’s fiduciary duty obligations to its clients, and additional information as to the SEC’s view of what constitutes full and fair disclosure by an adviser of its conflicts and informed consent to those conflicts by a client.

The Release purports not to create any new legal obligations for advisers, and thus to be only an “interpretation” and not a rulemaking. The Release does not take a position on the scope o

Related Attorney(s): Dorothy Mehta, Maurine Bartlett, Steven Lofchie
Related Practice(s): Broker-Dealer Regulation, Financial Regulation, Investment Management Regulation & Compliance
Related Office(s): New York
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Southern District of New York Vacates Insider Trading Guilty Plea Based on Insufficient Personal Benefit Evidence Under United States v. Newman

June 28, 2019

On June 21, 2019, in United States v. Lee, Judge Paul G. Gardephe of the U.S. District Court for the Southern District of New York issued an order vacating the guilty plea of a former investment portfolio analyst, Richard Lee, to charges of insider trading based on confidential information obtained from an investment research firm that, in turn, received the information from company insiders. 


Related Attorney(s): Jason Halper, Kyle DeYoung, Adam Magid, James Orth
Related Practice(s): Global Litigation, White Collar Defense and Investigations
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Third Circuit Affirms Rulings That Distributions to TCEH First Lien Creditors Are Governed by the Bankruptcy Code Rather Than Intercreditor Agreement Waterfall Provision on Enforcement of Collateral Remedies

June 24, 2019

On June 19, 2019, the United States Court of Appeals for the Third Circuit (the “Third Circuit”) affirmed a ruling of the United States District Court for the District of Delaware (the “District Court”) dismissing challenges by certain first lien creditors of Texas Competitive Electric Holdings LLC (“TCEH”) to the plan distributions and adequate protection payments made during TCEH’s bankruptcy case. 


Related Attorney(s): Howard Hawkins, Mark Ellenberg, Michele Maman, Thomas Curtin, Elizabeth Ruocco
Related Practice(s): Financial Restructuring, Global Litigation
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The SEC Adopts Security-Based Swap Regulations Governing Capital, Margin and Collateral Segregation

June 24, 2019

The Securities and Exchange Commission ("SEC") has adopted rules under the Securities Exchange Act (the "SEA") establishing (i) capital and margin requirements applicable to broker-dealers entering into security-based swaps ("SBS") and to security-based swap dealers ("SBSDs") that are not banks and (ii) a collateral segregation regime for SBS customers transacting with broker-dealers and with SBSDs. The Rules were first proposed in October 2012, and the comment period was reopened in a substantial release in October 2018.


Related Attorney(s): Steven Lofchie, Nihal Patel, Conor Almquist
Related Practice(s): Financial Regulation, Swap Regulation
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Cardholders Seek to Capital-ize on Madden

June 18, 2019

Last week, three Capital One cardholders filed a putative class action in the Eastern District of New York, Cohen v. Capital One Funding, LLC, alleging that the rates of interest they paid to a securitization trust unlawfully exceed the sixteen percent threshold in New York’s usury statutes.  The Plaintiffs seek to recoup the allegedly excessive interest payments and an injunction to cap the interest rates going forward.


Related Attorney(s): Scott Cammarn, Jonathan Watkins, Aaron Lang
Related Practice(s): Financial Regulation, Global Litigation
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Article 14 CRR Update

June 14, 2019

On 7 June 2019, Regulation (EU) 2019/876 (“CRR II”) was published in the Official Journal of the EU. CRD II amends the Capital Requirements Regulation in a number of respects. For securitisation market participants, a key change is an amendment to Article 14 of CRR and its effect on the application of key obligations in the Securitisation Regulation to members of a consolidated banking group.

 


Related Attorney(s): Suzanne Bell, Robert Cannon, Stephen Day, Claire Puddicombe, David Quirolo, Nick Shiren, Daniel Tobias, Michael Sholem
Related Practice(s): CLOs, Financial Regulation, Securitization & Asset Based Finance
Related Office(s): London
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EMIR Refit update

June 12, 2019

Regulation (EU) No 648/2012 imposed a range of obligations which can apply to counterparties trading in derivatives, including a clearing obligation, risk mitigation obligations (including the exchange of collateral) and a reporting obligation.


Related Attorney(s): Nick Shiren, Assia Damianova, Michael Sholem
Related Practice(s): Corporate & Financial Services Litigation & Regulation, Securitization & Asset Based Finance
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FTC Charges Two Japanese Corporations with Alleged HSR Avoidance Scheme

June 12, 2019

Two Japanese corporations each agreed to pay $2.5 million to settle Federal Trade Commission (“FTC”) charges of violating the premerger notification and waiting period requirements under the Hart-Scott-Rodino (“HSR”) Act.


Related Attorney(s): Joel Mitnick, Ngoc Hulbig
Related Practice(s): Mergers & Acquisitions
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SEC Adopts Regulation Best Interest

June 06, 2019

The Securities and Exchange Commission on June 5 adopted Regulation Best Interest: The Broker-Dealer Standard of Conduct, which requires that broker-dealers act in the “best interest” of their “retail customers.”


Related Attorney(s): Steven Lofchie, Maurine Bartlett, Nihal Patel, Conor Almquist
Related Practice(s): Corporate & Financial Services Litigation & Regulation
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Security-Based Swaps Meet Rule 15a-6 - Potential New Exemptions for Security-Based Swaps and SBSDs

June 03, 2019

The Securities and Exchange Commission has proposed a number of amendments to its rules and guidance governing security-based-swaps entered into by non-U.S. firms. The proposals would increase the activities that a U.S. agent could conduct without the SEC deeming the SBS to have been “arranged, negotiated or executed” in the United States and thus without triggering U.S. regulatory requirements.


Related Attorney(s): Steven Lofchie, Nihal Patel
Related Practice(s): Financial Regulation
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Trademark Licensees’ Rights Survive Bankruptcy Rejection

May 31, 2019

On May 20, 2019, the United States Supreme Court resolved one of the most important outstanding issues at the intersection of bankruptcy and intellectual property law, namely whether, under Section 365 of the Bankruptcy Code, a debtor-licensor’s rejection of a trademark license terminates rights of the licensee that would survive the licensor’s breach under applicable non-bankruptcy law.  In an 8-1 decision in Mission Product Holdings, Inc. v. Tempnology, LLC, the Court held that rejection does not terminate the licensee’s rights because a “rejection breaches a contract but does not rescind it.”


Related Attorney(s): Ingrid Bagby, Eric Waxman, Casey Servais
Related Practice(s): Financial Restructuring
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Corporate Governance Litigation & Regulation: A Periodic Review and Predictions for the Remainder of 2019

May 23, 2019

Since the start of 2018, state and, to a lesser extent, federal courts around the country, as well as state legislatures and Congress, have issued decisions or considered legislation having a substantial impact on corporate governance law.


Related Attorney(s): Jason Halper, Nathan Bull, Ellen Holloman, Jared Stanisci, Alexander Owings, Victor Bieger, Monica Martin, Zack Schrieber
Related Practice(s): Corporate & Financial Services Litigation & Regulation, Corporate Governance Litigation and Counseling, Global Litigation
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The District Court in Tribune Circumscribes Merit and Maintains Section 546(e) Safe Harbor Protection for Shareholders in the Wake of a Failed LBO

May 20, 2019

Last year, the Supreme Court issued its decision in Merit, unanimously ruling that a buyout transaction between private parties did not qualify for “safe harbor” protection under Bankruptcy Code section 546(e), on the basis that a “financial institution” acted as an intermediary in the overarching transaction.  Section 546(e) protects from avoidance certain transfers by, to, or for the benefit of a financial institution.


Related Attorney(s): Ingrid Bagby, Michele Maman, Kathryn Borgeson, Eric Waxman
Related Practice(s): Financial Restructuring
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Federal Securities Litigation and Regulation: A Periodic Review and Predictions for the Remainder of 2019

May 13, 2019

While the past year, or even eighteen months, was short on landmark federal securities law decisions, there was significant activity on the part of private securities litigants.  In 2018, plaintiffs filed 403 new federal securities fraud class actions, just short of 2017’s record high of 412.  This continued a marked uptick in securities filings over the last two years.  After 20 years with an average of only 203 new filings per year, the pace has now nearly doubled.


Related Attorney(s): Jason Halper, Jodi Avergun, Nathan Bull, Kyle DeYoung, Jonathan Watkins, Jared Stanisci, Adam Magid, Lex Urban, Kendra Wharton, James Orth, Rachel Ross
Related Practice(s): Global Litigation, White Collar Defense and Investigations
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Marketplace Lending Update #6: Is the Fintech Charter the Solution? Don’t Bank on It

May 09, 2019

Many have believed that the national bank “fintech charter” is an ideal solution to providing marketplace consumer loans on a 50-state basis.  A recent ruling from the Southern District of New York casts significant doubt on the viability of obtaining such a charter, at least in the near term.

In December 2016, the Office of the Comptroller of the Currency (“OCC”) announced its intention to consider the chartering of special purpose national banks to financial technology companies that provide banking products and services.  Under the proposal, such “fintech charter” banks would not be required to operate as full service national banks and, importantly, would not be required to accept deposits, as long as they engage in activities considered by the OCC to be core activities within the “business of banking,” such as lending and payment processing. 


Related Attorney(s): Scott Cammarn, Jonathan Watkins, Marshall Jones
Related Practice(s): Corporate, Corporate & Financial Services Litigation & Regulation, FinTech, Marketplace Lending and FinTech
Related Office(s): Charlotte, New York
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Cat Bond Update: Florida Assignment of Benefits

May 01, 2019

On April 24, 2019, the Florida Legislature passed a bill (the “Act”) to reform the requirements for the assignment of benefits of claims for residential and commercial property insurance.  The Act is expected to become law.  Assignment of benefits in Florida has been a concern for the ILS market as related litigation has become a significant factor in losses and claims development for a number of outstanding catastrophe bonds. 


Related Attorney(s): Matthew Feig, Robert Cannon
Related Practice(s): Securitization & Asset Based Finance
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Marketplace Lending Update #5: The Very Long Arm of Colorado Law

April 24, 2019

Recently a state court in Colorado ruled that securitization trusts that acquire marketplace lender loans originated to Colorado consumers are subject to Colorado jurisdiction.  The court’s ruling derailed the attempt by the securitization trusts to escape the ongoing battle between the State of Colorado and marketplace lenders over rates and fees that can be charged to Colorado residents.


Related Attorney(s): Scott Cammarn, Jonathan Watkins, Marshall Jones
Related Practice(s): Financial Regulation, Global Litigation, Securitization & Asset Based Finance, White Collar Defense and Investigations
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M&A Update: The Delaware Supreme Court’s Decision in Verition Partners Master Fund Ltd. v. Aruba Networks, Inc.—Calculating Fair Value in Statutory Appraisal Cases

April 22, 2019

In a decision as notable for its criticisms of the trial court judge as its contributions to Delaware appraisal jurisprudence, the Delaware Supreme Court in Verition Partners Master Fund Ltd. v. Aruba Networks, Inc. reversed a decision of the Delaware Court of Chancery in a statutory appraisal proceeding. The lower court had relied on the 30-day unaffected stock price to determine that $17.13 per share was the fair value of Aruba Networks, Inc. at the time of its acquisition by Hewlett Packard Companies (“HP”). The Supreme Court—in a unanimous per curiam decision—held that Aruba’s fair value per share was $19.10, representing the deal price minus synergies that were paid for by HP in the merger, and that the Court of Chancery abused its discretion by relying on the 30-day unaffected market price of Aruba’s stock before the transaction was publicly announced.


Related Attorney(s): Jason Halper, Joshua Apfelroth, Richard Brand, Nathan Bull, Ellen Holloman, William Mills, Jared Stanisci, Hyungjoo Han, James Orth
Related Practice(s): Corporate, Global Litigation, Mergers & Acquisitions
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Fiduciary Duties of Dissenting Directors and their Boards – Stobart v Tinkler

April 18, 2019

In Stobart v Tinkler [2019] EWHC 258 (Comm), the high court has taken an extremely restricted view of the freedom of a dissident director to take his case outside the boardroom. At the same time, the court largely endorsed the freedom of the board to silence that director with respect to public statements.


Related Attorney(s): Joanna Valentine, Joshua Apfelroth, Richard Brand, Stephen Fraidin, Christopher Smith
Related Practice(s): Corporate
Related Office(s): London, New York
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Cannabis Finance - SAFE in the STATES and Maybe Beyond?

April 08, 2019

Will 2019 be the year that federal lawmakers block U.S. law enforcement and regulatory agencies from enforcing marijuana prohibitions in states where marijuana is legal and finally resolve the divergence between state and federal law regarding marijuana?  Two bills currently making their way through Congress suggest this might be the case.


Related Attorney(s): Jodi Avergun, Steven Lofchie
Related Practice(s): Financial Regulation, Global Litigation, White Collar Defense and Investigations
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Delaware Court of Chancery Strictly Interprets Merger Agreement in Finding That Rent-A-Center, Inc. Properly Terminated Its Proposed Merger with Vintage Rodeo

April 04, 2019

In Vintage Rodeo Parent, LLC v. Rent-A-Center, Inc., C.A. No. 2018-0928-SG (Del. Ch. Mar. 14, 2019), Vice Chancellor Glasscock of the Delaware Court of Chancery found that Rent-A-Center, Inc. properly terminated its merger agreement with Vintage Capital Management LLC after Vintage failed to submit a notice to extend the drop-dead date for its pending $1.37 billion buyout  of Rent-A-Center. In doing so, the Court strictly interpreted the express language of the merger agreement and permitted Rent-A-Center to unilaterally terminate the merger by delivering a termination notice only hours after the extension deadline passed.


Related Attorney(s): Joshua Apfelroth, Jason Halper, William Mills, Chelsea Donenfeld
Related Practice(s): Corporate, Global Litigation
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Further Delays in the Expected Application Date of the Disclosure Templates for EU Securitisation Reporting

March 29, 2019

This memorandum provides an update regarding the further delay in the application of the transparency regulatory technical standards (“RTS”) (which include the new reporting templates) under the EU Securitisation Regulation.

 


Related Attorney(s): Suzanne Bell, Robert Cannon, Stephen Day, Claire Puddicombe, David Quirolo, Nick Shiren, Daniel Tobias, Assia Damianova, Sabah Nawaz, Michael Gambro, Stuart Goldstein
Related Practice(s): Securitization & Asset Based Finance
Related Office(s): Charlotte, London, New York
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Filling an Enforcement “Make-Whole”: Bankruptcy Court Enforces Prepayment Premium Notwithstanding Prepetition Loan Acceleration

March 28, 2019

On March 18, 2019, Judge Stuart M. Bernstein of the United States Bankruptcy Court for the Southern District of New York issued a decision enforcing a mortgage lender’s claim for a prepayment premium (a/k/a make-whole or yield maintenance premium) notwithstanding the lender’s prepetition acceleration of the loan due to the debtor’s default. In re 1141 Realty Owner LLC (“1141 Realty”).


Related Attorney(s): Ingrid Bagby, Eric Waxman
Related Practice(s): Financial Restructuring
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Law Firms Engaging in Non-Judicial Foreclosure Are Not “Debt-Collectors” Under FDCPA

March 28, 2019

On March 20, 2019, the Supreme Court of the United States ruled in the case of Obduskey v. McCarthy & Holthus LLP No. 17-1307 that a law firm conducting non-judicial foreclosure proceedings is not a “debt collector” under the Fair Debt Collection Practices Act, 15 U.S.C. 1692 et seq. (“FDCPA”), other than for a limited purpose.


Related Attorney(s): Steven Herman, Nicholas Brandfon
Related Practice(s): Real Estate
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Shareholder Engagement with UK Companies – Proposed Changes to the Stewardship Framework

March 11, 2019

Two UK regulatory bodies are currently consulting on changes to their shareholder engagement or stewardship rules.  The FRC is consulting on a revised version of its Stewardship Code and the FCA is consulting on its proposals implementing the shareholder engagement requirements of the EU’s Revised Shareholder Rights Directive.


Related Attorney(s): Joanna Valentine, Joshua Apfelroth, Richard Brand
Related Practice(s): Corporate
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The Digital Revolution Takes on New Meaning: Among Calls for Heightened U.S. Data Privacy Measures, California is King

March 01, 2019

California’s ambitious new data privacy law, the California Consumer Privacy Act of 2018 (“CCPA”), will go into effect on January 1, 2020 and promises to bring a new era of digital regulation to America’s shores. Financial institutions that just navigated their way through implementing the European Union’s General Data Protection Regulation (“GDPR”), which became effective in May 2018, may be uneasy about the prospect of complying with yet another new data privacy compliance regime. They will find some comfort in the fact that many of the systems and processes designed for GDPR compliance will serve their needs under the CCPA as well. However, between now and the go-live date of the CCPA, U.S. federal and state laws and regulations are likely to continue to evolve and expand, and financial institutions will need to prepare for CCPA implementation while staying abreast of other fast-moving developments. 


Related Attorney(s): Sophie Cuthbertson, James Treanor, Keith Gerver, Stephen Weiss
Related Practice(s): Cybersecurity and Data Privacy, Securitization & Asset Based Finance, White Collar Defense and Investigations
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SEC Adopts Final Rules for Disclosure of Hedging Policies

February 27, 2019

The U.S. Securities and Exchange Commission (the “SEC”) approved a final rule on December 18, 2018 implementing Section 955 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”).  The new rule will require a public company to disclose whether, and to what extent, it has adopted practices or policies regarding the ability of employees, officers, and directors to engage in certain hedging transactions with respect to the company’s equity securities.


Related Attorney(s): David Teigman, Andrew Alin, Joshua Apfelroth, Richard Brand, Christopher Cox, Stephen Fraidin, Erica Hogan, Braden McCurrach, William Mills, Gregory Patti, Pearl Yuan-Garg
Related Practice(s): Corporate, FinTech, Mergers & Acquisitions, Private Equity
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FTC Announces 2019 Thresholds for Merger Control Filings Under HSR Act and Interlocking Directorates Under the Clayton Act

February 19, 2019

The 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 30 days after the date of their publication in the Federal Register. 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.


Related Attorney(s): Joel Mitnick, Ngoc Hulbig
Related Practice(s): Corporate, Global Litigation
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EU to Require Insolvency Opinions in Relation to U.S. Sub-Custodians Under the EU AIFMD Regime

February 07, 2019

From April 2020 depositaries under the EU Alternative Investment Fund Managers Directive (“AIFMD”) will need to obtain independent legal advice regarding the protections under U.S. insolvency law afforded to the assets under the control of U.S. sub-custodians who wish to act as delegates of the AIFMD depositary.

The AIFMD is the EU regime which regulates EU managers of unregulated funds. The background to the AIFMD’s depositary provisions and its delegation requirements in this context is outlined below.

 

 


Related Attorney(s): Scott Cammarn, Ray Shirazi, Nick Shiren, James McDonnell
Related Practice(s): CLOs, Financial Regulation, Securitization & Asset Based Finance
Related Office(s): Charlotte, London, New York
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ESMA Publishes Q&As and Revised Disclosure Templates for Securitisation Reporting

February 04, 2019

On 31 January 2019, the European Securities and Markets Authority (“ESMA”) published an Opinion (the “Opinion”) containing a revised set of draft disclosure technical standards (the “Disclosure Technical Standards”) and a first set of Questions and Answers under the EU Securitisation Regulation (the “Q&As”). The Q&As mainly focus on issues arising from the templates annexed to the draft Disclosure Technical Standards.

These revised Disclosure Technical Standards have been produced as a result of a letter sent by the European Commission to ESMA dated 30 November 2018 (the “Commission’s Letter”), in which the Commission stated that it only intended endorsing ESMA’s draft Disclosure Technical Standards once certain amendments had been made.


Related Attorney(s): Suzanne Bell, Robert Cannon, Stephen Day, Claire Puddicombe, David Quirolo, Nick Shiren, Daniel Tobias, Assia Damianova, Sabah Nawaz
Related Practice(s): CLOs, Securitization & Asset Based Finance
Related Office(s): London
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Marketplace Lending Update #4: Litigation Mounts to New Highs in Colorado – Securitizations under Attack

January 02, 2019

On November 30, 2018, the Administrator of the Colorado Uniform Consumer Credit Code (the “Administrator”) took Colorado’s longstanding litigation against marketplace lenders Avant and Marlette to a new level, adding as defendants certain securitization trusts that had acquired Avant or Marlette loans.  By threatening the buyers of marketplace loans, the Administrator is escalating the pressure on Avant and Marlette–and indirectly the pressure on other marketplace lenders that extend credit to Colorado consumers. 


Related Attorney(s): Scott Cammarn, Jonathan Watkins, Chris Gavin, Joseph Beach, Peter Morreale
Related Practice(s): Financial Regulation, Global Litigation, Securitization & Asset Based Finance
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District Court Holds That Receipt of Reorganized Stock Did Not Violate Turnover and Standstill Provisions in Intercreditor Agreement

December 21, 2018

On November 30, 2018, Judge Nelson S. Román of the United States District Court for the Southern District of New York issued a decision affirming the dismissal of certain claims brought by senior secured creditors against junior secured creditors concerning the alleged breach of standstill and turnover provisions in an intercreditor agreement that governed the creditors’ relationship as creditors with recourse to common collateral.


Related Attorney(s): Michele Maman, Thomas Curtin
Related Practice(s): Financial Restructuring
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The Commission Fails to Endorse ESMA’s Draft Disclosure Technical Standards Under the Securitisation Regulation

December 19, 2018

The European Securities and Markets Authority (“ESMA”) published on its website late on 18 December 2018, a letter from the European Commission to ESMA dated 30 November 2018 (the “Commission’s Letter”), in which the Commission stated that it only intended endorsing the draft technical standards on disclosure requirements under the EU Securitisation Regulation prepared by ESMA, once certain amendments have been made.

The draft technical standards that the Commission has declined to endorse at this stage are those annexed to ESMA’s August 2018 Final Report (the “Final Report”) which draft technical standards included detailed draft reporting templates (the “draft Disclosure Technical Standards”).


