Insights from Winston & Strawn

Last week was a very busy week for bank regulatory developments.

It began with the release of the Federal Reserve System’s audited financial statements. The Combined Financial Statements of the Federal Reserve Banks showed total assets of $4.484 trillion and total capital of $39.5 billion, a ratio of less than one percent.

That was followed by a speech by FDIC Vice Chairman Thomas Hoenig. Mr. Hoenig has been involved in bank supervision for almost 40 years, and his views are always thoughtful and insightful, albeit sometimes controversial. In his speech, which was delivered to the Federal Reserve Bank of New York’s Conference on Supervising Large Complex Financial Institutions, he suggested the need for periodic full-scope examinations of the largest banks, not just of smaller banks. He observed that regulators, in the case of the largest banks, as agency economists have come to play a greater role in bank supervision, have come to rely on the continual presence of on-site examiners and limited targeted reviews, relying on bank models, model validation reviews, stress tests, and updates from management, instead of reviewing records and asking hard questions. He further observed that crises inevitably are instigated by unpredictable events generated outside model assumptions and variables. He anticipated the objection that it would take an army of examiners to perform full-scope reviews of the largest banks, suggesting that sampling across a bank’s portfolio makes such examinations practical. Mr. Hoenig also suggested that the regulators should require banks to disclose publicly significant examination findings in order to increase market discipline, noting that many large banks are already trading below their market values, which may indicate that the market suspects there may be undisclosed issues. Finally, Mr. Hoenig addressed capital, asserting that the largest firms are the least well capitalized of any banking groups operating in the U.S.; he further asserted that risk-based capital has become a substitute for strong examinations to address risk. He noted that tangible leverage ratios of the largest U.S. banks is 5.73 percent, although bank losses in the 2008 crisis approximated seven percent of assets. Keeping with his reputation for outspokenness, Mr. Hoenig even suggested that moving away from risk-based capital measures toward tangible equity would free up billions of dollars from supervision budgets.

Then, the U.S. Supreme Court weighed in, acting on a petition for certiorari in the Madden v. Midland Funding case. In that case, the Second Circuit U.S. Court of Appeals had ruled that the sale of a loan by a national bank terminates the applicability of the bank’s home state’s usury ceiling, subjecting the loan in the hands of the buyer to the usury ceiling of the state in which the borrower is located. The basis for the Second Circuit decision is that the loan buyer is not entitled to the benefit of state law preemption by the National Bank Act; however, the decision did not address almost two hundred years of precedent that the usurious nature of a loan is only measured when the loan is made. The Second Circuit decision has been construed as a threat to the business model of the growing marketplace lending/financial technology (or “fintech”) industry, which partners with banks that originate loans and then quickly resell those loans to investors. Last week, instead of acting on the petition for certiorari, the Court asked the Office of the Solicitor General to file a brief reflecting the views of the United States on the matter. The Solicitor General likely will ask federal bank regulators their views on the matter. The delay this will engender is likely to push argument of the case into the next Court term if certiorari is granted, leaving the industry with further uncertainty.

Then, however, marketplace/fintech lenders were cheered to learn that a group of Congressmen led by Representatives Patrick McHenry (R-NC) and Kevin McCarthy (R-CA) plans to introduce a package of bills in Congress that would, among other things, preempt state licensing laws, thereby enabling direct non-bank lenders to avoid state-by-state licensing in all 50 states. Apparently, the package of bills also might limit the authority of the Consumer Financial Protection Bureau, which, skeptics have suggested, might make passage unlikely.

Then, the federal bank regulators and the Financial Crimes Enforcement Network in the U.S. Treasury Department issued guidance on how banks that issue general purpose prepaid cards and mobile apps must perform customer identification procedures on holders of such cards and apps. Covered cards include debit cards and apps that provide employee wages and government benefits. It is thought that ease of access to such cards and apps and the ability to use them anonymously make such cards and apps potentially vulnerable to criminal abuse. Limits on card value, limits on frequency of transfers, and limits on amount of transfers help mitigate these risks, but the regulators felt that more needs to be done. However, they limited customer identification obligations under the new guidance to prepaid cards and apps that provide a holder the ability to reload funds from sources other than the employer or government benefit payor or the ability to access overdraft features.

