Trans-Pacific Partnership to shake up U.S. and Chinese Markets?

The Trans-Pacific Partnership (the “TPP”) agreement, a multination trade agreement, was finalized on October 5, 2015 after five years of negotiations. The finalization of the accords is a win for the U.S. in its attempt to directly compete with China in Asian markets. However, the Obama Administration, who has been pushing for this agreement since 2011, still needs congressional approval for the accords to be ratified domestically.

The TPP is specifically between the U.S., Japan, Australia, Peru, Malaysia, Vietnam, New Zealand, Chile, Singapore, Canada, Mexico, and Brunei Darussalam. Along with its principal focus of lowering trade barriers such as tariffs, the TPP will also establish a common framework for intellectual property, enforcement standards for labor law and environmental law, and an investor-state dispute settlement mechanism.

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Corporations are People…Except in the Tax World: Study Finds U.S. Corporations Stockpile $2.1 Trillion Overseas

Ever since Citizens United, the infamous notion that “corporations are people” has been a point of controversy and aversion among the American public. While the landmark case entreated corporations with the same rights as individuals in the context of political spending, such a mentality remains to be seen in the tax world, where a recent study found that $2.1 trillion in profits is being harbored in overseas tax havens by U.S. companies.

Citizens for Tax Justice, the non-profit group responsible for the study, reported that General Electric remains at the top of the list for the fifth year in a row with $119 billion overseas. Among others, technology companies such as Apple, Google, and Microsoft maintain more than one fifth of the $2.1 trillion overseas, a figure that is up 8% from 2014. These funds are generally held in low-tax countries such as Bermuda, Ireland, Luxembourg, and the Netherlands, and profits are stockpiled there in order to evade payment of the repatriation tax upon transfer to the U.S.

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Controlling the Narrative: Bank of America’s Corporate Governance Controversy

Recently, Bank of America announced that its CEO, Brian T. Moynihan, will be retaining the title of Chairman, along with the title of CEO. In 2009, during the fallout of the “great recession,” shareholders voted, by a slim 50.3% majority, to enact a bylaw preventing the combination of these two roles.

In 2014, the board repealed the bylaw, and elected Moynihan into both roles. Understandably, shareholders were not happy that Bank of America made the decision without a shareholder vote. To rectify the situation, Bank of America put the proposal up for a vote. On September 22, 2015, shareholders voted, with a 63% majority, to strike down the bylaw, and, thus, opening the way for Mr. Moynihan to fill both roles.

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Volkswagen May Face Civil and Criminal Charges

According to the Environmental Protection Agency (EPA), Volkswagen installed “defeat devices,” designed to cheat emissions tests, in 11 million diesel cars worldwide. VW’s “diesel dupe” has already caused the company considerable financial damage, as it has set aside $7.39 billion to cover recall costs in the U.S. alone. In addition, VW may now face civil and criminal charges for violations of the Clean Air Act (CAA) as well as class action lawsuits from private individuals.

Under the CAA, an automaker can be fined up to $37,500 for every noncompliant vehicle. The EPA could impose a total civil fine of more than $18 billion on Volkswagen for its approximately 500,000 noncompliant cars in the U.S, though allegations of violated environmental rules are often settled for much less than the maximum fine.

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SCOTUS to Decide Whether RICO Reaches Overseas

With a docket already filled with politically charged and highly contentious issues, the U.S. Supreme Court hopes to also address the reach of U.S. law overseas, specifically as it pertains to the Racketeer Influenced and Corrupt Organizations Act. Commonly referred to as RICO, the law was designed to combat organized crime by allowing for the criminal prosecution of “patterns of racketeering activity in an enterprise,” which may include money laundering, bribery, embezzlement, drug trafficking, and a number of other questionable activities.

A few days prior to the start of its new term beginning October 2015, the highest court in the land granted a writ of certiorari to hear the case RJR Nabisco, Inc., et al. v. European Community, et al, in order to resolve the question of whether RICO applies extraterritorially and if so, to what extent.  The petition, filed by counsel at Jones Day representing R.J. Reynolds, questioned the reversing of the lower court’s dismissal of the case in the Eastern District of New York by the sharply divided 2nd U.S. Circuit Court of Appeals Court of Appeals, which held that because the scope of RICO encompassed activities that apply to overseas conduct, claims filed based on these activities can proceed in a U.S. federal court.

