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Posted on January 23, 2012 by K&L Gates
By: Diane E. Ambler, Andras P. Teleki
On December 29, 2011, the Securities and Exchange Commission (“Commission”) published a final rule release (“Final Rule”) amending the Commission’s rules so as to exclude the value of a person’s primary residence and certain related secured debt from net worth calculations used to determine whether a person qualifies as an “accredited investor” eligible to purchase unregistered securities pursuant to private and other limited offering exemptions under the Securities Act of 1933.
The Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”) requires that the accredited investor net worth standard that applies to natural persons individually, or jointly with their spouse, be “more than $1,000,000…excluding the value of the primary residence.” The standard in effect prior to enactment of the Dodd-Frank Act also required a minimum net worth of more than $1,000,000 but allowed the primary residence to be included in the calculation of net worth. The Final Rule revises the Commission’s rules so as to conform to the new standard, which became effective upon enactment of the Dodd-Frank Act on July 21, 2010.
To view the complete alert online, click here.
Posted on January 18, 2012 by K&L Gates
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The 2012 Annual Outlook provides a valuable collection of articles that address important industry and regulatory trends and their correlation with government and political developments. This edition highlights regulatory issues in European Union countries, and also covers diverse topics such as: systemic financial risk regulation, anti-corruption and white-collar enforcement initiatives, tax policies, competition and antitrust law matters, intellectual property and international trade developments, energy and climate change, and health care and food safety laws.
Click here to read the report.
Posted on December 15, 2011 by K&L Gates
K&L Gates is pleased to announce the launch of Consumer Financial Services Watch, a new blog focusing on legal and regulatory developments affecting consumer financial service providers, including news and developments relating to the Consumer Financial Protection Bureau (CFPB) and other topics.
Recent Blog Posts
We're blogging about a host of topics of interest to the consumer financial products and services industry, with the most recent posts covering:
- FHA Insured Mortgages Require an Appraisal by a State Certified Appraiser. Learn more.
- CFPB Now Accepting Mortgage Complaints from Consumers. Learn more.
- The CFPB’s Office of Servicemember Affairs Looks at the Lending Practices of For-Profit Colleges and Their Impact on Military Members. Learn more.
- FHA: HUD Uses FAQs to Communicate Policy Changes. Learn more.
- HUD’s Proposed Fair Lending Rule: Deadline for Comments. Learn more.
- CFPB and Other Federal Banking Agencies Issue Joint Supervisory Statement Clarifying $10 Billion Asset Determination: Regulatory Uncertainty Remains. Learn more.
For more information, please visit our Consumer Financial Services Watch blog.
Posted on December 8, 2011 by K&L Gates
By: Charles R. Mills, Lawrence B. Patent, Gordon F. Peery
Culminating a process that took almost two years to complete, the Commodity Futures Trading Commission (“CFTC”), by a 3-2 vote on October 18, 2011, adopted regulations under the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) imposing so-called “hard” position limits on a wide range of commodity interest contracts based upon underlying agricultural, metal and energy products. On December 2, 2011, the International Swaps and Derivatives Association and the Securities Industry and Financial Markets Association initiated a legal challenge to the CFTC's regulations by both filing a suit in the federal district court in the District of Columbia and filing a petition for review of the regulations in the U.S. Court of Appeals for the District of Columbia Circuit. They allege that the CFTC violated the Administrative Procedure Act by (1) concluding that Dodd-Frank required it to establish position limits without first determining whether they were necessary; (2) failing to present a reasoned analysis or consider all evidence before adopting the regulations; (3) failing to conduct an adequate cost-benefit analysis; and (4) conducting a flawed rulemaking process that prevented commenters from meaningfully participating. They will seek guidance from the courts regarding which court is the correct forum for their challenge.
The new regulations effectively cap the net speculative position (long or short) that a trader may hold -- even on an intraday basis -- of each of 28 specified futures contracts, options on those futures contracts, and economically equivalent swaps. The regulations refer to those 28 futures contracts as “Core Referenced Futures Contracts.” Such contracts and their economically equivalent options on futures and swaps will be referred to collectively as “Referenced Contracts.” Positions in Referenced Contracts that meet the CFTC’s definition of bona fide hedges are exempt from the limits, provided a trader files a notice with the CFTC to claim the exemption.
In addition to the new hard limits, the CFTC also adopted new “visibility levels” for specified metals and energy contracts. These levels do not trigger position limits, but reaching them will require traders to report information about their positions to the CFTC.
To view the complete alert online, click here.
Posted on October 12, 2011 by K&L Gates
By: Kathryn M. Baugher
In the months ahead, the CFPB will be expanding the coverage of its consumer complaint portal to include products such as mortgages and student loans. Consumers have been able to submit credit card complaints through a portal on the CFPB web site since July 21st. In addition to providing a consumer portal through which consumers can submit and check on the status of their complaints, the CFPB now provides a company portal through which companies can view and respond to consumer complaints. The CFPB recently met with industry representatives to show them how the new system works.
When a consumer files a complaint through the consumer portal, the CFPB routes the complaint to the company that is the subject of the complaint. The CFPB’s goal is to route each complaint to the appropriate company within 24 to 48 hours of receipt. The company is then expected to communicate directly with the consumer to attempt to resolve the complaint. The CFPB has asked that companies respond to the consumer and update the company portal within 10 calendar days. After logging into the company portal, the company should explain the resolution provided and attach any relevant documents. The company should also select one of the following resolution statuses: full resolution provided, partial resolution provided, no resolution provided, or incorrect company. The CFPB will then e-mail the consumer regarding the status of their complaint and update the complaint status on the consumer portal.
