Compliance and Disclosure

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On March 10, the European Parliament adopted a legislative initiative report detailing recommendations for a new directive on corporate due diligence and corporate accountability for holding companies accountable for harm caused to human rights, the environment and good governance (the Report).
Continue Reading European Parliament Adopts Report Recommending Directive on ESG Due Diligence Obligations

On November 18, the Division of Corporation Finance (Division) of the Securities and Exchange Commission released updates to the Division’s Financial Reporting Manual. The Financial Reporting Manual is a key source of the Division’s informal accounting guidance and has been updated with changes through October 30.
Continue Reading SEC Division of Corporation Finance Releases Financial Reporting Manual Updates

On November 16, the Financial Industry Regulatory Authority (FINRA) filed with the Securities and Exchange Commission a proposed rule change to (1) adopt FINRA Rule 4111 (Restricted Firm Obligations), which would impose additional conditions on member firms with a history of misconduct; and (2) adopt FINRA Rule 9561 (Procedures for Regulating Activities Under Rule 4111) and amend FINRA Rule 9559 (Hearing Procedures for Expedited Proceedings Under the Rule 9550 Series) to create a new expedited proceeding to implement proposed Rule 4111.
Continue Reading FINRA Files Proposed Rule Change to Address Firms With History of Misconduct

On September 9, the Climate-Related Market Risk Subcommittee of the Market Risk Advisory Committee of the Commodity Futures Trading Commission released a comprehensive report addressing potential risks to the financial system arising from, or related to, climate change. The report is the first of its kind from a US financial regulator. Its findings and recommendations are wide-ranging, frequently extending beyond the CFTC’s remit.
Continue Reading CFTC Subcommittee Releases Report on Managing Climate Risk in the US Financial System

On September 7, the UK’s Financial Conduct Authority (FCA) published the 65th edition of its Market Watch newsletter on market conduct and transaction reporting issues (the Newsletter). The latest issue provides market participants with guidance on (1) FCA information confidentiality requirements; (2) documents subject to legal professional privilege (LPP); and (3) highlighting certain data issues when transaction reporting under the Markets in Financial Instruments Regulation (EU) No 600/2014 (MiFIR).
Continue Reading FCA Publishes Newsletter Market Watch 65

On June 23, the Division of Corporation Finance (the Division) of the Securities and Exchange Commission issued CF Disclosure Guidance: Topic No. 9A (Topic 9A) providing additional disclosure considerations for public reporting companies regarding operations, liquidity and capital resources disclosures in light of business and market disruptions related to the COVID-19 pandemic. Topic 9A supplements CF Disclosure Guidance Topic No. 9 issued by the Division on March 25, 2020 and discussed in Katten’s advisory “COVID-19 Impact on Public Disclosure on SEC Reporting Companies.”
Continue Reading SEC Division of Corporation Finance Issues Additional Disclosure Guidance Related to COVID-19 Pandemic

On August 20, the staff of the Division of Corporation Finance (the staff) of the Securities and Exchange Commission released several new Compliance and Disclosure Interpretations (C&DIs) relating to interactive data/eXtensible Business Reporting Language (XBRL), with a focus on items relating to Inline XBRL format requirements.
Continue Reading SEC Division of Corporation Finance Issues C&DIs Regarding Inline XBRL

Investment Advisers

On August 21, by a vote of 3 to 2, the Securities and Exchange Commission issued interpretive guidance on an investment adviser’s fiduciary duties with respect to voting of proxies for client accounts. The guidance makes clear that advisers may agree with their clients that the client, and not the adviser, will vote proxies, but such guidance is generally impractical for advisers to private funds and registered investment companies (because there is no practical way to assign voting power to the funds).
Continue Reading SEC Issues New Guidance Regarding Proxy Voting Responsibility of Investment Advisers and the Applicability of Proxy Rules to Proxy Voting Advice

On December 10, the National Futures Association (NFA) submitted to the Commodity Futures Trading Commission for review and approval proposed amendments to various NFA Compliance Rules and four NFA Interpretive Notices to incorporate swaps into these rules and notices.

Specifically, the NFA proposal would amend the following Compliance Rules:
Continue Reading NFA Proposes Amendments Incorporating Swaps into Compliance Rules and Interpretive Notices