Financial Regulators Continue Focus on Cybersecurity

Treasury Deputy Secretary Sarah Bloom Raskin served as the moderator of a panel on “Cybersecurity in a World of Evolving Technology,” before the Women in Finance and Technology Symposium in Washington, D.C., last week. With the ever-present concern regarding, and rampant media coverage of, hackers, money laundering, identity fraud, and the general safety and soundness of banking institutions, the focus on cybersecurity has been a consistent drumbeat from regulators in recent years. Raskin emphasized that cybersecurity was an area in which multiple regulators may be involved. Therefore, it is incumbent on regulators to ensure that they are imposing standards and guidelines that are consistent. Doing so allows financial institutions to implement policies and procedures that will be the most effective and, because such they are less likely to change as frequently after having been properly vetted and coordinated, institutions can implement the policies and procedures with a greater measure of certainty with regard to the total cost. This coordination must take place between both state and federal regulators for a single institution, and should also occur: (1) between regulators of different institutions (e.g., banks vs. credit unions vs. insurance companies); (2) across state borders so that state agencies across the country can identify risk areas and harmonize best practices for the specific types of institutions for which the regulator is responsible; and (3) between the prudential regulators and, where appropriate, law enforcement and intelligence agencies. Other members of the panel representing industry participants strongly agreed with this strategy, suggesting that to do otherwise risked a “proliferation of standards.”

In addition to the coordination of regulators, other topics for increasing cybersecurity included an enterprisewide focus that was implemented from the top down and a review of third-party service providers as well as the contractors for such third-party providers.

If you feel that your institution could benefit from an evaluation of its policies and procedures, Winston and Strawn attorneys have extensive experience helping organizations review their information security/information technology programs for regulatory compliance. 

Feature: Fiduciary Rules and Nominees for SEC Commissioner Positions 

In a March 15th press release, the Securities and Exchange Commission (“SEC”) announced the first-of-its-kind case under a provision of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”) which created a fiduciary duty that municipal advisors to their municipal clients. Jessica Kane, Director of the SEC’s Office of Municipal Securities, stated that, “[a]s fiduciaries, municipal advisors must identify and address all material conflicts of interest by eliminating or disclosing such conflicts. Municipal entities rely on the advice of their municipal advisors and must feel confident that those advisors are working in the municipal entity’s best interests.”

This press release was referencing the case in which the SEC announced a settlement with a Kansas-based municipal advisor to resolve allegations that the company violated the Dodd-Frank provision. In announcing this case, SEC enforcement chief Andrew Ceresney noted that “[a] municipal advisor’s first duty should be to its municipal client, not its own bottom line.” The SEC contended that when the advisor worked in 2011 on a municipal-bond deal for an unidentified city, two employees and its chief executive arranged for the offerings to be underwritten by a broker-dealer where the three men also worked, but failed to disclose the conflict of interest to the city. The advisor agreed to settle the claims and disgorge $290,000 in profits and interest and $85,000 as a separate civil penalty while the three men, who the SEC said were aware of the conflict posed, also agreed to settle the individual cases against them for amounts averaging almost $21,000 and agreeing to temporary bans from the financial services industry. The SEC found an April 2011 email in which one of the three men wrote: “if we are going to charge an [advisory] fee and [the City’s administrator] keeps calling us [municipal advisors], should we not resign as [municipal advisors] to [underwrite] this issue? Out of an abundance of caution I believe we should resign… ” The SEC added that there was a draft resignation letter attached to the email, but found that the men never sent the document to the city.

This case comes as the investment industry is bracing for the Department of Labor’s (“DOL”) new fiduciary rules that are expected to address conflicts of interest in retirement advice by requiring retirement advisers to also put clients’ interests ahead of their own. We believe action in this area to be imminent – please stay alert for future Winston and Strawn briefings if there are developments in this area.

The question of how best to develop a fiduciary rule for retirement advisers was a central focus in front of the Senate Banking Committee at the confirmation hearing for two new SEC Commissioners which is discussed immediately below.