Also last week, an evenly divided United States Supreme Court, the first since the loss of Justice Scalia, then ruled, without a written opinion, that a borrower’s spouse who is a guarantor of a loan may not bring a claim of gender discrimination under the Equal Credit Opportunity Act, upholding a decision of the Eighth U.S. Circuit Court of Appeals that overturned thirty years of Federal Reserve Board interpretation of the statute. The decision does not create nationwide precedent because a majority of the Justices did not agree. However, the interpretation remains the law in the Eighth Circuit (Arkansas, Iowa, Minnesota, Missouri, Nebraska, North Dakota, and South Dakota).

Then, on Thursday, the Basel Committee on Banking Supervision, which is made up of banking regulators from around the world, released a consultative paper proposing to limit bank use of internal risk models to determine capital requirements and proposing to require a more uniform standard for measuring certain asset risk. The largest banking organizations use “advanced approaches” to measure the risk of their assets in determining their capital requirements, and it appears risk-weighting practices may vary among those organizations by as much as 20 percent; smaller banking organizations are required to use a standardized approach to measuring the risk of different classes of assets. The Basel proposal would not interfere with the use of models to measure credit risk, but would apply to use of models to measure other asset risk, such as that of equity holdings. The Basel Committee does not have the legal authority to change law, and its recommendations are not binding unless local bank supervisors eventually adopt them. The Committee will accept comments on its proposal until June 24, 2016.

Finally, on Thursday, four United States Senators from states (Colorado, Oregon, and Washington) that have legalized the recreational use of marijuana wrote to federal financial regulators asking the regulators to provide more clarity on how banks and credit unions can serve legal marijuana businesses. Many banks and credit unions in states that permit recreational or medical use of marijuana decline to serve such businesses because sale of marijuana is a federal crime and knowing receipt of the proceeds of a crime generally constitutes the separate crime of money laundering. In February 2014, the Financial Crimes Enforcement Network in the U.S. Department of the Treasury issued guidance to the effect that financial firms may serve marijuana businesses under certain circumstances. The four Senators noted that many marijuana businesses, because they are not served by banks or credit unions, operate on an all-cash basis, which creates certain public safety risks. The letter also asserts that banks and credit unions are not only denying services to marijuana businesses but also to businesses with a tangential connection to such businesses, e.g., real estate firms that lease premises to marijuana businesses.

Other than that, nothing happened in the world of bank regulation last week. Hopefully, the pace of bank regulatory developments will slow for a little while so that the industry may have time to digest fully these developments. However, it is rumored that next month the federal bank regulators and the Securities and Exchange Commission will revive their five-year-old executive compensation rulemaking proposal that, among other things, would require large banking organizations to withhold 50 percent of the bonuses of certain executives for at least three years and then reduce such bonuses for certain losses incurred during that period.

Feature: The Financial Advice Market Review

On March 14th, the UK Treasury and the Financial Conduct Authority (“FCA”) released the Financial Advice Market Review (“FAMR”), which contains 28 recommendations for legislative and regulatory reforms to help consumers in the UK get affordable financial advice. The UK Treasury and the FCA launched the review in August 2015 in an effort to address an “advice gap” created, in part, by reforms prompted by the Retail Distribution Review in 2013. According to a report in the Financial Times, the FCA adopted regulations that prevented independent financial advisers from earning commissions from providers of financial products to mitigate potential conflicts of interest. By creating a system in which consumers must pay directly for financial advice, the reforms have left independent financial advisers unwilling to advise anyone aside from the wealthy. The reforms have also left average consumers unwilling or unable to pay the average rate of £150 per hour for financial advice.

The FAMR report divides its recommendations into three key areas: affordability; accessibility; and liabilities and consumer redress. In targeting affordability, the FAMR recommends that the government consider legislative changes to narrow the definition of “regulated advice” so that it is based on a personal recommendation. In addition, the review recommends that the FCA develop new guidance to help firms provide services to support consumers in making their own investment decisions. The goal of this recommendation is to give firms more leeway in providing high-quality guidance services and more streamlined advice services to consumers without crossing the boundary into regulated advice. An investment company executive told The Guardian that the proposal to simplify the definition of regulated advice was “critical,” but expressed concern that allowing streamlined advice could open the door to poor industry practices.

