ISS Survey on Current Governmental and Compensation Policy Issues
In a report released on September 26, Institutional Shareholder Services Inc. released its 2011-2012 Policy Survey Summary of Results (the Survey).
Continue Reading...CFTC Announces New Certification Procedure for Foreign Security Index Products
Co-authored by Christopher Mendoza and Christian Hennion
The Commodity Futures Trading Commission has adopted a final rule that creates a new certification procedure for foreign boards of trade (FBOTs) seeking to offer “broad-based” security index futures or options contracts (Index Products) to persons in the U.S. FBOTs are currently required to obtain no-action relief from CFTC staff prior to offering an Index Product to U.S. persons. The new procedure replaces the current no-action letter process and provides for expedited review, allowing an FBOT that is registered as such with the CFTC or that has previously received no-action relief from the CFTC – either for stock index products or allowing the FBOT to offer direct access to its electronic trading systems – to offer and sell an Index Product in the U.S. 45 days after submitting a request to the CFTC with respect to such product, absent notification from the CFTC to the contrary. The final rule also permits an FBOT to offer new Index Products after an expedited 15-day review period in reliance upon prior CFTC relief issued to that FBOT where the new Index Product is based on the same index that was the subject of such prior relief and is “substantially identical” to the Index Product covered by such prior relief. Finally, previously granted no-action relief will be grandfathered under the new regime, provided that the applicable FBOT submits a written statement representing that the covered Index Products remain fully compliant with the requirements of such relief.
The final rule, available here, will take effect on October 26.
CFTC Requests Comment on Eurex Clearing AG's Application for Registration as a DCO
Co-authored by Christopher Mendoza and Christian Hennion
The CFTC is requesting public comment on an application by Eurex Clearing AG for registration as a derivatives clearing organization. The CFTC staff intends to complete its review of the application on or before March 31, 2012. Comments should be submitted on or before October 31.
The CFTC press release may be found here.
The documents submitted by Eurex Clearing are available here.
FINRA Reminds Firms of Trade Reporting Requirements in OTC Equity Securities and Restricted Equity Securities Transactions
The Financial Industry Regulatory Authority has issued a Trade Reporting Notice (the Notice) to remind firms that over-the-counter (OTC) trades in OTC Equity Securities and trades in Restricted Equity Securities under Securities Act Rule 144A must be reported to FINRA’s OTC Reporting Facility (ORF) in accordance with FINRA trade reporting rules.
Continue Reading...FINRA Reminds Firms of Trade Reporting Requirements Relating to Customer Sales of Low-Value OTC Equity Securities
The Financial Industry Regulatory Authority has issued a Trade Reporting Notice (the Notice) to remind firms that sales of low-value over-the counter (OTC) equity securities positions from customer accounts that may be deemed by the customer and firm to be worthless are subject to FINRA trade reporting rules and must be reported to FINRA for publication purposes.
Continue Reading...SEC to Publish for Public Comment Updated Market-Wide Circuit Breaker Proposals to Address Extraordinary Market Volatility
The Securities and Exchange Commission announced that the national securities exchanges and the Financial Industry Regulatory Authority are filing proposals to revise existing market-wide circuit breakers that are designed to address extraordinary volatility across the securities markets. When triggered, these circuit breakers halt trading in all exchange-listed securities throughout the U.S. markets. The existing market-wide circuit breakers, which were originally adopted in October 1988, have only been triggered once (in 1997). These circuit breakers were not triggered during the severe market disruption of May 6, 2010, which led the exchanges and FINRA, in consultation with SEC staff, to assess whether the circuit breakers needed to be modified or updated in light of today’s market structure.