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Posted on October 10, 2011 by K&L Gates
By: David L. Beam
Raj Date recently issued a statement on the CFPB’s web site which suggests that the Bureau is considering a standardized disclosure form for checking account fees. The “problem,” Mr. Date said, “is that checking accounts often come with a wide variety of unexpected costs that can quickly add up for consumers.” One bank might call the fee one thing, while another bank calls it something else. And the circumstances under which banks charge the same fee might be different.
Mr. Date then noted that “CFPB has the ability to simplify checking account disclosures.” He said that this would be “good for competition” because it would allow “consumers to compare the checking account options from large banks, community banks, and credit unions and pick the one that works best for them.”
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Posted on October 7, 2011 by K&L Gates
By: Stephanie C. Robinson
Richard Cordray’s nomination to become the director of the Consumer Financial Protection Bureau will be in the hands of the full Senate now that the Senate Banking Committee has approved his nomination along a 12-10 party-line vote. But will the CFPB ever have an official leader in place? Not at this rate.
It has been fourteen months since Congress passed the Dodd-Frank Act, and the new government agency still has no formal leader.
While not challenging Cordray’s credentials, forty-four Republican Senators have vowed not to support any nominee to serve as director. They, like others, protest that a single director would have too much power and not be subject to enough oversight. In a letter sent to the President earlier this year, they wrote, “We believe that the Senate should not consider any nominee to be CFPB director until the CFPB is properly reformed.” They are calling for Democrats to make structural changes to the CFPB, including eliminating the director position and replacing it with a five-member commission, bringing the agency’s funding under congressional control, and making its operations subject to more oversight from other bank regulators. The forty-four Senate Republicans are enough to block Cordray’s approval.
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Posted on October 5, 2011 by K&L Gates
By: Gordon F. Peery, Lawrence B. Patent, Charles R. Mills
The Commodity Futures Trading Commission (“CFTC”) at its open meeting on September 8, 2011, proposed regulations to establish a schedule to phase in the effective dates of future final rules governing swap trading documentation, margin requirements for uncleared swaps, and mandatory swap clearing and trade execution pursuant to the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”). Further, CFTC Chairman Gary Gensler announced that the agency would not complete the adoption of all of the final rules implementing Dodd-Frank until at least the first quarter of 2012. Chairman Gensler stated that among the rules that will not be adopted until the first quarter of 2012 are those governing Swap Execution Facilities and the segregation of margin for uncleared swaps. He also stated that the CFTC is considering further exemptive relief from Dodd-Frank’s requirements for swaps.
To view the complete alert online, click here.
Posted on October 4, 2011 by K&L Gates
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The Impact of Dodd-Frank’s Whistleblower Provisions on FCPA Compliance
Date: Wednesday, October 19, 2011
Time: 11:00 a.m. EDT
Location: via webinar
Webinar Log-in: Opens at 10:45 am EDT
Dodd-Frank’s whistleblower provisions pose significant new challenges for corporate compliance programs, and these issues are particularly acute with respect to Foreign Corrupt Practices Act compliance. Decisions as to whether to self-report potential FCPA violations must be made under enormous time pressures and conditions of great uncertainty.
Please join us for a complimentary webinar as partners from our Government Enforcement practice (one of whom is a former Assistant Director in the FCPA unit of the SEC's Enforcement Division) discuss the current regulatory landscape and how companies might best adapt to these new circumstances.
Topics Include:
- How the SEC is handling whistleblower complaints
- What to expect if your company is the subject of such a complaint
- Cross-border issues that are likely to complicate internal investigations of FCPA matters
Who Should Attend:
- Compliance Officers
- Inside Counsel
Speakers Include:
- Luke T. Cadigan, Partner, Government Enforcement, Boston
- Amy L. Sommers, Partner, Government Enforcement, Shanghai
- Matt T. Morley, Partner, Government Enforcement, Washington, D.C.
- Edward J. Fishman, Partner, Government Enforcement, Washington, D.C.
Program registration is complimentary. To register, please click here by Friday, October 14, 2011.
For further questions, please email Tracey Chuckas or call 202.778.9123.
Posted on October 3, 2011 by K&L Gates
By: Mark D. Perlow, Shoshana L. Thoma-Isgur
On August 29, 2011, the Securities and Exchange Commission took action against a principal partner (the “Partner”) of a registered investment adviser to several private equity funds. The SEC issued an administrative order alleging that the Partner usurped investment opportunities from the adviser’s funds while failing to disclose a conflict of interest, thereby violating the adviser’s code of ethics, as well as violating the anti-fraud provisions of the federal securities laws, and aiding and abetting the violation of other federal securities laws.
To view the complete alert online, click here.
Posted on July 21, 2011 by K&L Gates
By: Daniel F. C. Crowley, Bruce J. Heiman, Akilah Green, Karishma Shah Page, Collins R. Clark, Nicole B. Ehrbar
July 21, 2011 will be the one year anniversary of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), the most comprehensive reform of the U.S. regulatory framework governing the financial system since the Great Depression. In the year since enactment, there has been an unprecedented flurry of regulatory and Congressional activity.
To view the complete alert, click here.
Posted on July 20, 2011 by K&L Gates
By: Deborah A. Linn, Yusef Alexandrine
On June 22, 2011, the Securities and Exchange Commission (“SEC”) adopted new rules and rule amendments under the Investment Advisers Act of 1940 to implement provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”). Section 410 of Dodd-Frank delineates a new group of advisers with assets under management of between $25 million and $100 million (“Mid-Sized Advisers”) and shifts the primary responsibilities for their regulatory oversight from the SEC to the state securities authorities. Despite the shift to state regulators, under certain circumstances, certain Mid-Sized Advisers may still be eligible to register with the SEC. This Alert will provide a summary of the final rules that affect a Mid-Sized Adviser’s ability to register with the SEC.