Hester Peirce, Nominee to Replace former SEC Commissioner Gallagher
Hester Pierce has been nominated to replace former SEC Commissioner Daniel Gallagher. On March 15th, Peirce, an outspoken critic of post-crisis regulation voiced her apprehension that the SEC has not been appropriately involved in the DOL’s proposed retirement advice fiduciary rule, saying that she has heard that the SEC’s input was not even considered. For his part, Commissioner Gallagher has opposed the proposed DOL rule and raised doubts about the SEC’s own effort to disseminate a blanket fiduciary standard for retail investment advice. At her confirmation hearing, Peirce expressed her unease regarding the way the DOL’s proposal was assembled. Peirce further expressed her worry “that what will end up happening is that we’ll cut a whole segment of people out of getting access” to advice. Conversely, in previous congressional testimony, SEC Chair Mary Jo White and other SEC and DOL officials have stated both agencies have discussed the rule.

Peirce, a senior research fellow at the Mercatus Center at George Mason University, has criticized new curbs on allowing banks’ to bet with their own money, tighter oversight of money-market mutual funds, and the Financial Stability Oversight Council. In the introduction to a 2012 book called “Dodd-Frank, What It Does and Why It’s Flawed,” which Peirce co-edited, she wrote that “[g]iving regulators more levers to pull and buttons to push with respect to the financial system only creates a false sense of security.”

Lisa Fairfax, Nominee to Replace former SEC Commissioner Aguilar
At the same confirmation hearing in front of the Senate Banking Committee, Lisa Fairfax, who has written extensively in favor of shareholder rights, shareholder activism, and gender and racial diversity on corporate boards, has been nominated to replace former SEC Commissioner Luis Aguilar. Fairfax commended the DOL rule’s intention to protect investors from conflicted advice, but added that it must not destabilize the advice market. Fairfax noted that “[p]rotecting investors in this space is of critical importance … [p]rotecting access to quality and appropriate advice in this area is also important, particularly for middle- and lower-income investors.” Fairfax wrote a 2011 textbook on shareholder activism and efforts to give investors greater voting power at public companies, including through so-called proxy access. In a 2009 paper, she wrote that the mechanism was “simply a stronger, and thus more meaningful, right” than other tools shareholders can use to influence corporate elections. The SEC is currently developing a rule, which Fairfax could be in a position to back as a commissioner, that would make it easier for shareholders to vote on board candidates offered by investors, in competition with those pushed by the company’s management. The rule would require a “universal ballot” (a single voting form in contested corporate elections). Now, voters in contested elections receive two ballots, each of which features a rival board slate.

While their stances on the proposed rule seem clear, when asked at the confirmation hearing by Sen. Jack Reed, to list their top investor-protection priorities, neither nominee cited the fiduciary duty rule to raise investment-advice standards and enhance oversight of advisers that Chair White is attempting to push through the agency.

Banking Agency Developments

OCC

OCC Comptroller Discusses Innovation and Community Development

On March 18th, the Office of the Comptroller of the Currency’s (“OCC”) Comptroller Thomas J. Curry discussed how innovative financial products and services are considered under the Community Reinvestment Act during remarks at the National Community Reinvestment Coalition annual conference. Comptroller Curry also highlighted the agency’s initiatives in support of responsible bank innovation. OCC Press Release.

OCC Announces New Senior Executives

On March 17th, the OCC announced that Grace Dailey will become Senior Deputy Comptroller for Bank Supervision Policy and Chief National Bank Examiner and Grovetta Gardineer will fill the newly created position of Senior Deputy Comptroller for Compliance and Community Affairs.. Gardineer assumes her new title and responsibilities immediately. OCC Press Release.