Related Attorney(s): Stephen Day, Claire Puddicombe, David Quirolo, Nick Shiren, Daniel Tobias, Suzanne Bell, Robert Cannon, Assia Damianova, Sabah Nawaz
Related Practice(s): CLOs, Securitization & Asset Based Finance
Related Office(s): London
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Tax Update: IRS Trims Back FATCA

December 17, 2018

On December 13, 2018, the Internal Revenue Service issued proposed regulations that eliminate certain types of withholding under Sections 1471-1474 of the tax code, which are commonly referred to as FATCA.  Under the proposed regulations, gross proceeds from the sale or other disposition of an asset will not be subject to FATCA withholding, and passthru payments will not be subject to FATCA withholding any earlier than two years after the publication of final regulations that define the term “foreign passthru payment.”  The proposed regulations also eliminate FATCA withholding on certain insurance premiums and provide other helpful guidance.


Related Attorney(s): Linda Swartz, Jason Schwartz, Mark Howe, Gary Silverstein
Related Practice(s): Tax
Related Office(s): New York, Washington
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FTC Calls “Foul” on Dolan for HSR Violation - No Free-Throw Allowed for Failure to File on Executive Equity Compensation

December 11, 2018

James L. Dolan, owner of New York’s Knicks and Rangers and Executive Chairman of Madison Square Garden Company, has agreed to pay $609,810 in civil penalties to settle Federal Trade Commission allegations that Dolan violated the premerger notification and waiting period requirements of the Hart-Scott-Rodino Act of 1976 when he acquired voting securities of MSG in 2017.


Related Attorney(s): Joel Mitnick, Ngoc Hulbig
Related Practice(s): Global Litigation
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Asset Managers are Focus of FTC Hearing on “Common Ownership” Investments

December 11, 2018

The Federal Trade Commission convened a hearing on December 6, 2018 to better understand the possible anticompetitive implications of institutional investors holding non-controlling amounts of voting securities in competing firms.  The hearing, entitled “Corporate Governance, Institutional Investors, and Common Ownership,” was presided over by FTC Commissioners Noah Joshua Phillips and Rohit Chopra and featured remarks by Securities and Exchange Commission Commissioner Robert J. Jackson, Jr.


Related Attorney(s): Joel Mitnick
Related Practice(s): Global Litigation
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Swap Execution Facilities, the Sequel

December 11, 2018

The Commodity Futures Trading Commission issued a release that would make significant revisions to the regulatory requirements that apply under Part 37 of the CFTC Rules to the trading of swaps and to the market places that offer “exchange trading” of swaps.  Beyond amending the Existing Rules, the SEF Proposing Release would substantially reinterpret two statutory terms: (i) the definition of a “swap execution facility” in CEA Section 1a(50) and (ii) the meaning of the phrase “makes the swap available to trade” in Section 2(h)(8) of the Commodity Exchange Act.


Related Attorney(s): Steven Lofchie, Nihal Patel, Conor Almquist
Related Practice(s): Corporate & Financial Services Litigation & Regulation
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Securitisation Regulation - Transparency and Article 14 CRR Issues: Where Do We Go From Here?

December 03, 2018

On 30 November 2018, the European Supervisory Authorities published a joint statement regarding: (i) the reporting templates that will be required under Article 7 of the Securitisation Regulation; and (ii) the amendment to Article 14 of the Capital Requirements Regulation and its effect on the application of obligations in the Securitisation Regulation. This memorandum discusses the potential impact of this joint statement.


Related Attorney(s): Stephen Day, Claire Puddicombe, David Quirolo, Nick Shiren, Daniel Tobias, Suzanne Bell, Robert Cannon, Assia Damianova, Sabah Nawaz
Related Practice(s): CLOs, Securitization & Asset Based Finance
Related Office(s): London
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Dismissal of Involuntary Bankruptcy Petition Against Taberna CDO is Win for Securitization Industry

November 20, 2018

On November 8, 2018, Judge Vyskocil of the U.S. Bankruptcy Court for the Southern District of New York issued a decision dismissing the involuntary petition that had been filed against Taberna Preferred Funding IV, Ltd. (“Taberna”), a non-recourse CDO, thus ending a nearly seventeen-month-long saga that was followed closely by bankruptcy practitioners and securitization professionals alike.


Related Attorney(s): Michele Maman, Neil Weidner, Howard Hawkins, Andrew Greenberg, Richard Solow
Related Practice(s): Financial Restructuring, Global Litigation, Securitization & Asset Based Finance
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Delaware Court of Chancery Finds Director Breaches of Fiduciary Duty and Aiding and Abetting Liability for Activist Investor in Shareholder Class Action Suit

November 19, 2018

On October 16, 2018, Vice Chancellor J. Travis Laster of the Delaware Court of Chancery issued a post-trial opinion in In re PLX Technology Inc. Stockholder Litigation, a dispute arising from the August 2014 merger between PLX Technology (“PLX” or the “Company”) and Avago Wireless (U.S.A.) Manufacturing Inc. (“Avago”), now known as Broadcom Inc.  The Court held that PLX’s directors had breached their fiduciary and disclosure duties in connection with the merger, and that Potomac Capital Partners II, L.P. (“Potomac”), an activist hedge fund that pushed for the sale of PLX to Avago, had knowingly participated in that breach.


Related Attorney(s): Richard Brand, Stephen Fraidin, Jonathan Watkins
Related Practice(s): Corporate, Global Litigation
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Rightsizing Regulation: U.S. Banking Agencies Release “Tailoring” Proposals and Regional Banks Are the Winners

November 05, 2018

Last week, the federal banking agencies issued two notices of proposed rulemaking designed to lessen regulatory requirements on small and regional banking organizations.  Together, these two proposals would establish a revised framework for applying prudential, capital, and liquidity standards to large U.S. banking organizations based on risk, consistent with the mandate imposed by Congress in the Economic Growth, Regulatory Relief, and Consumer Protection Act (the “Relief Act”) enacted earlier this year. 


Related Attorney(s): Scott Cammarn
Related Practice(s): Bank Regulation, Corporate, Financial Regulation
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Forward Movement in the Bureau of Consumer Financial Protection’s Student Loan Litigation: What This Means for Securitization

November 02, 2018

In September 2017, the Bureau of Consumer Financial Protection brought an enforcement action against the National Collegiate Student Loan Trusts for alleged violations of consumer financial protection laws in connection with student loan debt collection practices.  The action, titled Consumer Financial Protection Bureau v. The National Collegiate Student Loan Master Trust, was brought in the United States District Court for the District of Delaware.


Related Attorney(s): Ellen Holloman, Cheryl Barnes, Scott Cammarn, Jason Halper, Neil Weidner, Monica Martin
Related Practice(s): Global Litigation, Securitization & Asset Based Finance
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M&A Update: Delaware Supreme Court Clarifies the “Ab Initio” Requirement for Business Judgment Review of Controlling Stockholder Transactions in Flood v. Synutra

November 02, 2018

In Flood v. Synutra Int’l Inc., the Delaware Supreme Court clarified its holding in Kahn v. M&F Worldwide Corp. (“MFW”).  In MFW, the Court held that the business judgment rule—rather than the entire fairness standard—applies to a controlling stockholder transaction if such 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 (the “MFW Conditions”). At issue in Flood was whether the Court of Chancery properly applied the business judgment rule to a controlling stockholder acquisition of Synutra International even though the controlling stockholder did not include the MFW Conditions in its initial proposal to acquire Synutra, but instead included such conditions in a follow-up letter sent two weeks later.  Chief Justic

Related Attorney(s): Joshua Apfelroth, Jason Halper, William Mills, Chelsea Donenfeld
Related Practice(s): Corporate, Mergers & Acquisitions
Related Office(s): New York
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UK Budget 2018 – Key Tax Measures

October 31, 2018

The Chancellor of the Exchequer delivered the United Kingdom (“UK”) Budget for 2018 on 29 October 2018. The Budget was delivered against the backdrop of the UK’s negotiations with the European Union concerning Brexit.


Related Attorney(s): Adam Blakemore, Catherine Richardson
Related Practice(s): Tax
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Treasury Issues Proposed Regulations on Opportunity Zones

October 29, 2018

On October 19, 2018, the Internal Revenue Service (the “IRS”) and the Treasury Department issued proposed regulations relating to the new Opportunity Zone program. The Opportunity Zone program is intended to encourage investments in economically distressed qualified opportunity zones (“QOZs”) by allowing taxpayers to defer and, in some cases, reduce or eliminate tax on capital gains if they reinvest their gains within 180 days in qualified opportunity funds (“QOFs”), which, in turn, generally are required to invest at least 90% of their assets in (1) certain business property located in a QOZ (“QOZ Business Property”) and/or (2) equity in certain entities that hold QOZ Business Property (“QOZ Subsidiaries” and, together with QOZ Business Property, “QOZ Property”).


Related Attorney(s): Mark Howe, Jason Schwartz, Gary Silverstein, Linda Swartz
Related Practice(s): Tax
Related Office(s): New York, Washington
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M&A Update: Akorn Falls Far from the Tree: Delaware Chancery Court Finds a “Material Adverse Effect” for the First Time in Akorn, Inc. v. Fresenius Kabi AG, et al.

October 25, 2018

On October 1, 2018, the Delaware Court of Chancery found in Akorn, Inc. v. Fresenius Kabi AG, et al. that Fresenius was entitled to terminate its merger agreement with Akorn.  In so ruling, Vice Chancellor Travis Laster found that:  Akorn suffered a “Material Adverse Effect” (“MAE”) following the execution of the merger agreement; Akorn breached its representations related to regulatory compliance in a manner that would reasonably be expected to have an MAE; and Akorn did not comply in all material respects with its covenant to use commercially reasonable efforts to operate in the ordinary course of business following execution of the merger agreement.  The decision is the first time a Delaware court has held that a seller has suffered an MAE, entitling the buyer to terminate an acquisition transaction.  The decision offers insight into the interpretation of the term “Material Adverse Effect,” as well as other provisions com

Related Attorney(s): Joshua Apfelroth, Jason Halper, William Mills, Marianna Wonder
Related Practice(s): Corporate, Mergers & Acquisitions
Related Office(s): New York
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Accrual Clauses in RMBS Contracts Violate New York Law and Public Policy

October 18, 2018

On October 16, 2018, the New York State Court of Appeals held that contractual attempts to extend the statute of limitations for causes of action involving breaches of contract are unenforceable because they violate New York law and public policy.


Related Attorney(s): Peter Morreale, Howard Hawkins, Nathan Bull, Michael Gambro, Chris Gavin, Stuart Goldstein, Jason Halper
Related Practice(s): Corporate & Financial Services Litigation & Regulation, Global Litigation, Residential Mortgage-Backed Securities, Securitization & Asset Based Finance
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Definitely Maybe? The SEC Returns to Security-Based Swap Dealer Regulation

October 12, 2018

On October 11, 2018, the Securities and Exchange Commission (“SEC”) signaled that it is getting back into the Title VII game, by voting to re-open the comment period and request additional comment on rulemakings to adopt margin, capital, and collateral segregation requirements applicable to security-based swap dealers (“SBSDs”). The re-opening of the comment period is the first step that the SEC has taken towards implementing the statutory regime for SBSDs in over two years and also the first step under Chairman Jay Clayton.


Related Attorney(s): Steven Lofchie, Nihal Patel, Conor Almquist
Related Practice(s): Corporate & Financial Services Litigation & Regulation, Financial Regulation, Global Litigation
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The Evolution of European CMBS 2.0

October 11, 2018

This briefing reviews developments in European CMBS since the financial crisis and focuses on (1) 2011-15 European CMBS transactions (“2011-15 European CMBS”); (2) 2017-18 European CMBS (“2017-18 European CMBS”); and (3) other innovative structures that have recently been introduced to the European market, such as bond issues backed by real estate, which draw upon features from products outside the scope of traditional European CMBS.


Related Attorney(s): Michael Gambro, Stuart Goldstein, David Quirolo, Nick Shiren, Robert Cannon, Joo Kim, Sabah Nawaz
Related Practice(s): Securitization & Asset Based Finance
Related Office(s): Charlotte, London, New York
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Agencies Propose Amendments Relaxing Capital Requirements for ADC Loans

September 28, 2018

On September 18, 2018, the three federal banking agencies – the Board of Governors of the Federal Reserve System, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation – jointly announced a proposed regulation implementing Section 214 of the Economic Growth, Regulatory Relief, and Consumer Protection Act. Section 214 effectively provides relief to banking organizations with acquisition, development or construction (ADC) lending exposure by narrowing the types of exposures that constitute a “high volatility commercial real estate exposure”, a concept relevant for determining the capital charge for such a loan under U.S. bank capital regulations.


Related Attorney(s): Scott Cammarn, James Carroll, Steven Herman
Related Practice(s): Financial Regulation, Real Estate
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New IRS Guidance Regarding Section 162(m)’s Deduction Limitation for Executive Compensation – Increased Complexity and Reduced Availability of Grandfathering

September 17, 2018

The Internal Revenue Service (the “IRS”) recently issued Notice 2018-68 (the “Notice”) that provides guidance regarding the application of Section 162(m) of the Internal Revenue Code of 1986, as amended (“Section 162(m)”) following the amendments contained in the 2017 Tax Cuts and Jobs Act (the “TCJA”). While helpful in clarifying certain issues, the Notice narrowly interprets key aspects of the amended Section 162(m) in a manner that is likely to increase the complexity of compliance and greatly restrict eligibility for grandfathering of pre-TCJA compensation arrangements.


Related Attorney(s): David Teigman, Nicholas LaSpina
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ESMA’s Final Draft Disclosure Technical Standards

August 28, 2018

On 22 August 2018, the European Securities and Markets Authority (“ESMA”) published its Final Report on the technical standards on disclosure requirements under the EU Securitisation Regulation (the “Final Report”). This annexed final draft technical standards on the disclosure requirements under the Securitisation Regulation (the “draft Disclosure Technical Standards”) (consisting of draft Disclosure RTS and draft Disclosure ITS).


Related Attorney(s): Stephen Day, Claire Puddicombe, David Quirolo, Nick Shiren, Daniel Tobias, Suzanne Bell, Robert Cannon, Assia Damianova, Sabah Nawaz
Related Practice(s): CLOs, Securitization & Asset Based Finance
Related Office(s): London
read more »

Delaware Chancery Court Orders Venture Capital Firm To Increase Terminated LLC Member’s Payout In Post-Trial Opinion

August 28, 2018

On August 13, 2018, Vice Chancellor Travis Laster of the Delaware Court of Chancery ordered Domain Associates, LLC, a venture capital firm, to pay its former member, Nimesh Shah, the fair value of his 12.1% member interest as of the date he was forced to withdraw from the LLC, potentially worth millions of dollars, rather than the value of Shah’s capital account, which was only a few hundred thousand dollars.


Related Attorney(s): Jason Halper, Nathan Bull
Related Practice(s): Corporate, Global Litigation
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M&A Update: The Importance of a High-Quality Sales Process in Determining the Outcome of an Appraisal Proceeding

August 07, 2018

Two recent decisions by the Delaware Court of Chancery underscore that the outcome of an appraisal proceeding often will turn on the quality of a company’s sale process. While recent Delaware Supreme Court appraisal jurisprudence supports relying on the negotiated merger transaction price as the most reliable evidence of a seller’s fair value, flaws in the sales process, even if not rising to the level of a breach of fiduciary duty by the seller’s board, can lead the court to reject reliance on merger consideration.


Related Attorney(s): Jason Halper, Ellen Holloman, Joshua Apfelroth, Richard Brand, William Mills, William Simpson
Related Practice(s): Global Litigation, Mergers & Acquisitions
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Delaware Chancery Court Finds Absence of Controlling Stockholder Does Not Eliminate Possibility for Adequately Pled Corporate Overpayment Claims

August 02, 2018

On July 26, 2018, Vice Chancellor Glasscock of the Delaware Court of Chancery denied in part and granted in part Defendants’ motion to dismiss in Sciabacucchi v. Charter Communications Corporation et al.  The action challenged certain transactions between Charter Communications, Inc. and its largest stockholder, Liberty Broadband Corporation, which owned approximately 26% of Charter’s outstanding common stock and had the right to designate four of ten directors on Charter’s Board.


Related Attorney(s): Jason Halper, Ellen Holloman
Related Practice(s): Corporate, Global Litigation
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EBA’s Draft EU Risk Retention Regulatory Technical Standards

July 31, 2018

On 31 July 2018, the European Banking Authority (“EBA”) published its final draft Regulatory Technical Standards on the risk retention requirements  (the “draft Risk Retention RTS”) under the EU regulation intended to lay down common rules on securitisation and to create a European framework for “simple, transparent and standardised” securitisation (the “Securitisation Regulation”).


Related Attorney(s): Stephen Day, Claire Puddicombe, David Quirolo, Nick Shiren, Daniel Tobias, Robert Cannon, Assia Damianova, Sabah Nawaz, Suzanne Bell
Related Practice(s): Securitization & Asset Based Finance
Related Office(s): London
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Unclogging the Equity of Redemption Without "DRANO": Recent New York State Decision Sheds Light on Mortgage Loans Additionally Secured by Equity Pledges

July 27, 2018

On June 19, 2018, in HH Cincinnati Textile L.P. v. Acres Capital Servicing LLC, the Supreme Court of the State of New York refused to issue a preliminary injunction to prevent the foreclosure sale of the equity interests in two borrowers under Article 9 of the Uniform Commercial Code (“UCC”). HH Cincinnati Textile L.P. and HH KC Mark Twain, L.P. (together, the “Borrowers”) owned and financed redevelopment projects on real property located out of state in Cincinnati and Kansas City. Instead of entering into a mortgage loan secured by real property and entering into a separate mezzanine loan secured by limited partnership interests in the Borrowers, the parties to the litigation entered into a single loan secured by both forms of collateral. Ultimately, the Borrowers failed to repay the loan and Acres Capital Servicing LLC, as agent for DW Commercial Finance, LLC (the “Lender”) sought to conduct a UCC foreclosure sale of the limited partnership inte

Related Attorney(s): Steven Herman
Related Practice(s): Corporate Finance
Related Office(s): New York
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Supreme Court Refuses to Extend American Pipe Tolling to Successive Class Actions

June 22, 2018

On June 11, 2018, in China Agritech, Inc. v. Resh, the United States Supreme Court held that the American Pipe tolling doctrine, which suspends the running of the statute of limitations applicable to the claims of individual class members during the pendency of a putative class action, does not toll the limitations period with respect to later-filed class actions.


Related Attorney(s): Jason Halper, Adam Magid, James Orth
Related Practice(s): Global Litigation
read more »

The Basel Committee and IOSCO Issue Criteria to Identify “Simple, Transparent and Comparable” Short-Term Securitisations

June 01, 2018

On 14 May 2018, the Basel Committee on Banking Supervision (the “Basel Committee”) and the Board of the International Organization of Securities Commissions (“IOSCO”) issued criteria for identifying “simple, transparent and comparable” (“STC”) short-term securitisations (the “Short-Term STC Criteria”).


Related Attorney(s): Stephen Day, David Quirolo, Nick Shiren, Suzanne Bell, Robert Cannon
Related Practice(s): Securitization & Asset Based Finance
Related Office(s): London
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A Look at the Proposal to Simplify the Volcker Rule

May 31, 2018

On May 30, the Federal Reserve issued a proposal (the “Proposed Regulations”) to revamp regulations implementing the Volcker Rule, a centerpiece of the Dodd-Frank Act. The 373-page proposal, developed jointly with the other federal banking agencies and the Securities and Exchange Commission (“SEC”) and the Commodity Futures Trading Commission (“CFTC”) (collectively, the “Agencies”), comes four and a half years after the original regulations were adopted.


Related Attorney(s): Scott Cammarn
Related Practice(s): Financial Regulation
Related Office(s): Charlotte, New York
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Bank Deregulation Bill Becomes Law

May 25, 2018

Yesterday, President Trump signed into law the most significant banking legislation since the enactment of the Dodd-Frank Act in 2010.  The bill – named the Economic Growth, Regulatory Relief, and Consumer Protection Act – passed its final legislative hurdle earlier this week when it was approved by the U.S. House of Representatives.  Identical legislation passed the U.S. Senate last March on a bipartisan basis.  The law makes targeted, but not sweeping, changes to several key areas of the Dodd-Frank Act. 


Related Attorney(s): Scott Cammarn
Related Practice(s): Bank Regulation, Financial Regulation
read more »

Marketplace Lending Update #3: Kabbage Heads to Court

May 10, 2018

A recently filed California lawsuit raises the stakes in the ongoing challenge to the “bank origination model.” The lawsuit, Barnabas Clothing, Inc. v. Kabbage, Inc., was filed on March 22, 2018 in Superior Court in Los Angeles and recently removed to the federal court.1 Barnabas alleges violations of state usury, false advertising, and unfair competition laws, and asserts two federal Racketeer Influenced and Corrupt Organizations (“RICO”) Act claims. Barnabas seeks to certify a class on behalf of all California-based Kabbage borrowers and requests various relief, including that the court void the Kabbage loans.


Related Attorney(s): Scott Cammarn, Kyle DeYoung, Chris Gavin, Jonathan Watkins, William Simpson
Related Practice(s): Financial Regulation, Global Litigation, Securitization & Asset Based Finance, White Collar Defense and Investigations
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Choose One: Best Interest or Full Service

April 26, 2018

On April 18, the SEC approved the publication of three releases (the “Releases”) proposing new regulatory requirements that are intended to expand and clarify the duties that broker-dealers and investment advisers owe to their clients under the Securities Exchange Act of 1934 (the “Exchange Act”) and the Investment Advisers Act of 1940 (the “Advisers Act”), respectively. The Releases were adopted by a 4-1 vote (Commissioner Stein voting no), with even the Commissioners who voted to publish the Releases expressing concerns about their substance, albeit for opposing reasons.
The first section of this memorandum provides an overview of the Releases, their significance and background to their issuance. The next three sections of the memorandum describe each of the Releases in turn. The final section of this memorandum discusses the differing viewpoints of the Commissioners and the underlying policy debates informing those viewpoints.