To view the complete alert, click here.
Posted on July 20, 2011 by K&L Gates
By: Cary J. Meer, John W. Kaufmann, Jarrod R. Melson
On June 22, 2011, the Securities and Exchange Commission (“SEC”) issued a release adopting rules to implement and define the scope of two new exemptions from registration under the Investment Advisers Act of 1940 (“Advisers Act”). Congress created or directed the SEC to create these exemptions in Title IV of the Dodd-Frank Wall Street Reform and Consumer Protection Act, enacted on July 21, 2010 ("The Dodd-Frank Act"). The Dodd-Frank Act exempts from registration, among others:
- advisers solely to one or more venture capital funds (“Venture Capital Advisers”), and
- advisers solely to one or more qualifying private funds with aggregate assets under management in the United States of less than $150 million (“Private Fund Advisers”).
The Release adopts rules and definitions that give substance to these exemptions and clarify the terms and methods of their application.
To view the complete alert, click here.
Posted on July 14, 2011 by K&L Gates
In 2011, businesses around the globe have had to react and adapt to an uncommon series of financial, environmental, and political disruptions, while governments seek expanded jurisdiction and pursue vigorous enforcement efforts to resolve their crises. K&L Gates continues to keep abreast of these events and the consequential effect on the relationship between the private and public sectors.
K&L Gates’ Global Government Solutions® 2011 Mid-Year Outlook offers analysis and perspectives on significant regulatory developments and trends for the coming year. Articles address a variety of government-related topics, including an array of financial regulatory reforms (including Dodd-Frank’s whistleblower program and state enforcement of consumer financial laws), the U.S. budget debate, worldwide energy and environmental policies, antitrust enforcement in the health care industry, and competition law issues.
To view the report, click here.
Posted on June 13, 2011 by K&L Gates
By: Cary J. Meer, Deborah A. Linn, Jarrod R. Melson
On May 25, 2011, the Securities and Exchange Commission (the “SEC”) proposed and sought comment on an amendment to Rule 506 of Regulation D under the Securities Act of 1933, as amended (the “1933 Act”), that would address the mandate of Section 926 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”). Section 926 of the Dodd-Frank Act requires that the SEC issue rules within one year of the Dodd-Frank Act’s July 21, 2010 enactment precluding certain “felons and other ‘bad actors’” from participating in offerings of securities that are conducted pursuant to Rule 506 (the most commonly employed “safe harbor” for unregistered private placements of securities). This type of prohibition is commonly referred to as a “bad boy” disqualification.
In this Alert, we briefly discuss:
- The proposed categories of persons that can trigger the “bad boy” disqualification with respect to an issuer’s offering of securities;
- The proposed categories of actions, judgments or other events that trigger disqualification;
- Exceptions to disqualification; and
- Certain key issues raised by the proposed rules for sponsors and investment managers of private investment funds.
To view the complete alert online, click here.
Posted on May 19, 2011 by K&L Gates
By: Howard M. Goldwasser, Sean P. Mahoney, Anthony R.G. Nolan, Drew A. Malakoff
On April 14, 2011, a consortium of U.S. banking, housing and securities regulators (the “Regulators”) proposed joint regulations (the “Proposed Rules”) regarding credit risk retention in securitization. The Proposed Rules would implement Section 15G of the Securities Exchange Act of 1934, which requires the Regulators to prescribe joint regulations to require “any securitizer to retain an economic interest in a portion of the credit risk for any asset that the securitizer, through the issuance of an asset-backed security, transfers, sells or conveys to a third party.”
Generally speaking, a “securitizer” of any securitization would be required to retain at least 5 percent of the credit risk associated with the assets securitized in that transaction, unless an exemption were available under the Proposed Rules. The Proposed Rules prescribe some basic forms of risk retention that could be used in any type of securitization, as well as some forms of risk retention that would apply only to specific types of securitizations (such as those involving revolving asset master trusts, which are common to credit-card and automobile floorplan securitization, CMBS transactions, certain federal agency securities issuances, and ABCP conduits). The detailed requirements of the Proposed Rules would have far-reaching effects on the structure and practice of securitization.
Comments on the Proposed Rules are due on or before June 10, 2011.
To view the complete alert online, click here.
Posted on April 27, 2011 by K&L Gates
By: Anthony R.G. Nolan, Skanthan Vivekananda
On March 17, 2011 the Securities and Exchange Commission (“SEC”) published for comment a proposed rule intended to “re-adopt” the beneficial ownership reporting requirements under Rules 13d-3 and 16a-1 of the Securities Exchange Act of 1934 (the “Exchange Act”) as they apply to security-based swaps. The proposed rule is one of a series of regulatory initiatives that the SEC has taken to reflect the inclusion of security-based swaps in the definition of “security” for purposes of the Exchange Act and the Securities Act of 1933 and to reflect the repeal of prohibitions that previously had existed in those statutes on the regulation of aspects of security-based swaps.
To view the complete alert online, click here.
Posted on April 4, 2011 by K&L Gates
By: James E. Earle, Mark D. Perlow
On March 30, 2011, seven federal financial regulators published a proposed rule that would implement Section 956 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
As required by Section 956 of the Dodd-Frank Act, these joint regulations would prohibit “covered financial institutions” from entering into incentive-based compensation arrangements that encourage inappropriate risks, either because they provide certain covered persons of the covered financial institutions with excessive compensation, or because they could lead to material financial loss to the covered financial institution. As also required under Section 956, the regulations also would require covered financial institutions to disclose the structures of their incentive-based compensation arrangements in a manner sufficient to determine whether the foregoing prohibitions are being properly implemented.
