[Winston & Strawn LLP]
VOLUME 13, NO. 43
November 19, 2018
Insights from Winston & Strawn Feature: Federal Reserve Chair Delivers Framework for Easing Stress Test Burdens Banking Agency Developments Treasury Department Developments Securities and Exchange Commission Commodity Futures Trading Commission Disruptive Technology Developments Federal Rules Effective Dates Exchanges and Self-Regulatory Organizations Judicial Developments Industry News
Insights from Winston & Strawn
Brexit, Financial Services, Passporting and Equivalence
November Brexit Deal The topic of Brexit has been the subject of a high degree of anxiety within the financial services industry. In a potentially positive development, on November 14, 2018, the British Prime Minister, Theresa May, announced that Brexit negotiations had led to a deal with the European Union (EU) on the terms of Britain’s exit from the EU. The draft deal comes in two parts: a draft withdrawal agreement (which will become a legally binding treaty) covering matters such as the “divorce bill” (essentially how much the United Kingdom (UK) owes the EU for unpaid bills), rights of European residents, the Northern Ireland “backstop” and financial regulation; and a political declaration about the future relationship between the UK and Europe, which is aspirational in nature.
Transition Period One important aspect of the draft withdrawal deal is that it provides for a transition period which will continue until December 31, 2020, during which the status quo will continue to apply. This includes application to the financial services industry, meaning that current passporting rights would continue to apply until December 2020. While the current plan is still subject to approval by the British Parliament and the European Parliament (and it must also receive consent from each member state of the EU), if current financial services regulations will be preserved during the transition period, this will give firms a window to take appropriate steps before the current arrangements fall away.
Passporting Passporting and equivalence are key areas of interest for the financial services industry against the backdrop of Brexit. The political declaration within the draft agreement directly addresses financial services, stating that both the UK and the EU wish to preserve financial stability, that equivalence assessments ought to commence as soon as possible after Brexit, and that there should be ongoing cooperation in the area of regulation and supervision. However, these statements, though made with positive intentions, do not amount to an agreement over the treatment of financial services following Brexit. The outcome is still uncertain.
The EU operates on a principle of free movement (of people, goods, and services), part of which is an integrated “single market” across its member states. The passporting system derives from this concept. The basic premise is that when a bank or other financial services provider becomes established and authorised in one member state of the EU, it can apply for the right to provide certain services throughout the entire EU, or to open branches in other countries across the EU with few additional authorisation requirements. These pan-European authorisations are known as the financial services “passport.” There are nine different passports governing different financial services. They include the Markets in Financial Instruments Directive, which allows banks based in one member state to carry out investment services in different European trading venues, and the Payments Services Directive, which allows non-banks to provide payments to European customers.
The passporting regime relies on the assumption that there is a high standard of regulation across member states. The system means that financial services providers can establish branches in different member states on preferential terms compared to non-European entities and sell products and services across the EU. This system only extends to the European Economic Area and passporting rights are not generally open to “third country” (i.e., non-European) firms. Significant regulatory barriers exist for third-country firms. Upon leaving the EU, and without any specific provision being made in this area, the UK would likely become a third country for the purposes of the passporting regime, and financial services carried out between the EU and the UK would have to operate under the “equivalency” regime.
Equivalence Equivalence refers to an assessment and recognition process carried out by the EU to consider whether regulatory and supervisory regimes in third-country jurisdictions are equivalent to the corresponding regulatory framework in the EU; in particular, whether they are equivalent in how strict they are. A favorable equivalency decision from the EU would mean that it is possible for relevant authorities to rely on the compliance frameworks of entities from the relevant third country. This approach is employed to minimise duplication of supervisory and regulatory compliance efforts in order to ensure that third-country firms can access the internal market while ensuring that they have complied with the relevant legislation. The process of gaining a favorable equivalency judgment can be complex and lengthy (and can, of course, be political).
There are a range of uncertainties that come with equivalence. European market access rights that can be granted under equivalence decisions are restrictive, onerous, and changeable. Equivalence can be discretionarily activated or revoked by the EU. Additionally, certain financial services cannot currently be provided at all via equivalence.
What next? Given that passporting has underpinned the provision of financial services in the EU, Brexit has the potential to have a significant impact on the provision of financial services for both UK and European firms and customers, as well as industry participants in other jurisdictions who deal with them. While the treatment of financial services regulation following Brexit continues to be uncertain, it is encouraging that both the EU and UK are committed to working together to preserve financial stability and make adequate arrangements for the financial services industry.