Related Attorney(s): Steven Lofchie, Dorothy Mehta, James Frazier, Ellen Holloman, Nihal Patel, Matthew Lefkowitz, Mark Highman, Conor Almquist
Related Practice(s): Corporate, Corporate & Financial Services Litigation & Regulation, Global Litigation
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M&A Update: Delaware Chancery Court Finds Elon Musk May Be Controlling Stockholder of Tesla Motors

April 16, 2018

On March 28, 2018, in In re Tesla Motors, Inc. Stockholder Litigation, the Delaware Court of Chancery denied a motion to dismiss a lawsuit brought by stockholders of Tesla Motors, Inc. (“Tesla” or the “Company”).  The plaintiffs alleged that Tesla’s Board of Directors, along with its Chairman and CEO, Elon Musk, breached their fiduciary duties by approving the $2.6 billion acquisition of SolarCity, which allegedly benefitted SolarCity stockholders to the detriment of Tesla stockholders.


Related Attorney(s): Joshua Apfelroth, Jason Halper, William Mills
Related Practice(s): Corporate, Global Litigation, Mergers & Acquisitions
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Marketplace Lending Update #2: Another Rocky Mountain Remand

March 29, 2018

Last week, Colorado courts issued several new rulings related to marketplace lending.  First, the federal court in Colorado remanded another enforcement action brought by the Administrator of the Colorado Consumer Credit Code against Marlette Funding (“Marlette”), which had been doing business as a marketplace lender in Colorado under the name Best Egg.  Second, the federal court dismissed two parallel actions brought in federal court brought by WebBank and Cross River Bank to halt the state court proceedings.  These recent rulings illustrate the risks that persist in some states for marketplace lenders utilizing the bank origination model. 


Related Attorney(s): Scott Cammarn, Chris Gavin, Jason Halper, Kyle DeYoung, Jonathan Watkins, Jared Stanisci
Related Practice(s): Corporate & Financial Services Litigation & Regulation, Financial Regulation, Global Litigation
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M&A Update: A Trio of Delaware Decisions Discount Deal Price In Appraisal Litigation

March 26, 2018

In a trio of appraisal decisions, Delaware courts declined to use the deal price as the best evidence of fair value, instead using discounted cash flow analyses (“DCF”) and the unaffected market price to determine fair values below the merger consideration. Building on the trend reflected in the Delaware Supreme Court’s high-profile 2017 decisions in Dell, Inc. v. Magnetar Glob. Event Driven Master Fund Ltd. and DFC Global Corp. v. Muirfield Value Partners (discussed in our 2017 year-in-review), L.P., the Delaware Court of Chancery’s recent decisions in Verition Partners Master Fund Ltd. v. Aruba Networks, Inc. and In re Appraisal of AOL Inc., and the Delaware Supreme Court’s decision in Merlin Partners, L.P. v. SWS Group, Inc. further underscore the ability of companies and their boards to successfully contest dissenting shareholders seeking appraisal. 


Related Attorney(s): Marianna Wonder, Jared Stanisci, William Simpson, William Mills, Jason Halper, Nathan Bull, Joshua Apfelroth
Related Practice(s): Corporate, Global Litigation, Mergers & Acquisitions
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Under Advisement: SEC Scrutinizes Wealth Management Industry

March 21, 2018

Recent events have made it clear that there is an increased regulatory focus on the conduct of investment professionals in the wealth-management industry.  The Securities and Exchange Commission (“SEC”) in particular has emphasized that certain activities by investment advisers directly impacting retail investors, such as inadequate fee disclosure, dubious sales practices and inappropriate steering to unsuitable strategies and products, is a top enforcement priority under the leadership of SEC Chairman Jay Clayton.


Related Attorney(s): Matthew Lefkowitz, Kendra Wharton, Lex Urban, Dorothy Mehta, Todd Blanche, Kyle DeYoung, Jason Halper
Related Practice(s): Global Litigation, White Collar Defense and Investigations
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Health Care Investors Beware: U.S. Attorney Sues Private Equity Firm For Portfolio Company’s Alleged Billing Fraud

March 20, 2018

The U.S. Attorney for the Southern District of Florida has recently decided to intervene in a lawsuit brought under the Federal False Claims Act and initiated by a whistleblower. The U.S. Attorney has filed his own complaint-in-intervention. (U.S. ex rel. Medrano v. Diabetic Care Rx, LLC, No. 15-cv-62617, S.D. Fla.) What is significant about this case is that the federal government has also named a private equity (“PE”) firm (Reardon, Lewis & Haden, Inc., or RLH) as a defendant.


Related Attorney(s): Richard Brand
Related Practice(s): Corporate, Private Equity
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The UK Government’s Spring Statement

March 15, 2018

The Chancellor of the Exchequer delivered his first Spring Statement on 13 March 2018. As much of the United Kingdom Government’s substantive taxation measures will, as announced last year, be introduced in an Autumn budget, the Spring Statement contained very few substantive taxation measures.


Related Attorney(s): Adam Blakemore, Catherine Richardson
Related Practice(s): Tax
Related Office(s): London
read more »

Marketplace Lending Update: Who’s My Lender?

March 14, 2018

Over the last several weeks, two notable cases in federal court challenging certain aspects of the business model of marketplace lending companies headed down separate paths.  First, in an action brought against Kabbage, Inc. and Celtic Bank Corporation in the United States District Court for the District of Massachusetts, the parties agreed to, and the Court approved, a stipulation staying the proceedings pending an arbitrator’s review of whether the claims in that action are covered by the arbitration provisions in the governing loan agreements.  Second, in an action against marketplace lender Avant in the United States District Court for the District of Colorado, the Court accepted a magistrate judge’s recommendation to remand the case to state court over Avant’s objection.


Related Attorney(s): Scott Cammarn, Chris Gavin, Jason Halper, Kyle DeYoung, Jonathan Watkins, Jared Stanisci
Related Practice(s): Financial Regulation, Global Litigation
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Revisions Proposed to the UK Corporate Governance Code: An Overview and Comparison with Aspects of US Corporate Governance

February 23, 2018

In December 2017, the UK Financial Reporting Council (the “FRC”) proposed revisions to the UK Corporate Governance Code. These revisions will impact companies with a Premium Listing of equity shares in the UK, which are required under the Listing Rules to state in their annual report and accounts how they have applied the Code. The revisions are designed to achieve long-term company growth through enhanced corporate accountability mechanisms and are aimed at consolidating the UK’s reputation as a leading environment for transparent and efficient international business. Many of the proposed revisions, if enacted, would facilitate greater alignment between UK and US corporate governance law and regulations.


Related Attorney(s): Ellen Holloman, Jason Halper, Jared Stanisci, Hyungjoo Han
Related Practice(s): Global Litigation
Related Office(s): London, New York
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SCOTUS Blows the Whistle: Internal Whistleblowers Take Note

February 22, 2018

A whistleblower is not a whistleblower unless he reports suspected securities law violations to the SEC.  And, if the whistleblower does not report suspected misconduct to the SEC, the whistleblower is not protected against retaliation by the employer. So said the Supreme Court on February 21, 2018, in Digital Realty Trust, Inc. v. Somers; the Supreme Court ruled that the Dodd-Frank Act’s whistleblower anti-retaliation provisions apply only to individuals who have reported possible securities law violations to the U.S. Securities and Exchange Commission (“SEC”).


Related Attorney(s): Jodi Avergun, Kyle DeYoung, Lex Urban, Kendra Wharton
Related Practice(s): Global Litigation, White Collar Defense and Investigations
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Court of Appeals Decision: Managers of Open-Market CLOs Not Subject to Dodd-Frank Risk Retention

February 15, 2018

On February 9, 2018, a three-judge panel of the U.S. Court of Appeals for the District of Columbia Circuit unanimously ruled in favor of the Loan Syndications and Trading Association (“LSTA”) in its lawsuit against the Securities and Exchange Commission (“SEC”) and the Board of Governors of the Federal Reserve System (“FRB”) over the application of U.S. credit risk retention requirements to managers of open-market collateralized loan obligations (“CLOs”).


Related Attorney(s): Peter Williams, Neil Weidner, Daniel Tobias, Nathan Spanheimer, Nick Shiren, David Quirolo, Claire Puddicombe, Gregg Jubin, Jason Halper, David Gingold, Robert Cannon, Joseph Beach, Richard Schetman, Ivan Loncar
Related Practice(s): CLOs, Global Litigation, Securitization & Asset Based Finance
read more »

Contracting Party Beware: The Implied Covenant Will Not Save You From Your Agreement If You Negotiated Away Your Rights

February 12, 2018

On February 1, 2018, the Delaware Court of Chancery granted defendants’ motion to dismiss an action brought by minority unitholders of Trumpet Search, LLC (“Trumpet” or the “Company”). The defendants were other unitholders that collectively held a majority of the membership units in Trumpet and, under the governing operating agreement (“OA”), had the power to appoint four of the seven managers on the Trumpet board of directors. Vice Chancellor Glasscock’s decision, Christopher Miller et al. v. HCP & Co., et al., C.A. No. 2017-0291-SG (Del. Ch. Feb. 1, 2018), is a powerful reminder that the broad freedom of contract that Delaware law accords entities such as LLCs offers both the promise of great latitude to contracting parties and the threat of serious pitfalls for parties that fail to carefully protect their interests in the agreement. The decision also underscores the limits on an implied covenant breach claim under Delaware law.


Related Attorney(s): Jason Halper
Related Practice(s): Global Litigation
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FTC Announces 2018 Thresholds for Merger Control Filings Under HSR Act and Interlocking Directorates Under the Clayton Act

February 01, 2018

The 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 30 days after the date of their publication in the Federal Register.  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.


Related Attorney(s): Ngoc Hulbig
Related Practice(s): Global Litigation
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2017 Year in Review: Corporate Governance Litigation & Regulation

January 09, 2018

Delaware courts have recently issued decisions that have fundamentally altered corporate governance litigation.  In 2016, the Court of Chancery changed the landscape for resolution of class actions on the basis of “disclosure-only” settlements, i.e., settlements without any monetary payment to the class. 


Related Attorney(s): William Simpson, Jaclyn Hall, Adam Magid, Jared Stanisci, Nathan Bull, Jason Halper
Related Practice(s): Corporate, Global Litigation, White Collar Defense and Investigations
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Avoiding Patent Exhaustion: Structuring Agreements in View of the Latest Jurisprudence

January 05, 2018

What do the principles of patent exhaustion have to do with the convenience of disposable consumer products such as individual coffee/tea/beverage pods, disposable diagnostic test strips, refillable ink cartridges and the like? Although transparent to consumers, these principles are important to the innovative companies creating these products and protecting them through IP rights. How a company controls the proprietary rights to make and/or market these components can have profound consequences on maintaining its competitive edge in the marketplace.


Related Attorney(s): Howard Wizenfeld, Dorothy Auth Ph.D.
Related Practice(s): FinTech, Global Litigation, Intellectual Property, Patent & Trade Secret Litigation, Patent Preparation & Prosecution
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2017 Year in Review: Securities Litigation and Regulation

January 04, 2018

The securities litigation and regulatory landscape in 2017 defies simple categorization.  Plaintiffs filed 226 new federal class actions in the first half of 2017, more than double the average rate over the last 20 years, and an additional 99 federal class actions in the third quarter of 2017.  In contrast, new SEC enforcement proceedings declined.


Related Attorney(s): Jason Halper, Nathan Bull, Kyle DeYoung, Adam Magid, Jared Stanisci, James Orth, Jodi Avergun
Related Practice(s): Corporate & Financial Services Litigation & Regulation, Global Litigation, Securities Enforcement and Compliance, White Collar Defense and Investigations
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M&A Update: Delaware Court of Chancery Enforces Oral Agreement to Settle Proxy Contest

December 27, 2017

In a December 8th decision (Sarissa Capital Domestic Fund LP, et. al. v. Innoviva, Inc.), the Delaware Court of Chancery ruled in favor of Sarissa Capital Domestic Fund LP and certain of its affiliates in concluding that Sarissa and Innoviva, Inc. entered into a binding, oral agreement to settle a proxy contest prior to Innoviva’s 2017 annual meeting of shareholders.


Related Attorney(s): Joshua Apfelroth, Richard Brand, William Mills
Related Practice(s): Corporate, Mergers & Acquisitions
read more »

Fifteen Key Provisions in the Final Tax Reform Bill

December 21, 2017

On December 20, 2017, the Senate and House of Representatives passed H.R. 1, known as the “Tax Cuts and Jobs Act” (“Tax Reform Bill”).  President Trump is expected to sign the Tax Reform Bill by early January.  The Tax Reform Bill would represent the most significant revision to the tax code in over thirty years.  Our summary below highlights several of the most significant changes that will impact taxpayers.


Related Attorney(s): Jason Schwartz, Linda Swartz, Mark Howe, Gary Silverstein, David Teigman
Related Practice(s): Tax
Related Office(s): New York, Washington
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The EBA Publishes Draft Regulatory Technical Standards on the Risk Retention Requirements Under the EU Securitisation Regulation

December 21, 2017

On 15 December 2017, the European Banking Authority (“EBA”) published a consultation paper (the “Consultation Paper”) containing draft Regulatory Technical Standards on the risk retention requirements(the “Risk Retention RTS”) under the EU regulation intended to lay down common rules on securitisation and to create a European framework for “simple, transparent and standardised” securitisation (the “Securitisation Regulation”).

 


Related Attorney(s): Assia Damianova, Stephen Day, David Quirolo, Nick Shiren, Daniel Tobias, Suzanne Bell, Robert Cannon, Claire Puddicombe, Sabah Nawaz
Related Practice(s): CLOs, Securitization & Asset Based Finance
Related Office(s): London
read more »

Provisions of the Final Tax Reform Bill Affecting Nonprofit Tax-Exempt Organizations

December 21, 2017

On December 20, 2017, the Senate and House of Representatives passed H.R. 1, known as the “Tax Cuts and Jobs Act” (“Tax Reform Bill”).  President Trump is expected to sign the Tax Reform Bill by early January.  The Tax Reform Bill would represent the most significant revision to the tax code in over thirty years.  Our summary below highlights the key provisions in the Tax Reform Bill that will impact not-for-profit, tax-exempt organizations. Several other provisions are summarized in our Tax Update, “Fifteen Key Provisions in the Final Tax Reform Bill.” Most changes are generally effective as of 2018.


Related Attorney(s): Linda Swartz
Related Practice(s): Not-for-Profit Institutions, Tax
read more »

M&A Update: Delaware Supreme Court Emphasizes Deal Price in Appraisal Litigation

December 19, 2017

On December 14, the Delaware Supreme Court released a long-awaited opinion in Dell Inc. v. Magnetar Global Event Driven Master Fund Ltd. that reversed and remanded a high-profile appraisal case decided by the Delaware Court of Chancery in 2016.  The Delaware Supreme Court built on its recent opinion in DFC Global Corporation v. Muirfield Value Partners L.P. to reiterate the potential for negotiated merger consideration to constitute the most important evidence of fair value in appraisal actions.


Related Attorney(s): William Simpson, Marianna Wonder, Nathan Bull, Jason Halper, Joshua Apfelroth, William Mills
Related Practice(s): Corporate, Global Litigation, Mergers & Acquisitions
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Seventeen Provisions to Watch in the Senate Tax Reform Bill

December 12, 2017

On December 2, 2017, the Senate passed a tax reform bill that differs in some key aspects from the tax reform bill the House approved on November 16, 2017. A House and Senate conference committee will begin work to resolve the differences between the House and Senate bills.  Once the conference committee has reached an agreement, both the House and Senate must vote to pass a final bill in identical form before President Trump can sign the tax reform bill into law.  Key provisions of the Senate bill are summarized below.  We will update you as significant developments unfold.


Related Attorney(s): Jason Schwartz, Linda Swartz, Gary Silverstein, Mark Howe
Related Practice(s): Tax
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Subscription Credit Facilities: Misperceptions Remain Aplenty

December 07, 2017

On November 15, 2017, audit, tax and consulting firm PwC published a thought leadership piece titled:  “Sub-line facilities: end of the road?” (the “Article”).  While the subscription credit facility (“Subscription Facility”) market has become accustomed to seeing inflammatory headlines in the financial press in recent years, it is somewhat unsettling to see a thought leadership piece from the likes of PwC bear such an ominous title.  PwC is an experienced, global, preeminent financial institution with countless touch points with the private equity industry.  The Article’s title suggests that PwC’s audit or tax practices might have recent experiences or observations that support such a dire headline.  Reading the article, however, that does not at all appear to be the case.


Related Attorney(s): Michael Mascia
Related Practice(s): Securitization & Asset Based Finance
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UK Budget 2017 – Key Tax Measures

November 23, 2017

The Chancellor of the Exchequer delivered the UK Budget for 2017 on 22 November 2017.  Delivered against the backdrop of the UK’s ongoing negotiations to exit from the European Union, the Budget featured a significant downgrading of UK economic growth forecasts alongside a more encouraging reduction of public borrowing to less than 2 per cent of national income by 2020-2021. 

In this challenging economic situation, the Chancellor’s Budget navigated a careful passage in tax policy terms.  While there were some eye-catching proposals, including the abolition of stamp duty on real estate purchases of up to £300,000 for first-time buyers, the Government’s overall message in the Budget to the UK’s corporate and financial sectors was one of continuity rather than radical change.


Related Attorney(s): Adam Blakemore, Catherine Richardson
Related Practice(s): Tax
Related Office(s): London
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M&A Update: SEC Issues Guidance on Issuers’ Ability to Exclude Shareholder Proposals under Rule 14a-8

November 20, 2017

On November 1, 2017, the staff of the Division of Corporate Finance of the Securities and Exchange Commission published Staff Legal Bulletin No. 14I.  SLB 14I provides additional guidance to companies and shareholders regarding circumstances in which the Staff will consider granting no-action relief for a company to exclude a shareholder proposal from its proxy statement pursuant to Rule 14a-8.


Related Attorney(s): Joshua Apfelroth, Richard Brand, William Mills, Janet Hsueh
Related Practice(s): Corporate, Mergers & Acquisitions
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Fifteen Provisions to Watch in the Tax Reform Proposals

November 17, 2017

On November 14, 2017, Senate Finance Committee Chairman, Orrin Hatch (R-Utah), released his modified tax reform plan (“Senate Bill”), which adopts some of the House Bill proposals (as amended) (“House Bill”), but also includes some important differences as highlighted below.  Discussions are ongoing and the notable provisions summarized below may change and/or be replaced by new provisions.  We will update you as significant developments unfold.


Related Attorney(s): Mark Howe, Gary Silverstein, Linda Swartz, Jason Schwartz
Related Practice(s): Tax
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Autumn Budget 2017 Predictions

November 14, 2017

The Chancellor of the Exchequer's first Autumn Budget under the new budget timetable, which sees the Autumn Statement replaced with an Autumn Budget (and the Spring Budget replaced with a Spring Statement), will be announced on Wednesday 22 November 2017.  This Clients & Friends Memo considers tax announcements which might be made in the Autumn Budget


Related Attorney(s): Adam Blakemore, Catherine Richardson
Related Practice(s): Tax
Related Office(s): London
read more »

Potential Impact of House Tax Reform Bill on Nonprofit Tax-Exempt Organizations

November 10, 2017

On November 2, 2017, Republicans in the U.S. House of Representatives unveiled their tax reform bill (the “Bill”), entitled the “Tax Cuts and Jobs Act.” The Bill proposes significant changes to the current U.S. federal income tax regime affecting businesses and individuals, several of which we summarized in previous updates. This update focuses on the key provisions in the Bill (as amended by House Ways and Means Chair Kevin Brady) that would impact not-for-profit, tax-exempt organizations. The proposed changes would be generally effective for tax years beginning after 2017.


Related Attorney(s): Linda Swartz
Related Practice(s): Not-for-Profit Institutions, Tax
read more »

Effects of House Tax Reform Bill on Securitizations and Funds

November 09, 2017

On November 2, 2017, Republicans in the House of Representatives released their long-anticipated tax reform bill (the “Bill”).  The Bill, which is entitled the “Tax Cuts and Jobs Act,” includes significant changes to the current U.S. federal income tax regime, several of which we summarized in a previous update.  This update summarizes provisions in the Bill that could, if enacted in their current form, significantly affect securitization vehicles and investment funds.


Related Attorney(s): Jason Schwartz, Linda Swartz, Gary Silverstein, Mark Howe
Related Practice(s): Tax
read more »

Eleven Business Provisions to Watch in the House Tax Reform Bill

November 06, 2017

On November 2, 2017, Republicans in the House of Representatives released their long-anticipated tax reform bill (the “Bill”) which includes significant changes to the current U.S. federal income tax regime for businesses and individuals. While other members of the House of Representatives will comment on this Bill and significant changes are expected, the provisions noted below warrant close attention.


Related Attorney(s): Mark Howe, Gary Silverstein, Linda Swartz
Related Practice(s): Tax
Related Office(s): New York
read more »

PCAOB Rules to Require Reporting of Critical Audit Matters and Enhanced Details in Public Company Audit Reports

November 03, 2017

Auditors of public companies will be required to move beyond a simple “pass or fail” opinion and include significant new information in audit reports under rules proposed this year by the Public Company Accounting Oversight Board (the “PCAOB”) and recently approved by the Securities and Exchange Commission (the “SEC”).


Related Attorney(s): J. Robert Duncan
Related Practice(s): White Collar Defense and Investigations
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European Parliament Votes to Adopt the Securitisation and CRR Amendment Regulations

October 26, 2017

On 26 October 2017, the European Parliament voted in plenary session to adopt the EU regulation intended to lay down common rules on securitisation and to create a European framework for “simple, transparent and standardised” (“STS”) securitisation (the “Securitisation Regulation”). The European Parliament also voted to adopt the EU regulation amending the Capital Requirements Regulation (the “CRR”) (the “CRR Amendment Regulation”) (together, the “Regulations”).

