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.
The Volcker Rule: Criticisms and Compliance Issues
On December 10, 2013, the Office of the Comptroller of the Currency (“OCC”), the Board of Governors of the Federal Reserve System (“FRB”), the Federal Deposit Insurance Corporation (“FDIC”), the U.S. Securities and Exchange Commission (“SEC”), and the U.S. Commodity Futures Trading Commission (“CFTC”) issued jointly developed final regulations. By doing this, federal agencies implemented § 619 of the Dodd-Frank Act (Volcker Rule).
Regulation and the Future of Money: Mobile Payment and Virtual Currencies
What exactly is Bitcoin? You may have heard a great deal about this in the media. You may know that it is a virtual currency. You may have heard news that the evaluation of Bitcoin once skyrocketed to a record of $900. But you may not have heard an analysis of Bitcoin and other virtual currencies in the legal community.
Comcast and TWC Take Next Step in Proposed Merger
In February, the number one and number two cable providers in the US (Comcast and Time Warner Cable respectively) announced a proposed merger whereby Comcast would acquire TWC. The cable giants have already filed the Hart-Scott-Rodino notification with the DOJ, and on Tuesday, 8 April, they took another step towards completion of the merger by filing Applications and Public Interest Statement with the FCC. The merger must receive approval from both the DOJ and the FCC to proceed. The DOJ’s primary inquiry will be related to anti-trust concerns, whereas the FCC will seek to find that the merger achieves benefits that can only be reached by the combination of the two companies.