Corporate & Financial Weekly Digest

Corporate & Financial Weekly Digest

US Court of Appeals for the District of Columbia Circuit Grants Petition for Rehearing of Decision on Conflicts Minerals Rule

Posted in SEC/Corporate

On November 18, the US Court of Appeals for the District of Columbia Circuit granted the petitions of the Securities Exchange Commission and Amnesty International for a panel rehearing of the lawsuit challenging the SEC’s conflict minerals rule.  Continue Reading

SEC Adopts Regulation Systems Compliance and Integrity Rules

Posted in Broker-Dealer

On November 19, the Securities and Exchange Commission adopted new Regulation Systems Compliance and Integrity (Regulation SCI), a set of rules designed to strengthen the technology infrastructure of the US securities markets by reducing the occurrence of systems issues and improving resiliency when systems problems do occur. Continue Reading

FINRA and the MSRB Release Companion Proposals That Would Require Additional Disclosures for Transactions in Fixed Income Securities

Posted in Broker-Dealer

On November 17, the Financial Industry Regulatory Authority, Inc. and the Municipal Securities Rulemaking Board (MSRB) released companion proposals that would require disclosure of pricing reference information in customer confirmations for transactions in fixed income securities. Continue Reading

CFTC Proposes to Revise Interpretation on Forward Contracts with Embedded Volumetric Optionality

Posted in CFTC

On August 13, 2012, the Commodity Futures Trading Commission published for comment an interpretation to clarify the circumstances in which a contract that provides for variations in delivery amount (i.e., embedded volumetric optionality) is considered a forward contract. The CFTC has proposed to revise its previously issued interpretation to clarify that the embedded volumetric optionality must be primarily intended, at the time that the parties enter into the agreement, contract or transaction, to address physical factors or regulatory requirements that reasonably influence demand for, or supply of, a nonfinancial commodity. 

The CFTC is seeking public comment on its proposal, which must be received by December 22. 

The CFTC’s proposed interpretation is available here.

CFTC Extends Relief for Non-US Swap Dealers from Transaction-Level Requirements

Posted in CFTC, Dodd-Frank Developments

The Division of Swap Dealer and Intermediary Oversight, Division of Clearing and Risk and the Division of Market Oversight (Divisions) of the Commodity Futures Trading Commission have extended the no-action relief previously granted to non-US swap dealers (SDs) using personnel or agents located in the United States to arrange, negotiate or execute swaps. Continue Reading

CFTC Seeks Input on New Market Risk Advisory Committee

Posted in CFTC

The Commodity Futures Trading Commission is seeking comments on potential topics for discussion at future Market Risk Advisory Committee (MRAC) meetings. The CFTC indicated that suggested discussion topics should (i) relate to matters of public concern to clearinghouses, exchanges, intermediaries, market makers, end-users and the CFTC regarding systemic issues that threaten the stability of the derivatives markets and other financial markets, and/or (ii) assist the CFTC in identifying and understanding the impact and implications of an evolving market structure and movement of risk across clearinghouses, exchanges, intermediaries, market makers and end-users. Continue Reading

Investor Claims NetTALK Executives Took Control of Board

Posted in Litigation

On November 5, Telestrata, LLC brought a derivative shareholder action and direct action against, Inc., a publicly traded telecommunication company, and NetTALK’s directors and officers, alleging that the individual defendants unlawfully took control of the company to the detriment of shareholders and its authorized directors. Telestrata and NetTALK entered an agreement in February 2014 under which Telestrata would restructure $500,000 of NetTalk’s existing debt, lend an additional $4 million, grant Telestrata 48.88 percent ownership of the company, and issue a warrant for a grant of stock equal to an additional 20 percent stake in the company. The companies also agreed that Telestrata member Samer Bishay would become president of NetTALK with authority to bind the company to contractual or financing arrangements, limiting the authority of NetTALK’s CEO, Takis Kyriakides. According to the complaint, NetTALK erroneously issued Telestrata shares equal to 48.88 percent pre-closing, rather than after issuance, and failed to disclose, among other things, that it executed new employment agreements benefiting executives shortly before closing. The complaint further alleges that Kyriakides and NetTALK’s CFO entered into a number of financing transactions without Bishay’s approval, attempted to thwart Telestrata’s security interest in company property, and failed to inform Bishay of the significant financial matters. Upon discovery of the alleged improprieties, disinterested board members suspended Kyriakides and NetTALK’s CFO and attempted to eject them from NetTALK’s corporate offices, but were prevented from entering the premises by Kyriakides and other executives. Telestrata seeks an injunction and has asserted claims for breach of contract, breach of fiduciary duty, fraud in the inducement and conspiracy. 

Telestrata LLC v. Inc., et al., No. 1:14-cv-24137 (S.D. Fla. Nov. 5, 2014).