 


Related Attorney(s): Stephen Day, David Quirolo, Nick Shiren, Daniel Tobias, Suzanne Bell, Robert Cannon, Claire Puddicombe, Sabah Nawaz
Related Practice(s): Securitization & Asset Based Finance
Related Office(s): London
read more »

European Fund Finance Market Update

October 19, 2017

On October 11, 2017, the Fund Finance Association (the “FFA”) hosted its 3rd Annual European Fund Finance Symposium (the “Conference”) at the Landmark Hotel in London.  Forty-two market participants sponsored the Conference and 444 people attended, both substantial increases over years past.  There were multiple panel sessions covering topics including private equity fund formation, subscription credit facility transaction structures (“Facilities”), Hybrid and NAV facilities (“NAV Facilities”) and forecasts for future market developments.  This article provides a market update of the European Fund Finance market for those unable to attend the Conference.


Related Attorney(s): Michael Mascia, Jeremy Cross, Wesley Misson
Related Practice(s): Fund Finance
read more »

Wild West No Longer: The SEC Brings Enforcement Actions Against Two Initial Coin Offerings

October 12, 2017

Ending months of speculation about when regulators would wade into the world of Bitcoin and other digital currencies, the U.S. Securities and Exchange Commission (“SEC”) recently brought its first enforcement actions against two Initial Coin Offerings (“ICOs”) which it alleges effectively operated as high-tech Ponzi schemes.  The two investment schemes, both run by the same New York businessman, Maksim Zaslavskiy, solicited money from investors in exchange for digital currency (“tokens” or “coins”) which were purportedly tied to investments in real estate and diamonds that would appreciate in value over time.


Related Attorney(s): Lex Urban, John Moehringer, Kyle DeYoung
Related Practice(s): Cybersecurity and Data Privacy, White Collar Defense and Investigations
read more »

UK Criminal Finances Act 2017 Commences with New Tax Evasion Offences, Anti-Money Laundering Rules, and Asset Forfeiture Provisions

October 10, 2017

On 30 September 2017, Part 3 of the UK Criminal Finances Act 2017 (the “CF Act”) came into force creating new corporate offences for failing to prevent the facilitation of UK or overseas tax evasion.  Similar to the standard set forth for bribery in the UK Bribery Act 2010 (the “Bribery Act”), the new tax offences effectively impose strict liability on a company whose employees are found to have facilitated tax evasion, unless the company can show it had reasonable prevention procedures in place.  At the same time, the law creates new measures, which are set to come into effect in the near future, aiming to tackle money laundering and corruption, facilitate the recovery of the proceeds of crime and terrorist financing and provide authorities with new investigative and recovery powers.  It is the latest effort in a global trend among UK, US, and other international regulators to aggressively battle tax evasion, money laundering, and other financial crimes worldwide

Related Attorney(s): Adam Blakemore
Related Practice(s): Tax, White Collar Defense and Investigations
read more »

Equifax Data Breach Highlights SEC Disclosure Obligations for Public Companies in the Wake of Cybersecurity Attacks

September 18, 2017

On September 7, 2017, Equifax, one of the country’s three primary credit reporting bureaus, announced it had suffered a major cybersecurity breach that could potentially affect half of the U.S. population.   According to the company, it learned on July 29, 2017, that in mid-May 2017, hackers had gained access to its information systems and stole Social Security numbers, birth dates, addresses, and driver’s license numbers for approximately 143 million of its customers, along with credit card numbers for over 200,000 customers.  Since then, it has been separately reported that during the approximately five weeks between discovery of the breach and public disclosure, three senior executives sold approximately $1.8 million in Equifax shares.   Meanwhile, since Equifax’s announcement, the company has lost $4 billion in market value, spurring at least one securities class action lawsuit along with a wave of consumer class action lawsuits and scrutiny by Congress.   In a

Related Attorney(s): Stephen Weiss, Kyle DeYoung
Related Practice(s): Cybersecurity and Data Privacy, White Collar Defense and Investigations
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Compliance with Initial New York DFS Cybersecurity Rules Now Mandatory

September 12, 2017

As of August 28, 2017, insurance companies, banks, and other financial services companies regulated by the New York Department of Financial Services (“DFS”) must comply with an initial wave of new cybersecurity requirements intended to protect customer data, including maintaining written cybersecurity policies and procedures, designating a Chief Information Security Officer, and providing notice to the DFS of certain cybersecurity events.


Related Attorney(s): John Moehringer
Related Practice(s): Cybersecurity and Data Privacy, Global Litigation, Intellectual Property, White Collar Defense and Investigations
read more »

FinCEN Issues New Geographic Targeting Order for Shell Companies Purchasing High-End Residential Real Estate

August 28, 2017

In its latest effort to combat money laundering within the real estate sector, the Financial Crimes Enforcement Network (“FinCEN”) has issued a new Geographic Targeting Order (“GTO”) broadening its scrutiny of shell companies used to purchase luxury residential property in several key U.S. markets.


Related Attorney(s): Jodi Avergun, Steven Herman, Nicholas Brandfon
Related Practice(s): Real Estate, White Collar Defense and Investigations
read more »

D.C. Circuit Vacates and Remands FERC Approval of Southeast Market Pipelines Project

August 25, 2017

On Tuesday, August 22, 2017, the U.S. Court of Appeals for the District of Columbia Circuit vacated and remanded an order by the Federal Energy Regulatory Commission authorizing the construction and operation of the Southeast Market Pipelines Project.


read more »

Delaware Court of Chancery Extends Business Judgment Rule Deference to Controller Transactions Involving Third-Parties

August 23, 2017

On August 18, 2017, the Delaware Court of Chancery granted defendants’ motion to dismiss a class action brought by former minority stockholders of Martha Stewart Living Omnimedia, Inc. against Martha Stewart and Sequential Brands Group, Inc.


Related Attorney(s): Jason Halper
Related Practice(s): Global Litigation
read more »

Will Blockchain Render the Bill of Lading a Relic?

August 21, 2017

A bill of lading is an old form of legal document.  As merchants in the seventeenth and eighteenth centuries ceased accompanying their goods on ships and entrusted their proper delivery to the carrier, a need arose for a tangible and transferable document evidencing which party was entitled to receive the goods at their destination.


Related Attorney(s): Jeffrey Nagle, Christopher McDermott
Related Practice(s): Corporate, Financial Regulation
read more »

US Second Circuit Finds Testimony Compelled by UK Regulators to be Inadmissible in Criminal Proceedings

July 26, 2017

Creating a potential new impediment for collaboration between UK and US investigators, the Court of Appeals for the Second Circuit in New York recently held that evidence derived from compelled testimony cannot be used in a criminal case in the United States, even if the testimony was lawfully obtained in the foreign jurisdiction.  In overturning the convictions of two former Rabobank traders charged with manipulation of the London Interbank Offered Rate, the Second Circuit in United States v. Allen adopted a broad view of the Fifth Amendment right against involuntary self-incrimination as it applies to statements made to foreign regulators and law enforcement.  The decision will make it more likely that compelled statements made to investigators in the UK and elsewhere will be inadmissible against criminal defendants in the US.


Related Attorney(s): Jodi Avergun
Related Practice(s): Global Litigation, White Collar Defense and Investigations
Related Office(s): London, Washington
read more »

Asia-Pacific Fund Finance Market Update

June 29, 2017

On June 19, 2017, the Fund Finance Association hosted the inaugural Asia-Pacific Fund Finance Symposium at the Four Seasons Hotel in Hong Kong (the “Conference”).  Twenty different market participants sponsored the Conference and 247 people attended, including an impressive turn‑out from private equity fund sponsor personnel. 


Related Attorney(s): Michael Mascia, Wesley Misson, Jeremy Cross
Related Practice(s): Fund Finance
read more »

Agreement Reached on Form of New EU Securitisation Regulation and on Amendments to the Capital Requirements Regulation

June 27, 2017

The EU legislative institutions have now agreed compromise amendments to the proposed EU regulation intended to lay down common rules on securitisation and to create a European framework for “simple, transparent and standardised” (“STS”) securitisation. They have also agreed compromise amendments to the proposed regulation amending the Capital Requirements Regulation, which includes a new hierarchy of approaches for calculating exposures to securitisation transactions and provisions designed to result in the regulatory capital requirements for exposures to STS securitisations being lower than those for non-STS securitisations. This memorandum discusses the compromises reached on these EU regulations.


Related Attorney(s): Stephen Day, David Quirolo, Nick Shiren, Daniel Tobias, Suzanne Bell, Robert Cannon, Claire Puddicombe
Related Practice(s): Securitization & Asset Based Finance
Related Office(s): London
read more »

Financial CHOICE Act Would Complicate the Choices in Bringing and Defending Against SEC Cases

June 12, 2017

Legislation passed by the U.S. House of Representatives threatens to shake up the Securities and Exchange Commission’s enforcement program in a historic manner.


Related Attorney(s): Jason Halper, Jodi Avergun, Lex Urban, Kendra Wharton
Related Practice(s): Global Litigation, Securities Enforcement and Compliance, White Collar Defense and Investigations
read more »

European Commission Adopts Proposal to Amend EMIR

May 11, 2017

On 4 May 2017, the European Commission (the “Commission”) adopted a proposal for a Regulation amending Regulation (EU) No 648/2012 (“EMIR”) as regards the clearing obligation, the suspension of the clearing obligation, the reporting requirements, the risk-mitigation techniques for OTC derivatives contracts not cleared by a central counterparty, the registration and supervision of trade repositories and the requirements for trade repositories (the “Proposal”).


Related Attorney(s): David Quirolo, Nick Shiren, Assia Damianova
Related Practice(s): CLOs, Securitization & Asset Based Finance
Related Office(s): London
read more »

The Responsible Corporate Officer Doctrine in the Wake of DeCoster

May 03, 2017

The most important Park doctrine case in over forty years may be heading to the Supreme Court – but not if the federal government has its way. The Responsible Corporate Officer doctrine (“RCO doctrine”), commonly referred to as the Park doctrine, permits the government to prosecute employees for corporate misconduct when they are in a “position of authority” and fail to prevent or correct a violation of the Food, Drug and Cosmetic Act (“FDCA”).


Related Attorney(s): Anne Tompkins, Stephen Weiss
Related Practice(s): White Collar Defense and Investigations
read more »

The Delaware Chancery Court’s Columbia Pipeline and Saba Software Decisions: Lessons beyond Corwin

April 27, 2017

Two recent decisions from the Delaware Court of Chancery faithfully apply the Delaware Supreme Court’s holding in Corwin v. KKR Financial Holdings LLC.  No surprise there.  Corwin held that when “a transaction not subject to the entire fairness standard is approved by a fully informed, uncoerced vote of the disinterested stockholders, the business judgment rule applies.”  That is so even if, pre-Corwin, an all-cash merger otherwise would have been subject to enhanced scrutiny under Revlon


Related Attorney(s): Jason Halper, Hyungjoo Han
Related Practice(s): Global Litigation, Mergers & Acquisitions
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UK Proposal for Register of Foreign Beneficial Ownership of Real Estate Continues Global Trend Toward Transparency

April 20, 2017

On 5 April 2017, the UK Department for Business, Energy & Industrial Strategy (the “Department”) issued a call for evidence (the “proposal”) for a public register (the “foreign ownership register”) detailing the beneficial ownership of foreign companies or foreign entities that own or buy UK property, or that participate in certain UK central government procurement activities.[1] The proposal responds to recent pressure on the UK government to enhance the transparency of foreign property investment, and is the latest global effort to increase transparency and prevent legal entities being used to camouflage money laundering and other corrupt activities.

 


Related Attorney(s): Jodi Avergun
Related Practice(s): Global Litigation, White Collar Defense and Investigations
Related Office(s): London, Washington
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Broadband Internet Service Providers In Regulatory Limbo After Repeal of FCC Privacy and Data Security Rules

April 20, 2017

Potentially signaling the end of the short-lived stint by the Federal Communication Commission (“FCC”) to regulate consumer data privacy on the internet, the Trump Administration recently repealed Obama-era data privacy and security rules for broadband providers.  The action, passed by Congress and signed by President Trump pursuant to the Congressional Review Act, completely rescinds the rules that would have gone into effect later this year.  


Related Attorney(s): Keith Gerver
Related Practice(s): Cybersecurity and Data Privacy, White Collar Defense and Investigations
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Proposed Federal Cybersecurity Regulations for Financial Institutions Face an Uncertain Future

March 13, 2017

Last year’s proposed comprehensive framework for cybersecurity rules for large financial institutions is suddenly facing an uncertain future.


Related Attorney(s): Ruth Merisier
Related Practice(s): Cybersecurity and Data Privacy, White Collar Defense and Investigations
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The EU’s New Data Protection Regulation – Are Your Cybersecurity and Data Protection Measures up to Scratch?

March 06, 2017

In the context of increasing cyber-attacks on major corporate organisations, small businesses and government, data protection and cybersecurity is a hot topic. Added to this, the GDPR—a strict new regulatory regime in Europe—will commence in May 2018 and has implications for both non-European and European-based organisations.


Related Attorney(s): John Moehringer, Melis Acuner
Related Practice(s): Cybersecurity and Data Privacy, Global Litigation
Related Office(s): London, New York, Washington
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Signs, Signs, Everywhere a Sign: Changes in Store for SEC Enforcement under the Trump Administration

March 06, 2017

Even before President Trump’s nomination of Jay Clayton as the next Chairman of the Securities and Exchange Commission (“SEC” or “Commission”), signs have been appearing that changes are afoot within the Division of Enforcement (“Enforcement Division”). The power of Enforcement Division attorneys in the field to issue subpoenas and open new investigations was recently scaled back, and now will require personal sign-off by the Director of Enforcement in Washington, D.C.


Related Attorney(s): Nihal Patel, J. Robert Duncan, Anne Tompkins, Scott Cammarn, Jodi Avergun
Related Practice(s): Securities Enforcement and Compliance, White Collar Defense and Investigations
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M&A Update: Toehold Accumulations: Further Convergence Between Private Equity and Hedge Fund Strategies

March 02, 2017

Over the past few years, private equity funds and hedge funds have increasingly employed tactics traditionally employed by the other as part of their value maximization strategies.  Underscoring this convergence has been a willingness by private equity funds to incorporate a “toehold” accumulation strategy into their investment model.


Related Attorney(s): Joshua Apfelroth, Richard Brand, Jason Halper, William Mills
Related Practice(s): Bank Regulation, Corporate, Global Litigation, Mergers & Acquisitions, Private Equity
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New York State Releases Final “First-In-Nation” Cybersecurity Rules

February 28, 2017

The New York Department of Financial Services (“DFS”) recently released the much-anticipated final version of its “first-in-nation” cybersecurity rules that it first announced in the fall of last year.1  The rules require a wide range of insurance, banking, and financial services companies to adopt robust cybersecurity programs to protect sensitive and confidential data from theft or harm by cybercriminals. 


Related Attorney(s): John Moehringer, Howard Wizenfeld
Related Practice(s): Cybersecurity and Data Privacy, Intellectual Property, White Collar Defense and Investigations
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New York Seeks to Regulate Fintech Lending Market

February 21, 2017

New York is joining a small but growing list of states seeking to regulate the “bank-origination” method of online lending.


Related Attorney(s): Scott Cammarn, Joseph Beach
Related Practice(s): Bank Regulation, Financial Regulation, Marketplace Lending and FinTech, Securitization & Asset Based Finance
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The Trump Administration: President Trump Issues Executive Actions on Dodd-Frank and the DOL Fiduciary Rule

February 06, 2017

On February 3, 2017, President Trump signed two executive actions intended to provide a framework for scaling back the Dodd-Frank Act (“Dodd-Frank Act”)  and rescinding or revising the Department of Labor’s “fiduciary rule.” 

As we have previously written, President Trump and the Republican-majority Congress have various levers to rapidly revise and reverse the previous administration’s policies, short of legislative change.  Such mechanisms include the Congressional Review Act  and various forms of executive action, including executive orders, discretionary agency directives and enforcement decisions.  These executive actions are likely the beginning of a series of changes intended to reduce the regulatory burden on U.S. financial markets.

This memorandum discusses the two executive actions and their significance within a broader agenda to reshape financial regulation.


Related Attorney(s): Matthew Lefkowitz, Nihal Patel, Lary Stromfeld, Steven Lofchie, James Frazier, Scott Cammarn
Related Practice(s): Financial Regulation
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NIST’s Draft Update to Cybersecurity Framework Focuses on Third-Party Vendors and the Cost-Effectiveness of Cybersecurity Programs

February 01, 2017

On January 10, 2017, the National Institute of Standards and Technology (“NIST”) released a proposed update to its popular cybersecurity blueprint for organizations and businesses, known as the Framework for Improving Critical Infrastructure Cybersecurity (the “Framework”).  The updated Framework, titled “Draft Version 1.1,” includes, among other things, new provisions for assessing the cybersecurity risk posed by third-party vendors and the addition of a new section on measuring the cost effectiveness of cybersecurity programs.


Related Attorney(s): Keith Gerver
Related Practice(s): Cybersecurity and Data Privacy, White Collar Defense and Investigations
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Losing Your Marbles: A Sensible Interpretation of Section 316 of the Trust Indenture Act

January 27, 2017

The U.S. Court of Appeals for the Second Circuit issued its ruling in Marblegate Asset Management, LLC v. Education Management Corp. that provided much needed clarity to creditors and issuers involved in out-of-court restructurings affecting noteholders.  The issue for the court was whether Education Management Corp. violated the Trust Indenture Act (the “TIA”) when it implemented a restructuring that impaired the rights of one of its unsecured noteholders, Marblegate Asset Management, LLC.


Related Attorney(s): William Mills
Related Practice(s): Corporate, Financial Restructuring
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Prospects for U.S. Tax Reform Under President Trump

January 27, 2017

The election of President Donald J. Trump, combined with Republican control of Congress, makes fundamental U.S. federal income tax reform more likely than at any time since the enactment of the Tax Reform Act of 1986.


Related Attorney(s): Linda Swartz
Related Practice(s): Tax
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New Sheriff In Town As Rolls-Royce Pays Record Penalty For Foreign Bribery And Corruption

January 23, 2017

On 17 January 2017, the UK Serious Fraud Office, the US Department of Justice, and the Brazilian Ministério Público Federal announced an $800 million global settlement with Rolls-Royce plc and Rolls-Royce Energy Systems Inc., resolving allegations of a long-running scheme to bribe foreign officials in South America, the Middle East, Eastern Europe and Asia in exchange for assistance in obtaining government contracts. In addition to the payment of disgorgements and fines – the largest ever imposed under the UK’s Bribery Act 2010 – Rolls-Royce has agreed to implement a number of compliance measures and reporting requirements pursuant to deferred prosecution agreements with UK, US, and Brazilian authorities. The joint settlement, which was spearheaded by the SFO, heralds a new era in global cooperation and coordination in the enforcement of bribery and corruption laws.


Related Attorney(s): Kendra Wharton, Jodi Avergun
Related Practice(s): Global Litigation, White Collar Defense and Investigations
Related Office(s): London, Washington
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FTC Announces 2017 Thresholds for Merger Control Filings Under the HSR Act and Interlocking Directorates Under the Clayton Act

January 23, 2017

The Federal Trade Commission (“FTC”) has announced its annual revisions to the dollar jurisdictional thresholds in Section 7A of the Clayton Act and the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended (“HSR Act”).  The revised thresholds will become effective 30 days after the date of their publication in the Federal Register.


Related Attorney(s): Ngoc Hulbig
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2016 YEAR IN REVIEW: SECURITIES LITIGATION AND REGULATION

January 13, 2017

2016 was an active year in securities litigation.  In the first half of 2016 alone, plaintiffs filed 119 new federal class action securities cases.  It was also a busy year for SEC enforcement proceedings, with a record 868 cases filed, 548 of which were independent enforcement actions (as opposed to follow-up actions or cases based on delinquent regulatory filings).  This continued the trend of growth in SEC enforcement activity, as independent actions have increased by nearly 61% since 2013.


Related Attorney(s): Hyungjoo Han, Adam Magid, Jared Stanisci, Nathan Bull, Jason Halper
Related Practice(s): Global Litigation
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2016 YEAR IN REVIEW: CORPORATE GOVERNANCE LITIGATION AND REGULATION

January 12, 2017

2016 saw many notable developments in corporate governance litigation and related regulatory developments.


Related Attorney(s): Jaclyn Hall, Adam Magid, Jared Stanisci, Nathan Bull, Jason Halper, Hyungjoo Han
Related Practice(s): Corporate Governance, Global Litigation
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The Tenth Circuit Rules SEC Administrative Judges Are Unconstitutional, Setting Up Potential Supreme Court Review

January 11, 2017

The constitutionality of the SEC’s in-house administrative proceedings is in doubt following the 10th Circuit Court of Appeals’ ruling in Bandimere v. SEC.  In Bandimere, a three-judge panel held, by a 2-1 decision, that SEC administrative law judges (“ALJs”) are inferior officers under the Appointments Clause of the Constitution and that they must be appointed in accordance with that clause, rather than hired as employees.  The decision directly conflicts with the August 2016 holding of the Court of Appeals for the D.C. Circuit in Raymond J. Lucia Cos. v. SEC.  This circuit split sets the stage for a potential Supreme Court review of the SEC’s administrative proceedings.


Related Attorney(s): Kendra Wharton, Jodi Avergun
Related Practice(s): Securities Enforcement and Compliance, White Collar Defense and Investigations
read more »

New York State Revises “First-In-Nation” Cybersecurity Rules

January 10, 2017

The New York Department of Financial Services (“DFS”) recently issued a revised version of the cybersecurity rules that it first announced in the fall of last year.  The rules apply to a wide range of insurance, banking, and financial services companies under the DFS’s supervision and require them to adopt robust cybersecurity programs to protect sensitive and confidential data from theft by cybercriminals.


Related Attorney(s): Howard Wizenfeld, John Moehringer
Related Practice(s): Cybersecurity and Data Privacy, Global Litigation, Intellectual Property, White Collar Defense and Investigations
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The Trump Administration: Potential Levers of Regulatory Change Affecting the Commodities Markets

December 21, 2016

Much has happened since the election of Donald J. Trump as the 45th President of the United States and the return of both houses of Congress to Republican control.  The Trump transition team has repeatedly declared its intention to “dismantle” the Dodd-Frank Act (“Dodd-Frank” or “Act”), in the interim calling for an immediate moratorium on new rulemaking not required for emergencies to allow for a systematic review before further action is taken.