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Consumer Financial Protection Bureau Urges Student Loan Reform

On September 29, 2015, the Consumer Financial Protection Bureau (“Consumer Protection Bureau”) released a report urging reform in student loan servicing. The report acknowledged poor servicing of student loans and requested that new rules be put in place to protect borrowers. The report said student loan servicing is currently plagued by problems such as inaccurate loan statements, delays in refinancing, surprise late fees, and mislaid payments.

This directive to regulate the student loan servicer market comes out of President Obama’s Student Aid Bill of Rights statement from March of this year. The stated goal is to “help make paying for higher education an easier and fairer experience for millions of Americans.” In conjunction with the Departments of Education and the Treasury, the Consumer Protection Bureau urged student loan servicers to be consistent, accurate, actionable, accountable, and transparent. Together, they have laid out a framework for the student loan market, which has recently surged to $1.2 trillion (as of the writing of this article) from $600 billion just a decade ago.

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Second Circuit Upholds Credit Card Surcharges in New York State

On September 29, 2015, the U.S. Court of Appeals for the Second Circuit upheld New York General Business Law §518, effectively reviving a ban on retailer-imposed surcharges against credit card users. In a 3-0 decision, the appellate court judges overturned a ruling from the Southern District of New York that described the law as “incomprehensible,” determining that it violated neither the First Amendment nor the Due Process Clause of the Fourteenth Amendment.

Barring an effective appeal to the U.S. Supreme Court, retailers will now be subject to criminal penalties if they attempt to impose surcharges on customers paying with plastic. The maximum penalties include up to one year in prison and a $500 fine for merchants found to be in violation of the law.

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SABMiller Rejects $104 Billion Takeover Bid From Rival Anheuser-Busch

After rejecting two private proposals, SABMiller snubbed Anheuser Busch InBev’s first publicized bid of $104 billion on Wednesday. SABMiller, the world’s No.2 brewer, cited AB’s substantial undervaluation of the company as their continued reason for rejection. SABMiller’s board of directors, excluding directors nominated by its largest shareholder, Altria Group, dismissed the price as too low.

However, Altria, maker of Marlboro cigarettes, owns more than 25% of the brewer and has urged the board to engage in talks with AB. The tobacco giant has said that it would accept a deal at or above AB’s proposed price of £42.15 ($64.2) a share. This offer would net SABMiller a 44% premium over their closing price the day media began to speculate about a potential takeover. The Santo Domingo family, which owns around 15% of the giant brewer through BevCo Limited, stuck with the board in rejecting the first public price.

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Uber Plans to Appeal Driver Class Certification

The U.S District Court for the Northern District of California set up a high-stakes legal battle for Uber that might erode the unicorn’s $50 billion valuation.

In his September 1decision, Judge Edward M. Chen granted class-action status to a lawsuit brought by two Uber drivers seeking reclassification as employees to obtain reimbursement for expenses and tips. He ordered that the suit applies to all drivers in California who didn’t waive their right to the class action.

Despite the fact that Judge Chen had previously approved the arbitration clause stated in Uber’s drivers contracts in O’Connor v. Uber Technologies, Inc., he recently denied Uber’s motion to compel arbitration finding the arbitration clauses entered into with Uber drivers to be unenforceable.

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New Bitcoin Exchange Approved in New York

Bitcoin, the peer-to-peer payment system first published in 2009, has opened a monetary Pandora’s Box since day one. The system was created by an unknown individual or group with the name Satoshi Nakamoto. With no central authority, the system enables decentralized, irreversible and non-freezable money transfer with a completely digital currency. Such innovation gradually attracted enormous attention and the Bitcoin prices have been volatile, with a notable increase in 2013 and a subsequent downtrend in 2014.

People who are not familiar with Bitcoin may wonder how the system is connected with the existing currency system. Online Bitcoin exchanges are the marketplace for both individuals and institutional investors to buy or sell bitcoins using multiple currencies, and vice versa. Mt. Gox used to be the largest bitcoin exchange in the world before its dramatic bankruptcy in March 2014, with $460 million stolen by hackers and another $27.4 million missing from its bank accounts. There are a variety of exchanges available on the market nowadays, including but not limited to: ItBit, Coinsetter, Coinbase, Bitstamp, BTC-e and Cryptsy.

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