OCC Issues Revised Comptroller’s Handbook Booklet on Oil and Gas Lending

On March 16th, the OCC issued the “Oil and Gas Exploration and Production Lending” booklet of the Comptroller’s Handbook. This revised booklet, which replaces the “Oil and Gas Production Lending” booklet issued in April 2014, provides updated guidance to examiners on the risks inherent in lending to upstream oil and gas exploration and production companies and delivers supervisory guidance on prudent risk management of this lending activity. The booklet also includes expanded examiner guidance for evaluating exploration and production loans and the impact that these lending activities have on the risk profile and financial condition of national banks and federal savings associations. OCC Bulletin.

OCC Proposes Rule Changes to Reduce Regulatory Burden

On March 14th, the OCC proposed to remove outdated or unnecessary provisions of certain rules to reduce regulatory burden on national banks and federal savings associations. The proposal is part of the OCC’s decennial review of its rules required by the Economic Growth and Regulatory Paperwork Reduction Act (“EGRPRA”) of 1996 and follows three Federal Register notices and six outreach meetings conducted across the country since late 2014, which solicited comment from bankers, consumer and community groups, and other interested parties. Comments must be received within 60 days of the Federal Register notice publication. OCC Press Release.

FDIC

FDIC Board Adopts Final Rule to Increase Deposit Insurance Fund to Statutorily Required Level

On March 15th, the Board of Directors of the Federal Deposit Insurance Corporation (“FDIC”) approved a final rule to increase the Deposit Insurance Fund (“DIF”) to the statutorily required minimum level of 1.35 percent of total insured deposits. For banks with total assets of at least $10 billion, the final rule will impose a $0.045 surcharge per $100 of the assessment base (after certain adjustments).  FDIC Press Release.

Federal Reserve

Federal Reserve System publishes annual financial statements

On March 18th, the Federal Reserve System released the 2015 combined annual audited financial statements for the Federal Reserve Banks, as well as statements for the 12 individual Federal Reserve Banks, Maiden Lane LLC, and the Board of Governors. Federal Reserve Press Release.

Treasury Department Developments

FinCEN

FinCEN Issues Guidance for MSB Principals Regarding Agent Monitoring

On March 11th, the Financial Crimes Enforcement Network (“FinCEN”) issued guidance on existing anti-money laundering (“AML”) program rule compliance obligations for money services businesses (“MSB”) principals with respect to agent monitoring. This guidance reiterates the AML program obligations on the principals of MSBs to understand and appropriately account for the risks associated with their agents.  This guidance was broadly set forth back in 2004 by FinCENand primarily focused on foreign agents and counterparties. FinCEN Press Release.

CFPB

CFPB Takes Action to Shut Down Illegal Student Debt Relief Scheme

On March 15th, the Consumer Financial Protection Bureau (“CFPB”) requested that a federal district court enter a final judgment and order that would shut down a student debt relief scheme that charged borrowers millions of dollars in illegal upfront fees for federal student loan services. If approved by the court, the proposed judgment would ban the company, Student Loan Processing.US, and its sole owner, James Krause, from any future involvement in debt relief and student loan services. The order would also require the company to pay refunds to thousands of harmed consumers and a civil money penalty. CFPB Press Release.

Securities and Exchange Commission

Guidance

Division of Investment Management Updates Money Market Fund Reform FAQs

On March 18th, the SEC’s Division of Investment Management published updated responses to frequently asked questions regarding the 2014 money market fund reforms. The revised FAQs include additional guidance concerning the information funds must include on Form N-MFP. Money Market Fund Reform FAQs.

Division of Corporation Finance Revises Financial Reporting Manual

The SEC’s Division of Corporation Finance published a revised version of its Financial Reporting Manual on March 17th. Revisions to the manual include updated guidance on significance testing for equity method investments, changes to conform guidance to the Fixing America’s Surface Transportation (“FAST”) Act, and new guidance relating to the implementation of the Financial Accounting Standards Board’s (“FASB”) Accounting Standards Update  No. 2014-09 and International Financial Reporting Standard  15, which both address the recognition of revenue from contracts with customers. Financial Reporting Manual.