To view the complete alert online, click here.
Posted on March 22, 2011 by K&L Gates
By: Howard M. Goldwasser, Lloyd H. Johnson, Drew A. Malakoff
On January 20, 2011, the Securities and Exchange Commission (the “SEC”) published a final rule under the Securities Act of 1933 (the “Securities Act”) to set requirements for due diligence procedures and disclosure in asset-backed securities offerings. This rule is designed to implement Section 943 of the Dodd-Frank Act.
The new rule, Securities Act Rule 193, requires issuers of publicly offered asset-backed securities (“ABS”) to “perform a review of the pool assets underlying the asset-backed security.” In conjunction with Rule 193, the SEC has amended Item 1111 of Regulation AB to require that issuers also disclose the nature of the review of the assets, the “findings and conclusions” of the review and information regarding the amount and characteristics of assets that deviate from the underwriting criteria.
The Final Rule is effective as of March 28, 2011, but only registered offerings of ABS commencing with an initial bona fide offer after December 31, 2011 must comply with the Final Rule.
To view the complete alert online, click here.
Posted on February 25, 2011 by K&L Gates
By: Susan I. Gault-Brown, Cary J. Meer, Lawrence B. Patent
On January 26, 2011, the Commodity Futures Trading Commission (“CFTC”) proposed rescinding several exemptive rules (the “Private Fund Exemptive Rules”), adopted in 2003, that many operators (general partners/managing members) of private funds that directly or indirectly trade futures contracts and commodity options, and advisers to such funds, rely on to exempt themselves from registration as commodity pool operators (“CPOs”) – Rules 4.13(a)(3) and 4.13(a)(4) – and from registration as commodity trading advisors (“CTAs”) – Rule 4.14(a)(8)(i)(D).
If adopted, the CFTC’s proposal to rescind the Private Fund Exemptive Rules would require operators of private funds that wish to continue or begin trading futures contracts, commodity options, and – as of July 16, 2011 – swaps (together, “commodity interests”), to register as CPOs. Likewise, if adopted, the CFTC proposal would require certain advisers to private funds that continue or begin to trade commodity interests to register as CTAs. Importantly, as of July 21, 2011, many of these advisers will also be subject to investment adviser regulation by either the Securities and Exchange Commission (“SEC”) or one or more states. As a result, if the CFTC’s proposal is adopted, advisers to private funds that trade commodity interests likely will be subject to dual SEC/CFTC regulation.
To view the complete alert online, click here.
Posted on February 21, 2011 by K&L Gates
By: Lorraine Massaro, Anthony R.G. Nolan, Brian M. McNamara
On January 7, 2010, the CFTC proposed regulations (the “Proposed Regulations”) that would apply to the registration and operation of swap execution facilities (“SEFs”), including provisions designed to implement the core principles with which a SEF must comply to be registered and to maintain registration as a SEF under the Commodity Exchange Act (the “CEA”), as amended by the Dodd-Frank Act. The Proposed Regulations also set forth guidance, acceptable practices and other requirements for SEFs. SEFs form a new type of regulated marketplace for the trading of swaps provided for in Sections 5h and 2(h)(8) of the CEA.
To view the complete alert online, click here.
Posted on February 18, 2011 by K&L Gates
By: Susan I. Gault-Brown, Cary J. Meer, Lawrence B. Patent
On January 26, 2011, the Commodity Futures Trading Commission (“CFTC”) proposed amendments to CFTC Rule 4.5. CFTC Rule 4.5 currently excludes certain “qualifying entities,” including registered investment companies (“Registered Funds”), from CFTC regulation as commodity pool operators (“CPOs”). Under the proposed amendments, Registered Funds wishing to continue to claim the Rule 4.5 exclusion from CPO status would be required to limit their use of commodity futures and commodity options, and possibly swaps, and comply with certain marketing restrictions. Significantly, Registered Funds that are unable to operate their current investment programs under the proposed amendments to Rule 4.5 – including, but not limited to, so-called “managed futures” or “commodities strategy” funds and certain registered funds of hedge funds – would be forced either to change their investment program or face dual regulation by the Securities and Exchange Commission (“SEC”) and the CFTC. Among other matters, CFTC regulation would require the operator of such a Registered Fund – likely the Registered Fund’s board of directors – to register as a CPO and could require the Registered Fund’s adviser to register as a commodity trading advisor.
To view the complete alert online, click here
Posted on February 17, 2011 by K&L Gates
By: Arthur C. Delibert, Mark D. Perlow
As directed by the Dodd-Frank Act, the Securities and Exchange Commission and the Commodity Futures Trading Commission on January 26, 2011 jointly proposed new Form PF, which they would use to gather information aimed at evaluating the degree of “systemic risk” presented by certain types of private funds whose managers were either registered with the SEC or jointly registered with the SEC and the CFTC. On the same day, the CFTC also proposed new Form CPO-PQR and Form CTA-PR, which would solicit from commodity pool operators and commodity trading advisors that are registered with the CFTC, but not the SEC, information generally identical to that sought through Form PF. Proposed Form PF encompasses over 60 categories of questions and would collect from private fund managers information unprecedented in its scope and detail.
To view the complete alert online, click here.
Posted on February 17, 2011 by K&L Gates
By: Diane E. Ambler, Mark C. Amorosi
On January 18, 2011, the Financial Stability Oversight Council (the “FSOC”) issued a notice of proposed rulemaking regarding the circumstances under which nonbank financial companies, such as investment managers and broker-dealers, would become subject to supervision by the Board of Governors of the Federal Reserve System (the “Federal Reserve”). The notice sets forth a framework that provides broad discretion to the FSOC in making its determinations, which the notice states will be based on a combination of qualitative and quantitative metrics, but it provides little clarity on the metrics or other factors that would cause the FSOC to designate a nonbank financial company as systemically important enough to be under supervisory authority of the Federal Reserve.