Related Attorney(s): Steven Lofchie, Scott Cammarn
Related Practice(s): Financial Regulation
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Process Is Paramount: The Delaware Court of Chancery Gives “100% Weight” to Merger Price in Determining Company’s Fair Value in Appraisal Proceeding

December 20, 2016

On December 16, 2016, the Delaware Court of Chancery issued a post-trial opinion in an appraisal proceeding arising from the acquisition of Lender Processing Services, Inc. (“LPS” or the “Company”) by Fidelity National Financial, Inc. (“Fidelity”).  In his opinion in Merion Capital LP et al. v. Lender Processing Services Inc., C.A. No. 9320-VCL (Del. Ch. Dec. 16, 2016), Vice Chancellor Laster held that the “fair value” of the Company’s stock at the effective time of the merger was the $37.14/share merger price.


Related Attorney(s): Jared Stanisci, Jason Halper
Related Practice(s): Global Litigation, Mergers & Acquisitions
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The Trump Administration: Change By Executive Action and Inaction

December 09, 2016

The election of Donald J. Trump as the 45th President of the United States, along with Republican control of the majority of both the House of Representatives and the Senate, will likely result in significant changes in U.S. financial services, energy, and commodities laws and markets.


Related Attorney(s): Steven Lofchie, Scott Cammarn, Allison Saltstein
Related Practice(s): Financial Regulation
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ECON Agrees Compromise Amendments to STS/Risk Retention

December 08, 2016

The European Parliament’s Committee on Economic and Monetary Affairs (“ECON”) has today agreed compromise amendments (the “Compromise Amendments”) to the proposed EU regulation intended to lay down common rules on securitisation and create a European framework for “simple, transparent and standardised” (“STS”) securitisation (the “Regulation”).

 

 


Related Attorney(s): Daniel Tobias, Claire Puddicombe, Robert Cannon, Nick Shiren, David Quirolo, Stephen Day
Related Practice(s): Securitization & Asset Based Finance
Related Office(s): London
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The Supreme Court Restores Implied Benefit Theory in Insider Trading Prosecutions of Downstream Tippees

December 08, 2016

Friends and relatives of corporate insiders who knowingly receive and trade on inside information now confront greater exposure for federal securities laws violations.  On December 6, 2016, the Supreme Court held in United States v. Salman that “tippees” who trade on material non-public information may be found criminally liable even when there is no evidence of a pecuniary or tangible benefit to the insider who tipped.


Related Attorney(s): Jason Halper, Jodi Avergun
Related Practice(s): Global Litigation, White Collar Defense and Investigations
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United Airlines Settles with SEC for Side-Stepping Its Own Anti-Corruption Controls: Management Override for a Ride Over to South Carolina

December 07, 2016

In a settlement highlighting the need for public companies to implement – and adhere to – effective internal controls, United Airlines “United” recently paid a $2.4 million civil penalty to the Securities and Exchange Commission “SEC” for failing to follow its own compliance policies and procedures designed to prevent corrupt payments.


Related Attorney(s): J. Robert Duncan
Related Practice(s): White Collar Defense and Investigations
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IRS Phases in Section 871(m) Dividend Equivalent Withholding

December 05, 2016

On December 2, the U.S. Internal Revenue Service issued Notice 2016-76, which phases in the application of withholding on dividend equivalent payments under section 871(m). Under the notice, withholding applies only to delta-one transactions in 2017, and applies to other U.S. equity transactions beginning after 2017.

 


Related Attorney(s): Brian Foster, Mark Howe, Steven Lofchie, Ray Shirazi, Jason Schwartz
Related Practice(s): Tax
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The Trump Administration: Tools to Modify Current Tax Guidance

November 30, 2016

The election of Donald J. Trump as the 45th President of the United States, along with the Republican control of the majority of both the House of Representatives and the Senate, has raised the possibility that current Treasury regulations may be modified or nullified.


Related Attorney(s): Linda Swartz, Gary Silverstein, Mark Howe
Related Practice(s): Tax
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White Collar Crime Law Enforcement in a Trump Justice Department - 8 Predictions

November 29, 2016

After a conventional presidential campaign, determining the policy priorities and direction of the incoming administration with respect to the Justice Department’s white collar law enforcement responsibilities can be a relatively straightforward process.  Confident prediction this election year, however, is tempered by the lack of comprehensive Trump Administration policy releases addressing these issues. 


Related Attorney(s): Jodi Avergun, Anne Tompkins, J. Robert Duncan
Related Practice(s): Anti-Money Laundering Investigations and Compliance, Cybersecurity and Data Privacy, Economic Sanctions, FCPA Enforcement and Compliance, False Claims Act and Health Care Fraud, Pharmaceutical Regulation and Compliance, Securities Enforcement and Compliance, White Collar Defense and Investigations
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The European Central Bank Publishes Draft Guidance on Leveraged Transactions

November 25, 2016

On 23 November 2016, the European Central Bank (the “ECB”) launched a public consultation in relation to draft guidance for Eurozone banks intended to develop clear and consistent definitions, measures and monitoring with regard to leveraged transactions. The draft guidance sets out how the ECB expects banks to maintain the credit quality of their leveraged transactions and to monitor related risks to their balance sheets. The consultation period runs until 27 January 2017.


Related Attorney(s): Stephen Day, David Quirolo, Nick Shiren, Claire Puddicombe, Daniel Tobias
Related Practice(s): CLOs, Securitization & Asset Based Finance
Related Office(s): London
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The Trump Administration: Change By Appointment

November 18, 2016

The election of Donald J. Trump as the 45th President of the United States, along with the Republican control of the majority of both the House of Representatives and the Senate, will likely result in significant changes in U.S. financial services, energy, and commodities laws and markets.  The most sweeping changes may require legislation and may generate controversy within Congress – in particular in the U.S. Senate.


Related Attorney(s): Maurine Bartlett, Scott Cammarn, James Frazier, Steven Lofchie, Dorothy Mehta
Related Practice(s): Financial Regulation
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Enforcement at the Gates: SEC Action against Big Four Firm and New International Standards Highlight the Role of Accountants as Financial Gatekeepers

November 04, 2016

In late September 2016, Andrew Ceresney, Director of Enforcement of the Securities and Exchange Commission (“SEC”), signaled the SEC’s renewed focus on the key role played by audit committee members and external auditors as the “gatekeepers” of the financial reporting process.  While stating that the SEC would not second-guess the good faith actions of auditors, he pledged that auditors and audit committee members who failed to reasonably carry out their responsibilities under applicable accounting standards would be held to task.  In addition, just days before Mr. Ceresney made these remarks, the SEC made good on this promise by bringing its first enforcement action for an audit failure against a Big Four firm in nearly seven years, and its first ever independence-related action against auditors for maintaining overly close relationships with their clients. At the same time that the SEC was preparing this case, the International Ethics Standards Board for A

Related Attorney(s): J. Robert Duncan
Related Practice(s): Securities Enforcement and Compliance, White Collar Defense and Investigations
Related Office(s): Washington
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Further Guidance on the HSR Act Investment-Only Exemption for Seemingly “Passive” Investors Engaging with Management

November 02, 2016

Investors considering engaging with management should take note of a recent informal interpretation received from the FTC’s Premerger Notification Office (PNO) advising that certain seemingly “passive” behavior is inconsistent with the “investment-only” exemption freeing acquirers of voting securities from the reporting and notification requirements of the Hart-Scott-Rodino Antitrust Improvements Act of 1976 (the HSR Act).


Related Attorney(s): Ngoc Hulbig
Related Practice(s): Corporate, Mergers & Acquisitions
read more »

Controversial Debt-Equity Regulations Finalized With Limited Fixes, Concessions and Reservations by Government

October 24, 2016

On October 13, 2016, Treasury and the IRS issued important new final and temporary regulations (the “Regulations”) under section 385 of the Internal Revenue Code addressing the treatment of intercompany debt for U.S. federal income tax (“U.S. tax”) purposes. The Regulations generally will apply to taxable years ending after January 18, 2017, while the documentation requirements described below will apply to debt instruments issued after December 31, 2017. The proposed version of the Regulations, issued in April 2016, attracted controversy due to its broad reach and strict requirements as well as arguments that the rules exceeded the authority granted to Treasury by Congress.


Related Attorney(s): Jason Schwartz, Linda Swartz, Gary Silverstein, Mark Howe
Related Practice(s): Tax
Related Office(s): New York
read more »

Application of New Debt-Equity Regulations to Securitizations

October 24, 2016

On October 13, 2016, Treasury and the IRS issued new final and temporary “anti-inversion” regulations under section 385 of the Internal Revenue Code that could treat certain purchasers of notes issued by securitizations as having exchanged their notes for stock in certain related domestic entities.


Related Attorney(s): Jason Schwartz, Linda Swartz, Gary Silverstein, Mark Howe
Related Practice(s): Tax
Related Office(s): New York, Washington
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D.C. Circuit Brings CFPB under Presidential Control

October 13, 2016

On October 11, 2016, the United States Court of Appeals for the D.C. Circuit issued its long-awaited opinion in PHH Corp. v. Consumer Financial Protection Bureau, in which the Court held that the structure of the Consumer Financial Protection Bureau (“CFPB”) was unconstitutional under the Separation of Powers doctrine because its single Director was not subject to the supervision and control of the Executive Branch. The Court’s remedy was to reinterpret the relevant provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) to recast the CFPB as an executive agency, providing the President the power to supervise, direct, and remove at will its Director. Despite finding that the structure under which CFPB had been operating since its creation in 2011 was unconstitutional, the Court explicitly declined to address – at least for now – the effect of its ruling on past CFPB rules and enf

Related Attorney(s): Scott Cammarn
Related Practice(s): Financial Regulation, White Collar Defense and Investigations
Related Office(s): Charlotte, New York, Washington
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Supreme Court Justices Appear Hesitant to Narrow the Scope of Insider Trading Liability

October 07, 2016

Since the Second Circuit Court of Appeals’ December 2014 decision in United States v. Newman, the government’s ability to aggressively pursue insider trading cases involving tipping has been in doubt.  But, on October 5, the Supreme Court heard oral arguments in Salman v. United States, a case that should clarify the government’s burden in proving insider trading cases against tippers and tippees.


Related Attorney(s): Jodi Avergun
Related Practice(s): Securities Enforcement and Compliance, White Collar Defense and Investigations
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The Federal Reserve’s Proposed Rollback of Physical Commodities Authority for Financial Holding Companies

September 29, 2016

On September 23, 2016, the Board of Governors of the Federal Reserve System (the “FRB”) issued a proposed regulation concerning the ability of a financial holding company (“FHC”) to engage in physical commodities activities (the “Commodities Proposal”).  The Commodities Proposal follows an advanced notice of proposed rulemaking issued by the FRB more than two years ago in early 2014.


Related Attorney(s): Scott Cammarn
Related Practice(s): Financial Regulation
read more »

Your 401(k) Plan "Brokerage Window" May Require An S-8 Registration

September 28, 2016

New guidance from the Securities Exchange Commission requires issuers to take a fresh look at their 401(k) plans.  On September 22, 2016, the SEC’s Division of Corporation Finance released a Compliance and Disclosure Interpretation (“CDI”) addressing registration requirements for 401(k) plans that allow investments through a self-directed “brokerage window.”


Related Attorney(s): William Mills
Related Practice(s): Corporate
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Selected Risk Retention Questions and Answers for CMBS Securitizations

August 16, 2016

On October 22, 2014, the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Securities and Exchange Commission, the Federal Housing Finance Agency and the Department of Housing and Urban Development (the “Agencies”) released a joint final rule (the “Rule”) implementing the credit risk retention requirements of Section 15G of the Securities Exchange Act of 1934. The adopting release was published in the Federal Register on December 24, 2014 (the “Release”). References to sections of the Rule set forth below are to the version of the common rule published in the Federal Register (79 Fed. Reg. 77602 (December 24, 2014)).


Related Attorney(s): Stuart Goldstein, Anna Glick, Y. Jeffrey Rotblat, Michael Gambro
Related Practice(s): Commercial Mortgage-Backed Securities, Securitization & Asset Based Finance
Related Office(s): New York
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The SEC Retains its House Advantage During Administrative Proceedings

August 05, 2016

Facing pressure from industry practitioners and in the wake of constitutional challenges in multiple jurisdictions, the Securities and Exchange Commission (“SEC”) recently amended its Rules of Practice that apply to proceedings before an administrative law judge (“ALJ”).


Related Attorney(s): Lex Urban, Jodi Avergun
Related Practice(s): Securities Enforcement and Compliance, White Collar Defense and Investigations
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Amendments to the Basel Securitisation Framework – Alternative Capital Treatment for Simple, Transparent and Comparable Securitisations

August 03, 2016

The Basel Committee on Banking Supervision (the “Basel Committee”) published an updated version of the “Basel III Document – Revisions to the securitisation framework” on 11 July 2016 (the “Amended Securitisation Framework”).  This now includes alternative regulatory capital treatment for securitisation transactions which meet the criteria for identifying simple, transparent and comparable securitisations.  In this Clients & Friends Memo we discuss the background to this document and consider the amendments which have been made and how they will affect securitisation transactions.


Related Attorney(s): Robert Cannon, Nick Shiren, David Quirolo, Stephen Day
Related Practice(s): Securitization & Asset Based Finance
read more »

FinCEN Tightens the Screws on Money Launderers with Additional Scrutiny of High-Value Residential Real Estate Transactions

August 01, 2016

Choice real estate markets such as New York, Miami, Los Angeles, San Francisco, San Diego, and San Antonio may offer enticing amenities like buzzing nightlife or sunny beaches, but thanks to the Financial Crimes Enforcement Network (“FinCEN”), they now also come with an extra dose of law enforcement scrutiny.  On July 27, 2016, FinCEN expanded the locales in which Geographic Targeting Orders (“GTO”) will temporarily require U.S. title insurance companies to identify the natural persons (the “beneficial owners”) behind legal entities used to make “all cash” purchases of high-end residential real estate in those six metropolitan areas.


Related Attorney(s): Nicholas Brandfon, Steven Herman, Jodi Avergun
Related Practice(s): Anti-Money Laundering Investigations and Compliance, White Collar Defense and Investigations
read more »

Potential Risks and Rewards of Cybersecurity Information Sharing Under CISA

July 21, 2016

When President Obama signed into law the Cybersecurity Act of 2015, which was designed to facilitate information sharing on cybersecurity threats between the public and private sectors, proponents hailed it as “our best chance yet to help address this economic and national security priority in a meaningful way.”


Related Attorney(s): Keith Gerver
Related Practice(s): Cybersecurity and Data Privacy, White Collar Defense and Investigations
read more »

Supreme Court Reinvigorates Effectiveness of Obtaining an Opinion of Counsel to Defend against Potential Enhanced Damages for Willful Infringement in Halo Electronics

July 21, 2016

On June 13, 2016, the U.S. Supreme Court again reversed a decision of the Federal Circuit—the Circuit specially designated to hear all patent appeals—this time, in articulating the test for determining whether to award enhanced damages for willful patent infringement in Halo Electronics, Inc. v. Pulse Electronics, Inc.


Related Attorney(s): Dorothy Auth Ph.D.
Related Practice(s): Intellectual Property, Patent & Trade Secret Litigation
read more »

Proposed Regulations Would Block Some Spinoffs

July 15, 2016

Proposed regulations issued on July 14, 2016 generally would prevent tax-free spinoffs involving companies with less than 5% active business assets and spinoffs where one company holds a substantial amount of nonbusiness assets and the other company does not. These rules generally would apply to transactions occurring on or after the publication date of final regulations, subject to generous transition rules.


Related Attorney(s): Linda Swartz
Related Practice(s): Mergers & Acquisitions, Mergers & Acquisitions Taxation, Tax
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The Defend Trade Secrets Act: Significant Recent Changes to Intellectual Property Law May Provide New Avenues for Protecting Potentially Unpatentable Critical Discoveries

July 14, 2016

On May 11, 2016, President Obama signed into law the Defend Trade Secrets Act (“DTSA”), marking one of largest changes to intellectual property law since the America Invents Act of 2011. This legislation will allow companies to more rigorously protect their trade secrets which are defined as any information that is not generally known to the public, whose holder has made reasonable efforts to maintain its secrecy, where an independent economic value is derived from that secrecy.


Related Attorney(s): Dash Cole, Dorothy Auth Ph.D.
Related Practice(s): Intellectual Property, Patent & Trade Secret Litigation
read more »

Proposed QI Agreement Addresses Cascading Withholding on Dividend Equivalents

July 05, 2016

On July 1, the U.S. Internal Revenue Service issued Notice 2016-42, which proposes changes to the qualified intermediary (QI) agreement to address cascading U.S. withholding tax on dividends and “dividend equivalents” received and paid by qualified derivatives dealers (QDDs) with respect to U.S. equity securities.


Related Attorney(s): Mark Howe, Jason Schwartz, Brian Foster, Ray Shirazi, Steven Lofchie
Related Practice(s): Financial Regulation, Tax
Related Office(s): New York, Washington
read more »

SEC Proposal Would Require Business Continuity and Transition Plans for Investment Advisers

June 30, 2016

Citing the ongoing risk of terrorist and cyber-attacks, the 2008 financial crisis, and Hurricanes Katrina and Sandy, the SEC has issued proposed rules under the Investment Advisers Act of 1940 that would require investment advisers to establish business continuity and transition plans to be utilized in the event of a data loss, system failure, or other significant business disruption. The proposed rules for investment advisers, similar to business continuity plan rules already mandated by FINRA, the CFTC, and the NFA, would require that such plans be risk-based, documented in written policies and procedures, and reviewed at least annually. The proposed rules would also amend the existing books and records requirements to impose new recordkeeping obligations relating to business continuity and transition plans.  If approved, they would convert what is currently an industry best practice to a requirement for all SEC-registered investment advisers.


Related Attorney(s): Dorothy Mehta
Related Practice(s): Financial Regulation, White Collar Defense and Investigations
Related Office(s): New York, Washington
read more »

It’s a Mad, Mad, Madden World

June 29, 2016

On Monday, June 27, 2016, the Supreme Court of the United States denied the petition for certiorari in Midland Funding LLC v. Madden, No. 15-610.  The Supreme Court’s denial leaves intact the unusual – and troubling – decision by the U.S. Court of Appeals for the Second Circuit, Midland Funding, LLC v. Madden.  In that case, the Second Circuit held that the application of state usury laws to nonbank assignees is not preempted by Section 85 of the National Bank Act (the “NBA”), but rather such assignees remain subject to state usury limits.  The Second Circuit’s decision suggests that a nonbank assignee of a bank-originated loan might not be able to collect the amount of interest contracted for by the originating national bank if the rate of interest exceeds the usury rate otherwise applicable to the assignee.


Related Attorney(s): Scott Cammarn
Related Practice(s): Bank Regulation, Financial Regulation, White Collar Defense and Investigations
Related Office(s): Charlotte
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What does Brexit mean for the European CLO Market?

June 27, 2016

In its referendum held on 23 June 2016, the UK voted to leave the European Union (“Brexit”).  On the following day, David Cameron announced that he will resign as Prime Minister on the election of a new Conservative Party leader and that such leader should be elected prior to the Conservative Party annual conference which starts on 2 October 2016.  David Cameron said that he will leave it to his successor formally to notify the European Council of the UK’s intention to withdraw from the European Union.


Related Attorney(s): Daniel Tobias, Catherine Richardson, Claire Puddicombe, Robert Cannon, Nick Shiren, David Quirolo, Adam Blakemore
Related Practice(s): Securitization & Asset Based Finance, Tax
Related Office(s): Brussels, London
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M&A Update: New York Court of Appeals Rejects Extension of Common Interest Privilege to Merger Talks

June 15, 2016

On June 9, 2016, a divided New York Court of Appeals in a much-anticipated ruling held that the attorney-client privilege can only be maintained for communications involving third parties in situations where litigation is pending or reasonably anticipated.  The decision reversed an intermediate appeals court’s expansion of the privilege to situations where the parties shared a “common legal interest” short of pending or reasonably anticipated litigation.  


Related Attorney(s): Nathan Bull, William Mills
Related Practice(s): Corporate, Corporate Governance, Global Litigation
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European Parliament Rapporteur Publishes Draft Amendments to the Proposed EU Securitisation Regulation

June 10, 2016

On 6 June 2016, Paul Tang MEP, the Rapporteur of the Committee on Economic and Monetary Affairs (“ECON”) of the European Parliament, published a “Draft Report”, consisting mainly of  draft amendments (the “Proposed Amendments”) to the EU's proposal for a regulation intended to lay down common rules on securitisation and create a European framework for “simple, transparent and standardised” (“STS”) securitisation (the “Regulation”).


Related Attorney(s): Daniel Tobias, Nick Shiren, David Quirolo, Claire Puddicombe, Stephen Day, Robert Cannon
Related Practice(s): Securitization & Asset Based Finance
Related Office(s): London
read more »

CFPB Proposed Rules Address Payday Loans and Impose New Customer Diligence Requirements

June 08, 2016

The Consumer Financial Protection Bureau (“CFPB”) last week announced long-awaited proposed rules governing payday loans and other high-cost credit products, including that lenders must take steps to ensure prospective borrowers have the ability to repay them.


Related Attorney(s): Scott Cammarn
Related Practice(s): Bank Regulation, Financial Regulation, White Collar Defense and Investigations
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Update on the EU STS and Risk Retention

May 25, 2016

On 19 May 2016, the Committee on Economic and Monetary Affairs of the European Parliament (“ECON”) published a working document on the European Commission’s proposal for a regulation (the “Proposed Regulation”) intended to harmonise risk retention, transparency and due diligence requirements applying to securitisations and to create a legal framework to encourage “simple, transparent and standardised” securitisations (“STS securitisations”).