No-Action Letters

Division of Corporation Finance Offers Interpretive Guidance Regarding Application of Rule 144 in Exchange of Partnership Units for REIT Common Stock

The SEC’s Division of Corporation Finance issued an interpretive letter on March 14th that clarified the application of Securities Act Rule 144’s holding period to shares of real estate investment trust (“REIT”) common stock acquired through the exchange of units in an umbrella operating partnership (“OP Units”). At the request of Bank of America N.A., Merrill Lynch, Pierce, Fenner & Smith Incorporated, the Division of Corporation Finance concluded that, for the purposes of Rule 144(d)(1), the holding period for the shares of REIT common stock commenced upon acquisition of the OP Units. SEC No-Action Letter.

Speeches and Statements

Grim Cites Third Avenue Management’s Woes as Supporting Evidence for Liquidity Risk Proposal

David Grim, Director of the SEC’s Division of Investment Management, addressed the Investment Company Institute’s 2016 Mutual Funds and Investment Management Conference on March 14th, providing an overview of the Division’s current rulemaking initiatives and his thoughts on recent events in the investment management industry. Grim highlighted Third Avenue Management’s decision to shut down its Focused Credit Fund last December as additional evidence to support the SEC’s proposed liquidity risk management rules, which, he noted, has already received almost 80 comments. Grim also suggested that certain investment strategies focused on distressed debt or other illiquid assets may not be suitable for open-end funds. Grim Remarks.

Other Developments

OIG Offers Recommendations to Improve Efficiency of OCIE Investment Adviser Exams

On March 16th, the SEC released the Office of Inspector General’s (“OIG”) final report concerning its evaluation of the Office of Compliance Inspections and Examinations’ (“OCIE”) management of investment adviser examination coverage goals, which examined the OCIE’s efficiency and effectiveness in managing its human resources in meeting its long term goals for investment adviser examinations. The report found that OCIE’s use of the percentage of investment advisers examined each year as its performance measure may not provide meaningful information due to variations in the administration of exams. The report recommended that the OCIE adopt the Government Accountability Office’s (“GAO”) risk-management framework to support its long term objectives in investment adviser examination coverage. OIG Report.

Investment Management Releases Money Market Fund Statistics Data

The SEC’s Division of Investment Management published new money market fund statistics with data as of February 29, 2016. Money Market Fund Statistics.

SEC Approves PCAOB’s 2016 Budget with Reservations

A divided SEC voted to approve the Public Company Accounting Oversight Board’s (“PCAOB”) 2016 budget and annual accounting support fee at an open meeting on March 14th. The PCAOB’s 2016 budget of $257.7 million will be funded primarily by an accounting support fee of $253.3 million that will be assessed on issuers and registered broker-dealers: issuers will pay $220.9 million and broker-dealers will pay $32.4 million. The 2016 budget reflects an increase of approximately 3 percent over the PCAOB’s 2015 budget and the accounting support fee is approximately 12 percent higher. SEC Press Release.

In supporting the proposed budget, SEC Chair White emphasized the importance of ensuring that the PCAOB is properly funded to fulfill its responsibilities in protecting investors and markets, but also urged the PCAOB “to take a hard look at their funding and expenses . . . including with respect to compensation.” In voting against the proposed budget, SEC Commissioner Michael S. Piwowar objected to the amount of the accounting support fee and the five-year projections for future PCAOB spending that “represent a mountain of escalating costs.” See also Stein Statement.

SEC Approves PCAOB’s 2016 Budget with Reservations

A divided SEC voted to approve the Public Company Accounting Oversight Board’s (“PCAOB”) 2016 budget and annual accounting support fee at an open meeting on March 14th. The PCAOB’s 2016 budget of $257.7 million will be funded primarily by an accounting support fee of $253.3 million that will be assessed on issuers and registered broker-dealers: issuers will pay $220.9 million and broker-dealers will pay $32.4 million. The 2016 budget reflects an increase of approximately 3 percent over the PCAOB’s 2015 budget and the accounting support fee is approximately 12 percent higher. SEC Press Release.