To view the complete alert online, click here.
Posted on February 9, 2011 by K&L Gates
By Diane E. Ambler, András P. Teleki.
As required by the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”), the Securities and Exchange Commission (“Commission”) on January 18, 2011 proposed amendments to its “accredited investor” definition limiting natural persons who would qualify as purchasers under the private offering exemptions under the Securities Act of 1933. The Dodd-Frank Act requires the net worth financial standards by which the Commission defines an “accredited investor” to exclude the value of a natural person’s primary residence. The change was effective on July 21, 2010, the date the Dodd-Frank Act became law, and the proposed Commission rules reflect the new standard consistent with interpretations by the Commission’s Division of Corporation Finance shortly after enactment of the Dodd-Frank Act. The Commission also proposed technical conforming amendments to Form D and several other rules.
To view the complete alert online, click here.
Posted on February 4, 2011 by K&L Gates
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K&L Gates continues to monitor and analyze the shifting relationships between business and government worldwide, as governments around the globe are increasingly involved in the economy and the private sector. Effectively navigating these dynamic relationships has become a significant challenge for organizations large and small.
K&L Gates' Global Government Solutions 2011 Annual Outlook contains informative articles on some of the most consequential government developments that we anticipate in 2011. Among the topics covered are the implementation of the Dodd-Frank financial reform law and the Basel III accords on international financial regulation, the global convergence of competition law, changes in the health care industry and related regulations, environmental and energy policies, aggressive regulatory and law enforcement efforts, and changes in the political landscape.
To view the report, click here.
Posted on February 2, 2011 by K&L Gates
By: Anthony R.G. Nolan, Drew A. Malakoff, Shawn McBride, Lynwood E. Reinhardt
On January 4, 2011, the SEC published for comment new and amended rules under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), that set forth the conditions under which issuers of publicly registered ABS may suspend the obligation to file periodic Exchange Act reports. The proposed rules are intended to implement the disclosure requirements contained in Section 942(a) of the Dodd-Frank Act.
In conjunction with the proposed rule, the SEC staff also published a no-action letter that provides for limited grandfather protection for Exchange Act reporting requirements of issuers of registered ABS that had been issued during or prior to 2009.
Comments on the proposed rules must be submitted by February 7, 2011.
To view the complete alert online, click here.
Posted on January 28, 2011 by K&L Gates
By: Anthony R.G. Nolan, Gordon F. Peery, Drew A. Kelly
On December 15, 2010, the CFTC proposed a comprehensive set of principle-based regulations that would establish standards of compliance for derivatives clearing organizations DCOs. The proposed regulations would establish the standards of compliance for relating to (i) reporting; (ii) recordkeeping; (iii) public information; and (iv) information sharing. The proposed regulations are designed to implement Section 5b(c)(2) of the Commodity Exchange Act, as amended by Section 725(c) of the Dodd-Frank Act.
Public comments on the proposed rules must be filed with the CFTC on or before February 14, 2011.
To view the complete alert online, click here.
Posted on January 25, 2011 by K&L Gates
By: Philip M. Cedar, Angela L. Cottrell
The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) amended Section 15B of the Securities Exchange Act of 1934 to (i) require municipal advisors to register with the Securities and Exchange Commission (“SEC” or the “Commission”), (ii) grant the Municipal Securities Rulemaking Board regulatory authority over municipal advisors and (iii) impose a fiduciary duty on municipal advisors when advising municipal entities. On December 20, 2010, the Commission proposed Rules 15Ba1-1 through 15Ba1-7 (the “Proposed Rules”), which would establish a permanent registration regime for municipal advisors by, among other matters, creating a set of disclosure forms for both municipal advisory entities and certain of their employees to file with the Commission and be made publicly available. The Proposed Rules also provide additional guidance as to the activities that would require registration as a municipal advisor and impose certain record-keeping requirements on such advisors. If adopted, the Proposed Rules would replace the temporary, more limited registration requirements under interim Rule 15Ba2-6T, which became effective on October 1, 2010, which the SEC issued to comply with a deadline imposed by the Dodd-Frank Act.
To view the complete alert online, click here.
Posted on January 21, 2011 by K&L Gates
By: Philip M. Cedar, Stacey H. Crawshaw-Lewis, Lawrence B. Patent, Lloyd H. Johnson
On December 9, 2010, the CFTC proposed for comment a far-reaching set of business conduct rules (collectively, the “Proposed Regulation”) to govern swap dealers (“SDs”) and major swap participants (“MSPs”) in their dealings with counterparties. The Proposed Regulation would prohibit certain fraudulent and abusive practices and impose significant disclosure, diligence, suitability and transaction execution obligations on SDs and MSPs. In addition, where an SD or MSP acts as an advisor to a counterparty that is a “Special Entity,” including certain governmental entities, municipalities, employee and governmental benefit plans and endowments, it must act in the “best interests” of such Special Entity and have a reasonable basis to believe that the Special Entity has a qualified representative meeting certain sophistication and independence criteria. The Proposed Regulation also contains “pay-to-play” provisions that would prohibit SDs and MSPs from entering into swaps with municipal entities if they make certain political contributions to officials of such entities.
To view the complete alert online, click here.
Posted on January 18, 2011 by K&L Gates
By: Lawrence B. Patent
On December 9, 2010, the CFTC adopted an interim final rule (the “IFR”) regarding the reporting of information about “transition swaps” (which are defined as swap transactions that have been entered into after July 21, 2010, the date of enactment of the Dodd-Frank Act, and prior to the effective date of the swap data reporting and recordkeeping rules implementing the Dodd-Frank Act).
