Insights from Winston & Strawn
On May 22, 2015, the Consumer Financial Protection Bureau (CFPB) issued its statutorily mandated semi annual rulemaking agenda. This agenda contains an impressive number of rulemakings in various stages, nine of which the CFPB itself characterizes as “major initiatives.”
Going through the agenda chronologically based on when action is expected, the CFPB plans to finalize its rule defining “larger participants” in auto lending markets early this summer.
Of course, the CFPB’s Truth in Lending Act – Real Estate Settlement Procedures Act Integrated Disclosure rule is scheduled to become effective August 1, although Congressmen are asking the CFPB to postpone the effective date to January 1, 2016.The CFPB has rejected this so far because yearend is a time when many firms have other competing programming demands to meet.
It appears that, then, a final Home Mortgage Disclosure Act rule will be released in late summer.
Next, expect issuance of a final mortgage rule loosening requirements somewhat in “rural or underserved areas” in the fall of 2015.
Issuance of a notice of proposed rulemaking on payday and auto title loans is planned later this year. Then, in early 2016, a final rule on prepaid financial products is expected.
The CFPB gave no timing estimate as to when debt collection rules will be proposed; and it is still assessing whether rulemaking may be warranted as to overdrafts and as to predispute arbitration clauses. (This week more than 50 Democratic Congressmen wrote to CFPB Director Richard Cordray urging that the CFPB prohibit the use of such clauses in consumer financial contracts.)
All things considered, this is an unusually important time for CFPB rulemaking.
Feature: The Foreign Corrupt Practices Act
Andrew Ceresney, the Director of the Securities and Exchange Commission’s (“SEC”) Division of Enforcement, recently gave a speech entitled “The SEC’s Cooperation Program: Reflections on Five Years of Experience.” View the text of the speech here.
As the title indicates, Ceresney discussed how the Enforcement Division uses cooperation agreements and other cooperation tools to determine what, if any, penalties should be assessed when settling an enforcement action. He used recent SEC Foreign Corrupt Practices Act (“FCPA”) matters to illustrate his remarks. Customarily, a settling FCPA defendant will be assessed a penalty that is at least equal to the disgorgement amount. However, when a respondent engages in selfpolicing, selfreporting, remediation, and cooperation, the penalties can be substantially less. In one FCPA case, a penalty of $1 million was assessed even though the disgorgement amount was $7.5 million. In another case, where the disgorgement ordered was $16 million, no penalty was required. Ceresney noted that in this particular matter, the selfreporting was prompt and the disciplinary action against the offending employees swift.
Ceresney additionally warned of the risks firms take when they fail to selfreport and cooperate, reminding them of the information the agency is receiving as a result of the whistleblower program. Accompanying such warnings are recent reports of SEC and Justice Department investigations into banks who have allegedly hired the children of influential government officials in Asia in an effort to increase business. But as FTSE Global Markets and the Wall Street Journal both report, the scrutinized banks are pushing back. View the FTSE Global Markets article here and the Wall Street Journal article here. The banks note that no precedent exists for holding a firm liable under the FCPA for hiring an official’s offspring. They also ask, how far can the FCPA reach? Can U.S. regulators employ a U.S. anticorruption law to a hiring decision made overseas? Others question how regulators can apply the FCPA if the hired offspring is objectively qualified.
CFO.com has republished an article by the Economist on what it calls the business of antibribery. The Economist notes the rising costs incurred by companies conducting an internal corruption investigation. Contributing to those costs is the increasing number of jurisdictions with anticorruption regimes. And as efforts to evade antibribery laws become more sophisticated, the difficulties associated with uncovering them also increase. View the republished article here.
The U.S. regulatory response to these evermoresophisticated bribery schemes has been the establishment by the Federal Bureau of Investigation (“FBI”) of three dedicated international corruption squads. The squads are based in New York City, Los Angeles, and Washington, D.C. The FBI’s press release announcing the formation of these specialized units emphasized that they will employ such law enforcement tools as courtauthorized wiretaps, surveillance, and informants. View the FBI press release here.
FINRA – Regulatory Matters at a Glance
Please click here to view a summary of the regulatory notices, rule filings, guidance and the like published by the Financial Industry Regulatory Authority (“FINRA”) during the previous month.