SEC Approves New SIPC Rule Governing Supplemental Reports of SIPC Membership

The SEC published a final rule on March 14th that approves the Securities Investor Protection Corporation’s (“SIPC”) proposed rule change to add SIPC Rule 600, which establishes the form and content of the supplemental report of SIPC membership to replace the requirements currently in Securities Exchange Act Rule 17a-5. Following amendments to Rule 17a-5 that transferred responsibility for the supplemental reports SIPC modeled Rule 600’s requirements on those for supplemental reports under Rule 17a-5. The rule will become effective on March 31, 2016. SEC Release No. SIPA-175.

Commodity Futures Trading Commission

CFTC and EPA Enter Into a Memorandum of Understanding

On March 17th, the Commodity Futures Trading Commission (“CFTC”) and the Environmental Protection Agency entered into a Memorandum of Understanding that allows the agencies to share Renewable Fuel Standard (“RFS”) data and analysis. Under the agreement, the agencies agree to cooperate and coordinate on topics related to implementation of the RFS program and the market for renewable identification numbers. CFTC Press Release.

 

CFTC Approves Final Rule to Amend the Trade Option Exemption

On March 16th, the CFTC approved a final rule that removes certain reporting and recordkeeping requirements for trade option counterparties that are neither swap dealers nor major swap participants (“Non-SD/MSPs”), including commercial end-users that transact in trade options in connection with their businesses. The Final Rule will become effective upon publication in the Federal Register. CFTC Press ReleaseMassad StatementBowen Statement

 

CFTC Approves Substituted Compliance Framework in Follow-up to the Recent Equivalence Agreement between the U.S. and the EU

On March 16th, the CFTC unanimously approved a substituted compliance framework for dually-registered central counterparties (“CCPs”) located in the European Union (“EU”), together with a comparability determination with respect to certain EU rules. The Notice of Comparability Determination for the European Union: Dually-Registered Derivatives Clearing Organizations and Central Counterparties will be effective upon publication in the Federal Register. Simultaneously, the CFTC’s Division of Clearing and Risk  issued a no-action letter providing limited relief for dually-registered derivatives clearing organizations (“DCOs”)/CCPs from the application of CFTC regulations to discrete aspects of a DCO/CCP’s non-U.S. clearing activities. CFTC Press ReleaseMassad StatementGiancarlo Statement.

CFTC Announces Volcker Rule CEO Attestation Delivery Method

On March 15th, the CFTC’s Division of Swap Dealer and Intermediary Oversight announced that certain banking entities subject to Appendix B of Part 75 of the CFTC’s regulations should submit their CEO attestations through the following email address: VolckerAttestation@cftc.govCFTC Press Release.

DMO Provides Relief in Connection with Swap Trade Confirmations

On March 14th, the CFTC’s Division of Market Oversight issued a no-action letter (CFTC Staff Letter 16-25) extending the time period for relief in connection with swap trade confirmation requirements previously provided in CFTC Staff Letter 15-25, which expires on March 31, 2016. The no-action letter extends relief to the earlier of (1) 11:59 pm (Eastern Time) March 31, 2017 or (2) the effective date of revised CFTC regulations that establish a permanent solution to the confirmation matters raised by the current regulations. According to the letter, relief is provided to swap execution facilities (“SEFs”) from the requirement in CFTC Regulation 37.6 that a SEF obtain documents that are incorporated by reference in a trade confirmation issued by a SEF, prior to issuing the confirmation. SEFs are also relieved from the requirement in CFTC Regulations 37.1000, 37.1001 and 45.2(a) that a SEF maintain such documents as records. Finally, the letter states that SEFs are relieved from the requirement in CFTC Regulation 45.3(a) that a SEF report confirmation data contained in the documents that the SEF incorporates by reference in a confirmation. CFTC Press Release.