Continue Reading...Shareholder Advisory Vote Constitutes Evidence of Board's Breach of Duty of Loyalty
The U.S. District Court for the Southern District of Ohio declined to dismiss a complaint brought by shareholders of Cincinnati Bell, a publicly-traded company, suing the company’s directors for breach of the duty of loyalty. The shareholder derivative suit was based on the directors’ grant of $4 million in bonuses on top of $4.5 million in salary and other compensation to the chief executive officer in the same year that Cincinnati Bell had incurred significant declines in net income, earnings per share, share price and a negative annual shareholder return. Ordinarily, courts will not inquire into board decisions under the business judgment rule, but the court found that the presumption of this rule had been rebutted by the plaintiffs’ allegations of evidentiary facts demonstrating that Cincinnati Bell’s board members did not act in the best interests of the company or its shareholders. Included among these evidentiary facts was the Cincinnati Bell board’s unanimous approval of the executive compensation at issue, notwithstanding an advisory vote, required under the Dodd-Frank Wall Street Reform Act, in which 66% of voting shareholders voted against such compensation.
NECA-IBEW Pension Fund ex rel. Cincinnati Bell, Inc. v. Cox, No. 1:11-cv-451 (S.D. Ohio Sept. 20, 2011).
Misrepresentations Regarding Financing of Buy-Out of LLC Interest Not a 10b-5 Violation
The U.S. Court of Appeals for the Eleventh Circuit affirmed summary judgment dismissing claims for, inter alia, alleged violations of federal securities laws and conspiracy to defraud brought by a member of a limited liability company (LLC) and its owners against the defendant who had financed the buy-out of the member’s one-half interest in the LLC at issue. Defendant, Shelby Peeples, falsely stated that he had no involvement in the buy-out of member DynaVision Group, LLC’s, interest in Signature Hospitality Carpets, LLC, when, in fact, Peeples had financed the buy-out. The circuit court found that Peeples’ misrepresentation regarding his (lack of) involvement in the buy-out did not play a causative role in DynaVision’s decision to sell its interest in the LLC, and thus did not rise to a level of fraud actionable under Rule 10b-5. Specifically, the circuit court found that because DynaVision lacked the expertise necessary to operate Signature, could not have persuaded the individual members of the LLC to stay on board, and was forced to choose between cashing out and total ownership (based on a buy-sell provision in Signature’s operating agreement), DynaVision would be unable to prove the reliance element of a 10b-5 claim.
Ledford v. Peeples, No. 06-10715, 2011 WL 4424448 (11th Cir. Sept. 23, 2011).
SEC Announces Roundtable on Microcap Securities
Co-authored by James Anderson
On September 19, the Securities and Exchange Commission announced that it will host a public roundtable to discuss the regulatory issues surrounding the execution, clearance and settlement of “microcap securities,” low-priced stocks issued by companies with small capitalizations that trade primarily on the OTC Bulletin Board or OTC Quote (previously Pink Sheets). The roundtable will take place on October 17 at the SEC’s Washington D.C. headquarters. The topics expected to be discussed include some key regulatory issues such as anti-money laundering monitoring, compliance challenges and potential changes to the regulatory framework. Panelists will include representatives from The Deposit Trust Company, broker-dealers and the Financial Industry Regulatory Authority.
The SEC’s press release states that the purpose of the roundtable is to “gather ideas and request input,” which may lead to regulatory changes affecting the execution, clearance and settlement of low-priced securities.
Click here for the SEC’s press release announcing the roundtable.
CFTC Provides Temporary Relief from Large Trader Reporting for Physical Commodity Swaps
The Division of Market Oversight (DMO) of the U.S. Commodity Futures Trading Commission has issued a letter providing temporary relief from daily large trader reporting requirements for physical commodity swaps. The reporting requirements, which apply to both cleared and uncleared swaps, were to take effect on September 20.
The DMO letter grants relief to derivatives clearing organizations and clearing members until November 21 for cleared swaps and January 20, 2012 for uncleared swaps. Reliance on this relief is voluntary, and is conditioned upon the provision of month-end open interest data by no later than February 20, 2012. Open interest attributable to uncleared swaps must also be reported separately by the counterparty to such swaps.
The DMO letter may be found here.
FINRA Seeks Public Comment on Proposed Amendments to Rule 5210 Regarding Publication of Indications of Interest
The Financial Industry Regulatory Authority (FINRA) requests comment on proposed amendments to FINRA Rule 5210 to require that member firms receive a customer order in a security before displaying a quotation or indication of interest (IOI) in a way that purports to represent that the quotation or IOI originated with a customer. Similarly, a firm could not continue to display a quotation or IOI as representing a customer order once the customer order was executed or cancelled.
