Corporate & Financial Weekly Digest

Corporate & Financial Weekly Digest

SEC Staff Publishes New Guidance on Shareholder Proposals

Posted in SEC/Corporate

On November 1, the Division of Corporation Finance of the Securities and Exchange Commission (Division) published Staff Legal Bulletin No. 14I (SLB 14I), which provides new, issuer-friendly guidance on shareholder proposals in advance of the 2018 proxy season. Specifically, SLB 14I provides guidance on (1) exclusion of shareholder proposals under the “ordinary business” and “economic relevance” exceptions under Rule 14a-8 of the Securities Exchange Act of 1934; (2) proposals submitted on behalf of shareholders through a representative; and (3) the use of images in proposals. Continue Reading

SEC Approves a Longer Period to Review Fees for the Consolidated Audit Trail

Posted in Broker-Dealer

Earlier this year, several exchanges and the Financial Industry Regulatory Authority filed proposed rule changes to adopt industry member fees that would fund the consolidated audit trail (CAT). The proposed rule changes were immediately effective upon filing with the Securities and Exchange Commission. However, on June 30, the SEC temporarily suspended the rules and initiated proceedings to determine whether it should approve the proposed CAT fees.

On November 9, the SEC extended the time period to consider each of the proposed rule changes to January 14, 2018. The SEC release is available here.

FINRA Releases Notice to Members Addressing “Pay-to-Play” Rule for Capital Acquisition Brokers

Posted in Broker-Dealer

On November 6, the Financial Industry Regulatory Authority (FINRA) released Notice to Members 17-37, which provides information about the Pay-to-Play rule applicable to capital acquisition brokers (CABs). The SEC’s pay-to-play rules prohibit an investment adviser and its covered associates from providing or agreeing to provide payment to any person to solicit a government entity for investment advisory services on behalf of the investment adviser, unless the person is a “regulated person.”

FINRA’s new rule clarifies that CABs are subject to the same pay-to-play restrictions already applicable to non-CAB member firms and that CABs, therefore, constitute “regulated persons” for purposes of the SEC’s pay-to-play rules. Please see the October 6 edition of the Corporate & Financial Weekly Digest for more information.

CFTC’s Division of Clearing and Risk Provides No-Action Relief to Certain Foreign Financial Institutions From Swap Clearing Requirements

Posted in CFTC, Derivatives

On November 7, the Commodity Futures Trading Commission’s (CFTC) Division of Clearing and Risk (DCR) published Staff Letters 17-57, 17-58 and 17-59 (Staff Letters), which provided Banco Centroamericano de Integración Económica, the European Stability Mechanism, and the North American Development Bank, respectively, with no-action relief from the swap clearing requirements set forth in Section 2(h)(1) of the Commodity Exchange Act (Clearing Requirement), as implemented by CFTC Regulations 50.2 and 50.4. In each instance, DCR determined that granting such no-action relief was consistent with the end-user exception to the Clearing Requirement (End-User Exception). (For a more complete discussion of the End-User Exception, please refer to the July 13, 2012 edition of Corporate & Financial Weekly Digest). The Staff Letters note that the non-action relief provided thereunder does not extend to other provisions of the Commodity Exchange Act and CFTC regulations, such as the recordkeeping and reporting requirements under parts 23 and 45 of the CFTC’s regulations.

Staff Letter 17-57 is available here.

Staff Letter 17-58 is available here.

Staff Letter 17-59 is available here.

FCA Publishes Issue 54 of Market Watch Newsletter

Posted in Financial Markets, UK Developments

On November 8, the UK Financial Conduct Authority (FCA) published issue 54 of Market Watch, its newsletter on market conduct and transaction reporting issues.

With the January 3, 2018 implementation date of the revised Markets in Financial Instruments Directive (MiFID II) and Markets in Financial Instruments Regulation (MiFIR) fast approaching, Market Watch contains articles relating to: Continue Reading

FCA Publishes Speech on Robo Advice

Posted in Financial Markets, UK Developments

On November 3, the UK Financial Conduct Authority (FCA) published a speech by Bob Ferguson, FCA Head of Department, Strategy Competition Division, giving the FCA’s perspective on robo advice.

Key points of the speech include:

  • the FCA sees automated advice as a valuable vehicle to help tackle the issues faced by those consumers who are unserved or underserved by more traditional advice models, as well as promoting competition in the UK financial advice market;
  • the FCA’s Advice Unit continues to be active in providing regulatory feedback and external tools to firms developing an automated advice (or guidance) model;
  • the FCA believes automated advice brings its own risks, but well-designed models have great potential for compliance risk reduction; and
  • the FCA will supervise robo advice firms with a focus on outcomes, looking at the suitability of recommendations for the consumer and acting where it sees harm.

The speech can be found here.

FCA Publishes Alert for Firms Who Have Appointed Representatives

Posted in Financial Markets, UK Developments

On November 3, the UK Financial Conduct Authority (FCA) published an alert addressed to all firms who have Appointed Representatives or Introducer Appointed Representatives (ARs). An AR is a person who conducts regulated activities and acts on behalf or under the regulatory structure/licence of an authorized firm (its principal). Continue Reading

FCA Opens Consultation on Expectations of Firms in Unregulated Markets and Industry Codes of Conduct

Posted in Financial Markets, UK Developments

On November 3, the UK Financial Conduct Authority (FCA) published a consultation paper (CP17/37) on supervising adherence to proper standards of market conduct for unregulated markets and activities, including standards set out in industry-written codes of conduct. Continue Reading

SEC Division of Corporation Finance Issues C&DI Clarifying Exemptions for Non-GAAP Information in Forecasts for M&A Transactions

Posted in SEC/Corporate

On October 17, the staff of the Securities and Exchange Commission’s Division of Corporation Finance issued guidance related to the scope of Regulation G’s exemption for disclosure of non-generally accepted accounting principles (GAAP) information. Continue Reading

Reminder: EU Variation Margin Rules Apply to Physically Settled FX Forwards Beginning January 3, 2018

Posted in Derivatives

Starting January 3, 2018, physically settled foreign exchange forward transactions (FX Forwards) will be subject to the variation (but not initial) margin requirements set out in Commission Delegated Regulation (EU) 2016/2251 of October 4, 2016 (EU Margin Regulation) that apply generally to OTC derivatives. FX Forwards are defined in Article 27 of the EU Margin Regulation as “physically settled OTC derivative contracts that solely involve the exchange of two different currencies on a specific future date at a fixed rate agreed on the trade date of the contract covering the exchange.” Continue Reading