Banking Agency Developments
FDIC Reports Increased Profits for Banks
On May 27th, Bloomberg summarized remarks by Federal Deposit Insurance Corporation (FDIC) chair Martin Gruenberg on the results of the First Quarter 2015 Quarterly Banking Profile. The FDIC report indicated an increase in bank profits by 6.9%. Gruenberg credited trading revenue and income from mortgagerelated activities for the increase. Gruenberg also noted that interest rates still pose a challenge for banks, and cautioned that efforts to search for higher yield by banks will continue to be met with heightened regulatory scrutiny. FDIC Press Release.
OCC to Host Risk Governance and Compliance Workshops
On May 27th, the Office of the Comptroller of the Currency (“OCC”) announced it will host two workshops in Des Moines, Iowa, aimed at assisting directors of national community banks and federal savings association with risk governance and compliance. The Risk Governance Workshop, which will focus on practical guidance for directors in measuring and managing risk, will be held July 14, 2015. The Compliance Risk Workshop will be held July 15, 2015, and will focus on the elements of an effective compliance risk management program. OCC Press Release.
FRB Proposes Making Some State and Municipal Bonds HighQuality Liquid Assets
On May 21st, the Federal Reserve Board (FRB) proposed adding certain general obligation state and municipal bonds to the assets banking organizations may use to satisfy Liquidity Coverage Ratio (LCR) requirements. The proposed rule would recognize investment grade, general obligation U.S. state and municipal bonds as high quality liquid assets on the condition that they meet the same liquidity criteria that currently apply to corporate debt securities. The proposed rule would apply only to organizations subject to LCR requirements and supervised by the FRB. Comments on the proposed rule will be accepted until July 24, 2015. Federal Reserve Board Press Release.
FRB Requests Comments on Changes to ACH Service
On May 21st, the FRB requested comments on proposed changes to the sameday automatic clearinghouse (ACH) service under consideration by Federal Reserve Banks. The changes would correspond to amendments recently adopted by the NACHA to its ACH operating rules and would require all receiving depository financial institutions to participate in sameday ACH service and require all originating depository financial institutions to pay a fee to the receiving institution for each sameday ACH transaction. Comments should be submitted by July 2, 2015. FRB Press Release.
OCC Community Developments Investments Newsletter
On May 19th, the OCC published “Small Multifamily Rental Property Financing,” the latest edition of its Community Developments Investments electronic newsletter.
Final Rules Integrating Bank Licensing Activities
On May 18th, the OCC released a final rule integrating policies and procedures for corporate activities and transactions of national banks and federal savings associations. The rule eliminates unnecessary requirements, promotes fairness in supervision, and furthers the safe and sound operation of the institutions the OCC supervises. It also makes technical and conforming changes where appropriate to enable a provision to apply to national banks and federal savings associations, clarifies responsibilities of OCC licensing offices, updates the description of OCC supervision structure, and corrects contact information. The final rule is effective July 1, 2015. OCC Press Release.
Treasury Department Developments
CFPB Charges Mortgage Lender with Discriminatory Pricing
On May 28th, the Consumer Finance Protection Board (“CFPB”) charged Provident Funding Associates with engaging in discriminatory mortgage pricing, charging higher broker fees on mortgage loans to AfricanAmerican and Hispanic borrowers. In settling the charges, Provident agreed to pay $9 million in damages to borrowers harmed by the discriminatory practices. CFPB Press Release.
FinCEN Appoints New Deputy Director
On May 21st, the Financial Crimes Enforcement Network (FinCEN) announced the appointment of Jamal El Hindi as new Deputy Director. ElHindi has served as acting Deputy Director since January, and is a nineyear veteran of FinCEN, previously serving as Associate Director for the Policy Division. FinCEN Press Release.
FSOC 2015 Annual Report
On May 19th, the Financial Stability Oversight Council approved its 2015 annual report. Among other things, the report found that the risk of fire sales of collateral deployed in repo transactions remains; full implementation of the orderly liquidation authority and the phasingin of enhanced prudential standards in the coming years should help reduce remaining perceptions of government support for large, complex, interconnected financial institutions; and although regulators now collect significantly more data on financial markets and institutions, critical gaps remain in the scope and quality of available data. FSOC Press Release.
Securities and Exchange Commission
Statements and Speeches
Commissioner Takes Aim at the Federal Reserve’s Encroachment on Commission’s Core Mission On May 20th, Commissioner Michael S. Piwowar delivered prepared remarks at the Exchequer Club of Washington, D.C in which he attacked the Federal Reserve’s call for the development of “prudential market regulation,” asserting “It is the Commission, not the banking regulators, that should be regulating the capital markets. Period.” The Commissioner argued that in place of the imposition of new regulatory requirements, banks should be subject to more disclosure requirements, upon which the Commission and the market can act accordingly. Commissioner’s remarks.