Federal Rules Effective Dates

March 2016 – May 2016

Consumer Financial Protection Bureau
March 3, 2016 Application Process for Designation of Rural Area under Federal Consumer Financial Law; Procedural Rule. 81 FR 11099.
Commodity Futures Trading Commission
April 1, 2016 Margin Requirements for Uncleared Swaps for Swap Dealers and Major Swap Participants. 81 FR 635.
Federal Deposit Insurance Corporation
April 1, 2016 Margin and Capital Requirements for Covered Swap Entities. 80 FR 74839.
Federal Housing Finance Agency
April 1, 2016 Margin and Capital Requirements for Covered Swap Entities. 80 FR 74839.
Federal Reserve System
April 1, 2016 Margin and Capital Requirements for Covered Swap Entities. 80 FR 74839.
March 1, 2016 Unfair or Deceptive Acts or Practices (Regulation AA). 81 FR 8133.
Office of the Comptroller of the Currency
April 1, 2016 Margin and Capital Requirements for Covered Swap Entities. 80 FR 74839.
Office of Foreign Assets Control
March 16, 2016 Cuban Assets Control Regulations. 81 FR 13989.
Securities and Exchange Commission
May 16, 2016 Crowdfunding. 80 FR 71387.
April 19, 2016 Security-Based Swap Transactions Connected With a Non-U.S. Person's Dealing Activity That Are Arranged, Negotiated, or Executed by Personnel Located in a U.S. Branch or Office or in a U.S. Branch or Office of an Agent; Security-Based Swap Dealer De Minimis Exception. 81 FR 8597.
March 31, 2016 Securities Investor Protection Corporation. 81 FR 14372.

Exchanges and Self-Regulatory Organizations

Financial Industry Regulatory Authority

SEC Initiates Proceedings to Consider Merits of FINRA’s Proposed Capital Acquisition Broker Rules

On March 17th, the SEC instituted proceedings to determine whether to approve or disapprove the Financial Industry Regulatory Authority’s (“FINRA”) proposal to adopt a separate rule set to apply to capital acquisition brokers, which are firms that are solely corporate financing firms that provide a variety of advisory services to companies but do not engage in activities typically associated with traditional broker-dealers. Comments should be submitted within 21 days of publication in the Federal Register. Rebuttal comments are due within 35 days. SEC Release No. 34-77391.

FINRA Report Offers Effective Practices for Use of Digital Investment Advice Tools

FINRA published a report on March 15th that reviews the regulatory principles and best practices for digital advice services offered by financial services firms. The report recommended that firms using digital investment advice tools implement sound governance and supervision practices relating to: the governance and supervision of algorithms; customer profiling; governance and supervision of portfolios and conflicts of interest; and rebalancing. The report also recommended that firms train employees to identify and understand the key assumptions and limitations of these tools. FINRA Press Release.

ICE Clear Credit

SEC Greenlights ICE’s Plan to Clear Certain Asia-Pacific CDS Contracts

On March 14th, the SEC issued an order approving ICE Clear Credit LLC’s (“ICE”) proposed rule change to establish new rules that would permit ICE to clear certain Asia-Pacific credit default swap (“CDS”) contracts. SEC Release 34-77361.

Municipal Securities Rulemaking Board

MSRB Proposes Rule Change to Shorten Regular-Way Settlement to T+2

On March 14th, the SEC requested comments on a proposed rule change filed by the Municipal Securities Rulemaking Board (“MSRB”) that would amend its rules on uniform practice and confirmation, clearance, settlement and other uniform practice requirements to define the regular-way settlement for municipal securities transactions as occurring on a two-day settlement cycle (“T+2”). Comments should be submitted on or before April 8, 2016. SEC Release No. 34-77364.

NASDAQ OMX Group

NASDAQ Seeks Approval of Fee for New Wireless Connectivity Service

On March 16th, the SEC requested comments on a proposed rule change filed by The Nasdaq Stock Market LLC (“NASDAQ”) that would permit NASDAQ to establish a fee for its Remote ITCH to Trade Options Wave Ports, a new optional wireless connectivity service for clients co-located at certain third-party data centers. Comments should be submitted within 21 days of publication in the Federal Register, which is expected the week of March 21, 2016. SEC Release No. 34-77381.

