Corporate & Financial Weekly Digest

Corporate & Financial Weekly Digest

SEC Announces Rule Proposal to Modernize, Simplify and Increase the Accessibility of Required Disclosure

Posted in SEC/Corporate

On October 11, the Securities and Exchange Commission issued a press release announcing that it voted to propose amendments to modernize and simplify disclosure requirements in Regulation S-K, and related rules and forms, by updating, streamlining or otherwise improving the SEC’s disclosure framework “in a manner that reduces the costs and burdens on registrants while continuing to provide all material information to investors.” The proposed amendments are based on recommendations made in the staff of the SEC’s Report on Modernization and Simplification of Regulation S-K, as required by the Fixing America’s Surface Transportation Act (FAST Act). In the press release, SEC Chairman Jay Clayton noted that “an effective disclosure regime provides investors with the information necessary to make informed investment choices without imposing unnecessary burdens of time and money on issuers, and today’s action embodies that goal.” Continue Reading

SEC Approves FINRA Registration, Qualification and Continuing Education Rules

Posted in Broker-Dealer

The Securities and Exchange Commission has approved the Financial Industry Regulatory Authority rules that (1) consolidate the National Association of Securities Dealers (NASD) and Incorporated New York Stock Exchange registration rules, as well as existing FINRA rules; (2) restructure the representative-level qualification examination requirements; and (3) amend continuing education requirements. The rules will become effective October 1, 2018. Continue Reading

ESMA Updates MiFID II Q&A on Commodity Derivatives

Posted in EU Developments

On October 4, the European Securities and Markets Authority (ESMA) updated a question and answer document (Q&A) relating to commodity derivatives under the revised Markets in Financial Instruments Directive (MiFID II) and the Markets in Financial Instruments Regulation (MiFIR).

The updated Q&A contains new questions and answers relating to the following topics:

  • position management controls operated by trading venues; and
  • the ancillary activity exemption, specifically relating to how the capital employed test should be calculated and how various underlyings falling under the C(10) category of financial instruments should be treated for the purposes of ancillary activity calculations.

The Q&A is available here.

ESMA Highlights Importance of LEI for MiFID II Compliance

Posted in EU Developments

On October 9, the European Securities and Markets Authority (ESMA) published a briefing (Briefing) on the importance of the legal entity identifier (LEI) in enabling firms to comply with their obligations under the revised Markets in Financial Instruments Directive (MiFID II) and the Markets in Financial Instruments Regulation (MiFIR), beginning January 3, 2018. Continue Reading


Posted in EU Developments

On October 5, the European Securities and Markets Authority (ESMA) updated two question and answer documents: one relating to the Undertakings for the Collective Investment in Transferable Securities Directive (UCITS) and the other relating to the Alternative Investment Fund Managers Directive (AIFMD). Continue Reading

SEC Provides Regulatory Relief to Companies Impacted by Recent Hurricanes

Posted in SEC/Corporate

On September 28, the Securities and Exchange Commission (SEC) announced its issuance of an order and its adoption of interim final temporary rules to provide regulatory relief to companies, including publicly traded companies, investment companies, accountants and transfer agents, affected by Hurricanes Harvey, Irma and Maria. The order and interim rules conditionally exempt affected persons from certain requirements of the federal securities laws for specified periods, and extend filing deadlines for specified reports and forms for issuers subject to reporting obligations under Regulation Crowdfunding and Regulation A. Continue Reading

FINRA Board of Governors Authorizes Rule Proposals at September Meeting

Posted in Broker-Dealer

Last week, the Financial Industry Regulatory Authority Board of Governors (Board) had its September meeting. Among other things, the Board approved the publication of two rule proposals.

In particular, the Board authorized the publication of a proposed rule that would allow firms to use technology to conduct remote inspections of certain qualifying offices that have a limited number of associated persons and where only low-risk activities occur. Additionally, the Board agreed to publish a proposed rule that would provide investors with enhanced disclosures through BrokerCheck, such as additional information about individuals and firms with both broker-dealer and investment adviser registrations, and that would allow firms to include in BrokerCheck a comment about arbitration awards pertaining to the firm. The Regulatory Notices requesting comment on these proposals have not yet been published.

A full summary of the Board’s September meeting is available here.

SEC Approves FINRA Rule Change to Subject Capital Acquisition Brokers to Pay-to-Play Rules

Posted in Broker-Dealer

On September 29, the Securities and Exchange Commission approved the rule proposal of the Financial Industry Regulatory Authority to subject capital acquisition brokers (CABs) to the same pay-to-play restrictions already applicable to non-CAB member firms. As explained in more detail in this Katten advisory, CABs are FINRA members that are engaged in a limited range of broker-dealer activities, such as advising firms on capital raising and corporate restructuring or acting as a private placement agent to institutional investors (subject to certain conditions). CABs elect to be treated as such and are subject to a separate set of streamlined FINRA rules. Continue Reading

US Department of Justice Challenges Acquisition Seven Months After Closing

Posted in Antitrust

On September 26, the Antitrust Division of the US Department of Justice (DOJ) challenged Parker Hannifin Corporation’s acquisition of CLARCOR Inc. The challenge was launched seven months after the parties completed the antitrust review required by the Hart Scott Rodino Act (HSR) and closed on the transaction. The DOJ seeks to unwind a portion of the acquisition by forcing Parker Hannifin to divest either Parker Hannifin’s or CLARCOR’s aviation fuel filtration assets, so that a separate competitor can be created in the aviation fuel filtration business. The complaint alleges that the parties are the only two US manufacturers of aviation fuel filtration products that meet the technical specifications required by airlines, the US military and other US purchasers of aviation fuel. The complaint further alleges that the parties are head-to-head competitors in the sale of aviation fuel filtration systems and aviation fuel filtration elements.

The DOJ press release announcing the lawsuit claims that Parker Hannifin failed to provide certain documents and data concerning the fuel filtration business and refused to enter into a hold separate agreement covering the fuel filtration assets while the DOJ concluded its investigation.. In recent years the DOJ and the Federal Trade Commission have challenged a number of consummated M&A transactions where no HSR filing was required. This is a rare post-closing challenge where the parties went through the HSR process.

ESMA Chairman Comments on MiFID II implementation and Brexit

Posted in EU Developments

On September 29, Reuters published comments from European Securities and Markets Authority (ESMA) Chairman Stephen Maijoor on the implementation of the significantly revised and updated Markets in Financial Instruments Directive (MiFID II and its subordinate regulations and directives) and the implications of Brexit. Continue Reading