Related Attorney(s): Stephen Day, Nick Shiren, David Quirolo
Related Practice(s): Securitization & Asset Based Finance
Related Office(s): London
read more »

Government’s Decision Not to Charge Phil Mickelson Illustrates Difficulties in Proving Insider Trading Cases Against Tippees

May 24, 2016

On May 19, 2016, the United States Attorney’s Office for the Southern District of New York and the Securities and Exchange Commission (“SEC”) announced insider trading charges against Las Vegas sports bettor William (“Billy”) Walters and former Dean Foods chairman Thomas Davis for allegedly trading on nonpublic company information.  Tellingly, no charges were brought against professional golfer Phil Mickelson, who was named as a relief defendant and agreed to repay close to $1 million in trading profits made as part of the alleged scheme.


Related Attorney(s): Kendra Wharton
Related Practice(s): Securities Enforcement and Compliance, White Collar Defense and Investigations
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Dual Decisions Provide Narrow Path for Plaintiffs to Establish Standing in Data Breach and Cybersecurity Suits

May 23, 2016

Last week, decisions by the United States Supreme Court and the Northern District of Georgia provided further guidance regarding the narrow path required for a class action plaintiff to successfully establish Article III standing in a data breach claim brought in federal court.


Related Attorney(s): Keith Gerver
Related Practice(s): Cybersecurity and Data Privacy, White Collar Defense and Investigations
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In Wake of the Panama Papers, Treasury Proposes New Reporting Requirements for Foreign-Owned Legal Entities

May 18, 2016

On May 10, 2016, the Treasury Department issued proposed regulations that, if approved, will require business entities formed in the United States that are owned by a single foreign person to obtain an employer identification number (“EIN”), maintain adequate records of certain transactions, and file information returns with the Internal Revenue Service (“IRS”).


Related Attorney(s): Linda Swartz, Mark Howe, Jodi Avergun, Keith Gerver, Kendra Wharton
Related Practice(s): Tax, White Collar Defense and Investigations
read more »

FinCEN Issues Final Rules for Customer Due Diligence Requirements

May 13, 2016

On May 11, 2016, the Financial Crimes Enforcement Network (“FinCEN”) issued the final version of its long-awaited “Customer Due Diligence Rules” under the Bank Secrecy Act.  The final rules impose a new requirement on “covered financial institutions” – which include banks, broker-dealers, mutual funds, and futures commission merchants and introducing brokers in commodities – to identify the beneficial owners who own or control certain legal entity customers at the time a new account is opened.


Related Attorney(s): Scott Cammarn, Dorothy Mehta, Jodi Avergun
Related Practice(s): Anti-Money Laundering Investigations and Compliance, Bank Regulation, Financial Regulation, White Collar Defense and Investigations
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CFPB Targets Mandatory Arbitration Clauses to Protect Consumer Class Actions

May 10, 2016

On May 5, 2016, the Consumer Financial Protection Bureau (“CFPB”) issued a proposed rule to prohibit providers of certain consumer financial products and services from using arbitration clauses to block consumers from filing or participating in class action lawsuits. In addition, the proposed rule would impose a reporting obligation on providers of covered consumer financial products or services, requiring that certain materials filed in arbitration cases be submitted to the CFPB.


Related Attorney(s): Scott Cammarn
Related Practice(s): Financial Regulation, White Collar Defense and Investigations
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SEC Focuses on Investor Perspective and Use of Technology with New Concept Release

May 06, 2016

On April 13, 2016, the U.S. Securities and Exchange Commission issued a concept release on the business and financial disclosures required by Regulation S-K. The release is part of an ongoing comprehensive evaluation by the SEC of disclosure requirements in response to statutory mandates in the FAST Act and JOBS Act (more information on which can be found at the Disclosure Effectiveness Initiative). This review also includes the Report on Review of Disclosure Requirements in Regulation S-K and forthcoming reports on Regulation S-X.


Related Attorney(s): William Mills
Related Practice(s): Corporate, Financial Regulation
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M&A Update: Proposed Amendments to the Delaware Appraisal Statute

April 19, 2016

The Corporation Law Section of the Delaware State Bar Association recently approved proposed legislation to amend the General Corporation Law of the State of Delaware (the “DGCL”).  Among the proposed changes are amendments that would mitigate some of the risks presented by stockholder appraisal actions by barring appraisal claims that do not meet certain minimum thresholds.  In addition, the proposed legislation would allow companies to limit the amount of statutory interest payable to stockholders who seek appraisal by making discretionary payments to such stockholders prior to the final value determination by a court.  If adopted by the Delaware General Assembly, these amendments would apply to merger agreements entered into on or after August 1, 2016.


Related Attorney(s): Joshua Apfelroth, William Mills
Related Practice(s): Corporate, Mergers & Acquisitions
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Current Structuring May Not Shield Private Equity Firms from ERISA Liabilities

April 14, 2016

On March 28, 2016, the U.S. District Court for the District of Massachusetts held that two private equity funds within Sun Capital were jointly and severally liable under the Employee Retirement Income Security Act of 1974, as amended (ERISA), for the $4.5 million multiemployer pension plan withdrawal liability of a portfolio company. This landmark decision appreciably changes the landscape for private equity investment in companies with pension plans or potential pension liabilities.


Related Attorney(s): Linda Swartz, James Frazier
Related Practice(s): Corporate, ERISA
Related Office(s): New York, Washington
read more »

M&A Update: Broad Anti-Inversion Rules Released

April 05, 2016

On April 4, 2016, Treasury released new rules making it more difficult for some U.S. companies to invert (“Serial Inversion Regulations”), Proposed Regulations limiting the effectiveness of “earnings stripping” techniques (“Earnings Stripping Regulations”), and Final and Temporary Treasury Regulations incorporating rules previously described in Notices 2014-52 and 2015-79. 


Related Attorney(s): William Mills, Linda Swartz
Related Practice(s): Tax
Related Office(s): New York
read more »

Important Court Decision For No-Fault Insurers -- Federal Court Rejects Argument To Limit Insurers’ Right To Seek Judicial Relief From Fraud Schemes

April 05, 2016

We are pleased to inform you of a very favorable recent caselaw development in the no-fault insurance area, in which our firm played a significant role.  Specifically, on March 24, 2016, in the case of Liberty Mutual Fire Insurance Company, et al. v. Shapson, et al., the United States District Court for the Eastern District of New York (Honorable Eric N. Vitaliano) rejected certain defendants’ attempt to stay or dismiss an insurer’s federal lawsuit seeking declaratory relief stemming from a major no-fault fraudulent scheme involving the fraudulent incorporation of providers, unlawful fee-splitting and other improper conduct.


Related Attorney(s): William Natbony
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New York State Bill Would Alter Taxation of Carried Interest

March 31, 2016

A bill recently introduced in the New York State Assembly would impose additional tax on carried interest.  The taxation of carried interest has been widely discussed over the last decade, with a number of bills introduced (but not enacted) in Congress that generally would tax such carried interest at ordinary Federal income tax rates (rather than at lower capital gain rates).


Related Attorney(s): Linda Swartz
Related Practice(s): Tax
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The Southern District of New York’s Norske Skog Decision: What Constitutes A Refinancing May Be In The Eye of The Beholder

March 29, 2016

The recent decision by the United States District Court for the Southern District of New York in Citibank, N.A. v. Norske Skogindustrier ASA  could be an important consideration for future drafting and interpretation of debt agreements.  While the Court’s decision is in the context of a preliminary injunction motion, the opinion provides useful guidance for parties potentially undertaking a refinancing exchange offer, and for parties who may seek to challenge such an exchange.  Given the increasing need for companies in distressed industries to exchange debt and extend maturities, parties facing a potential debt exchange should consider the Norske Skog court’s indenture analysis.



Related Attorney(s): Ingrid Bagby, William Mills, Stuart Goldstein
Related Practice(s): Corporate, Financial Restructuring, Securitization & Asset Based Finance
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Delaware Bankruptcy Court Rules TCEH First Lien Distributions Are Governed by the Bankruptcy Code, Not by Intercreditor Agreement Waterfall

March 21, 2016

On March 11, 2016, Judge Christopher Sontchi of the U.S. Bankruptcy Court for the District of Delaware issued an opinion in the Energy Future Holdings bankruptcy that resolved an intercreditor dispute over $90 million in proceeds to be distributed under the plan of reorganization. The Court determined that distributions under a plan of reorganization and monthly adequate protection payments made pursuant to a cash collateral order were governed solely by the plan and order, and were not required to be distributed in accordance with a waterfall provision in an intercreditor agreement.


Related Attorney(s): Mark Ellenberg, Howard Hawkins, Ivan Loncar, Ellen Halstead, Michele Maman, Thomas Curtin
Related Practice(s): Corporate, Financial Restructuring
Related Office(s): New York, Washington
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UK Budget 2016 – Key Tax Measures

March 17, 2016

The Chancellor of the Exchequer delivered the UK Budget for 2016 on 16 March 2016.

In this Client and Friends Alert we have outlined the key tax measures that we expect to be of interest to Cadwalader’s clients and friends.


Related Attorney(s): Catherine Richardson, Adam Blakemore
Related Practice(s): Tax
Related Office(s): London
read more »

FRB Requests Comments on Proposed Single-Counterparty Credit Limits

March 17, 2016

The Board of Governors of the Federal Reserve System ("FRB") has requested comments on reissued proposed rules that would establish a single-counterparty credit limits ("SCCL") for domestic and foreign bank holding companies with $50 billion or more in total consolidated assets. The proposed rules are intended to implement Section 165(e) of the Dodd-Frank Act, which requires the FRB to impose limits on the amount of credit exposure that such domestic or foreign bank holding companies can have to unaffiliated companies in order to reduce the number of risks that might arise from the companies' failure.

Comments on the proposed regulations must be submitted by June 3, 2016.


Related Attorney(s): Scott Cammarn, Evan Weller
Related Practice(s): Financial Regulation, Securitization & Asset Based Finance
Related Office(s): Charlotte
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Bank Resolutions – Trust the Regulators, but Keep Your Powder Dry

February 17, 2016

In times of financial turbulence, politicians, regulators and the media make the case for tighter controls of the markets.  However, with new regulatory powers coming in and the resulting extra layer of complexity that their application brings, investors have their reasons not to put their trust in regulators.  As seen with recent developments in Portugal and Italy, a number of competing motivations surround the rescue of financial institutions.  The old maxim – “Put your trust in God, but keep your powder dry” -  may be applied to describe investor sentiment in an environment where treating senior investors equitably has not been a priority for local regulators.


Related Attorney(s): Nick Shiren, Assia Damianova
Related Practice(s): Securitization & Asset Based Finance
Related Office(s): London
read more »

Getting By With a Little Help From Friends: United States Supreme Court to Clarify Insider Trading Liability in Tipping Cases

January 27, 2016

On January 19, 2016, the United States Supreme Court granted certiorari in United States v. Salman, in which the Ninth Circuit Court of Appeals held that the government may prove a “personal benefit” to a tipper of inside information—a necessary element of an insider trading case involving tipping—by showing evidence that an insider made a “gift” of confidential information to a trading relative or friend.


Related Attorney(s): Kendra Wharton, Jodi Avergun
Related Practice(s): Securities Enforcement and Compliance, White Collar Defense and Investigations
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FTC Announces 2016 Thresholds for Merger Control Filings Under HSR Act and Interlocking Directorates Under the Clayton Act

January 26, 2016

The 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 (the “HSR Act”); the revised thresholds are expected to become effective in late February 2016, 30 days after the date of their publication in the Federal Register.  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.


Related Attorney(s): Ngoc Hulbig
Related Practice(s): Mergers & Acquisitions
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M&A Update: Highlights from 2015 and Implications for 2016

January 19, 2016

A record-setting year for M&A deal activity, 2015 also yielded several important legal decisions and highlighted significant trends that are likely to influence M&A market participants in 2016 and beyond.


Related Attorney(s): Lindsey Kister, Braden McCurrach, Joshua Apfelroth, William Mills
Related Practice(s): Corporate, Corporate Governance, Global Litigation, Mergers & Acquisitions
read more »

FinCEN Targets High-Value Real Estate Transactions in New York and Miami

January 19, 2016

On January 13, 2016, the Financial Crimes Enforcement Network (“FinCEN”) announced that it had issued a Geographic Targeting Order (“GTO”) which will temporarily require certain title insurance companies to report the identity of natural persons who make “all-cash” purchases of high-value residential real estate through shell companies in New York County (Manhattan) and Miami-Dade County.


Related Attorney(s): J. Robert Duncan, Nicholas Brandfon, Steven Herman, Jodi Avergun
Related Practice(s): Real Estate, White Collar Defense and Investigations
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The EBA’s New Remuneration Guidelines: Expanding the Scope of the Bonus Cap

January 14, 2016

On 21 December 2015 the European Banking Authority (“EBA”) published its final guidelines on sound remuneration policies (the “Guidelines”), together with its opinion on proportionality (the “EBA Opinion”).

The Guidelines and EBA Opinion are likely to be of particular relevance to a number of smaller regulated investment firms, since the EBA’s intention is that they will no longer be able to disapply the so-called “bonus cap” on the basis of “proportionality”.


Related Attorney(s): Nick Shiren, David Quirolo
Related Practice(s): Securitization & Asset Based Finance
Related Office(s): London
read more »

Glass Lewis Opens Registration for Issuer Data Report Requests, including expanding access to certain companies in Canada and Europe

January 08, 2016

U.S. companies listed on the NASDAQ and NYSE, as well as certain listed companies in Canada and Europe, with annual shareholder meetings scheduled between March 1, 2016 and June 30, 2016 may now register through January 31, 2016 to receive an Issuer Data Report (IDR) from Glass Lewis. The IDR service has per country participation limits and is available to eligible companies on a first-come, first-served basis. The registration period for a country will end prior to January 31, 2016 if the participation limit for that country is reached.


Related Attorney(s): Christopher Cox, William Mills
Related Practice(s): Corporate, Corporate Governance
read more »

OFAC Publishes Cyber-Related Sanctions Regulations

January 08, 2016

On December 31, 2015, the Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) issued regulations implementing Executive Order 13694 of April 1, 2015, which authorized the imposition of economic sanctions on individuals and entities determined to be responsible for, complicit in, or benefitting from significant cyber attacks or cyber theft. 


Related Attorney(s): Keith Gerver, James Treanor
Related Practice(s): Cybersecurity and Data Privacy, White Collar Defense and Investigations
read more »

M&A Update: Delaware Chancery Court Invalidates Charter and Bylaw Provisions Allowing Only For Cause Removal of Directors Where Board is Not Classified

January 05, 2016

In a December 21, 2015 transcript ruling, the Delaware Chancery Court invalidated the provisions of VAALCO Energy, Inc.’s charter and bylaws that allow for removal of directors only “for cause” even though VAALCO’s board is not classified.  Vice Chancellor Laster ruled that the charter and bylaw provisions conflicted with the plain reading of Section 141(k) of the Delaware General Corporation Law, which states that stockholders may remove directors from the board with or without cause except where the board is classified or directors are elected by cumulative voting.


Related Attorney(s): Andrew Alin, William Mills
Related Practice(s): Corporate, Mergers & Acquisitions
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The PATH Act

December 28, 2015

On December 18, 2015, President Obama signed into law the Protecting Americans from Tax Hikes Act of 2015 (the PATH Act). In short, the PATH Act (i) extends or makes permanent a number of temporary tax provisions that had expired or were set to expire, (ii) significantly restricts the ability of companies that are not real estate investment trusts (REITs) to spin off REIT subsidiaries on a tax-free basis, (iii) expands the opportunities for certain foreign investors to invest in U.S. real estate without paying FIRPTA (Foreign Investors in Real Property Tax Act) taxes, and (iv) modifies a number of the REIT and FIRPTA rules.


Related Attorney(s): Jason Schwartz
Related Practice(s): Tax
Related Office(s): New York, Washington
read more »

President Obama Signs Cybersecurity Act of 2015 to Encourage Cybersecurity Information Sharing

December 24, 2015

On December 18, 2015, President Obama signed into law a $1.1 trillion omnibus spending bill that contained the Cybersecurity Act of 2015 (the “Act”), a compromise bill based on competing cybersecurity information sharing bills that passed the House and Senate earlier this year. The Act creates a voluntary cybersecurity information sharing process designed to encourage public and private sector entities to share cyber threat information.


Related Attorney(s): Keith Gerver
Related Practice(s): Cybersecurity and Data Privacy, White Collar Defense and Investigations
Related Office(s): Washington
read more »

CFTC Adopts Margin Requirements for Uncleared Swaps

December 17, 2015

Yesterday, the Commodity Futures Trading Commission held an open meeting at which it voted to adopt final rules governing margin requirements for uncleared swaps entered into by swap dealers and major swap participants who are not supervised by a “prudential regulator.”


Related Attorney(s): Nihal Patel, Patrick Calves
Related Practice(s): Financial Regulation, Swap Regulation
read more »

2016 Proxy Season – Quick Reference Guide

December 17, 2015

The year is coming to an end and the 2016 proxy season is on the horizon. This quick reference guide identifies considerations based on themes from 2015, offers recommendations and resources for the upcoming season, and discusses expected future changes in disclosure rules that public companies will want to keep on their radar as proxy preparations begin.


Related Attorney(s): William Mills, Christopher Cox
Related Practice(s): Corporate, Corporate Governance
read more »

Update on the EU’s Proposed Regulation on Securitisation and its Potential Impact on US Market Participants

December 17, 2015

We discussed the European Commission’s (the “Commission”) proposal for a regulation (the “Regulation”) intended to harmonise existing EU laws applying to securitisations, including EU risk retention rules, and to create a legal framework intended to encourage “simple, transparent and standardised securitisations” (“STS securitisations”) in our briefing note dated 1 October 2015. This update looks at jurisdictional and transparency aspects of the latest draft of the Regulation, in particular focusing on some of the ways in which it may affect market participants in the US.


Related Attorney(s): Stephen Day, Daniel Tobias, Nick Shiren, David Quirolo, Claire Puddicombe, Robert Cannon
Related Practice(s): Securitization & Asset Based Finance
Related Office(s): London
read more »

Contractual Recognition of Bail-In – Are You Ready?

December 15, 2015

The aim of the EU Bank Recovery and Resolution Directive (the “BRRD”)  is to establish a framework for the recovery and resolution of EU credit institutions and significant investment firms and to equip EU national authorities with harmonised powers and tools to tackle financial crises at such institutions and firms. These powers and tools include preparatory and preventative measures , early supervisory intervention  and resolution. One of the resolution tools is the “bail-in” tool which enables EU national authorities to recapitalise in-scope entities or reduce the principal amount of, or to convert to equity, in-scope liabilities.


Related Attorney(s): Nick Shiren, Assia Damianova
Related Practice(s): Securitization & Asset Based Finance
Related Office(s): London
read more »

M&A Update: Delaware Supreme Court Upholds Rural Metro Decision, but Financial Advisors Can Breathe a Sigh of Relief

December 15, 2015

In a November 30, 2015 decision, the Delaware Supreme Court upheld the Delaware Chancery Court’s $76 million damages award against RBC Capital in In re Rural/Metro Corp. S’holders Litig.  The ruling, however, notably rejected the trial court’s characterization of financial advisors as “gatekeepers” of the M&A process, and the Court emphasized that its holding is to be narrowly viewed in the context of the specific facts of the case.


Related Attorney(s): William Mills, Lindsey Kister, Joshua Apfelroth
Related Practice(s): Corporate, Mergers & Acquisitions
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The “State of Play” of the European Financial Transaction Tax: European Council Meeting, 8 December 2015

December 11, 2015

On 3 December 2015 the Luxembourg President of the Council of the European Union released a “state of play” announcement on the progress made during the course of this year by the ten European Union participating member states (Austria, Belgium, France, Germany, Greece, Italy, Portugal, Slovakia, Slovenia and Spain) towards the introduction of the European financial transaction tax (the “FTT”).


Related Attorney(s): Catherine Richardson, Adam Blakemore
Related Practice(s): Tax
read more »

The End of the Implied Certification Theory?: The U.S. Supreme Court Grants Certiorari in Case That Could Substantially Limit the False Claims Act

December 11, 2015

On December 4, 2015, the United States Supreme Court granted certiorari in Universal Health Services, Inc. v. United States ex rel. Escobar.  In Universal Health Services, Inc., the Supreme Court will decide the legal validity of the “implied certification” theory of False Claims Act (“FCA”) liability.  Under this theory, a relator or the government may allege that whenever a government contractor, or a Medicare or Medicaid provider, submits a claim for payment to the government, that party has also impliedly certified that it has complied with all applicable statutory, regulatory, and contractual requirements.


Related Attorney(s): Keith Gerver, Anne Tompkins
Related Practice(s): False Claims Act and Health Care Fraud, White Collar Defense and Investigations
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CFTC / CME Settle Misappropriation Case

December 03, 2015

On December 2, 2015, the U.S. Commodity Futures Trading Commission (“CFTC” or “Commission”) and the New York Mercantile Exchange (“NYMEX”) simultaneously announced settlements with Arya Motazedi, a gasoline trader, including for claims of insider trading under CFTC Rule 180.1. On numerous occasions from approximately September to December of 2013, while trading RBOB Gasoline Physical Futures and CL Light Sweet Crude Oil Futures, Motazedi allegedly engaged in: (1) trading that moved money from his employer’s account to two of his personal accounts;2 and (2) transactions in his personal accounts, ahead of his employer’s account, to the detriment of the employer’s account. The Commission noted that Motazedi caused his employer to lose $216,955.80.


Related Attorney(s): Scott Cammarn, Lary Stromfeld, Steven Lofchie
Related Practice(s): Commodities & Futures Regulation
Related Office(s): Charlotte, Houston, New York, Washington
read more »

CFTC Extends No-Action Relief for Swaps Executed as Part of Certain Package Transactions

November 30, 2015

On October 14, 2015, the Division of Market Oversight (“DMO”) for the U.S. Commodity Futures Trading Commission (“CFTC”) issued an additional extension of no-action relief for swaps executed as part of “package” transactions.  This relief provides additional time for the CFTC to resolve lingering market infrastructure challenges associated with limited execution methods for swaps subject to mandatory trade execution by permitting counterparties to execute package transactions using additional methods of execution through November 15, 2016.