Another key recommendation to increase affordability of financial advice involves encouraging the use of automated advice models, or “robo advice.” As an article in Reuters notes, the use of robo advisers is far less common in the UK than in the United States, where robo advisers cover approximately $19 billion in assets. The FAMR suggests that the FCA establish an Advice Unit to assist firms in developing automated advice models. This recommendation represents a boon to the UK fintech industry, according to an article in Forbes, which stands to benefit from eased restrictions surrounding the definition of regulated advice and the opportunity to develop tools for use by established companies and industry start-ups. Financial advisers are concerned that automated tools could cause user errors that result in investors making poor choices.

To address concerns regarding accessibility, the FAMR recommends that the UK Treasury assist consumers in accessing their pensions by creating a “dashboard” that consumers can use to track the various investments they accumulate during their working life. The FAMR also advocates permitting consumers to tap into pension funds prior to retirement to offset the cost of investment advice. This recommendation addresses concerns created by recent pension reforms that allow individuals to withdraw and invest these funds after age 55; however, many workers are taking advantage of these reforms without obtaining advice on how they invest the funds.

While its recommendations for affordability and accessibility have the potential to bring sweeping reforms to the financial advice sector, the FAMR proceeds cautiously in recommending changes that affect liabilities and consumer redress. The FAMR report suggests that the FCA explore changes to the Financial Services Compensation Scheme (“FSCS”) levy to address concerns raised by firms that the funding model is unpredictable and that costs are not distributed fairly. The FAMR also makes several recommendations to increase the transparency and best practices of the Financial Ombudsman Service. However, as The Telegraph notes, the FAMR declines to implement a 15-year “long stop” on financial advice complaints, concluding that it would weaken protections for consumers who purchase long-term financial products.

All of the key recommendations advanced by the FAMR are subject to consultation. The report recommends that the UK Treasury and the FCA work together to develop a framework for monitoring the development of the advice market and report on the progress made towards implementation in 12 months. A review of the outcome of the FAMR should be conducted by the UK Treasury and the FCA in 2019.

Banking Agency Developments


OCC Publishes Interim Final Rule on Expanded Examination Cycle Eligibility

On March 24th, the Office of the Comptroller of the Currency (“OCC”), the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation (“FDIC”) published an interagency interim final rule amending the regulations governing eligibility for the 18-month on-site examination cycle, pursuant to the Fixing America’s Surface Transportation Act (“FAST Act”). The rule makes qualifying 1- and 2-rated national banks, federal savings associations, and federal branches and agencies with less than $1 billion in total assets eligible for an 18-month (rather than a 12-month) examination cycle. OCC Bulletin.

OCC to Host Risk Governance and Credit Workshops in Virginia

On March 21st, the OCC announced that it will be hosting two workshops in Williamsburg, Va., at the DoubleTree by Hilton Williamsburg, April 19-20, for directors of national community banks and federal savings associations supervised by the OCC. A Risk Governance workshop will be held on April 19th and a Credit Risk workshop will be held on April 20th. OCC Press Release.

Agencies Release Guidance to Issuing Banks on Applying Customer Identification Program Requirements to Holders of Prepaid Cards

As mentioned above, on March 21st, the OCC announced that federal financial institution regulatory agencies (the Federal Deposit Insurance Corporation (“FDIC”), Federal Reserve Board, National Credit Union Administration, OCC, and Financial Crimes Enforcement Network (“FinCEN”) have issued guidance clarifying the applicability of the Customer Identification Program (“CIP”) rule to prepaid cards issued by banks. OCC Press Release.


FDIC Announces Community Banking Conference

On March 22nd, the FDIC announced that it will bring together community bankers, regulators, researchers, and others for a conference on community banking on April 6th in Arlington, Va. As part of the FDIC’s Community Banking Initiative, the conference will explore strategies for long-term success in the community banking sector.FDIC Press Release.

Federal Reserve

Federal Reserve Begins 2016 Survey of Finance Companies

On March 23rd, the Federal Reserve announced that it will begin its Survey of Finance Companies this month as part of the continuing effort to paint a comprehensive view of the range of companies in this sector of the U.S. financial system. The survey collects balance sheet data on major categories of household and business credit receivables and liabilities from finance companies. A letter from Federal Reserve Chair Janet Yellen is being sent to approximately 2,300 companies urging their participation in the survey. Federal Reserve Press Release.