James A. Tannock
New Listing Regime in Hong Kong to Attract Pre-Revenue Biotech Companies
On April 24, 2018, The Stock Exchange of Hong Kong Limited published the outcome of deliberations on biotech company listings and announced new rules. Briefing.
Favorable Aircraft SIFL Calculations 2019 – Is Your Company Ready?
The most successful, companies often have a corporate jet to transport executives for business purposes for efficiency and security reasons. Most permit guest travel on such trips and many also permit purely personal flights. Companies should consider acting now to support the executives’ not paying more in tax later, by using long-blessed special tax rates rather than much higher market rates. Briefing.
Feature: Federal Reserve Chair Delivers Framework for Easing Stress Test Burdens
On November 9th, Federal Reserve Board (“Board”) Vice Chairman for Supervision, Randal Quarles, delivered keynote remarks on the current and future shape of financial regulation at a Brookings Institution event in Washington, D.C. Discussing the next chapter in the Board’s stress testing program, which was implemented after the 2008 financial crisis to determine whether banks have enough capital to survive the losses that would be caused by a severe economic downturn, Quarles said that financial regulators were getting ready to ease a few of the rules, which have sometimes led to embarrassing headlines for banks that failed the tests.
Specifically, Quarles stated that the Board would like to change the rules in an effort to “increase both the transparency and the efficiency of the stress testing regime.” He added that the revamp of the annual stress tests could focus on three contentious issues: the possibility of having dividends and stock repurchases publicly rejected, the stress testing process’s lack of transparency, and the shame that comes with failing the assessments’ qualitative portion. However, Quarles clarified, the changes are “not intended to alter materially the overall level of capital in the system or the stringency of the regime.”
In April 2018, the Board proposed to introduce a “stress capital buffer” (“SCB”) that would, in part, merge the forward-looking stress test results with the Board’s non-stress capital requirements. This SCB would yield “capital requirements for large banking organizations that are firm-specific and risk-sensitive.” Quarles now suggested that, while comments on the April proposal “have flagged certain elements of the regime that could benefit from further refinement,” the Board intends to soon adopt a rule that will incorporate ways in which to answer bankers’ fears that the consequential capital demands could be subject to unpredictable swings from one year to the next. Quarles noted that a revamp of the annual stress tests will go into effect no earlier than 2020, instead of 2019 as the central bank had initially planned.
During his semi-annual testimony at a U.S. House of Representatives Committee on Financial Services hearing on November 14th, Quarles defended the Board’s plans to overhaul how it manages bank stress tests. Quarles statedthat the proposed changes signify a “step forward in regulatory efficiency,” which produces a “nuanced framework where riskier activities and a larger systemic footprint correspond to higher supervisory and regulatory requirements.” In responding to lawmakers’ questions, Quarles said that he does not see that the Board is proposing to weaken regulation but suggested that it is instead “an appropriate alignment of regulation.”
Speaking ahead of Quarles’ prepared testimony, Representative Maxine Waters vowed that the “days of this committee weakening regulations and putting our economy once again at risk of another financial crisis will come to an end” when Democrats take control of the House in January 2019.
Banking Agency Developments
Joint Agency Releases Federal and State Financial Regulatory Agencies Issue Interagency Statement on Supervisory Practices Regarding Financial Institutions and their Customers Affected by California Wildfires
On November 15th, the Office of the Comptroller of the Currency (“OCC”), the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation (“FDIC”), the National Credit Union Administration, and the California Department of Business Oversight announced in a joint release that they recognize the serious impact of the California wildfires on the customers, members, and operations of many financial institutions and will provide appropriate regulatory assistance to affected institutions subject to their supervision.
OCC Comptroller of the Currency Discusses Condition of the U.S. Banking System
On November 14th, Comptroller of the Currency Joseph M. Otting discussed the condition of the U.S. federal banking system during a speech in Tokyo.
OCC Allows National Banks and Federal Savings Associations Affected by California Wildfires to Close
On November 13th, the OCC announced that it issueda proclamation allowing national banks, federal savings associations, and federal branches and agencies of foreign banks affected by wildfires and high winds in California to close. OCC Bulletin 2012-28 “Supervisory Guidance on Natural Disasters and Other Emergency Conditions”provides guidance on actions bankers could consider implementing when their bank or savings association operates or has customers in areas affected by a natural disaster or other emergency.