Memorial Day Tribute
On May 20th, Commissioner Daniel M. Gallagher spoke in tribute to former Securities and Exchange Commission (“SEC”) Secretary, John P. Wheeler, III. In announcing the creation of the “John P. Wheeler Veterans Charity Award,” the Commissioner announced the first recipient of the “Wheeler Award” as Susan Schneider, the founder and longserving Chair of the SEC Veterans Committee. Inaugural recipient. Chair White offered the opening remarks in which she praised Wheeler’s contribution, “Jack held degrees from West Point, Harvard and Yale; and, closest to home, for almost a decade, he served as Assistant General Counsel, Special Counsel to the Chairman, and Secretary of the SEC. And that is just the short list of Jack Wheeler’s amazing accomplishments.” White’s comments.
EDGAR System Upgrades to Support Regulation A
On May 26th, the SEC published a Final Rule adopting revisions to the EDGAR Filer Manual to reflect updates to the EDGAR System. The updates are being made primarily to support the submission form types for Regulation A. The EDGAR System was upgraded May 11, 2015, the effective date for the updated Filer Manual and the rule amendment was May 26, 2015. Final Rule.
New Disclosures Required for Registered Investment Companies
On May 20th, ThinkAdvisor reported the SEC’s announcement of proposed rules, forms and amendments to modernize and enhance the reporting and disclosure of information by investment companies and investment advisers. The proposals, announced by SEC Chairwoman Mary Jo White at the SEC Open Meeting, would see amendments to Form ADV and new monthly and annual reporting forms for mutual funds, ETFs and other registered investment companies. Press Release. The “Amendments to Form ADV and Investment Advisers Act Rules” Release No. IA4091 would require advisors to disclose on Form ADV information on assets (including swaps and exchangetraded funds) and use of borrowings and derivatives in separately managed accounts. The proposals would also require more information about branch office operations and, for the first time, make advisers list social media accounts on their ADV. Under the “Investment Company Reporting Modernization” mutual funds, exchangetraded funds, and other registered investment companies would be required to file a new portfolio form (Form NPORT) and a new annual reporting form (Form NCEN) that would require census type information. This information would be reported in a structured data format. SEC Release No. 339776.
Meeting of the Small and Emerging Companies Advisory Committee
On June 3, 2015, the Advisory Committee on Small and Emerging Companies will hold an open meeting. SEC Release No. 339774.
OIG Semiannual Report to Congress
On May 26th, the SEC’s Office of the Inspector General published the latest Semiannual Report to Congress covering October 1, 2014, to March 31, 2015. OIG Report. On May 27th, the SEC published the accompanying Management Report. Management Response.
2014 SEC GovernmentBusiness Forum on Small Business Capital Formation
On May 22nd, the SEC published the ThirtyThird Annual Final Report of the SEC GovernmentBusiness Forum on Small Business Capital Formation. A major purpose of the Forum is to provide a platform to highlight perceived unnecessary impediments to small business capital formation and address whether they can be eliminated or reduced. Each Forum seeks to develop recommendations for government and private action to improve the environment for small business capital formation, consistent with other public policy goals, including investor protection. Final Report.
Draft EDGAR Manuals Issued
On May 15th, the SEC made available two draft EDGAR manuals: the draft EDGARLink Online XML Technical Specification (Version 16) and the draft EDGAR Filer Manual (Volume II) EDGAR Filing (Version 32).
On May 28th, the SEC announced that Andrew J. “Buddy” Donohue had been named the agency’s chief of staff. Mr. Donohue will replace Lona Nallengara who will leave the agency in June. Associate Director for Clearing and Settlement in the Division of Trading and Markets, Peter J. Curley, is departing the agency later this month. In addition, Jessica Kane has been named the director and Rebecca J. Olsen the deputy director of the Office of Municipal Securities.
Commodity Futures Trading Commission
Market Risk Advisory Committee Meeting Agenda
On May 19th, the Commodity Futures Trading Commission (“CFTC”) published the agenda for its June 2, 2015 Market Risk Advisory Committee meeting. The Committee will discuss issues related to: (1) the appropriate industry response to current and potential cybersecurity threats; and (2) the concentration of futures commission merchants, and its effect on, and other factors currently affecting, market liquidity. CFTC Press Release.
