Yesterday, Securities and Exchange Commission Chairman Mary Jo White announced a broad set of initiatives to tackle the growing concerns about the influence of computer-driven trading on the stock market. Included in these initiatives is the proposed increase in regulation of high-frequency traders and dark pools, in order to boost market stability, improve markets for smaller companies, and enhance transparency.
A Look at the Past, Present, and Expected Future of Insider Trading
As news of the insider trading probe into Phil Mickelson and Carl Icahn gains steam, insider trading is on the mind of (most) people. On its website, the Securities and Exchange Commission (“SEC”) notes that “insider trading continues to be a high priority area for the SEC’s enforcement program” and “in recent years, the SEC has filed insider trading cases against hundreds of entities and individuals.”[i] As media is flooded with insider trading updates, a look at the past, present, and expected future of insider trading charges is warranted. (more…)
Supreme Court Relaxes Standard for Patent Indefiniteness
In a decision issued on June 2, 2014, the U.S. Supreme Court lowered the bar for parties arguing patent indefiniteness under 35 U.S.C. § 112. Nautilus, Inc. v. Biosig Instruments, Inc., No. 13-369 (U.S. June 2, 2014). The unanimous decision, authored by Justice Ruth Bader Ginsburg, rejected the standard promulgated by the U.S. Court of Appeals for the Federal Circuit that a patent claim is indefinite “only when it is ‘not amenable to construction’ or ‘insolubly ambiguous.’” 715 F.3d 891, 899 (Fed. Cir. Apr. 26, 2013). Instead, the Supreme Court ruled that a patent claim is invalid where it fails to “inform those skilled in the art about the scope of the invention with reasonable clarity.” Nautilus, Inc., No. 13-369 at 11. Though the precise contours of the new “reasonable clarity” standard remain uncertain, this decision will allow parties to more easily challenge the validity of vague or ambiguous patent claims.
SEC Postpones Payment Disclosure Rule for Oil and Gas Companies
In 2012, the Securities and Exchange Commission (“SEC”) adopted a rule that would require companies that extract oil, natural gas, and minerals to disclose payments made to the U.S. government along with foreign governments. Such companies would need to “disclose the information annually by filing a new form with the SEC called Form SD.” The 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act mandated this rule and hoped that the rule would “encourage transparency and fight corruption in resource rich countries.”
Uber v. Lyft: Who Will Come Out On Top?
Uber and Lyft have been engaging in head-to-head competition in San Francisco. As both companies continue to grow in popularity, the question, “are you an Uber or a Lyft type of person?” permeates our everyday lives. In order to continue to grow and dominate the market, both companies have been trying to poach each other’s drivers. However, many are characterizing this behavior as a “race to the bottom.” (more…)
Credit Suisse Pleads Guilty to DOJ Charge of Conspiracy to Aid Tax Evasion; FRB and NYDFS Take Related Actions
As widely reported in the financial press, Credit Suisse AG (“Credit Suisse”), a large Swiss bank that maintains a branch and other offices in the United States pleaded guilty to the felony of conspiracy to aid tax evasion by U.S. taxpayers and agreed to pay an aggregate penalty of approximately $2.6 billion. Credit Suisse’s plea and penalty payment settled a three-year investigation by the U.S. Department of Justice (the “DOJ”). Credit Suisse was the first bank of its size to plead guilty to a crime in the U.S. in more than a decade. In prior cases, in part to avoid significant collateral consequences from a bank’s criminal conviction to employees, shareholders, others not personally involved in the crime or to avoid harm to the U.S. economy, the DOJ had often accepted a guilty plea from a subsidiary of the applicable bank and a deferred prosecution agreement from the bank itself.
CFPB Cites Problems Among Debt Collectors, Payday Lenders
Recently, the Consumer Financial Protection Bureau (CFPB) released a report highlighting abusive and unlawful practices in the payday loan, debt collection, and consumer reporting markets.
The released Supervisory Highlights report, the fourth report of its kind by the CFPB, examines findings such as regulatory violations or unfair, deceptive, or abusive acts or practices (UDAAPs), in selected program areas so that industry participants can use the information to ensure their operations remain in compliance with Federal consumer financial law.
White House Mortgage Policy Advances Housing Finance Reform
While the economy has been improving since the financial crisis, the housing market has been slow to recover. The White House has proposed a plan to help homeowners refinance their mortgages while Congress has proposed the Housing Finance Reform and Taxpayer Protection Act of 2014 (introduced in 2013) as part of the greater system of housing finance reform with the hopes of boosting the housing market.
Flash Boys–Concerns Over High Frequency Trading
High frequency trading is gaining significant media attention recently as Michael Lewis published his book, Flash Boys: A Wall Street Revolt, on the subject. While high frequency trading (HFT) was introduced into the markets in 1999, this platform for conducting rapid electronic trades of securities has been gaining significant attention by federal regulators including the Securities and Exchange Commission (“SEC”), the Commodity Futures Trading Commission (“CFTC”), and most recently, the Senate.
Inside the Courts: An Update From Skadden Securities Litigators
This quarter’s issue of Inside the Courts, Skadden’s securities litigation newsletter, includes summaries and associated court opinions of selected cases principally decided between late January and early May 2014. The cases address developing state and federal court trends in bylaws, class certification, fiduciary duties, insider trading, interpreting the U.S. Supreme Court’s Janus decision, PSLRA matters and applications of the securities laws to domestic and foreign corporations.
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