OCC Enforcement Action Policies and Procedures Manuals
On November 13th, the OCC announced that it has issued its Policies and Procedures Manual for enforcement actions against institution-affiliated parties (“IAP”) of national banks, federal savings associations, and federal branches and agencies of foreign banks. The OCC also updated its policies and procedures regarding bank enforcement actions and related matters and civil money penalties, primarily to ensure consistency with its policies and procedures for enforcement actions against IAPs.
FDIC FDIC Requests Information on Small-Dollar Lending
On November 14th, the FDIC announced that it is seeking public comment on issues related to small-dollar lending by FDIC-supervised financial institutions. The Request for Information (“RFI”) solicits comments on the consumer demand for small-dollar credit products, the supply of small-dollar credit products currently offered by banks, and what the FDIC can do to better enable banks to offer responsible, prudently underwritten credit products to meet consumer demand. Comments on the RFI will be accepted for 60 days after publication in the Federal Register.
Federal Reserve Federal Reserve Approves Final Amendments to Simplify Regulation J and to Make it Conform More Closely with Regulation CC
On November 15th, the Board announced that it had approved final amendments to simplify Regulation J (Collection of Checks and Other Items by Federal Reserve Banks and Funds Transfers through Fedwire) and to make it conform more closely with Regulation CC (Availability of Funds and Collection of Checks). The amendments become effective as of January 1, 2019.
Federal Reserve to Review its Strategies, Tools, and Communication Practices
On November 15th, the Board announced that next year it will review the strategies, tools, and communication practices it uses to pursue its congressionally-assigned mandate of maximum employment and price stability. The review will include outreach to a broad range of interested stakeholders.
Treasury Department Developments
FinCEN FinCEN Reissues Real Estate Geographic Targeting Orders and Expands Coverage to 12 Metropolitan Areas
On November 15th, the Financial Crimes Enforcement Network (“FinCEN”) announced the issuance of revised Geographic Targeting Orders that require U.S. title insurance companies to identify the natural persons behind shell companies used in all-cash purchases of residential real estate. The purchase amount threshold, which previously varied by city, is now set at $300,000 for each covered metropolitan area. FinCEN is also requiring that covered purchases using virtual currencies be reported.
Securities and Exchange Commission
Guidance Investment Company Reporting Modernization Frequently Asked Questions
On November 14th, the Securities and Exchange Commission’s (“SEC”) Division of Investment Management announced that it has prepared responses to questions related to the investment company reporting modernization reforms adopted in October 2016 and revised in December 2017.
Speeches and Statements Jackson Highlights Dangers of Leveraged ETFs
Bloomberg reported on November 12th that SEC Commissioner Robert J. Jackson Jr. reiterated his concerns about the impact of leveraged exchange-traded funds (“ETFs”) on investors and the asset class as a whole. Jackson, who delivered remarks at a CFA Society of New York event on passive investing and corporate governance, said that a proposal made by the SEC’s Fixed Income Market Structure Advisory Committee to assign new terminology to these products to distinguish them from other kinds of ETFs was a good start, but may not be enough to address the risks posed by leveraged ETFs.
Peirce Believes Enforcement Actions Against Compliance Officers Should Be Rare
On November 9th, the SEC published the remarks delivered by SEC Commissioner Hester M. Peirce on October 30, 2018, at the National Membership Conference of the National Society of Compliance Professionals. In her remarks, Peirce discussed the role of compliance officers, the role of the SEC in helping firms to comply, and enforcement actions against compliance officers, noting that she is generally reluctant to support enforcement actions against compliance officers for fear of driving compliance professionals out of the business.
Other Developments SEC Holds Roundtable on the Proxy Process
On November 15th, the SEC convened a roundtable on the proxy process, which brought together panelists from a variety of viewpoints to discuss proxy voting mechanics and technology; shareholder proposals, and proxy advisors. Pensions & Investments reported that panelists discussed the pros and cons of adopting a universal proxy ballot, the adoption of end-to-end vote confirmation, and how blockchain technology might benefit the proxy voting process. Law360 reported that representatives of the major proxy advisory firms defended their practices against charges that conflicts of interest interfere with their ability to effectively advise investors. SEC Commissioner Kara M. Stein observed that the current proxy system, with its “plethora of cottage industries … has not necessarily helped to provide transparency to either companies or their investors.” See also statements by SEC Chairman Jay Clayton and Commissioner Elad L. Roisman.