Continue Reading...Ninth Circuit Allows Discharge of Debt Related to Securities Law Violation
Co-authored by Elizabeth D. Langdale
The U.S. Court of Appeals for the Ninth Circuit has found that debts relating to a securities law violation could be discharged in a Chapter 7 bankruptcy proceeding if the debtor himself was not responsible for violating federal securities laws.
Delaware Chancery Court Enjoins Texas Lawsuit Based on Forum Selection Clause
Co-authored by Elizabeth D. Langdale
The Delaware Chancery Court enjoined a lawsuit pending in Texas state court based on a forum selection clause providing for exclusive jurisdiction in Delaware over claims arising out of the parties’ agreements.
Federal Reserve Says Motor Vehicle Dealers Need Not comply With Dodd-Frank Data Collection Requirements
The Federal Reserve Board (the Board) on September 20 issued a final rule amending Regulation B to provide that motor vehicle dealers are not required to comply with new data collection requirements in the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act) until the Board issues final regulations to implement the statutory requirements. The Dodd-Frank Act amended the Equal Credit Opportunity Act to require creditors to collect information about credit applications made by women- or minority-owned businesses and by small businesses. The Consumer Financial Protection Bureau (CFPB) must implement this provision for all creditors except certain motor vehicle dealers who are subject to the Board's jurisdiction. The CFPB previously announced that creditors are not obligated to comply with the data collection requirements until the CFPB issues detailed rules to implement the law. The Board is amending Regulation B to apply the same approach to motor vehicle dealers.
To view the final rule, click here.
Office of Comptroller Applies Forex Rules Applicable to National Banks to Federal Savings Banks
The Office of the Comptroller of the Currency (OCC) announced on September 12 that it adopted an interim final rule amending its rule governing retail foreign exchange transactions to apply to Federal savings associations and making conforming changes to the required risk disclosure statements. As amended effective on July 16, 2011, by the Dodd–Frank Wall Street Reform and Consumer Protection Act, the Commodity Exchange Act forbids Federal savings associations from engaging in certain off-exchange transactions in foreign currency with retail customers (retail forex transactions), except pursuant to a rule authorizing the transaction (a retail forex rule). The OCC promulgated a retail forex rule for national banks on July 14. See 76 Fed. Reg. 41375 (codified at 12 CFR part 48). On July 21, the OCC obtained the authority to promulgate a retail forex rule for Federal savings associations. This interim final rule authorizes Federal savings associations to engage in retail forex transactions on the same terms as national banks. As required by the Commodity Exchange Act, the retail forex rule includes requirements for conducting retail forex transactions with respect to disclosure, recordkeeping, capital and margin, reporting, business conduct, and documentation. This interim final rule also makes conforming changes to the risk disclosures required by the retail forex rule.
Continue Reading...Office of Comptroller Updates Enforcement Action Policy for Federal Savings Associations
On September 9, the Office of the Comptroller of the Currency (OCC), pursuant to section 316 of the Dodd–Frank Wall Street Reform and Consumer Protection Act, revised the scope of its Policies & Procedures Manual (PPM) policy for taking appropriate enforcement action in response to violations of law, rules, regulations, final agency orders and unsafe and unsound practices or conditions (Enforcement Action Policy) to include federal savings associations. The revised PPM (linked below) will provide for consistent and equitable enforcement standards for national banks and federal savings associations. This PPM supersedes PPM 5310-3, Enforcement Action Policy, dated July 30, 2001, and Supplement 1 to PPM 5310-3(REV), dated November 10, 2004. It also supersedes Office of Thrift Supervision (OTS) Examination Handbook Section 080, Enforcement Actions, dated July 18, 2008, and any OTS policies and guidance that relate to issues addressed by OTS Examination Handbook Section 080 that are addressed in this PPM.
Continue Reading...DOL to Revise Definition of Benefit Plan "Fiduciary"
Co-authored by Hannah C. Amoah
On September 19, the Employee Benefits Security Administration (EBSA) of the U.S. Department of Labor (DOL) announced its intention to revise and re-propose amendments to its definition of “fiduciary.” The new proposal is expected to be issued in early 2012.
