Over the years, Bolivia has been known as the focal point of political and economic instability, and although it still remains South America’s poorest country, much has changed.
Delaware Supreme Court Endorses “Fee-Shifting” Bylaw in Certified Question of Law
On May 8, 2014, the Delaware Supreme Court provided an en banc answer to a certified question of law from the U.S. District Court for the District of Delaware captioned ATP Tour, Inc. v. Deutscher Tennis Bund, concluding that fee-shifting provisions in the bylaws of a Delaware corporation are facially valid under Delaware law and enforceable even against parties who joined the corporation before the bylaw was adopted. Although this opinion arose in the context of a non-stock corporation, as discussed below, the opinion is relevant to traditional stock corporations as well. Further, the court acknowledged that the bylaw would not necessarily be rendered unenforceable as an equitable matter if adopted with the “intent to deter litigation.”
Read the rest of the WSGR report here.
European Court Rejects UK’s Financial Transaction Tax Challenge
U.K.’s challenge to the proposed financial transaction tax (FTT), while recognizing that the U.K.’s challenge was precautionary — and possibly premature.
Appeals Court Assails “Too Easy” Insider Convictions
The outcome of an appeal pending in the U.S. Court of Appeals for the Second Circuit in Manhattan on the question of defining ‘tippee-liability’ for insider trading could become a turning point in the prosecution of insider trading cases. Assailing the jury instruction in the case, the Court of Appeals panel criticized the trial judge for making convictions for insider trading ‘too easy’ by not requiring proof that the defendant-appellants, who were remote tippees, knew that the tipper personally benefitted by disclosing the material nonpublic information.
SEC Staff Provides Guidance on Fund Deregistration Applications
The staff of the SEC’s Division of Investment Management (the “Staff”) issued IM Guidance Update No. 2014-5, which provides guidance on responding to selected items in Form N-8F, the from used to apply for deregistration under the Investment Company Act of 1940. Among other matters, the Guidance Update addresses issues particular to unit investment trusts and appropriate responses for different “Abandonment of Registration” scenarios. (more…)
New Compliance Regime For U.S. Banks: Asset-Based Leverage Ratios and Other Proposals
The financial crisis generated concern that banks were taking excessive risks and they did not have adequate capital to run their operations. It was not clear if the existing Basel framework demonstrated weakness to contain the crisis or if it was the framework that led to the liquidity crisis and ultimately to the financial crisis. The U.S. government, through the Federal Reserve used funds under TARP to inject liquidity in the financial system. Even today the printing of money (quantitative easing) is going unabated to prop up the economy. Given this background, the regulation of banks has become increasingly important. Under the new Basel III requirements, U.S. regulators are requiring stronger leverage ratios for major U.S. banks. This would restrict banks to limit their borrowing and force them to fund their operations through equity.
Private-Equity’s Secondary Market
Private-equity has been an incredibly popular investment tool for institutional investors around the world, and in 2012 the industry surpassed $3 trillion of assets under management. The popularity of this form of investing is generated from the enormous success that Private Equity has attained with many funds regularly providing a return on investment above 20%. This rate of return does not come without issues, though.
SEC Forms a Group to Examine Private Equity and Hedge Funds: Sources
According to a Reuters report, the U.S. Securities and Exchange Commission (“SEC”) has recently formed a group (the “Group”) dedicated to examine private equity funds and hedge funds. The Group will focus on how these entities value their assets, disclose their fees, and communicate with investors.
Poison Pills in the Era of Shareholder Activism
Shareholder activism is the way in which shareholders leverage their equity stake to put public pressure on a corporation’s behavior. In his keynote address at the 2014 Berkeley Center for Law, Business and the Economy, and Berkeley Business Law Journal Shareholder Activism Symposium, Larry Sonsini, Chairman of Wilson Sonsini Goodrich & Rosati, declared that there has been a noticeable shift from a director-centric model to a shareholder-centric model. Until recently, shareholders were fighting defensive measures and managerial successions. Nowadays they are engaged in battles over corporate sales, spinoffs or corporate sustainability.
SEC Proposes Security-Based Swap Recordkeeping, Reporting and Notification Requirements and Capital Rules for SEC Registrants
On April 17, 2014, the Securities and Exchange Commission (SEC) proposed new regulations that would implement the recordkeeping, reporting and notification requirements of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The proposed regulations would apply to registered security-based swap dealers (SBSDs) and major security-based swap participants (MSBSPs), as well as to broker-dealers that are not registered as SBSDs or MSBSPs but are engaged in security-based swap activities.