SEC Releases 2018 Agency Financial Report
On November 15th, the SEC published its Agency Financial Report for fiscal year 2018, which provides detailed financial and performance information designed to help Congress and the public assess the SEC’s accomplishments and understand its financial and operational picture.
SEC Reports Rise in Whistleblower Tips in 2018
On November 14th, the SEC published its annual report to Congress on its whistleblower program. Among other things, the report revealed that the SEC received more than 5,200 whistleblower tips in fiscal year 2018, representing the highest increase in tips since the beginning of the program and a nearly seventy-six percent increase since 2012.
Investor Advisory Committee to Meet in December
On November 9th, the SEC provided notice that its Investor Advisory Committee will hold a public meeting on December 13, 2018, to discuss, among other things, disclosures on human capital; disclosures on sustainability and environmental, social, and governance (“ESG”) topics; and unpaid arbitration awards. Written statements to the Committee should be submitted on or before December 13, 2018.
DERA White Paper Examines Impact of Tick Size Pilot on Stock Prices
On November 9th, the SEC’s Division of Economic and Risk Analysis (“DERA”) published a staff white paper that analyzes the effect on stock prices of the announcement of the assignment of stocks in the Tick Size Pilot to the Test Groups and the Control Group. The paper found that the increase in tick size associated with the Pilot had no impact on stock prices, calling into question the idea that similar changes in tick size can affect cost of capital of small capitalization companies.
Commodity Futures Trading Commission
Division of Enforcement Issues Report on FY 2018 Results
On November 15th, the Commodity Futures Trading Commission’s (“CFTC”) Division of Enforcement announcedthat it has issued its report outlining its major priorities and initiatives during the past Fiscal Year 2018 (FY 2018). Enforcement Director James McDonald announced the release of the report at a speech given at NYU as part of the Program on Corporate Compliance & Enforcement.
Disruptive Technology Developments
London Is Turning Into a Global AI Hub
On November 15th, CNBC reported that London is gaining a reputation as a global artificial intelligence (“AI”) hub, as new research has shown that, between 2015 and 2017, AI developers in the city saw a venture capital funding increase of over 200%.
CFTC Enforcement Director Discusses Trends in Cryptocurrency Fraud
On November 15th, Crowdfund Insider reported on CFTC Enforcement Director James M. McDonald’s speech at the NYU School of Law in which he addressed current trends in enforcement, including regarding crypto and virtual currencies.
Regulatory Clarity Is Crucial in the Cryptocurrency and Blockchain Environment
On November 13th, Forbes reported that lack of regulatory certainty in the cryptocurrency and blockchain environment could lead to a turf battle between the U.S. Department of the Treasury, the SEC, and other possible bureaucratic entities, which could potentially result in redundant or excessive regulations and slow down the growth in innovation and development.
Federal Rules Effective Dates
November 2018 – January 2019
Commodity Futures Trading Commission
November 13, 2018
De Minimis Exception to the Swap Dealer Definition. 83 FR 56666.
Consumer Financial Protection Bureau
January 1, 2019
Truth in Lending (Regulation Z) Annual Threshold Adjustments (Credit Cards, HOEPA, and Qualified Mortgages). 83 FR 43503.
Federal Deposit Insurance Corporation
November 9, 2018
Margin and Capital Requirements for Covered Swap Entities. 83 FR 50805.
Federal Housing Finance Agency
December 18, 2018
Responsibilities of Boards of Directors, Corporate Practices, and Corporate Governance. 83 FR 52950.
November 15, 2018
Federal Home Loan Bank Community Support Program-Administrative Amendments. 83 FR 52115.
November 9, 2018
Margin and Capital Requirements for Covered Swap Entities. 83 FR 50805.
November 5, 2018
Indemnification Payments. 83 FR 49987.
Federal Reserve System
January 1, 2019
Availability of Funds and Collection of Checks. 83 FR 46849.
November 29, 2018
Reserve Requirements of Depository Institutions. 83 FR 54517.
November 9, 2018
Margin and Capital Requirements for Covered Swap Entities. 83 FR 50805.
Office of the Comptroller of the Currency
November 9, 2018
Margin and Capital Requirements for Covered Swap Entities. 83 FR 50805.
Office of Foreign Assets Control
November 15, 2018
Democratic Republic of the Congo Sanctions Regulations. 83 FR 57308.
November 5, 2018
Iranian Transactions and Sanctions Regulations. 83 FR 55269.
Securities and Exchange Commission
January 1, 2019
Optional Internet Availability of Investment Company Shareholder Reports. 83 FR 29158.