Under the IFR, transition swaps must be reported (the mechanics of which are discussed below) in accordance with the requirements set forth in new Section 2(h)(5)(B) of the Commodity Exchange Act (the “CEA”), which was added by Section 723 of the Dodd-Frank Act. CEA Section 2(h)(5)(B) generally requires parties to transition swaps to report certain information regarding such swaps to a swap data repository or to the CFTC. Because rules implementing the reporting requirements of CEA Section 2(h)(5)(B) have yet to be put into effect, the CFTC adopted this IFR to regulate the reporting and record retention relating to transition swaps before such rules become effective.
Although open for comment, the IFR is binding on swap market participants from its date of adoption.
To view the complete alert online, click here.
Posted on January 6, 2011 by K&L Gates
By: Lawrence B. Patent
On December 1, 2010, the CFTC proposed regulations under Section 725 of the Dodd-Frank Act that would establish standards by which derivatives clearing organizations (“DCOs”) must demonstrate compliance with certain core principles, as well as requirements for a DCO chief compliance officer, as set forth in Section 5b of the Commodity Exchange Act. The proposed regulations would also make certain technical amendments to other existing CFTC regulations to conform to requirements of the Dodd-Frank Act.
This alert discusses the Dodd-Frank Act’s grant of explicit rulemaking authority to the CFTC concerning DCOs, which could lead to requirements on DCOs beyond those established by the statutory core principles, an expansion of the core principle related to antitrust, as well as a new core principle added by the Dodd-Frank Act regarding legal risk.
Public comment on the proposed regulations may be filed with the CFTC on or before February 11, 2011.
To view the complete alert online, click here.
Posted on January 5, 2011 by K&L Gates
By: Susan I. Gault-Brown, Anthony R.G. Nolan, Lawrence B. Patent
On December 21, 2010, the Commodity Futures Trading Commission and the Securities and Exchange Commission jointly proposed rules to clarify the Dodd-Frank Act definitions of the terms “swap dealer,” “security-based swap dealer,” “major swap participant,” and “major security-based swap participant,” and “eligible contract participant.” The proposed definitions, if finalized as proposed, would provide greater clarity to the scope of the definitions of those terms as used in the Dodd-Frank Act but would also have profound implications for a large number of participants in the swap and security-based swap market.
To view the complete alert online, click here.
Posted on December 27, 2010 by K&L Gates
By Anthony R.G. Nolan.
On November 23, 2010, the Commodity Futures Trading Commission proposed a rule to implement requirements relating to conflicts of interest for swap dealers (“SDs”) and major swap participants (“MSPs”) that are contained in Section 4s(j)(5) of the Commodity Exchange Act, which was added pursuant to Section 731 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Proposed Rule 23.605 would generally address conflicts of interest that arise as a result of (1) research reports prepared and/or released by SDs and MSPs, (2) certain clearing determinations made by persons in the clearing arms of SDs and MSPs, and (3) disclosures made to customers of SDs and MSPs regarding potential derivatives transactions.
Public comment on the proposed rule must be received on or before January 24, 2011.
To view the complete alert online, click here.
Posted on December 21, 2010 by K&L Gates
By Edward G. Eisert, Lawrence B. Patent.
On December 2, 2010, the Securities and Exchange Commission published for comment proposed Regulation SBSR – Reporting and Dissemination of Security-Based Swap Information (“Proposed Rule”) that is intended to facilitate the reporting and dissemination of “security-based swap” information under the Securities Exchange Act of 1934 as required by Sections 763 and 766 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
The deadline for submitting comments on the Proposed Rule is January 18, 2011.
To view the complete alert online, click here.
Posted on December 17, 2010 by K&L Gates
By John W. Kaufmann, Jarrod R. Melson.
On November 19, 2010, the Securities and Exchange Commission issued a release proposing rules to implement and define the scope of two new exemptions from registration under the Investment Advisers Act of 1940. Congress created or directed the SEC to create these exemptions in Title IV of the Dodd-Frank Wall Street Reform and Consumer Protection Act, enacted on July 21, 2010. The Dodd-Frank Act exempts from registration, among others:
- an adviser solely to one or more venture capital funds (“Venture Capital Advisers”), and
- an adviser solely to one or more private funds with aggregate assets under management in the United States of less than $150 million (“Private Fund Advisers”).
The release proposes rules and definitions that give substance to these exemptions and clarify the terms and methods of their application, but leave many issues unaddressed. This alert discusses each exemption and the proposed rules in the release relating to such exemptions.
To view the complete alert online, click here.
Posted on December 16, 2010 by K&L Gates
By: Alan P. Goldberg
In companion releases designed to implement the provisions of the Dodd-Frank Act, the SEC recently proposed rules under the Advisers Act to, among other matters, implement the registration of private fund advisers with the SEC, enunciate proposed reporting requirements for hedge fund and other investment advisers, as well as reporting requirements for “exempted advisers,” reallocate regulatory responsibility, and define exemptions for advisers to venture capital funds, private fund advisers with less than $150 million under management (“Exempt Reporting Advisers”) and foreign private advisers.
The SEC also took the opportunity in these releases to propose rules that would require advisers to provide additional information about three areas of their operations:
- the private funds they advise;
- the data that advisers provide about their advisory business; and
- advisers’ non-advisory activities and their financial industry affiliations.
The SEC also proposed certain additional changes intended to improve its ability to assess compliance risks and to identify advisers that are subject to the Dodd-Frank Act’s requirements concerning certain incentive-based compensation arrangements. This alert outlines these proposed new disclosure requirements, which the SEC noted are designed to assist it in assessing the risk of the adviser.