Related Attorney(s): Andrew Greenberg
read more »

UK Autumn Statement 2015 – Key Tax Measures

November 26, 2015

The Chancellor of the Exchequer delivered his budgetary Autumn Statement on 25 November 2015.  In this Client and Friends Alert we have outlined the key tax measures that we expect to be of interest to Cadwalader’s clients and friends.  Following the two UK Budgets held in March and September 2015, the number of announcements made by the Chancellor in the Autumn Statement is less than has been the case in previous years.  As regards those announcements which have been made, much of the detail is absent at this stage.  Further detail and proposed legislative drafting for these measures is expected in the Finance Bill 2016, scheduled to be published on 9 December 2015.


Related Attorney(s): Catherine Richardson, Adam Blakemore
Related Practice(s): Tax
read more »

ISS Accepting Company-Selected Peer Group Submissions, including, for the first time, companies in the Russell MicroCap Index

November 23, 2015

Companies in the Russell 3000 and Russell MicroCap Index with annual meetings scheduled between February 1, 2016 and September 15, 2016 may submit updates to their self-selected compensation benchmarking peer groups from 9:00 AM EST on Tuesday, November 24, 2015 through 8:00 PM EST on Friday, December 11, 2015. A separate peer group update process for eligible companies with 2016 annual meetings after September 15, 2016 will be held in mid-2016.


Related Attorney(s): William Mills, Christopher Cox
Related Practice(s): Corporate
Related Office(s): New York
read more »

CFTC Releases Swap Dealer De Minimis Report

November 20, 2015

CFTC Staff’s Preliminary Report on whether to modify the swap dealer de minimis threshold highlights the difficulty in identifying swap dealing activity and problems with swap data reporting


Related Attorney(s): Andrew Greenberg
Related Practice(s): Financial Regulation, Swap Regulation
read more »

M&A Update: Treasury Announces Second Anti-Inversion Notice

November 20, 2015

On November 19, 2015, Treasury issued Notice 2015-79 (the “Notice”), which announces Treasury’s intent to issue regulations reducing the tax benefits available to inverted groups and making it more difficult for some U.S. companies to invert.  The Notice, which includes rules governing inversions and post-inversion restructuring, notably does not impose additional limits on earnings stripping.  The Notice generally applies to inversions completed after November 18, 2015.


Related Attorney(s): Christopher Cox, Linda Swartz
Related Practice(s): Corporate, Tax
Related Office(s): New York
read more »

M&A Update: Chancery Court Finds Merger Price to be Most Persuasive Factor in Appraisal Action

October 28, 2015

In a recent decision in an appraisal action, the Delaware Chancery Court reaffirmed the Court’s reluctance to substitute its own calculation of the “fair value” of a target company’s stock for the purchase price derived through arms-length negotiations, provided it resulted from a thorough, effective and disinterested sales process. The October 21, 2015 decision, Merion Capital LP and Merion Capital II LP v. BMC Software, Inc., not only provides a comprehensive review of the fundamentals of appraisal actions, but also serves as a cautionary tale for merger arbitrageurs and other stockholders looking to seek appraisal remedies.


Related Attorney(s): William Mills, Joshua Apfelroth
Related Practice(s): Corporate, Global Litigation
Related Office(s): New York
read more »

Prudential Regulators Release Final Margin Rules for Swaps

October 23, 2015

On October 22, 2015, the Federal Deposit Insurance Corporation held an open meeting at which it voted to adopt: (i) final rules governing margin and capital requirements for uncleared swaps and (ii) an interim final rule to implement statutory amendments excluding certain entities from the requirements.  The Rules, which were also approved by the Comptroller of the Currency and are to be jointly adopted by the other “Prudential Regulators,” set margin requirements for uncleared swaps and uncleared security-based swaps entered into by swap dealers, security-based swap dealers, major swap participants and major security-based swap participants who are supervised by a Prudential Regulator (such entities, “Covered Swap Entities”).


Related Attorney(s): Steven Lofchie, Nihal Patel
Related Practice(s): Bank Regulation, Financial Regulation, Swap Regulation
read more »

Buyer (and its Creditors) Beware: SemCrude District Court Finds That Purchasers Took Oil and Gas Free and Clear of Producers' Liens

October 13, 2015

Although almost eight years have lapsed since the chapter 11 cases of Tulsa, Oklahoma-based SemCrude L.P. were confirmed, many of the issues at the forefront of those cases are re-emerging in light of the recent uptick in oil and gas-related restructurings.  The SemCrude cases provided useful guidance for oil and gas producers and purchasers to best address the perfection and management of security interests in oil and gas-related collateral.


Related Attorney(s): Mark Ellenberg, Ingrid Bagby, Michele Maman
Related Practice(s): Financial Restructuring
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Chancery Court Provides Lessons on Conflicts of Interest in a Sales Process – Holds Only Financial Advisor Open to Liability

October 13, 2015

In an October 1st decision (In re Zale Corporation), the Delaware Chancery Court dismissed claims that Zale Corporation’s directors breached their fiduciary duties in connection with Zale’s agreement to merge with Signet.  The Court, however, permitted a claim to proceed against Merrill Lynch, Zale’s financial advisor, for aiding and abetting a breach of fiduciary duty by Zale’s board of directors.  In so holding, the Court sent yet another stern warning that financial advisors are well-served to disclose all potential conflicts of interest to their client in order to mitigate any potential aiding and abetting liability.  The decision also offers valuable lessons with respect to potential director and stockholder conflicts of interest.


Related Attorney(s): Joshua Apfelroth, William Mills
Related Practice(s): Corporate, Global Litigation, Mergers & Acquisitions
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M&A Update: Fully Informed Vote of Disinterested Stockholders Results in Business Judgment Rule Protection in Post-Closing Review of Merger

October 05, 2015

In an October 2, 2015 decision, Corwin, et al. v. KKR Financial Holdings LLC., et al., the Delaware Supreme Court clarified that once a merger closes, as long as it has been approved by a fully informed vote of the disinterested stockholders, the standard for reviewing the board’s conduct will be the business judgment rule unless the transaction is subject to the entire fairness standard (as can be the case in a transaction with a controlling stockholder). The Court stated that business judgment rule protection would also apply in this scenario even if the Revlon enhanced scrutiny standard applied to the merger.


Related Attorney(s): William Mills
Related Practice(s): Corporate, Global Litigation, Mergers & Acquisitions
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Securitisation: Keeping it Simple?

October 01, 2015

On 30 September 2015, the European Commission published a proposal for a regulation intended to harmonise existing EU laws applying to securitisations (including proposed changes to the EU risk retention rules) and to create a legal framework intended to encourage "simple, transparent and standardised securitisations."


Related Attorney(s): Stephen Day, David Quirolo, Nick Shiren, Daniel Tobias, Claire Puddicombe, Robert Cannon
Related Practice(s): Securitization & Asset Based Finance
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New 871(m) Regulations Finalize Dividend Equivalent Payment Withholding Rules for Equity Derivatives

October 01, 2015

On September 17, 2015, the IRS and the Treasury Department issued final, temporary, and proposed regulations under section 871(m) of the Internal Revenue Code (collectively, the “new regulations”) that provide the rules for withholding on “dividend equivalent payments” on derivatives that reference U.S. equity securities.  In general, the rules narrow the class of derivatives that would have been subject to withholding under the proposed regulations issued in 2013 (the “2013 proposed regulations”).


Related Attorney(s): Jason Schwartz
Related Practice(s): Tax
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Delaware Court Leaves Ousted Executive on His Own for Legal Fees

September 21, 2015

In a September 11, 2015, decision, the Delaware Chancery Court denied a former officer and director advance reimbursement of legal fees in a dispute with his company, despite his insistence that multiple corporate documents and Delaware law entitled him to advancement. The opinion underscores the importance of careful drafting of indemnification and advancement agreements and also highlights the limits on the ability of officers or directors to receive indemnification or advancement for actions taken beyond the scope or span of their positions.


Related Attorney(s): William Mills
Related Practice(s): Corporate, Global Litigation
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New DOJ Policy Regarding Individual Accountability for Corporate Wrongdoing

September 10, 2015

On September 9, 2015, the U.S. Department of Justice announced a new policy regarding individual accountability for corporate misconduct.  The policy, described in a memo authored by Deputy Attorney General Sally Yates, posits that “one of the most effective ways to combat corporate misconduct is by seeking accountability from the individuals who perpetrated the wrongdoing.”  The focus on individuals represents the first formal announcement of a policy shift that Department of Justice (DOJ) officials have hinted at during the past year.


Related Attorney(s): Anne Tompkins, Jodi Avergun, J. Robert Duncan
Related Practice(s): White Collar Defense and Investigations
Related Office(s): Charlotte, Washington
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M&A Update: Delaware Court Finds Dole Executives Personally Liable for Millions in Damages for Defrauding Stockholders in Buy-Out and Undermining Special Committee Process

August 28, 2015

In its August 27th post-trial opinion, In re Dole Food Co., Inc. Stockholder Litigation, the Delaware Chancery Court held Dole executives David Murdock and Michael Carter personally liable for $148 million in damages for undermining and interfering with the special committee’s efforts to obtain a fair price for Dole’s minority stockholders following Murdock’s decision to take the Company private in 2013.  The decision emphasizes that transactions with a controlling stockholder that employ the dual procedural protections of independent director and “majority of the minority” approval must actually adhere to the substance and purpose of those protections.


Related Attorney(s): William Mills, Richard Brand
Related Practice(s): Corporate, Global Litigation, Mergers & Acquisitions
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The Second Circuit Denies Midland’s Request For Rehearing On Its Decision That Upended Longstanding Principles of Lending Law

August 26, 2015

On August 12, 2015, the United States Court of Appeals for the Second Circuit denied Midland Funding, LLC and Midland Credit Management (collectively, “Midland”)’s petition for panel rehearing, or, in the alternative, rehearing en banc, of the Second Circuit’s recent decision in Madden v. Midland Funding, LLC (“Madden”), that upended well-settled lending law by holding that the federal preemption of state usury laws does not extend to non-national bank assignees of national banks, thus calling into doubt the enforceability of loans that were valid when made, depending on the identity and location of the assignee.


Related Attorney(s): Nathan Bull, Scott Cammarn
Related Practice(s): Bank Regulation, Financial Regulation, Global Litigation
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D.C. Circuit Upholds Attorney-Client Privilege Again in In re Kellogg Brown & Root, Inc.

August 17, 2015

On August 11, 2015, the U.S. Court of Appeals for the D.C. Circuit granted a petition by Kellogg Brown & Root, Inc. (“KBR”) for a writ of mandamus in order to protect KBR’s assertion of attorney-client privilege over its prior internal investigation of alleged violations of the False Claims Act.  In re Kellogg Brown & Root, Inc., No. 14-5319, slip op. (D.C. Cir. Aug. 11, 2015) [hereinafter KBR II].  The opinion was actually the second writ of mandamus granted in this closely watched case over the course of only 14 months.


Related Attorney(s): Jodi Avergun
Related Practice(s): Global Litigation, White Collar Defense and Investigations
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TCEH Bankruptcy: SDNY Transfers Delaware Trust Company v. Wilmington Trust N.A. Intercreditor Dispute to Delaware Bankruptcy Court, Reaffirming Broad View of Bankruptcy Jurisdiction

August 05, 2015

On July 23, 2015, in an action arising from the huge TCEH chapter 11 bankruptcy, Judge Paul A. Engelmayer of the U.S. District Court for the Southern District of New York issued an opinion in Delaware Trust Company v. Wilmington Trust N.A. denying plaintiff’s motion to remand the case back to New York state court, and granting defendants’ motion to transfer the case to the District of Delaware, from where it will be referred to the United States Bankruptcy Court for the District of Delaware.



Related Attorney(s): Ivan Loncar, Mark Ellenberg, Ellen Halstead, Michele Maman, Thomas Curtin, Howard Hawkins
Related Practice(s): Financial Restructuring, Global Litigation
Related Office(s): New York, Washington
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Illinois Court Strikes Down Chicago Pension Reforms, Deepening City's Financial Crisis

July 29, 2015

On July 24, 2015, Judge Rita M. Novak of the Circuit Court of Cook County, Illinois struck down recently enacted legislation designed to shore up two of the City of Chicago’s severely underfunded pension plans by, among other things, reducing benefits.  Judge Novak viewed as controlling a decision by the Illinois Supreme Court from May of this year which held that similar legislation reducing benefits for members of state-funded pension plans violated the “pension protection clause” of the Illinois constitution. 

 


Related Attorney(s): Lary Stromfeld, Ellen Halstead, Howard Hawkins, Michele Maman, Ivan Loncar, Mark Ellenberg, Casey Servais, Ingrid Bagby, Thomas Curtin
Related Practice(s): Distressed Municipal Finance, Financial Regulation, Financial Restructuring
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UK Summer Budget 2015 – Key Tax Measures

July 09, 2015

The Chancellor of the Exchequer’s first Budget of the new Parliament, delivered on 8 July 2015, will be remembered as a reforming Conservative budget, including significant changes to the United Kingdom’s welfare provisions such as limiting the availability of personal working tax credits and introducing the new National Living Wage. 


Related Attorney(s): Catherine Richardson, Adam Blakemore
Related Practice(s): Tax
Related Office(s): London
read more »

SEC Focus On Expense Allocation: In the Matter of KKR

July 09, 2015

On June 29, 2015, the SEC charged Kohlberg Kravis Roberts & Co. L.P. (“KKR”), an SEC-registered investment adviser, with misallocating more than $17 million in broken deal and diligence expenses to its flagship private equity funds in breach of its fiduciary duties under the Investment Advisers Act of 1940 (the “Advisers Act”).


Related Attorney(s): Steven Lofchie, Dorothy Mehta
Related Practice(s): Financial Regulation, Fund Formation, Investment Management Regulation & Compliance
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Investing in the United States: CFIUS Concerns for Chinese Investors

July 09, 2015

Michael Liu, Jane Ng, Viola Jing and Keith Gerver have authored a Clients & Friends Memo to discuss the latest trends in reviews conducted by the Committee on Foreign Investment in the United States (CFIUS) for Chinese investors contemplating possible investments in U.S. assets. The Memo provides a recap of the CFIUS framework and process, and some recommendations to avoid unnecessary complications and after-deal scrutiny from CFIUS.


Related Attorney(s): Keith Gerver
Related Practice(s): Corporate
Related Office(s): Hong Kong
read more »

Second Circuit Holds Application of State Usury Laws to Third-Party Debt Purchasers Not Preempted by National Bank Act

June 08, 2015

On May 22, 2015, in Madden v. Midland Funding, LLC, (“Madden”), the United States Court of Appeals for the Second Circuit held that the application of state usury laws to third-party assignees is not preempted by the National Bank Act but rather such assignees remain subject to state usury limits.  The Madden decision has potentially far-reaching implications for investors in, and securitizers of, bank-originated loans to the extent that it casts into doubt the ability of an assignee of a bank loan to collect interest at the rate originally provided for in the agreement.


Related Attorney(s): Stuart Goldstein, Michael Gambro, Nathan Bull, Scott Cammarn
Related Practice(s): Bank Regulation, Financial Regulation, Securitization & Asset Based Finance
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M&A Update: IRS Mulls Change to Spinoff Rules

May 27, 2015

In a statement that would mark a stark change in approach, an IRS official recently indicated that the IRS may begin requiring that companies seeking to effect tax-free spinoffs conduct active businesses that represent a minimum percentage of the companies’ assets.  The official noted that the IRS may hold future requests by taxpayers for guidance on this issue in abeyance.


Related Attorney(s): William Mills, Linda Swartz
Related Practice(s): Corporate, Mergers & Acquisitions, Tax
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Supreme Court Holds That Orders Denying Plan Confirmation Are Not Final for Appellate Purposes

May 21, 2015

On May 4, 2015, a unanimous United States Supreme Court in Bullard v. Blue Hills, 135 S. Ct. 1686 (2015), resolved a long-standing circuit court split by holding that a bankruptcy court’s order denying confirmation of a debtor’s proposed bankruptcy plan is not a “final” order that can be immediately appealed as a matter of right.  Although arising in the chapter 13 context, the Court’s holding also likely applies in chapter 11 and amounts to a major win for creditors, who gain important leverage during plan negotiations with debtors now left with fewer options following denial of confirmation.


Related Attorney(s): Casey Servais, Ingrid Bagby, Mark Ellenberg
Related Practice(s): Financial Restructuring
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A Looming Crisis: Illinois Supreme Court Strikes Down Statute Reducing Benefits

May 19, 2015

On May 8, 2015, the Supreme Court of the State of Illinois struck down recently enacted state public pension reform legislation on the grounds that the legislation violated the “pension protection clause” of the Illinois constitution. The legislation had sought to reduce Illinois’s pension liabilities by reducing annuity benefits to some members of the State’s public pension systems.


Related Attorney(s): Michele Maman, Ellen Halstead, Thomas Curtin, Howard Hawkins, Ingrid Bagby, Mark Ellenberg, Lary Stromfeld, Ivan Loncar, Casey Servais
Related Practice(s): Financial Restructuring
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M&A Update: Delaware Supreme Court Issues Important Ruling Protecting Independent Directors

May 18, 2015

On May 14, 2015, the Delaware Supreme Court ruled that claims against independent directors must be dismissed when a company charter provision shields directors from monetary liability for breach of the duty of care and the plaintiffs are unable to plead facts establishing that the directors breached the duty of loyalty, acted in bad faith or gained an improper personal benefit.  The decision, In re Cornerstone Therapeutics Inc. Stockholder Litigation, illustrates the power of so-called “exculpatory” charter provisions and emphasizes that plaintiffs bear the burden of pleading facts to support a “non-exculpated” claim against independent directors.


Related Attorney(s): William Mills
Related Practice(s): Corporate, Corporate Governance, Mergers & Acquisitions
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Revisions to the Securitisation Framework: Final Rules published by the Basel Committee

May 15, 2015

The Basel Committee on Banking Supervision (the “Basel Committee”) has published the revised securitisation framework setting out the standards for regulatory capital requirements for securitisation exposures held in the banking book (the “Revised Securitisation Framework”).  The Revised Securitisation Framework is largely based on the proposals published by the Basel Committee in December 2013, with some changes and clarifications.



Related Attorney(s): Glenn Weston, Suzanne Bell, Assia Damianova, Jake Lindsay, Nick Shiren, David Quirolo, Daniel Tobias, Robert Cannon, Claire Puddicombe, Stephen Day, Jennifer McIntosh
Related Practice(s): Securitization & Asset Based Finance
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SEC Proposes Title VII Regulatory Framework for Non-US Dealers Transacting in the United States

April 30, 2015

The U.S. Securities and Exchange Commission (the “SEC”) reproposed rules addressing the application of certain requirements under Title VII of the Dodd-Frank Act (the “Reproposal”) to non-U.S. persons dealing in security-based swaps (“SBSs”), where the transactions, or certain aspects of the transactions, take place in the United States.


Related Attorney(s): Steven Lofchie, Nihal Patel
Related Practice(s): Financial Regulation, Swap Regulation
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Final Regulations on Section 162(m) Deduction Limit Exceptions

April 28, 2015

New final regulations (the “Final Regulations”) have been issued clarifying and altering the “qualified performance-based compensation” exception and the transitional “reliance period” exception for newly public companies to the $1 million limit on deductible compensation for covered employees of public companies.


Related Attorney(s): Linda Swartz
Related Practice(s): Tax
Related Office(s): New York
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CFTC Issues No-Action Relief for Amended Legacy Swaps between SDs and SPVs

April 01, 2015

On March 31, 2015, the Division of Swap Dealer and Intermediary Oversight (the “Division”) of the Commodity Futures Trading Commission (the “CFTC”) issued no-action relief regarding compliance with certain of its swap regulations, including, but not limited to, business conduct and swap trading relationship documentation requirements for swap dealers (“SDs”), in connection with swaps entered into by structured finance special purpose vehicles (“SPVs”) prior to October 10, 2013 (“Legacy SPV Swaps”).  The relief was granted in response to a request by the Structured Finance Industry Group (“SFIG”).  Cadwalader represented SFIG in connection with the request.


Related Attorney(s): Nihal Patel, Ivan Loncar, Neil Weidner
Related Practice(s): Commodities & Futures Regulation, Financial Regulation, Swap Regulation
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UK Budget 2015 – Key Tax Measures

March 19, 2015

The Chancellor of the Exchequer’s final Budget of the current Parliament, given on 18 March 2015, was held in the shadow of the UK’s general election on 7 May 2015.  With the backdrop of the UK’s GDP growth increasing, continued low interest rates, rising employment and a reducing national debt, this was never going to be a Budget for surprise announcements.  This was a consolidating budget – a “game closer”, not a “game changer” as one newspaper reported.


Related Attorney(s): Adam Blakemore, Catherine Richardson
Related Practice(s): Tax
Related Office(s): London
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M&A Update: Market Pressures, Favorable Law Spur REIT Conversions and Spinoffs

March 16, 2015

Urged on by activists and institutional shareholders, a large number of companies with real estate holdings pursued real estate investment trust (REIT) conversions or spinoffs in 2014.


Related Attorney(s): William Mills
Related Practice(s): Corporate, Tax
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The Obama Administration’s Personal Data Notification & Protection Act: An Analysis

February 12, 2015

On January 12, 2015, President Obama proposed the Personal Data Notification & Protection Act, which would create a federal standard for data breach notification.  The proposed bill is part of a more wide-ranging effort by the Obama administration  to shore up the nation’s cybersecurity.


Related Attorney(s): Keith Gerver
Related Practice(s): Cybersecurity and Data Privacy, White Collar Defense and Investigations
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Unregistered CTA Summit Energy Services: Choose Your Words Wisely

February 09, 2015

A recent case highlights the importance of periodically reviewing an energy company's marketing materials and related activities (including statements made on websites) to ensure that the company is not holding itself out -- without CFTC registration -- as a CTA (commodity trading advisor).