SEC Announces Creation of Advisory Committee on Small and Emerging Companies
Co-authored by Jonathan Weiner
On September 13, the Securities and Exchange Commission announced the formation of an Advisory Committee on Small and Emerging Companies. According to the SEC, the committee is intended to facilitate advice and recommendations specifically related to privately held businesses and publicly traded companies with market capitalizations of less than $250 million.
FINRA Provides Guidance on Prohibition Against Offering Favorable Research to Induce Participation in an Offering
Co-authored by Madelyn Calabrese and Avi Badash
The Financial Industry Regulatory Authority (FINRA) has issued Regulatory Notice 11-41 (the Notice) reminding firms of the prohibition against offering favorable research in return for an issuer’s investment banking business. It has come to FINRA’s attention that certain issuers may be attempting to extract implicit promises of favorable research from firms by suggesting (publicly or directly) to potential deal participants that positive research coverage would be a condition to being selected as an underwriter or selling group member.
Broker-Dealers and Advisors Involved in Bank Loans to State and Local Governments May Be Subject to MRSB Rules
Co-authored by Madelyn Calabrese and Avi Badash
The Municipal Securities Rulemaking Board (MSRB) has issued Notice 2011-052 (the Notice) which provides that certain financings that are called “bank loans” may be municipal securities and therefore subject to MSRB rules. For example, if a broker-dealer serves as a placement agent for a “bank loan” that is deemed a municipal security, the broker-dealer is subject to all applicable MSRB rules, as well as other federal securities laws. Additionally, the Notice provides that when, as agent, a broker-dealer effects a direct purchase of variable rate demand obligations (VRDOs) by its bank affiliate followed by a restructuring of such VRDOs, such restructuring may be so significant that it amounts to a primary offering of municipal securities which may trigger obligations under Rule G-32.
CBOE Implements Origin Code "L" for Non-Trading Permit Holder Affiliate Orders
Co-authored Madelyn Calabrese and Avi Badash
Effective September 1, the Chicago Board Options Exchange, Inc. (CBOE) has implemented origin code “L” to identify proprietary orders of “Non-Trading Permit Holder Affiliates” for purposes of hedging the proprietary over-the-counter trading of the Clearing Trading Permit Holder or its affiliates to aggregate with the trading activity of the Clearing Trading Permit Holder for purposes of the fee cap and slide scale. “Non-Trading Permit Holder Affiliates” are wholly-owned affiliates or subsidiaries of Clearing Trading Permit Holders that are registered U.S. or foreign broker-dealers and are not themselves CBOE Trading Permit Holders.
Click here to read Regulatory Circular RG11-103.
IOSCO Publishes Commodity Derivatives Markets Supervisory Principles
Co-authored by Christopher Mendoza and Christian Hennion
The Technical Committee of the International Organization of Securities Commissions (IOSCO) published a report, prepared by the IOSCO Task Force on Commodity Futures Markets, on principles for the regulation and supervision of commodity derivatives markets (the Principles). The report addresses the G20’s November 2010 request for further work on regulation and supervision of physical commodity derivatives markets.
Sixth Circuit Finds That Mutual Fund Class Action Is Preempted By SLUSA
Shareholders in three mutual funds issued by Morgan Keegan Select Fund, Inc. (the Funds) filed a state court class action alleging that the Funds’ officers, directors, and affiliates took unjustified risks in allocating the Funds’ assets and then concealed those risks from shareholders, causing the shareholders to retain their shares while the shares dropped in value. The complaint asserted only state law causes of action. The U.S. District Court for the Western District of Tennessee ruled that the Securities Litigation Uniform Standards Act of 1998 (SLUSA) precluded the plaintiffs’ class action and dismissed their claims with prejudice.
Continue Reading...Eleventh Circuit Court of Appeals Affirms Dismissal of Whistleblower Retaliation Suit
The plaintiff, a former employee of Stein Mart, Inc., brought claims alleging that Stein Mart wrongfully dismissed her in violation of the Sarbanes-Oxley Act of 2002 and the Florida Whistleblower Act. The U.S. District Court for the Middle District of Florida granted summary judgment in favor of Stein Mart, and the U.S. Court of Appeals for the Eleventh Circuit affirmed on appeal.