CFTC International Affairs Director to Assume New Role
On May 29th, the CFTC announced that Sarah E. Josephson, the Director of the agency’s Office of International Affairs (“OIA”), would leave her position and return to her current role as Deputy Director in the Division of Clearing and Risk. Jeffrey M. Bandman, Special Counsel, will serve as Acting Director of the OIA while the agency searches for a new director. CFTC Press Release.
CFTC Issues Updated Enabling NoAction Letter for Qualifying Australian Licensed Markets
On May 19th, the CFTC’s Divisions of Market Oversight and Swap Dealer and Intermediary Oversight announced that Yieldbroker Pty Limited intends to apply for relief and achieve compliance by October 15, 2015, under an updated enabling noaction letter (CFTC Letter No. 1529) for qualifying swaps trading platforms that are licensed in Australia and overseen by the Australian Securities & Investments Commission. If Yieldbroker’s application for relief is approved, Yieldbroker will become the first Australian swaps trading platform that permits direct access to U.S. persons to qualify under this framework. The framework provides for longterm noaction relief from the requirement to register as a swap execution facility (“SEF”) or designated contract market (“DCM”). In the interim, the Division of Market Oversight, in accordance with CFTC NoAction Letter No. 1530, will not recommend enforcement action against Yieldbroker for failure to register as a SEF or DCM, or against any market participants for use of, or other relationships with Yieldbroker for the period expiring October 15, 2015. CFTC Press Release.
Exemptions for the Southwest Power Pool Proposed
On May 21st, the CFTC published for comment a proposed order concerning Southwest Power Pool, Inc. (“SPP”), a Regional Transmission Organization (“RTO”). Under the proposal certain SPP transactions would be exempted from the Commodity Exchange Act and its regulations. The proposed order is similar to the April 2, 2013 final order issued by the Commission that exempted certain specified transactions of six other RTOs and Independent System Operators. Comments should be submitted on or before June 22, 2015. CFTC Press Release.
Federal Rules Effective Dates
December 2013 February 2014
Consumer Finance Protection Board
August 1, 2015 Amendments to the 2013 Integrated Mortgage Disclosures Rule Under the Real Estate Settlement Procedures Act (Regulation X) and the Truth In Lending Act (Regulation Z) and the 2013 Loan Originator Rule Under
the Truth in Lending Act (Regulation Z). 80 FR 8767.
Integrated Mortgage Disclosures Under the Real Estate Settlement Procedures Act (Regulation X) and the Truth In Lending Act (Regulation Z). 78 FR 79730.
Federal Deposit Insurance Corporation
July 1, 2015 Restrictions on Sale of Assets of a Failed Institution by the Federal Deposit Insurance Corporation. 80 FR 22886.
Federal Finance Housing Agency
July 6, 2015 Minority and Women Inclusion Amendments. 80 FR 25209.
June 29, 2015 Federal Home Loan Bank Community Support Program Administrative Amendments. 80 FR 30336.
National Credit Union Administration
July 6, 2015 Chartering and Field of Membership Manual. 80 FR 25924.
June 5, 2015 Corporate Credit Unions. 80 FR 25932.
Office of the Comptroller of the Currency
July 1, 2015 Integration of National Bank and Federal Savings Association Regulations: Licensing Rules. 80 FR 28345.
Securities and Exchange Commission
June 19, 2015 Amendments for Small and Additional Issues Exemptions Under the Securities Act (Regulation A). 80 FR 21805.
June 15, 2015 Nationally Recognized Statistical Rating Organizations. 79 FR 55077.
[This rule is effective November 14, 2014; except the amendments to Sec. 240.17g3(a) (7) and (b)(2) and Form NRSRO, which are effective on January 1, 2015; and the amendments to Sec. 240.17g2(a)(9), (b)(13) through (15), Sec. 240.17g5(a)(3)(iii)(E), (c)(6) through (8), Sec. 240.17g7(a) and (b), and Form ABS15G, which are effective June 15, 2015. The addition of Sec. Sec. 240.15Ga2, 240.17g8, 240.17g9, 240.17g 10, and Form ABS Due Diligence15E are effective June 15, 2015.]
Exchanges and SelfRegulatory Organizations
Financial Industry Regulatory Agency
FINRA Proposes Rule to Provide Educational Communication
On May 27th, the Financial Industry Regulatory Agency (“FINRA”) requested comment on a proposed rule that would require a member firm that hires or associates with a registered representative to provide educational communication to former retail customers that would highlight the potential implications of transferring assets to the recruiting firm. Comments are due by July 13, 2015. FINRA Regulatory Notice 1519.