To view the complete alert online, click here.
Posted on December 16, 2010 by K&L Gates
By: Deborah A. Linn, Joanne F. Osberg
On November 19, 2010, the Securities and Exchange Commission proposed new and amended rules under the Investment Advisers Act of 1940 to implement provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Section 410 of Dodd-Frank delineates a new group of advisers with assets under management of between $25 million and $100 million (“Mid-Sized Advisers”) and shifted the primary responsibilities for their regulatory oversight from the SEC to the state securities authorities. Despite the shift primarily to state regulators, under certain circumstances certain Mid-Sized Advisers may register with the SEC. This alert provides a summary of the proposed provisions that affect a Mid-Sized Adviser’s ability to register with the SEC.
To view the complete alert online, click here.
Posted on December 9, 2010 by K&L Gates
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December 14, 2010 11:00 a.m. - 12:30 p.m. EST
Please join us for a complimentary webinar as our panel discusses the best practices and emerging trends in global private placements in today's global economy.
Topics Include:
- US Private Placements of Private Funds - A Quick Review and How
Dodd-Frank Affects Them
- Dodd Frank - Private Fund Report Requirements
- Dodd Frank - Investment Adviser Registration Requirements and the
Foreign Adviser
- Adviser Registration - What it Means in Practice
- Products and Services Needed by Advisers After Dodd-Frank
- EU Private Placements Today
- The AIFMD: The End of EU Private Placements as We Know Them?
- UCITS IV: The Alternative Directive to the AIFMD?
To register, please click here.
Posted on December 9, 2010 by K&L Gates
By Charles R. Mills, Anthony R.G. Nolan.
The The Commodity Futures Trading Commission has proposed two rules to implement the anti-manipulation authority added in Sections 6(c)(1) and 6(c)(3) of the Commodity Exchange Act pursuant to Section 753 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Proposed Rule 180.1 generally would make it unlawful to employ any manipulative or deceptive device or contrivance relating to a swap, or a contract of sale of a commodity, in interstate commerce, or for future delivery on or subject to the rules of any registered entity. Proposed Rule 180.2 would make it unlawful for any person, directly or indirectly, to manipulate or attempt to manipulate the price of any swap, or of any commodity in interstate commerce, or for future delivery on or subject to the rules of any registered entity.
To view the complete alert online, click here.
Posted on November 29, 2010 by K&L Gates
By: Susan I. Gault-Brown, Anthony R.G. Nolan, Robert A. Wittie
On November 3, 2010, the Securities and Exchange Commission published for comment a proposed rule intended to implement anti-fraud and anti-manipulation provisions regarding security-based swaps pursuant to Section 763(g) of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
Proposed Rule 9j-1 under the Securities Exchange Act of 1934 would make it unlawful for any person to directly or indirectly engage in fraud, manipulation or deception in connection with the offer, purchase or sale of any security-based swap, as well as “the exercise of any right or performance of any obligation under” a security-based swap. The proposed rule is intended to make clear that the fraud and manipulation protections of the federal securities laws apply not only to offers, purchases and sales of security-based swaps but also explicitly to “the cash flows, payments, deliveries, and other ongoing obligations and rights that are specific to security-based swaps.”
Comments are due on or before December 23, 2010.
To view the complete alert online, click here.
Posted on November 19, 2010 by K&L Gates
By Lawrence B. Patent.
On November 2, 2010, the Commodity Futures Trading Commission (“CFTC”) published a proposed new reporting framework for swaps based on physical commodities similar to the CFTC’s current large trader reporting regime for exchange-traded futures contracts. The public comment period ends December 2, 2010.
The proposed regulations would require clearing organizations, clearing firms and swap dealers to report to the CFTC daily, on an account-by-account basis, their aggregate proprietary and customer positions in swaps that are economically equivalent to the exchange-traded futures contracts on physical commodities specified in the proposed regulations. Although the proposed regulations would not require commercial end-users to file daily reports, they would require end-users to keep records relating to reported swap positions and related cash and futures market transactions.
The CFTC has proposed its new Part 20 regulations pursuant to Section 737(a)(4) of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which added new Section 4a(a)(5) of the Commodity Exchange Act that authorizes the CFTC, as appropriate, to establish speculative position limits for swaps based upon physical commodities that are economically equivalent to exchange-traded futures or option contracts. The proposed reporting framework is intended to provide the CFTC with the swap market information it needs to develop speculative position limits for swaps based upon physical commodities that are economically equivalent to exchange-traded futures contracts on the same commodities.
To view the complete alert online, click here.
Posted on November 17, 2010 by K&L Gates
The Dodd-Frank Wall Street Reform and Consumer Protection Act has resulted in a number of headlines related to mortgage lending, including required "skin in the game," "plain vanilla" mortgage loans, and the death of "yield spread premiums." Perhaps the least reported headline, however, is the fact that significant changes are on the way for appraisals. While the Dodd-Frank Act spelled the end for the Home Valuation Code of Conduct, Fannie Mae and Freddie Mac introduced new Appraiser Independence Requirements that went into effect in October 2010. Moreover, as a result of amendments made by the Dodd-Frank Act to the Truth in Lending Act, the Federal Reserve Board recently published interim final regulations regarding appraisal independence requirements and the payment of customary and reasonable rates to appraisers. The result is that lenders and the appraisal management companies they engage are in for changes in the way they pay appraisers and use certain appraisal products.