Continue Reading...FDIC Approves Rules Requiring Living Wills and Contingency Plans
The Federal Deposit Insurance Corporation (FDIC) on September 13 approved a final rule (the Rule) to be issued jointly by the FDIC and the Federal Reserve Board (the Board) to implement Section 165(d) of the Dodd-Frank Wall Street Reform and Consumer Protection Act. This provision requires bank holding companies with assets of $50 billion or more and companies designated as systemic by the Financial Stability Oversight Council to report periodically to the FDIC and the Federal Reserve the company's plan for its rapid and orderly resolution in the event of material financial distress or failure. The Rule approved by the FDIC implements these requirements and "will be considered by the Federal Reserve in the coming days." Approval is expected.
Continue Reading...Federal Reserve Publishes Interchange fee Guidelines
On September 14, the Federal Reserve Board published Regulation II: Debit Card Interchange Fees and Routing, 12 CFR 235, Debit Card Interchange Fees and Routing--A Small Entity Compliance Guide. The guide provides, in a question and answer format, information regarding the new system of interchange fees that take effect on October 1.
Failure to Provide COBRA Notice Tolls Statute of Limitations
Co-authored by Christopher Buch
Under the Consolidated Omnibus Budget Reconciliation Act of 1986 (COBRA), an employer that sponsors a group health plan is generally required to provide an employee with a right to continue healthcare coverage after the employee’s termination of employment. The employer (or its healthcare administrator) must also notify terminated employees of their COBRA rights. This notice must be given within 44 days from the date of the employee’s termination of employment. Although COBRA does not provide a limitations period for improper-notice claims (i.e., the statute of limitations), courts “borrow” the most analogous limitations period from the forum state. On August 22, the United States Court of Appeals for the Eleventh Circuit ruled on the timing of that notice and the statute of limitations for improper-notice claims.
FSA Imposes £8 Million Market Abuse Fine
On August 31, the UK Financial Services Authority (FSA) announced an £8 million (approximately $12.6 million) fine on Swift Trade Inc. (Swift Trade), a Canadian company that is not FSA authorized or regulated, for market abuse in the form of “layering.” It placed relatively large orders on one side of the London Stock Exchange (LSE) order book, which moved the share price. It then traded on the opposite side of the order book to profit from the share price movement. It then rapidly deleted the large orders that had been entered in order to cause the movement in price and repeated this conduct in reverse on the other side of the order book. None of these large orders were intended to be traded. They were carefully placed close enough to the touch price (i.e., the best bid and offer prevailing in the market at the time) to give a false and misleading impression of supply and demand, but far enough away to minimize the risk that they would be traded. The trading activity caused many individual share prices to be positioned at an artificial level, from which Swift Trade profited directly.
Continue Reading...FSA Obtains High Court Injunction Against Market Manipulation
On September 1, the UK Financial Services Authority (FSA) announced that it had obtained an interim High Court injunction preventing a number of companies and individuals from market manipulating in respect of certain UK-listed shares.
Continue Reading...Independent Commission on Banking Publishes Final Report
Co-authored by Andrew Turner
The Independent Commission on Banking (ICB) published its Final Report on September 12. The Final Report recommends that UK retail banking activities should be ring-fenced into separate subsidiaries and the imposition on both banks and other financial conglomerates of capital requirements that are substantially stricter than those required by Basel III standards.
SEC Will Not Appeal Proxy Access Decision; Rule 14a-8 Amendment To Become Effective
Mary Schapiro, Chairman of the Securities and Exchange Commission, announced this week that the SEC will not appeal the decision of the U.S. Court of Appeals for the District of Columbia’s decision vacating SEC Rule 14a-11, which would have required companies to include shareholders’ director nominees in company proxy statements. In her announcement, SEC Chairman Schapiro stated that the SEC will continue to seek to provide “a meaningful opportunity for shareholders to exercise their right to nominate directors” and is analyzing the U.S. Court of Appeal’s objections and continuing to review comments previously received on Rule 14a 11.