Related Attorney(s): Andrew Greenberg
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U.S. District Court Holds that Puerto Rico's Recovery Act is Unconstitutional

February 09, 2015

On February 6, 2015, Judge Francisco Besosa of the U.S. District Court for the District of Puerto Rico held that the Puerto Rico Public Corporation Debt Enforcement and Recovery Act (the “Recovery Act”) is expressly preempted by section 903 of the Bankruptcy Code and is therefore unconstitutional.  The court also denied the Commonwealth’s motion to dismiss the plaintiffs’ claims under the Contracts Clause and certain of the plaintiffs’ claims under the Takings Clause.


Related Attorney(s): Howard Hawkins, Lary Stromfeld, Thomas Curtin, Mark Ellenberg, Ivan Loncar
Related Practice(s): Bankruptcy Litigation, Distressed Energy, Distressed Municipal Finance, Financial Restructuring, Municipal Derivatives, Municipal Securitization
read more »

SEC Issues Guidance for Shorter Debt Tender Offers

February 04, 2015

On January 23, 2015, the Staff of the U.S. Securities and Exchange Commission (the “SEC”) issued a no-action letter that allows certain tender offers for non-convertible debt securities to remain open for five business days, as opposed to the 20 business day period specified in Rule 14e-1 under the Securities Exchange Act of 1934 (the “Exchange Act”).  The no-action letter supersedes several prior no-action letters that had established market practice for abbreviated tender offers for nearly 30 years.

 


Related Attorney(s): William Mills
Related Practice(s): Corporate, Mergers & Acquisitions
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Second Circuit Denies Petition for En Banc Review of Fairfield Decision

January 16, 2015

On January 13, 2015, the U.S. Court of Appeals for the Second Circuit denied a petition for en banc review of the Second Circuit’s September 2014 panel decision holding that bankruptcy courts are required to review the propriety of a Chapter 15 debtor’s transfers of property interests within the territorial jurisdiction of the U.S., even if such a transfer has already been approved in the debtor’s foreign proceeding.  This decision represents a departure from prior cases, in which U.S. judges often enforced foreign court orders based on principles of comity and prohibited challengers from “re-litigating” such disputes in the U.S.  Absent consideration and reversal by the U.S. Supreme Court, the Second Circuit’s opinion and subsequent denial of en banc review could signal a paradigm shift in Chapter 15 jurisprudence and is sure to be cited with fervor by litigants in future Chapter 15 proceedings.  The decision may als

Related Attorney(s): Ingrid Bagby
Related Practice(s): Bankruptcy Litigation, Financial Restructuring
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FTC Announces 2015 Thresholds for Merger Control Filings Under HSR Act and Interlocking Directorates Under the Clayton Act

January 16, 2015

The 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 (the “HSR Act”); the revised thresholds will become effective 30 days after the date of their publication in the Federal Register.  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.


Related Attorney(s): Ngoc Hulbig
Related Office(s): Charlotte, Washington
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The EBA Report On Securitisation Risk Retention, Due Diligence And Disclosure – More Of The Same For The CLO Market?

January 08, 2015

On 22 December 2014, the European Banking Authority (the “EBA”) published an opinion and a report (together, the “Report”) on securitisation retention, due diligence and disclosure requirements under Regulation (EU) No 575/2013 (the “Capital Requirements Regulation”). The Report contains advice from the EBA that takes the form of:

  • Nine recommendations on the overall appropriateness of the securitisation retention, due diligence and disclosure requirements under the Capital Requirements Regulation; and
  • One recommendation on the convergence of the risk retention regulatory frameworks.

Related Attorney(s): Nick Shiren, David Quirolo, Daniel Tobias, Robert Cannon
Related Practice(s): CLOs, Securitization & Asset Based Finance
Related Office(s): London
read more »

New York Enacts Revisions to the UCC

December 29, 2014

As many readers are aware, substantial revisions to Article 9 of the Uniform Commercial Code (the “UCC”) became effective in all 50 states and the District of Columbia in 2001 or shortly thereafter.   Although these amendments modernized and simplified commercial law and practice in important respects, enough ambiguities and frictions arose between theory and practice to justify statutory fine tuning.  Accordingly, the Uniform Law Commission and the American Law Institute set to work on amendments in 2008.  A version of these amendments were signed into law in New York by Governor Cuomo on December 17, 2014.  They are part of an omnibus bill that, in addition to amending Article 9, updates several other articles of New York’s version of the UCC (hereafter referred to as the “Act”)


Related Attorney(s): Jeffrey Nagle
Related Practice(s): Corporate, Securitization & Asset Based Finance
Related Office(s): Charlotte, New York
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M&A Update: Revlon: Motive, Market Checks and Injunctions

December 24, 2014

In two separate December 19th decisions, the Delaware Supreme Court and the Delaware Chancery Court declined to enjoin stockholder votes with respect to pending mergers for alleged violations of the target board’s Revlon duties. The decisions affirmed longstanding Delaware caselaw providing that “there is no ‘single blueprint’ for directors to obtain the highest value reasonably attainable” for its stockholders in the satisfaction of its Revlon duties, “so long as they choose a reasonable route to get there.” The decisions offer boards nuanced guidance on how to satisfy Revlon duties in the context of a sale of corporate control.


Related Attorney(s): William Mills, Joshua Apfelroth
Related Practice(s): Global Litigation
Related Office(s): New York
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M&A Update: New York State Court Extends Common Interest Privilege to Merger Talks

December 10, 2014

In a December 4, 2014 decision, the New York Appellate Court, First Department, held that documents and discussions related to negotiation of a merger could be protected by the common interest privilege.  The ruling represents a change in New York law which, unlike Delaware, previously limited the common interest privilege to situations where litigation was pending or reasonably anticipated.


Related Attorney(s): William Mills
Related Practice(s): Corporate, Global Litigation, Mergers & Acquisitions
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M&A Update: Federal Court Decision in Allergan Control Battle Raises Serious Questions for New Takeover Technique

November 06, 2014

The Federal District Court’s November 4th ruling in Allergan, Inc. vs. Valeant Pharmaceuticals International, Inc. raises “serious questions” for the takeover partnership employed by Valeant and Pershing Square in their hostile bid to acquire Allergan.


Related Attorney(s): William Mills, Joshua Apfelroth
Related Practice(s): Global Litigation, Mergers & Acquisitions
Related Office(s): New York
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M&A Update: No Control, No Conflict, No Problem

October 31, 2014

On October 24th, the Delaware Chancery Court dismissed a lawsuit challenging the merger of Crimson Exploration and Contango Oil & Gas.  Minority Crimson stockholders alleged that Oaktree Capital Management, Crimson’s largest stockholder with a 33.7% stake, controlled Crimson and caused it to be sold below market value for “self-serving reasons.”  The Court disagreed, finding that even if Oaktree was a controlling stockholder—which was likely not the case—the merger should be reviewed under the deferential business judgment rule, and not the more stringent entire fairness standard, because Oaktree was not conflicted in the transaction.  The Court concluded that the Crimson directors had not breached their fiduciary duties, and the case was dismissed.


Related Attorney(s): Joshua Apfelroth, William Mills
Related Practice(s): Corporate, Global Litigation, Mergers & Acquisitions
read more »

Final Credit Risk Retention Requirements for Asset-Backed Securities Transactions

October 30, 2014

On October 21-22, 2014, the federal regulatory agencies responsible for implementing regulations under The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) finalized rules for risk retention requirements in asset-backed securities (as further defined below, “ABS”) transactions.  The final rules (the “Final Rules”) contain clarifications and revisions to the reproposed rules (the “Reproposed Rules”) highlighted in Part II–Executive Summary of Significant Changes from the Reproposed Rules below, but in most respects the Final Rules are substantially the same as the Reproposed Rules.  Parts III through VII below are a restatement of our prior Clients & Friends Memo updated to reflect the Final Rules.


Related Attorney(s): David Burkholder, Patrick Quinn, Ray Shirazi, Ira Schacter, Lary Stromfeld, Lisa Pauquette, Y. Jeffrey Rotblat, Michael Gambro, David Gingold, Steven Lofchie, Peter Williams, Frank Polverino, Gregg Jubin, Cheryl Barnes, Henry LaBrun, Richard Schetman, Scott Cammarn, Michael McCormack, Neil Weidner, Stuart Goldstein, Anna Glick
read more »

Risk Retention for Commercial Mortgage-Backed Securities: Fact Sheet

October 29, 2014

On October 22, 2014, the federal regulatory agencies responsible for implementing regulations under Dodd-Frank finalized the risk retention rules for ABS transactions, including CMBS transactions. The final rules come more than three years after risk retention rules were originally proposed, and more than a year after the rules were re-proposed.  The final rules contain a few clarifications and revisions to the re-proposed rules, but for the most part the final rules are substantially the same as the re-proposed rules.


Related Attorney(s): Lisa Pauquette, David Burkholder, Patrick Quinn, Stuart Goldstein, Michael Gambro, Anna Glick, Henry LaBrun, Y. Jeffrey Rotblat, Frank Polverino, Robert Kim
read more »

New MiFID I Consultation Paper Creates Further Challenges for Commodity Market Participants

October 14, 2014

On 29 September 2014, ESMA published a consultation paper (the Consultation Paper) seeking industry feedback for guidelines relating to certain commodity derivatives, namely those falling under C6 and C7 of Annex I of the Markets in Financial Instruments Directive (MiFID).  One of the reasons for publication of the guidelines is to ensure consistent treatment of these contracts under the European Market Infrastructure Regulation (EMIR) which has been in force throughout the European Union (EU) since 12 August 2012.  EMIR was implemented with the objective of increasing transparency and reducing risk in the European OTC derivatives markets.  The obligations under EMIR include certain clearing, risk mitigation and reporting requirements for parties entering into OTC derivatives.


Related Attorney(s): Assia Damianova, Nick Shiren
Related Practice(s): White Collar Defense and Investigations
Related Office(s): London
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M&A Update: Chancery Court Orders Financial Advisor to Pay Millions in Damages For Aiding and Abetting Breach of Fiduciary Duty

October 13, 2014

On October 10, 2014, Vice Chancellor Travis Laster ruled that RBC Capital was liable to the former stockholders of Rural/Metro Corporation for $75.8 million – representing 83% of the total damages – for aiding and abetting breaches of the duty of care by Rural/Metro’s board in connection with the 2011 sale of the company to Warburg Pincus.  The decision puts a chilling exclamation point on the continuing scrutiny by Delaware courts of conflicted sell-side advisers.


Related Attorney(s): William Mills
Related Practice(s): Corporate, Global Litigation
Related Office(s): New York
read more »

First Criminal Prosecution for Spoofing: High Frequency Trading Firm Owner Indicted in Northern District of Illinois

October 07, 2014

On October 2, 2014, the U.S. Attorney for the Northern District of Illinois announced the indictment of Michael Coscia, the owner of Panther Energy Trading (“Panther”), for six counts of commodities fraud and six counts of spoofing. This indictment represents the first ever criminal case to use the anti-manipulation authority provided in the Dodd-Frank Act to charge spoofing in the context of commodities transactions, and is one of the first major cases announced by the newly-formed Securities and Commodities Fraud section of the U.S. Attorney’s office for the Northern District of Illinois. 


Related Attorney(s): Jodi Avergun
Related Practice(s): White Collar Defense and Investigations
Related Office(s): Washington
read more »

Potential Impact of New SEC Rules on Cell Tower Securitizations

September 30, 2014

On August 27, 2014, the Securities and Exchange Commission (the “SEC”) adopted two final rules implementing new regulations affecting asset-backed securities (“ABS”).  The first set of rules, referred to in this memorandum as the “Third Party Reports Rules,” include new rules requiring the filing of the findings and conclusions of reports of third-parties who have been employed by issuers and underwriters to provide due diligence services.  The second set of rules, referred to in this memorandum by its popular name, “Regulation AB II,” relate to asset-level disclosure and shelf registration requirements applicable to ABS transactions.  These rules impose significant new filing, reporting and disclosure obligations on parties to ABS transactions.  This memorandum discusses the applicability of these final rules to cell tower securitizations.


Related Attorney(s): Michael Gambro, Michael McCormack, Frank Polverino, Stuart Goldstein
Related Practice(s): Securitization & Asset Based Finance
Related Office(s): Charlotte, New York
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Skandia: Intra-Company Supplies Treated as Taxable Transactions for VAT Purposes by the Court of Justice of the European Union

September 24, 2014

On 17 September 2104, the Court of Justice of the European Union (the “CJEU”) gave its preliminary ruling in the case of Skandia America Corporation USA, Sweden Branch v Skatterverket (C-7/13) (“Skandia”).  The decision of the CJEU has been awaited with interest throughout this summer, and the CJEU has now ruled that the supply of externally purchased services from a company’s main establishment in the United States to its Swedish branch is a taxable transaction for value added tax (“VAT”) purposes.  The decision of the CJEU has not followed the opinion delivered by Advocate General Wathelet on 8 May 2014, in which he had opined that such services should not be subject to VAT.


Related Attorney(s): Catherine Richardson, Adam Blakemore
Related Practice(s): Corporate Taxation, Tax, Tax Controversy
Related Office(s): London
read more »

M&A Update: Treasury Announces New Anti-Inversion Rules

September 23, 2014

On September 22, 2014, the Treasury Department announced its intent to issue new regulations that will reduce the tax benefits available after an inversion and may make it more difficult for some U.S. companies to invert (the “Notice”). The Notice does not require congressional action and applies immediately to all inversions completed after September 21, 2014.


Related Attorney(s): Linda Swartz, Christopher Cox
Related Practice(s): Corporate, Mergers & Acquisitions, Tax
Related Office(s): New York
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CFTC Votes to Re-Propose Margin Requirements for Uncleared Swaps

September 18, 2014

On September 17, 2014, the Commodity Futures Trading Commission (“CFTC”) voted to re‑propose rules to impose initial and variation margin requirements on uncleared swaps entered into by swap dealers and major swap participants that are not regulated by a “Prudential Regulator” (such entities, the “Covered Swap Entities”). The CFTC vote comes two weeks after the Prudential Regulators voted to re-propose analogous rules for swap dealers and major swap participants under their jurisdiction (the “PR Margin Proposal”). According to the discussion at the CFTC’s open meeting, the CFTC proposal – the text of which has not yet been made publicly available – is expected to be substantially similar to the PR Margin Proposal.


Related Attorney(s): Steven Lofchie, Nihal Patel
Related Practice(s): Financial Regulation, Swap Regulation
Related Office(s): New York
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No Market Interest Rate and No Make Whole: Momentive Performance Court Rejects Lender Arguments Against Confirmation

September 17, 2014

On August 26, 2014, Judge Robert D. Drain of the United States Bankruptcy Court for the Southern District of New York ruled that (i) the debtors could satisfy the cramdown requirements of section 1129(b) of the Bankruptcy Code by issuing to certain secured noteholders replacement notes with interest rates calculated at the prime rate plus a non-payment risk component, as opposed to a market rate, and (ii) the debtors’ noteholders were not entitled to payment of make-whole premiums as part of their allowed claims. In re MPM Silicones, LLC, Case No. 14-22503-rdd (Bankr. S.D.N.Y.).  By favoring a below-market risk premium in the cramdown context, this decision reinforces for lenders the importance of presenting clear evidence on plan feasibility and the risks facing a company post-chapter 11 emergence in order to be awarded higher interest rates on any cramdown paper.  


Related Attorney(s): Mark Ellenberg, Ingrid Bagby
Related Practice(s): Financial Restructuring
Related Office(s): New York, Washington
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New Rules for Third-Party Due Diligence Reports for Asset-Backed Securities

September 09, 2014

On August 27, 2014, the Securities and Exchange Commission (the “SEC”) adopted final rules (the “Final Rules”) implementing, among other things, provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”) relating to third-party due diligence reports for asset-backed securities.


Related Attorney(s): Joseph Beach, Lisa Pauquette, Michael McCormack, Cheryl Barnes, Neil Weidner, David Burkholder, Y. Jeffrey Rotblat, Gregg Jubin, Stuart Goldstein, Frank Polverino, Michael Gambro, Anna Glick, Patrick Quinn, Henry LaBrun
Related Practice(s): CLOs, Commercial Mortgage-Backed Securities, Derivatives & Structured Products, Financial Regulation, Municipal Securitization, Securitization & Asset Based Finance
Related Office(s): Charlotte, London, New York, Washington
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CRA3 – Final Draft Regulatory Technical Standards in relation to Disclosure Requirements for Structured Finance Instruments

September 08, 2014

On 24 June 2014, ESMA published its Final Report on the draft regulatory technical standards under CRA3 (as defined below) (the “Final Report”). With respect to structured finance instruments, the Final Report sets out draft standards for the information to be disclosed, the frequency of disclosure and the presentation of the applicable information in relation to the disclosure requirements for structured finance instruments pursuant to Article 8b of the CRA Regulation.


Related Attorney(s): Nick Shiren, Assia Damianova, Suzanne Bell, Robert Cannon, Stephen Day
Related Practice(s): Securitization & Asset Based Finance
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At Long Last—SEC Adopts Final Regulation AB II

September 05, 2014

On August 27, 2014 the Securities and Exchange Commission (the “SEC”) approved final rules relating to asset-backed securities (“ABS”) disclosure and registration (the “Final Rules”).  The Final Rules are contained in a final release, which was published on September 4, 2014 on the SEC’s website (the “Final Release”).  The Final Rules represent the culmination of a lengthy rulemaking process, which began with the publication by the SEC in early 2010 of proposed rules   (the “2010 Proposal”)  and the subsequent re-proposal in 2011 of a portion of the proposed rules  (the “2011 Re-Proposal” and, collectively with the 2010 Proposal, the “Proposed Rules”). 


Related Attorney(s): Anna Glick, Frank Polverino, Ivan Loncar, Stuart Goldstein, Gregg Jubin, David Burkholder, Lisa Pauquette, Cheryl Barnes, Robert Kim, Michael Gambro, Joseph Beach, Patrick Quinn, Henry LaBrun, Neil Weidner, Y. Jeffrey Rotblat
Related Practice(s): CLOs, Commercial Mortgage-Backed Securities, Derivatives & Structured Products, Financial Regulation, Municipal Securitization
Related Office(s): Charlotte, New York
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Summary of Prudential Regulators’ Re-Proposed Margin Rules

September 04, 2014

On September 3, the Board of Governors of the Federal Reserve System (“Board”), the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, the Farm Credit Administration and the Federal Housing Finance Agency (collectively, the “Prudential Regulators”) voted to re-propose rules to implement Sections 731 and 764 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) (a draft of which has been published online – the “Draft Proposal”). The Draft Proposal would impose initial and variation margin requirements on prudentially regulated swap dealers, security-based swap dealers, major swap participants and major security-based swap participants (“Covered Swap Entities”) entering into uncleared swaps and security-based swaps.


Related Attorney(s): Nihal Patel, Steven Lofchie
Related Practice(s): Financial Regulation
Related Office(s): New York
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SEC Adopts Regulation AB II

August 28, 2014

This morning the Securities and Exchange Commission in an open meeting voted to adopt long-awaited final rules (the "Final Rules") implementing a series of changes to the registration and offering process for asset-backed securities (“ABS”) and expanded disclosure and reporting under the SEC's Regulation AB.  The package of rules, which is commonly referred to as “Regulaton AB II”, was first proposed by the SEC on April 7, 2010 and certain elements were reproposed on July 26, 2011 (the “Reproposed Rules”).


Related Attorney(s): Gregg Jubin, Robert Kim, David Burkholder, Anna Glick, Stuart Goldstein, Henry LaBrun, Joseph Beach, Lisa Pauquette, Neil Weidner, Y. Jeffrey Rotblat, Patrick Quinn, Cheryl Barnes, Michael Gambro, Ivan Loncar, Frank Polverino
Related Practice(s): Bank Regulation, CLOs, Commercial Mortgage-Backed Securities, Derivatives & Structured Products, Distressed Municipal Finance, Financial Regulation, Financial Restructuring, Municipal Derivatives, Municipal Securitization, Securitization & Asset Based Finance, Warehouse Lending
Related Office(s): Charlotte, New York
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Restructuring of Unlisted EU Companies: AIFMD Applies to Non-EU Fund Managers on Acquisitions of Substantial Stakes

August 27, 2014

The Alternative Investment Fund Managers Directive (“AIFMD”) imposes restrictions on “asset stripping” on managers (“AIFMs”) of alternative investment funds (“AIFs”) that acquire control of EU companies.  The rules contain new notification requirements (as low as 10% of shares). These requirements apply to EU and non-EU AIFMs marketing in the EU and will impact private equity, venture capital and some hedge funds, their portfolio companies and target companies.


Related Attorney(s): Nick Shiren, Robert Cannon, Assia Damianova
Related Practice(s): Financial Restructuring, Securitization & Asset Based Finance
Related Office(s): London
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Finally Certainty About Licensing SPVs Under the FCA Consumer Credit Regime

August 20, 2014

From 1 April 2014, responsibility for the regulation of consumer credit in the UK was transferred from the Office of Fair Trading (“OFT”) to the Financial Conduct Authority (“FCA”), drawing certain activities relating to consumer credit within the authorisation and regulated activity provisions of the Financial Services and Markets Act 2000 (“FSMA”).  As the FSMA regime is regarded as more onerous than the previous Consumer Credit Act 1974 (“CCA”) licencing regime and due to the timing implications of obtaining full authorisation, the applicability of an exemption (the “SPV Exemption”) for SPVs introduced by statutory instrument to entities holding the benefit of consumer credit agreements will be of interest to market participants.


Related Attorney(s): Stephen Day, Nick Shiren
Related Practice(s): Securitization & Asset Based Finance
Related Office(s): London
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M&A Update | Inversions: The View from Ireland

July 07, 2014

On June 25, 2014, Ireland’s Taoiseach (Prime Minister) Enda Kenny and Minister for Finance Michael Noonan, among others, met with Cadwalader Chairman-elect and Corporate Group Co-Chair James C. Woolery in Dublin regarding foreign direct investment in Ireland and, specifically, the recent acceleration in U.S.-to-Ireland inversion transactions.


Related Attorney(s): Christopher Cox, Linda Swartz
Related Practice(s): Corporate,