FINRA Requests Comment on Restructuring Exam
On May 27th, FINRA published FINRA Regulatory Notice 1520 requesting comments on a concept proposal to restructure the representativelevel qualification examination program into a format whereby all potential representativelevel registrants would take a general knowledge examination and an appropriate specialized knowledge examination to reflect their particular registered role. Comments are due by July 27, 2015.
Communications Guidance Updated
Code of Arbitration Procedure Changes Approved
On May 22nd, the SEC approved proposed rule changes to amend the Rules 12214 and 12601 of FINRA’s Code of Arbitration Procedure for Customer Disputes and Rules and Code of Arbitration Procedure for Industry Disputes. The proposed changes would increase the fee for the late cancellation or postponement of a scheduled hearing, lengthen the notice period for cancelling or postponing a scheduled hearing session, and increase the amount of honoraria paid to arbitrators affected by the late cancellation or postponement of a scheduled hearing session. The amendments are effective on June 26, 2015. SEC Release 3475036; FINRA Regulatory Notice 1518.
Longer Period Designated for Appointment Process
On May 21st, the SEC designated July 7, 2015 to either approve or disapprove, or institute proceedings to determine whether to disapprove both New York Stock Exchange Arca (SEC Release 3475032), New York Stock Exchange Market (SEC Release 3475033), and New York Stock Exchange (SEC Release 3475038) proposed rule changes to modify the appointment process utilized by the Exchanges.
CDS Procedures Approved
On May 28th, the SEC approved ICE Clear Europe’s rule change revising Credit Default Swaps (“CDS”) procedures, CDS Risk Model Description and CDS EndofDay Price Discovery Policy to provide the basis for ICE Clear Europe to clear CDX North America Index CDS Contracts (“CDX.NA Contracts”). SEC Release 34 75065.
Higher Bar Needed for Preemption under National Bank Act
On May 22nd, in Madden v. Midland Funding, LLC, the Second Circuit Court of Appeals reversed a district court order of preemption under the National Bank Act. The plaintiff’s delinquent credit card account had been sold by a national bank to a debt purchaser. The debt purchaser sought to collect, and the plaintiff brought a putative class action alleging violations of the Fair Debt Collection Practices Act and New York’s usury law, claiming that the interest rate being charged was higher than permitted in New York State. The appellate court held that there is no preemption where the defendant is simply an assignee of a national bank but is not itself a national bank, its subsidiary, or its agent, and where the application of state law would not interfere with a national bank’s ability to exercise its powers under the National Bank Act. No Preemption.
Dismissal of MF Global Claims Against Its Auditor Affirmed
On May 22nd, the Second Circuit Court of Appeals issued a nonprecedential summary order dismissing MF Global’s claims against its former auditor, PwC. MF Global alleged that PwC had failed to detect deficiencies in MF Global’s accounting and internal control procedures prior to the company’s collapse. The company claimed, on its own behalf, that PwC had breached its fiduciary duty, and also claimed, on behalf of itself and its customers, that PwC had been professionally negligent. The appellate court affirmed the district court’s dismissal of the claims brought on behalf of MF Global as barred by in pari delicto, under which a court will not intercede to resolve a dispute between two wrongdoers. The court affirmed the dismissal of the claims brought on behalf of customers on the basis of a lack of privity or nearprivity between those customers and PwC. Dismissal Affirmed.
SecuritiesFraud Class Action Remanded for New Trial
On May 21st, the Seventh Circuit remanded a securitiesfraud class action against a consumer lending company to the district court for further proceedings. Household International, Inc. and some of its executives engaged in predatory lending practices, misrepresenting these practices, as well as delinquency rates and earnings, in order to inflate its stock price. The Court held that plaintiffs’ evidence of loss causation was insufficient because the leakage model adopted by the jury to quantify the impact of the truth on Household’s stock price did not account for firmspecific, nonfraud related factors that may have affected the decline in stock price, instead relying on a general statement from an expert that these factors did not apply. The Court further held that the jury instructions, by including approving or furnishing false information, contradicted the Supreme Court’s definition of making a false statement under Rule 10b5 in Janus. The Court concluded that the district court’s error may have caused prejudice to the three executive defendants, who were all found liable of making certain false statements. Glickenhaus & Co. v. Household International, Inc.