Treasury Department Developments


FinCEN Answers FAQs regarding Prepaid Access

On March 24th, the Financial Crimes Enforcement Network (“FinCEN”) published additional responses to frequently asked questions regarding Bank Secrecy Act regulations relating to Prepaid Access. The guidance addresses, among other things, de minimis cash refund requirements under state law, the use of quick response codes in connection with Prepaid Access, the definition of “defined merchant” in the context of closed loop Prepaid Access, and policies and procedures reasonably adapted to avoid the threshold for sellers of Prepaid Access. FinCEN FAQs.

FinCEN Issues Guidance to Financial Institutions Based on the FATF Updated Lists of Jurisdictions with Strategic Anti-Money Laundering and Counter-Terrorist Financing Deficiencies

On March 21st, the FinCEN issued an advisory on the Financial Action Task Force (“FATF”)-identified jurisdictions with anti-money laundering (“AML”) and counter-terrorist financing (“CFT”) deficiencies. FinCEN Advisory.

U.S. and Argentine Financial Intelligence Units Restore Cooperation to Fight Terrorism and Organized Crime

On March 21st, FinCEN Director Jennifer Shasky Calvery signed a memorandum of understanding (“MOU”) with her Argentine counterpart, Mr. Mariano Federici, President of the Unidad de Informacion Financiera (“UIF”) of the Republic of Argentina. Ms. Calvery and Mr. Federici are leaders of their countries’ Financial Intelligence Units (“FIUs”), which are charged with collecting, analyzing, and sharing reports and information gained from their countries’ financial institutions to combat money laundering, terrorist finance, and organized crime. Information sharing between FinCEN and the UIF was suspended last year after an unauthorized disclosure of information received by the UIF from FinCEN. The MOU is a first step in reestablishing information sharing between the two FIUs. FinCEN Press Release.


CFPB Rule Broadens Qualified Mortgage Coverage of Lenders Operating in Rural and Underserved Areas

On March 22nd, the Consumer Financial Protection Bureau (“CFPB”) issued an interim final rule that broadens the availability of certain special provisions for small creditors that operate in rural or underserved areas. The new rule, which takes effect on March 31st, implements Congress’s recent legislation, the Helping Expand Lending Practices in Rural Communities (“HELP”) Act, that allowed more small creditors operating in rural or underserved areas to take advantage of these provisions. Comments on the interim final rule should be submitted on or before April 25, 2016. CFPB Press Release.

Securities and Exchange Commission

Requests for Comment

SEC Seeks Additional Comments on IEX’s Application for Registration as Exchange

The Securities and Exchange Commission (“SEC”) instituted disapproval proceedings on March 18th regarding Investors’ Exchange LLC’s (“IEX”) application for registration as a national securities exchange, indicating in the order that it will determine whether to grant or deny IEX’s application by June 18, 2016. The SEC also requested comments on several amendments to IEX’s Form 1, which include changes that would redesign IEX’s outbound routing functionality in response to concerns that it gives IEX an unfair advantage over other routing broker-dealers. Comments should be submitted on or before April 14, 2016. SEC Release No. 34-77406.

IEX Application Prompts SEC to Reconsider Definition of Automated Quotation under Regulation NMS

The SEC published a proposed interpretation on March 18th that would update the definition of automated quotation under Rule 600(b)(3) of Regulation NMS. Under the proposal, the SEC would interpret “immediate” when determining whether a trading center maintains an “automated quotation” for the purposes of Rule 611 to include response time delays at trading centers that are de minimis, whether intentional or not. The SEC proposed the revised interpretation in response to an increase in the speed of trading technology since the adoption of Regulation NMS and questions posed by IEX’s proposed intentional “speed bump” that would delay access to an exchange’s quotation by a sub-millisecond amount. Comments should be submitted on or before April 14, 2016. SEC Release No. 77407.


Investment Management Guides SBIC Advisers on FAST Act Registration Exemptions

The SEC’s Division of Investment Management issued new guidance on March 21st concerning Fixing America’s Surface Transportation (“FAST”) Act amendments to the Investment Advisers Act that impact the registration of investment advisers to small business investment companies (“SBICs”). The Division indicated that it would recommend amendments to Investment Adviser rules to reflect the FAST Act amendments; in the interim, the Division would not object to an adviser relying on the FAST Act amendments to the venture capital fund adviser exemption or the private fund adviser exemption, but such an adviser must file the reports required of an exempt reporting adviser on Form ADV. IM Guidance Update 2016-03.