November 16, 2018
Adoption of Updated EDGAR Filer Manual; Correction. 83 FR 57677.
November 13, 2018
Regulation of NMS Stock Alternative Trading Systems. 83 FR 56257.
November 5, 2018
Adoption of Updated EDGAR Filer Manual. 83 FR 55264.
Disclosure Update and Simplification. 83 FR 50148.
Treasury Department
November 17, 2018
Government Securities Act Regulations: Large Position Reporting Rules. 83 FR 52767.
November 10, 2018
Determination and Temporary Provisions Pertaining to a Pilot Program To Review Certain Transactions Involving Foreign Persons and Critical Technologies. 83 FR 51322.
Exchanges and Self-Regulatory Organizations
Cboe Global Markets SEC Seeks Comments in Disapproval Proceedings for BYX’s Proposal to Make Permanent Its Retail Price Improvement Program
On November 15th, the SEC instituted proceedings to determine whether to approve or disapprove Cboe BYX Exchange Inc.’s (“BYX”) proposed rule change to make permanent its pilot Retail Price Improvement Program. Comments should be submitted within 21 days of publication in the Federal Register, which is expected shortly. Rebuttals are due within 35 days. SEC Release No. 34-84600.
CFE Proposes Changes to Minor Rule Violation Rules
On November 15th, the SEC requested comments on a proposed rule change filed by CBOE Futures Exchange LLC (“CFE”) that would amend its rules regarding the processing of minor rule violations by deleting references to the Business Conduct Committee from each of the summary fine schedules that addresses violations of CFE rule provisions related to recordkeeping and reporting requirements. Comments should be submitted within 21 days of publication in the Federal Register, which is expected shortly. SEC Release No. 34-84601.
CFE Proposes Changes to Rules on Correcting Reporting Errors
On November 9th, the SEC provided notice of a proposed rule change filed by CFE to extend the time frame for the correction of Block Trade and Exchange of Contract for Related Position (“ECRP”) transaction reporting errors to 4:00 p.m. Chicago time on the business day of the transaction. The proposed rule change would also clarify that for the Trade Desk to bust or adjust a Block Trade or the CFE contract leg of an ECRP transaction, an Authorized Reporter or party on each side of the transaction must agree upon the mistake, inaccuracy, or error that occurred. Comments should be submitted on or before December 7, 2018. SEC Release No. 34-84560.
CFE Proposes Changes to Block Trade and ECRP Reporting Provisions
On November 9th, the SEC requested comments on CFE’s proposal to amend reporting provisions under CFE Rules 414, 415, and 714 relating to Block Trades and ECRP Transactions by revising the criteria for who can act as an Authorized Reporter for ECRP transactions and Block Trades and allowing for the assessment of summary fines for violations of two comparable ECRP and Block Trade reporting provisions. Comments should be submitted on or before December 7, 2018. SEC Release No. 34-84561.
Financial Industry Regulatory Authority FINRA Releases 2019 and Q1 2020 Report Filing Due Dates
In an Information Notice published on November 16th, the Financial Industry Regulatory Authority (“FINRA”) provided a list of the due dates for Annual Audit, Financial and Operational Combined Uniform Single (“FOCUS”), Form Custody, and supplemental FOCUS Report filings that are due in 2019 or the first quarter of 2020.
International Swaps and Derivatives Association ISDA Chart of Derivatives Subject to Margin Rules
On November 9th, the International Swaps and Derivatives Association (“ISDA”) published a chart that offers a comparison of derivatives projects subject to regulatory initial and variation margin requirements in jurisdictions which have final requirements for regulatory margin.
Options Clearing Corporation SEC Approves OCC’s Options Disclosure Document Supplement
On November 9th, the SEC granted accelerated approval for the delivery of the Options Clearing Corporation’s (“OCC”) October 2018 supplement that amends the options disclosure document to include disclosure regarding foreign currency index options and implied volatility index options, certain contract adjustment disclosures, and T+2 (trade date plus two) settlement. SEC Release No. 34-84565.
Miami International Holdings MIAX Options Proposes Changes to Risk Protection for SAO Orders
On November 14th, the SEC requested comments on a proposed rule change filed by Miami International Securities Exchange LLC (“MIAX Options”) that would amend Exchange Rule 519, MIAX Order Monitor; Exchange Rule 519A, Risk Protection Monitor; and Rule 517, Quote Types Defined, to remove settlement auction only orders (“SAO Orders”) from certain risk protection features offered by MIAX Options. Comments should be submitted within 21 days of publication in the Federal Register, which is expected shortly. SEC Release No. 34-84594.