Options Clearing Corporation

OCC Proposes New Options Exchange Risk Control Standards Policy

On March 14th, the SEC provided notice of The Options Clearing Corporation’s  proposed rule change to adopt a new Options Exchange Risk Control Standards Policy. The proposed policy addresses risks posed by erroneous transactions and imposes fees on cleared trades that may occur on Options Exchanges that have not implemented risk controls that are aligned with the principles-based risk control standards developed and guaranteed by The Options Clearing Corporation.. Comments should be submitted on or before April 8, 2016. SEC Release No. 34-77358.

Judicial Developments

Fiduciaries of Employee Stock Ownership Plan Did Not Breach Duty of Prudence by Not Recognizing Imminence of Lehman’s Collapse

Plaintiffs appealed from dismissal of their complaint alleging breach of duties by defendants, fiduciaries of an employee stock ownership plan invested exclusively in the common stock of Lehman Brothers. Appellants, who suffered financial losses after Lehman declared bankruptcy, claimed defendants breached their duty of prudence under ERISA by continuing to permit investment in Lehman stock in the months leading up to its bankruptcy. The Second Circuit affirmed on March 18th, finding plaintiffs failed to show that the defendants breached their fiduciary duties by not recognizing the imminence of Lehman’s collapse. Lehman.

Congress Limited Direct Review to Certain Sections of the Exchange Act

A trade group challenged a joint regulation implementing a section of the Securities Exchange Act of 1934 (the “Exchange Act”), taking issue with the decision of the four agencies responsible for its implementation to extend the credit risk retention requirement to managers of open market collateralized loan obligations, which are “specialized investment vehicle[s] designed to invest” in large loans issued to companies without strong credit. On March 18th, the D.C. Circuit transferred the petitions to the district court for lack of jurisdiction, finding Congress limited direct review to certain sections of the Exchange Act. LSTA.

Industry News

SEC Rejects Request to Omit Shareholder Proposal on Gender Pay

The SEC has rejected a request to omit a proposal on gender pay equality from its annual ballot, deciding that the company should allow shareholders to vote on that proposal. The activist arm of an investment firm had submitted the proposal to nine technology companies, but only one sought SEC approval to omit the proposal. Reuters.

Federal Bank Supervisors Can Reduce, Not Eliminate, Risk of Bank Failures.

On March 18th, Reuters reported that New York Federal Reserve President William Dudley has stated that the army of supervisors from the Federal Reserve and other agencies can reduce, but not eliminate, the risk of bank failures. Dudley added that supervisors, who sometimes work day-to-day inside banks, “can reduce the chances” that these firms fail “but can never guarantee” that. Reuters.

SEC Chair White Says SEC Could Curb Use of Adjusted Earnings Figures.

On March 16th, The Wall Street Journal reported that SEC Chair White, in addressing the U.S. Chamber of Commerce conference in Washington, D.C., stated that regulators are considering whether to curb some of the freedom that firms enjoy to provide adjusted earnings figures. The SEC’s current rules allow companies to report profit figures that don’t comply with generally accepted accounting principles (“GAAP”), provided they don’t obscure the official numbers and reconcile the non-GAAP numbers to the equivalent GAAP figure. The Wall Street Journal.

Mark Cuban Is Taking Criticism of the SEC to the U.S. Supreme Court.

On March 16th, The Washington Post reported that Dallas Mavericks owner Mark Cuban, who previously beat SEC charges of insider trading, filed briefs in the U.S. Supreme Court attacking the agency’s use of in-house or administrative courts. The Washington Post.

MF Global Investors Reach $29.8 Million Settlement in Securities Class Action.

On March 15th, CFO reported that MF Global Investors have reached a $29.8 million settlement with five financial institutions that underwrote the sale of its bonds, apparently concluding more than four years of litigation over the 2011 collapse of the futures brokerage. The settlement in the securities class action brings the total recovery for investors to around $234 million, including $74.9 million from other underwriters, $64.5 million from former MF Global officials. CFO.