Corporation Finance Updates C&DI on Description of Shareholder Proposals

The SEC’s Division of Corporation Finance updated its Compliance and Disclosure Interpretation (“C&DI”) regarding requirements under Rule 14a-4(a)(3) for the description of Rule 14a-8 shareholder proposals on a registrant’s proxy card. The revised C&DI, which was issued on March 22nd, indicates that both management and shareholder proposals must clearly identify and specifically describe the action on which shareholders will vote and provides examples of descriptions that would be considered inadequate. C&DI 301.01.

Exemptive Orders and No-Action Relief

SEC Grants Additional Exemptions from Tick Size Pilot Program Data Collection Requirements

The SEC’s Division of Investment Management granted limited exemptions under Rule 608(e) of Regulation NMS to Bats BYX Exchange (“BYX”), Bats EDGA Exchange (“EDGA”), and Bats EDGX Exchange (“EDGX”) on March 22nd from compliance with certain data collection requirements contained in the Plan to Implement a Tick Size Pilot Program. The orders exempt the three exchanges from identification requirements for Retail Investor Orders; certain time reporting requirements; the time used for performing certain calculations; the methodology for calculating Market Maker profitability; and the requirement to provided data collected under the Program to the SEC within 30 calendar days following the month-end of the initial data collection date.

China National Chemical Corporation Receives Exemptive and No-Action Relief in Tender Offer for Syngenta

On March 21st, the SEC’s Division of Corporation Finance issued an exemption from Rule 14d-11(e) and additional no-action relief to China National Chemical Corporation and CNAC Saturn (NL) B.V. in their proposed acquisition of Syngenta AG. Under the exemption, the purchaser will be permitted to pay for the Subject Securities tendered in the Subsequent Offer Period after the expiration of that period, in accordance with Swiss law and practice, even if payment occurs more than 20 U.S. business days after the date of tender. Additionally, the Division would not recommend enforcement action if the purchaser pays for the securities tendered during the Main Offer Period as promptly as practicable, and on or before the 10th SIX trading day after the Main Offer Period expires. SEC No-Action Letter.

SEC Extends SDR Rules Compliance Date

On March 18th, the SEC granted a temporary exemption from compliance with Securities Exchange Act rules governing security-based swap data repositories (“SDRs”); the exemption, which was set to expire on March 18, 2016, has been extended until June 30, 2016. In addition, the SEC’s order extends SDRs’ relief from complying with certain sections of the Exchange Act in the Dodd-Frank Act Effective Date Order so that the relief will expire either on the date the SEC grants registration to an SDR or June 30, 2016, whichever is earlier. SEC Release. No. 34-77400.

Speeches and Statements

Schnurr Says Challenges in Revenue Recognition Transition Underscore Difficulties in Creating Global Standards

In remarks before the 12th Annual Life Sciences Accounting and Reporting Congress on March 22nd, SEC Chief Accountant James V. Schnurr discussed the transition activities for the new revenue recognition standard, concerns regarding non-GAAP reporting measures, and the importance of collaboration among preparers, auditors and management in effectively designing and implementing internal control over financial reporting. Schnurr noted the continuing challenges associated with implementing the new revenue recognition standard and speculated that these challenges may call into question the feasibility of a single set of high-quality, global standards. Schnurr Remarks.

White Discusses Budget Priorities, Fiduciary Rule and Adviser Exams During House Testimony

In testimony before the U.S. House Appropriations Subcommittee on Financial Services and Central Government on March 22nd, SEC Chair Mary Jo White outlined the SEC’s priorities under its Fiscal Year 2017 budget request of $1.781 billion, which included increased examination of investment advisers, development of technology, and expansion of its investigative capabilities. According to a report in Think Advisor, White said she expects the SEC to issue its own uniform fiduciary rule for brokers and dealers, which she indicated would certainly diverge from the DOL’s fiduciary rule. White also indicated that the planned transition of examiners from broker-dealer exams to adviser exams will call for additional oversight of FINRA by the SEC.

Other Developments

SEC Will Consider Business Conduct Rules for SBS Dealers, Regulation S-K Disclosure Modernization at Open Meeting

The SEC will hold an open meeting on March 30, 2016, to consider whether to adopt rules regarding the business conduct standards for security-based swap (“SBS”) dealers and major security-based swap participants. The SEC will also consider whether to issue a concept release concerning the modernization of certain business and financial disclosure requirements in Regulation S-K. SEC Sunshine Act Meeting Notice.

