Corporate & Financial Weekly Digest

Corporate & Financial Weekly Digest

Delaware Amends Its Corporate Law to Prohibit Fee-Shifting, Approve Exclusive Forum Provisions and Facilitate At-The-Market Offerings

Posted in SEC/Corporate

On June 24, Delaware’s Governor signed legislation approving amendments to the Delaware General Corporation Law (DGCL). While annual amendments to the DGCL typically involve technical fixes, this year’s legislation addresses a number of substantive issues described below: Continue Reading

SEC Division of Corporation Finance Issues New C&DIs Relating to New “Regulation A+”

Posted in CFTC

On June 23, the Securities and Exchange Commission’s Division of Corporation Finance issued new Compliance and Disclosure Interpretations (C&DIs) relating to the recently expanded Regulation A, commonly referred to as “Regulation A+”. Regulation A+, which was promulgated under the Jumpstart Our Business Startups Act (JOBS Act), permits eligible issuers to offer up to $50 million of their securities within any 12-month period in quasi-public offerings. As noted in the June 19 edition of the Corporate & Financial Weekly Digest, Regulation A+ became effective on June 19. Continue Reading

CFTC’s Division of Market Oversight Issues Updated Guidebook for Part 20 Reports

Posted in CFTC

The Commodity Futures Trading Commission’s Division of Market Oversight has issued an updated Guidebook and Appendices for reports to the CFTC under Part 20 of its regulations, which require large trader reports for certain physical commodity swaps.

The Guidebook and Appendices, which supersede prior versions of those documents, detail technical corrections corresponding to validation rules that the CFTC will use to review Part 20 submissions. The Guidebook includes reporting formats and record layouts for position reports and Form 102S filings, a data dictionary for mapping reportable data elements to a record layout and examples for converting swaps into futures equivalent units. The Appendices provide coding schema examples for FpML and FIXML formats. Continue Reading

CFTC’s Division of Market Oversight to Hold Public Roundtable Regarding Made Available To Trade Determinations

Posted in CFTC, Derivatives, Dodd-Frank Developments

The Commodity Futures Trading Commission’s Division of Market Oversight will hold a public roundtable on July 15 from 10:00 a.m. to 2:00 p.m. (ET) to discuss the provision of the Commodity Exchange Act that, with an exception for “end users,” requires transactions in certain swaps to be executed only on a swap execution facility or designated contract market. Continue Reading

FIA Market Technology Division Releases Recommendations to Prepare for Leap Second Event

Posted in CFTC

The Futures Industry Association’s (FIA) Market Technology Division (MTD) published a report of recommendations to prepare the industry for the leap second event on June 30.

A leap second is the addition of an extra second at the end of the day to realign the Coordinated Universal Time standard with mean solar time. Periodically adding the leap second corrects for irregularities in the earth’s rate of rotation. Continue Reading

Massachusetts Federal Jury Convicts Amateur Golfer for Insider Trading

Posted in Litigation

A federal jury in the District of Massachusetts recently convicted Eric McPhail of securities fraud — one of the first criminal insider trading convictions since the US Court of Appeals for the Second Circuit’s decision in United States v. Newman.

The allegations arose out of information Mr. McPhail received from a close friend— an executive at American Superconductor Corporation (AMSC) — who was a member of the same country club and went on golf and other trips together. This information allegedly included nonpublic information about AMSC’s business activities. According to the government, Mr. McPhail then gave this information to other friends of his, who made trades based on the information and earned more than $500,000. Mr. McPhail is alleged to have tipped those friends in return for golf tournament fees and meals, and to have told one of them after a tip that he “like[s] Pinot Noir and love[s] steak…looking forward to getting paid back.” Continue Reading

Final Rules Concerning the Restrictions Imposed On the Retail Distribution of CoCos and Other Regulatory Capital Instruments

Posted in Financial Markets, UK Developments

In August 2014, the UK Financial Conduct Authority (FCA) used its consumer protection powers for the first time and introduced temporary product intervention rules (Temporary Rules) that restricted the distribution of contingent convertible instruments (CoCos) and similar products to retail investors for a period of 12 months commencing October 1, 2014. These distribution restrictions did not impact the distribution of CoCos and similar products to professional or institutional clients, or to exempt persons. Continue Reading

UK FCA Publishes Latest “Market Watch” Newsletter

Posted in Financial Markets, UK Developments

The UK Financial Conduct Authority (FCA) published the 48th edition of its “Market Watch” newsletter on June 22. Market Watch is the FCA’s periodic newsletter for publishing its guidance on market conduct and transaction reporting issues. This latest edition includes guidance and commentary from the FCA on:

Trade Volume Advertising. Some firms choose to advertise their trading volumes solely through automatic feeds, which derive directly from the firm’s trading software. These feeds are usually delayed and, therefore, during this time gap, the market remains unaware of recent trading activity. However, the FCA notes that some other firms choose to advertise trading volumes using both automatic feeds and an element of discretion, which allows traders to override the automatic feed. This discretionary element enables traders to immediately advertise any significant trading volume. Continue Reading

SEC Denies Motion to Stay Regulation A+

Posted in SEC/Corporate

On June 16, the Securities and Exchange Commission denied a motion, filed by Monica J. Lindeen, Montana State Auditor, ex officio Commissioner of Securities and Insurance, which sought to stay the effectiveness of new “Regulation A+” (which became effective today, June 19). As noted in the June 5 edition of Corporate & Financial Weekly Digest, Ms. Lindeen, in her capacity as the Montana State Auditor and Commissioner of Securities and Insurance, previously filed a lawsuit with the Federal Court of Appeals for the District of Columbia (DC Circuit), which seeks to enjoin the effectiveness of Regulation A+ on the basis that Regulation A+ exceeded the SEC’s congressional mandate by pre-empting state “blue sky” review of Tier 2 offerings under Regulation A+. The lawsuit is currently pending. Continue Reading

SEC Requests Public Comment on ETPs

Posted in Broker-Dealer

On June 12, the Securities and Exchange Commission announced that it is seeking public comment in connection with its review of the listing and trading of exchange-traded products (ETPs) on national securities exchanges and retail sales of ETPs by broker-dealers.

The request for comment addresses exchange standards for listing novel ETPs, exemptions sought by market participants to trade new or complex ETPs and market pricing and arbitrage mechanisms for ETPs. Specifically, the request seeks to examine the application of Rules 101 and 102 of Regulation M in the context of ETPs, and invites comment on the conditions pertaining to ETPs’ exemptions from Section 11(d)(1) of the Securities Exchange Act of 1934 (Exchange Act) and Exchange Act Rules 10b-10, 11d1-2, 14e-5, 15c1-5, and 15c1-6. Continue Reading