Credit Suisse just confirmed that it is facing regulatory inquiries over its dark pools (private stock trading platforms). Credit Suisse is one of the largest dark pool operators, joined by Barclays and UBS. Credit Suisse has now joined more than 30 defendants in lawsuits over high-frequency trading currently pending in the U.S. District Court for the Southern District of New York. UBS and Deutsche Bank are also facing inquiries from regulators, including the Securities and Exchange Commission (“SEC”) and Eric T. Schneiderman, the New York Attorney General. Credit Suisse has not commented on which regulators are investigating the Zurich-based bank.
DC Circuit Determines That CFIUS Violated Ralls Corporation’s Right to Due Process
On July 15, 2014, the United States Court of Appeals for the District of Columbia determined that the Committee on Foreign Investment in the United States (CFIUS) violated Ralls Corporation’s right to due process under the Fifth Amendment. Significantly, the court held that the CFIUS process was deficient under the Fifth Amendment, and that Ralls was entitled to access unclassified evidence relied on by the president and the opportunity to rebut that evidence. If sustained, this decision may have significant implications for the CFIUS process. The case should be closely monitored by companies involved in or considering transactions within the committee’s jurisdiction, and counsel representing those companies.
SEC Adopts Money Market Fund Reform Rules
The Securities and Exchange Commission announced recently that they have adopted amendments to the rules that govern money market mutual funds. These amendments are intended to make structural and operational reforms to address the risk of investor runs in money market funds, while preserving the benefits of the funds.
The SEC is looking to prevent another disaster similar to the 2008 financial meltdown, where there was an investor exodus out of money-market mutual funds.
Exclusive Forum Provisions
A recent spike in the use of exclusive forum provisions in M&A deals has made the task of evaluating whether such a provision could be beneficial a vital step on any dealmaker’s checklist.
The recent surge in the use of provisions can be attributed to its general enforcement under judicial review, whether in Delaware or other jurisdictions.
Bitcoin: New York First State to Propose Regulations
The popular virtual currency, Bitcoin, has a marked history of use in the black market – made practical by its ability to be exchanged anonymously without being easily traced. As a result, this has led to a push for regulations that would increase accountability and reduce criminal activity. On July 23, New York issued a Notice of Proposed Rule Making from the New York State Department of Financial Services on “Regulation of the Conduct of Virtual Currency Businesses.” Those businesses would have to obtain a license to engage in virtual currency business activity essentially by demonstrating that business will be legitimate.
AbbVie and Shire Merger Expected
In a recent announcement, AbbVie, a research based biopharmaceutical company, revealed plans to acquire Shire, a biopharmaceutical company for $53 billion. If successful, this merger would provide a significant tax advantage for Chicago-based AbbVie as it would “reincorporate in Britain and reduce its tax bill.”
English Administrative Court Highlights Unresolved Issues Concerning EU Pharmacovigilance Law and Enforcement Under the Penalties Regulation
This case raises important issues concerning the powers of the European Medicines Agency (EMA) and the powers and obligations of a national authority (in this case the Medicines and Healthcare products Regulatory Agency (the MHRA)) when conducting inspections relating to the adequacy of the pharmacovigilance systems of the holder of a marketing authorisation and whether it has complied with its obligations relating to the reporting of suspected adverse reactions associated with the use of its products, particularly where an infringement procedure relating to such matters is pending. In this case the infringement procedure relates to an investigation under the Penalties Regulation (EC) No 658/2007 (the Penalties Regulation)1 being conducted by the EMA; seemingly the first of its kind.
Update on Russia-Ukraine Sanctions: Significant Expansion of Sanctions Presents Additional Compliance Challenges
On July 16, 2014, the United States announced another expansion of sanctions in response to events in southern and eastern Ukraine. The United States for the first time imposed sanctions against major Russian companies and banks – Gazprombank, Novatek, Rosneft, Vnesheconombank, which have been placed on a new Sectoral Sanctions Identification (“SSI”) List. While SSI List sanctions are less far-reaching than standard “blocking” sanctions, they could represent a substantial challenge and complication for those doing business in and with Russia. The United States also extended “blocking” sanctions to an additional five Russian individuals, nine Russian/Ukrainian companies, as well as the Luhansk People’s Republic and the Donetsk People’s Republic. The European Union (“EU”) is also reportedly considering broader sanctions against Russian and Ukrainian individuals and companies.
“Transforming Strawberries into Securities:” Investing in Farmland
A new real estate investment trust called the American Farmland Company has popped up. American Farmland is run by a group of investors that includes Thomas S.T. Gimbel, who once headed the hedge fund division of Credit Suisse. As food prices have been on the rise, hedge funds have developed a history of buying up cheap farm land. However, American Farmland is looking to do something that very few have done before: allow ordinary investors to purchase stock in American Farmland. Currently, two other real estate investment trusts—Farmland Partners and Gladstone Land Corporation—are trading on the Nasdaq stock exchange. American Farmland would join them to become the third real estate investment trust that owns and leases farmland to trade on a U.S. stock exchange.
Credit Suisse Has Its Largest Loss Since the Financial Crisis
Zurich-based investment bank, Credit Suisse, recently reported a second-quarter loss of 700 million Swiss francs (779 million dollars)—the bank’s largest lost since the financial crisis in 2008. The loss stands in contrast to the bank’s net profit of 1.05 billion francs in the previous year. The loss is the aftershock of a settlement Credit Suisse reached with the United States in May by pleading guilty to one count of conspiring to aid tax evasion. The bank was helping Americans hide their money in Swiss accounts in order to avoid paying U.S. taxes. As a result, Credit Suisse agreed to pay $2.6 billion in penalties. In regards to the bank’s recent legal issues, Brady Dougan, the bank’s Chief Executive Officer in the U.S., said that “there is no issue that has taken more of [the bank’s] time over the past five to six years.”