Continue Reading...SEC Lowers Listing Fees for Fiscal Year 2012
Co-authored by Daniel Silverthorn
Effective October 1, the fees that public companies and other issuers pay to register their securities with the Securities and Exchange Commission will decrease from $116.10 per million dollars to $114.60 per million dollars. This fee rate is applicable to the registration of securities under Section 6(b) of the Securities Act of 1933, the repurchase of securities under Section 13(e) of the Securities Exchange Act of 1934, and proxy solicitations and statements in corporate control transactions under Section 14(g) of the Exchange Act.
Click here for the SEC’s fee rate advisory.
SEC Recoups Bonus of Former Beazer Executive Under Sarbanes-Oxley
Co-authored by Daniel Silverthorn
On August 30, the Securities and Exchange Commission announced a settlement with the former chief financial officer of Beazer Homes USA to recover more than $1.4 million in bonus and stock profits that he received after the home builder filed fraudulent financial statements during fiscal year 2006.
SEC Seeks Review of Existing Regulations
Co-authored by Michelle McIntosh
On September 6, the Securities and Exchange Commission announced that it is seeking public comment on the development of a plan for the retrospective review of its regulations. Executive Order 13579 signed by the President on July 11, requires independent agencies to “develop and release to the public a plan...under which the agency will periodically review its existing significant regulations.” In response to the Executive Order and its continuing efforts to update its regulations to reflect market developments and changes in the regulatory landscape, the SEC invites public comments on the development of its plan for retrospective review. Public comments must be submitted by October 6.
Click here to read SEC Release No. 32-9257.
CFTC Allows U.S. Trading of Euronext Brussels' Futures Contract on BEL 20 Index
Co-authored by Christopher Mendoza and Christian Hennion
On August 31, the Commodity Futures Trading Commission’s Office of General Counsel issued a no-action letter allowing the offer and sale in the U.S. of the BEL 20 Index futures contract that is traded on Euronext Brussels.
A copy of the no-action letter may be found here.
CFTC Grants CME Clearing Europe Limited Registration as a Derivatives Clearing Organization
Co-authored by Christopher Mendoza and Christian Hennion
On September 2, the Commodity Futures Trading Commission issued an order granting CME Clearing Europe Limited registration as a derivatives clearing organization pursuant to Section 5b of the Commodity Exchange Act. Under the terms of the order, CME Clearing Europe Limited is permitted to clear swaps and forward contracts on energy, agricultural, freight and metals products executed either bilaterally or on or through a swap execution facility.
A copy of the Order of Registration may be found here.
SEC Issues Concept Releases on Investment Company Derivative Use, Mortgage Securities and Rule 3a-7
Co-authoered by Gregory Xethalis
On August 31, the Securities and Exchange Commission issued three concept releases regarding: (i) the use of derivatives by investment companies (Derivatives Release), (ii) companies engaged in the business of acquiring mortgages and mortgage-related instruments (Mortgage Securities Release), and (iii) the treatment of asset-backed issuers under Rule 3a-7 (Rule 3a-7 Release). In the concept releases, the SEC requests comments from the public on a variety of issues. Comments for all of the concept releases should be received on or before November 7.
Third Circuit Affirms District Court's Dismissal of Securities Fraud Class Action for Failure to Plead Scienter
Co-authored by Elizabeth Langdale
The U.S. Court of Appeals for the Third Circuit affirmed the District Court’s grant of defendants’ motion to dismiss all claims against corporate defendants and individual officers and directors of Horizon Lines, Inc. for securities fraud arising out of price fixing under the heightened pleading standard in the Private Securities Litigation Reform Act (the PSLRA). Highlighting that the PSLRA places a weighty burden on plaintiffs, the Third Circuit affirmed that plaintiff did not plead sufficient facts to raise a strong inference of scienter as to the senior executives of Horizon. The Third Circuit further held that in pleading scienter as to the corporation, one still needed to look to the state of mind of the individual corporate officials who made the statements at issue, as opposed to the collective knowledge of all the corporation’s employees. Because there was no individual at Horizon who made actionable statements with scienter, the Third Circuit affirmed the District Court’s determination that the plaintiff had not pled scienter against the corporation.