Please join us on Tuesday, November 30, 2010 from 2:00 – 3:30 p.m. Eastern Standard Time for a complimentary webinar that will cover:
- Fannie Mae's and Freddie Mac's Appraiser Independence Requirements and a comparison to the Home Valuation Code of Conduct;
- New appraisal requirements for "higher risk mortgages" under the Truth in Lending Act;
- National requirements for registration of appraisal management companies;
- Appraisal independence standards to be implemented under the Truth in Lending Act; and
- Requirements for a lender's/appraisal management company's payment of "customary and reasonable" rates for appraisal services.
Time for questions and answers will follow the webinar presentation.
RSVP:
Click here to register online. Registration closes at 5:00 p.m. EST on November 29.
Speakers Include:
Phillip L. Schulman, Partner, Washington, D.C.
Nanci L. Weissgold, Partner, Washington, D.C.
Holly Spencer Bunting, Associate, Washington, D.C.
Kerri M. Smith, Associate, Washington, D.C.
Posted on November 8, 2010 by K&L Gates
By George P. Attisano, Clair E. Pagnano, Joanne A. Skerrett.
On October 21, 2010, the President’s Working Group on Financial Markets released a report detailing a number of potential options to address systemic risks that it believes are presented by money market funds (“money funds”) and to reduce what it views as these funds’ susceptibility to runs. The report (entitled “Money Market Fund Reform Options”) (the “Report”) discusses several proposed reforms that it suggests should be reviewed by the Financial Stability Oversight Council (“FSOC”), which was established under the Dodd-Frank Act. The Report was prepared in response to a proposal by the Treasury Department in its white paper on financial reform in June 2009 and is over a year late. The Report makes no recommendations and expresses no preferences regarding these policy options and in fact strives to present the arguments for and against each option.
To view the complete alert online, click here.
Posted on November 2, 2010 by K&L Gates
by Philip M. Cedar, Anthony R.G. Nolan, Drew A. Malakoff
On October 19, 2010, the Securities and Exchange Commission (the “SEC”) published for comment several new rules intended to implement the disclosure requirements contained in Section 945 and a portion of Section 932 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”). The focus of these proposed rules is due diligence on securitized assets and disclosure of the diligence review. These proposed rules give further insight into the morass of issues facing the industry under the new order of securitization.
To view the complete alert online, click here.
Posted on October 26, 2010 by K&L Gates
By: Jeffrey W. Acre
On October 18, 2010, the Securities and Exchange Commission (the “SEC”) proposed various new rules and amendments to existing rules (collectively, the “Proposed Rules”) to implement controversial provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) dealing with shareholder approval of a company’s executive compensation (commonly referred to as “say-on-pay”) and compensation arrangements between named executive officers and companies involved in certain significant transactions (commonly referred to as “golden parachute” compensation). This alert summarizes the key aspects of the Proposed Rules, including timing and transition matters.
To view the complete alert online, click here.
Posted on October 20, 2010 by K&L Gates
By Lawrence B. Patent.
On October 1, 2010, the Commodity Futures Trading Commission (“CFTC”) adopted “interim final rules” regarding the reporting of information about swap transactions entered into prior to the July 21, 2010 enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”). The Securities and Exchange Commission (“SEC”) adopted similar interim final rules for security-based swaps on October 13, 2010. Because the infrastructure envisioned by Dodd-Frank for receiving information about swap transactions is not yet in place, the interim final rules require parties to pre-enactment swaps to retain certain records related to the transactions, but the actual reporting of data about pre-enactment swaps is generally deferred until the CFTC and SEC implement the necessary rules and swap data repositories are established.
The rules apply to “pre-enactment unexpired swaps,” which are defined to mean any swap that was entered into prior to the enactment of Dodd-Frank on July 21, 2010, the terms of which had not expired as of that date. Accordingly, all parties to unexpired swap transactions entered into prior to July 21, 2010 should retain all relevant documentation and review their recordkeeping compliance systems to make sure that data related to such swaps are being captured and maintained.
To view the complete alert online, click here.
Posted on October 20, 2010 by K&L Gates
By Lawrence B. Patent.
On October 1, 2010, the Commodity Futures Trading Commission (“CFTC”) adopted “interim final rules” regarding the reporting of information about swap transactions entered into prior to the July 21, 2010 enactment of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”). The Securities and Exchange Commission (“SEC”) adopted similar interim final rules for security-based swaps on October 13, 2010. Because the infrastructure envisioned by Dodd-Frank for receiving information about swap transactions is not yet in place, the interim final rules require parties to pre-enactment swaps to retain certain records related to the transactions, but the actual reporting of data about pre-enactment swaps is generally deferred until the CFTC and SEC implement the necessary rules and swap data repositories are established.
The rules apply to “pre-enactment unexpired swaps,” which are defined to mean any swap that was entered into prior to the enactment of Dodd-Frank on July 21, 2010, the terms of which had not expired as of that date. Accordingly, all parties to unexpired swap transactions entered into prior to July 21, 2010 should retain all relevant documentation and review their recordkeeping compliance systems to make sure that data related to such swaps are being captured and maintained.
To view the complete alert online, click here.
Posted on August 17, 2010 by K&L Gates
The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act") represents the most dramatic revision of the U.S. financial regulatory framework since the Great Depression.
K&L Gates lawyers and policy professionals have been actively involved in many aspects of the Dodd-Frank Act and have sought to provide our clients and friends with updated information and analysis on some of its key provisions. Through focused and coordinated efforts of our Financial Services, Corporate and Policy and Regulatory practice areas, K&L Gates has prepared a series of alerts on key provisions of the Act. Below we list the financial reform alerts that we have distributed to date on the Dodd-Frank Act, all of which may be accessed electronically through a link to our Financial Reform webpage.
To view the complete alert online, click here.