ERISA Duty of Prudent Investment Is Continuous
On May 18th, a unanimous U.S. Supreme Court vacated a Ninth Circuit opinion holding that certain claims brought under the Employee Retirement Income Security Act (“ERISA”) were untimely. Beneficiaries in an ERISA pension plan claimed that defendants, the plan’s fiduciaries, breached their duties by selecting higher cost retail mutual funds for inclusion in the plan when materially identical lowercost institutional alternatives existed. Because the suit was filed more than six years after the fiduciaries selected the mutual funds, the Ninth Circuit held that the claims were barred. In vacating that order, the Supreme Court noted that ERISA’s fiduciary duties are derived from the common law of trusts and held that an ERISA fiduciary has a continuing duty to not only exercise prudence in selecting investments at the outset, but to also monitor and remove imprudent investments later. Tibble v. Edison International.
Four Swiss Banks Settle with DOJ
On May 28th, Reuters reported that Societe Generale Private Banking (LuganoSvizzera), MediBank AG, LBBW (Schweiz) AG, and Scobag Privatbank AG settled potential charges of assisting Americans with tax evasion under a voluntary program with the Department of Justice (“DOJ”). The banks agreed to pay penalties ranging from $9,090 to $1.36 million and must provide detailed information on accounts of U.S. taxpayers under investigation. Three banks have already settled with the DOJ and more expected to do so. Banks.
Banks’ Role in FIFA Bribery Case
On May 27th, Reuters reported on the role played by more than a dozen banks in the FIFA, soccer’s governing body, corruption case involving over $150 million in bribes. FIFA is under investigation by the Department of Justice. None of the banks were accused of any wrongdoing. Banks. The nine FIFA officials and five sports marketing executives have been indicted on federal charges for alleged corruption, including money laundering, racketeering and wire fraud. Charges.
FRB Issues Report on Households’ Economic WellBeing
On May 27th, the Federal Reserve Board (“FRB”) issued its 2014 survey of the financial and economic conditions of American households which found that individuals’ overall perceptions of financial wellbeing improved slightly between 2013 and 2104, but their optimism increased significantly when looking forward. The survey reveals a lack of economic preparedness by many, ranging from the ability to pay an emergency expense to saving for retirement. FRB Press Release.
FINRA Head Says SEC Not DOL Should Regulate IRAs
On May 27th, head of the Financial Industry Regulatory Authority (“FINRA”) Richard Ketchum said, in his remarks at the 2015 Annual Conference, that the Securities and Exchange Commission (“SEC”) along with FINRA are better able to regulate “a brokerdealer best interest standard under the securities laws, rather than the present Department of Labor (“DOL”) proposal.” He stated that the DOL proposal is not in the best interest of investors as it would move enforcement to civil class action suits and the judicial recommendation may not end up being in the best interest of the investor. Ketchum also raised concern about applying a different legal standard for IRAs and 401(k)s which would cause difficulties for investors who do not segregate taxadvantaged from their other investment strategies. He suggested steps that the SEC and FINRA could take to ensure that brokers’ and dealers’ recommendations are in the “best interest” of the investor. Speech.
DoddFrank’s Regulations Encourages Banks’ RentSeeking
On May 27th, Adam Davidson in the New York Times analyzed DoddFrank’s effectiveness and concluded that “DoddFrank does little to prevent or counteract the rentseeking and regulatory arbitrage that have been the hallmarks of the 21st century bank.” In fact, it is because regulations are so complex and extensive that banks are able to seek rentsbenefits obtained by having power over something that others needand use the knowledge of their necessity to consumers to take more than they deserve. Rentseeking.
Massachusetts and Montana Sue SEC over JOBS Act
On May 26th, Think Advisor reported that Massachusetts is joining Montana in asking the Federal Court of Appeals for the District of Columbia to review the SEC’s Regulation A+ of the Jump Start Our Business Startups (“JOBS”) Act rules. Regulation A+ offers two tiers of offerings which are subject to lighter regulation, disclosure and reporting requirements than larger securities sales. Tier 1, for offerings up to $20 million in 12 months, requires registration with the state and the SEC, but Tier 2, for offerings up to $50 million in 12 months, requires only SEC registration. The two states believe the SEC violated the congressional intent of the JOBS Act which was to allow state review of small securities offerings. Regulation A+.
Warren Says DOL Should Hold Hearings on Bank Waivers
On May 24th, Reuters reported that Senator Elizabeth Warren, responding to the SEC’s granting waivers to the banks involved in the manipulating of foreign currency in the Financial Times, questioned whether banks that are allowed exemptions should be permitted to deal with pension and retirement savings plans and called for the Department of Labor should hold public hearings on the matter. DOL Hearings.