City of Roseville Employees’ Retirement System v. Horizon Lines, Inc., Nos. 10-2788 and 10-3815 (3d Cir. Aug. 24, 2011).
Defendants' Ineffective Document Review Procedure Results in Finding of Waiver
Co-authored by Elizabeth Langdale
The U.S. District Court for the Northern District of Illinois held that defendants, Village of Park Forest and individual defendants (collectively, the Village), waived privilege as to inadvertently produced documents where they failed to take reasonable precautions to prevent the disclosure of privileged material and subsequently failed to correct their error in a timely manner. Citing defendants’ lack of an adequate explanation of their review process, their failure to check the production before sending it to the plaintiffs and their ultimate failure to identify and withhold from production any of the 159 documents on their privilege log, the court determined that the steps taken to prevent disclosure were not reasonable. Further, the Court found no unfairness in allowing the plaintiffs to access the privileged documents and ultimately held the Village responsible for its failure to take reasonable care to safeguard the privilege and to rectify the error once it occurred.
Thorncreek Apartments III, LLC v. Village of Park Forest, et al., Nos. 08 C 1225, 08 C-0869, 08-C-4303 (N.D. Ill. Aug. 9, 2011).
Creditors of Insolvent Limited Liability Companies Cannot Sue Derivatively
Co-authored by Jason Clouser
The Supreme Court of Delaware recently held that creditors of insolvent Delaware limited liability companies (LLCs) lack standing to bring derivative suits on behalf of the LLCs.
Seventh Circuit Cuts Damages Award Due to Lack of Evidence of Lost Profits
Co-authored by Jason Clouser
The U.S. Court of Appeals for the Seventh Circuit dramatically reduced damages awarded to a defunct internet marketing company, finding that the company squandered its opportunity to provide a reasonable estimate of the harm it suffered as a result of the defendant’s conduct.
Federal Reserve Proposes Rule to Allow Companies to Register As Securities Holding Companies
The Federal Reserve Board (the Board) on August 31 issued a proposed rule to implement Section 618 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act), which permits (but does not require) nonbank companies that own or are owned by a registered securities broker or dealer to register with the Board and subject themselves to supervision by the Board. The proposed rule outlines the requirements that a securities holding company must satisfy to make an effective registration election, including filing the appropriate form with the responsible Federal Reserve Bank. The utility of the proposed rule appears to be limited to those companies that are required by a foreign regulator or provision of foreign law to be subject to comprehensive consolidated supervision. According to the Board, only a handful of companies are expected to make an election to register, thereby subjecting themselves to extensive regulation akin to that imposed on bank holding companies (including capital requirements), but absent restrictions on non-banking activities.
To view the proposal, click here.
Federal Reserve Announces Public Hearings of Capital One Notice to Acquire ING Bank, Sharebuilder Advisors, and ING Direct Investing
The Federal Reserve Board on August 31 announced the location for a public meeting in Washington, D.C., on the notice by Capital One Financial Corporation, McLean, Virginia, to acquire ING Bank, Wilmington, Delaware, and indirectly to acquire shares of Sharebuilder Advisors, LLC, and ING Direct Investing, Inc., both of Seattle, Washington.
Continue Reading...FDIC Announces New Investor Match Program
The Federal Deposit Insurance Corporation (FDIC) on September 7 announced the launch of a new program to encourage small investors and asset managers to partner with larger investors to participate in the FDIC's structured transaction sales for loans and other assets from failed banks. The Investor Match Program will help to facilitate partnerships in order to bring together sources of capital and expertise. Participants in the program will use a customized database to identify potential collaborations, which will be identified at the sole discretion of the participating firms.
Continue Reading...FDIC to Hold Open Meeting on Rate Adjustments
The Board of the Federal Deposit Insurance Corporation (FDIC) will meet on Tuesday, September 13, at 10:00 a.m. in Washington, D.C., to consider assessment rate adjustments for large and highly complex financial institutions. The FDIC originally published its proposed rate adjustment guidelines on April 15.
To view the previously published proposed rate adjustment guidelines, click here.