MIAX Options Proposes Rule Changes Impacting Certain Proprietary Option Products
On November 14th, the SEC provided notice of a proposed rule change filed by MIAX Options that would amend certain rules in connection with the listing and trading of non-multi-listed option products that are proprietary to MIAX Options. Among other things, the proposal would adopt new definitions for the terms “Proprietary Product” and “Non-Proprietary Product,” adopt a new price protection provision, and adopt new rule text for processing certain orders during the Opening Process. Comments should be submitted within 21 days of publication in the Federal Register, which is expected shortly. SEC Release No. 34-84859.
NASDAQ OMX Group SEC Approves Nasdaq’s Listing and Trading Rules for Corporate Non-Convertible Bonds
On November 13th, the SEC issued an order granting accelerated approval to The Nasdaq Stock Market LLC’s (“Nasdaq”) amended proposal to list and trade corporate non-convertible bonds on Nasdaq. The SEC also requested comments on three amendments to the proposal. Comments on the amendments should be submitted within 21 days of publication in the Federal Register, which is expected shortly. SEC Release No. 34-84575.
National Futures Association NFA Requests Nominations for Public Representatives
On November 16th, the National Futures Association notified members that it is seeking nominations to fill the five Public Representative vacancies on its Board of Directors. Nominations should be submitted on or before January 4, 2019.
NYSE SEC Delays Action on NYSE Arca’s Proposed Changes to Equity Index-Linked Securities Listing Standards
On November 13th, the SEC designated December 30, 2018, as the date by which it will approve, disapprove, or institute disapproval proceedings for NYSE Arca, Inc.’s (“NYSE Arca”) proposed rule change to amend listing standards set forth in NYSE Arca Rule 5.2-E (j)(6)(B)(I) relating to criteria applicable to components of an index underlying an issue of Equity Index-Linked Securities. SEC Release No. 34-84576.
Judicial Developments
Investors in Fannie Mae and Freddie Mac Are Not Entitled to Share in Future Profits
Under the Housing and Economic Recovery Act, the government acts as conservator for Fannie Mae and Freddie Mac. In return, Fannie Mae and Freddie Mac had to give their net profits to the Department of Treasury in perpetuity. Some of Fannie Mae’s and Freddie Mac’s shareholders challenged the deal, which wiped out their expectation to share in future profits. On November 14th, the Third Circuit rejected the challenge, holding that the Act gave the government power to enter the deal, the deal complies with the Act’s requirements and state corporate law, and the relief sought would restrain the government’s powers as conservator. Jacobs v. Federal Housing Finance Agency.
Industry News
‘CAT’ Trading System Goes Live
The long-awaited consolidated audit trail (“CAT”) system went live on November 15th, with U.S. exchanges like Nasdaq, the New York Stock Exchange, and Cboe Global Markets reporting detailed market information. According to the Financial Times, “bugs” in the system are yet to be ironed out. This is the first phase of the CAT, which was devised following the 2010 flash crash. The second phase of the CAT is scheduled to begin in a year, with large brokers reporting.
Bipartisan Bill Introduced to Require SEC to Directly Regulate Proxy Advisers
On November 14th, Reuters reported that six U.S. senators have introduced a bipartisan bill that would require the SEC to directly regulate proxy advisory firms like Glass, Lewis & Co. and Institutional Shareholder Services, which advise investors on how to vote in corporate elections. This bill comes as corporate lobbyists such as the U.S. Chamber of Commerce are seeking to control “proxy advisers,” which they say have too much influence over corporate democracy.
DOJ and SEC Subpoena Snap for IPO Information
On November 13th, Reuters reported that that U.S. Department of Justice (“DOJ”) and the SEC have subpoenaed social media app maker Snap Inc. for information about its March 2017 initial public offering (“IPO”). The previously unreported federal inquiries follow an ongoing shareholder lawsuit in which investors are contending that Snap misled the public about how competition from Instagram had influenced the company’s growth.
SEC Wants More Detailed Corporate Disclosure on Impact of Brexit
On November 12th, The Wall Street Journal reported that SEC Chairman Jay Clayton is focusing on corporate disclosures regarding the risks associated with Brexit. Clayton told company controllers and accountants during the Current Financial Reporting Issues Conference in New York that he expects companies to look at the issue closely and share their views with the investment community.
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