SEC Announces Meeting of the Investor Advisory Committee

The SEC’s Dodd-Frank Investor Advisory Committee will meet on April 14, 2016, to discuss a recommendation regarding mutual fund cost disclosure and cybersecurity and related investor protection concerns, among other topics. The public may submit written statements to the Committee, which should be received on or before April 14, 2016. SEC Commission Notice 33-10058.

Staff Announcements

The SEC announced on March 21st that it has appointed Keith E. Cassidy as Deputy of the SEC’s Office of Legislative and Intergovernmental Affairs. Cassidy will succeed Tim Henseler, who will serve as Office Chief in the Division of Corporation Finance’s Office of Enforcement Liaison. SEC Press Release.

Commodity Futures Trading Commission

CFTC Issues Final Rule Amending Limited Trade Options Exemption

On March 21st, the Commodity Futures Trading Commission (“CFTC”) issued a final rule, effective immediately, to amend the limited trade options exemption in the CFTC’s regulations with respect to reporting requirements for trade option counterparties that are not swap dealers or major swap participants; recordkeeping requirements for trade option counterparties that are not swap dealers or major swap participants; and certain non-substantive amendments. 81 FR 14966.

Federal Rules Effective Dates

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Exchanges and Self-Regulatory Organizations

Financial Industry Regulatory Authority

FINRA’s Proposed Rule on Recruitment Practices and Account Transfers Gains SEC Approval

On March 23rd, the SEC approved the Financial Industry Regulatory Authority’s (“FINRA”) proposed rule change to adopt new rules that would require a recruiting firm to deliver an educational communication to former customers of its representatives highlighting key considerations in transferring assets to the recruiting firm, and the direct and indirect impacts of such a transfer on those assets. SEC Release No. 34-77430.

ICE Clear Credit LLC

ICE Proposes Revisions to its Operational Risk Management Framework

On March 21st, the SEC requested comments on a proposed rule change filed by ICE Clear Credit LLC (“ICE”) that would update its Operational Risk Management Framework to implement organizational changes related to its operational risk management processes. Comments should be submitted on or before April 15, 2016. SEC Release No. 34-77413.


NYSE Arca Proposes New Discretionary Pegged Order Based on IEX Proposal

On March 24th, the SEC provided notice of a proposed rule change filed by NYSE Arca, Inc. (“NYSE Arca”) that would amend its rules to add a new Discretionary Pegged Order for its Pillar trading platform. The new order is based on the Discretionary Pegged Order proposed by IEX in its application for registration as a national securities exchange. Comments should be submitted within 21 days of publication in the Federal Register, which is expected the week of March 28, 2016. SEC Release No. 34-77441.

Judicial Developments

In the Interest of Fairness, Panel Vacates $10 Million Fines Imposed on Securities Fraud Defendants

Two money managers were convicted, following a jury trial, of various offenses relating to securities fraud. The district court sentenced them to prison, fined them $10 million each, and imposed forfeiture and restitution against them for over $47 million. On March 23rd, the Second Circuit affirmed the judgments but vacated the $10 million fines in the interest of fairness and remanded for reconsideration, noting that the record is not at all clear that the defendants will be able to pay the $10 million criminal fines after satisfying their other criminal and civil repayment obligations. Tanaka.

Industry News

U.S. Indicts Seven Iranian Computer Specialists for Cyberattacks on Banks and a NY Dam

On March 24th, The New York Times reported that the Justice Department has unsealed an indictment against seven Iranian computer specialists who regularly worked for the country’s Islamic Revolutionary Guards Corps, charging that they were behind cyberattacks on dozens of American banks and that they attempted to take over the controls of a small dam in Rye, NY. The indictment also cited attacks on the New York Stock Exchange and AT&T. The New York Times.

SEC Rules that Exxon Mobil Must Allow Climate Change Vote

On March 24th, Reuters reported on the SEC ruling that Exxon Mobil must include a climate change resolution on its annual shareholder proxy. The SEC sent a letter to Exxon in which it stated that the oil producer cannot keep a proposal spearheaded by New York state’s comptroller from a full shareholder vote at the company’s annual meeting in May. If approved, the proposal would force Exxon to outline particular risks that climate change or legislation designed to limit it could pose to its ability to operate profitably. Exxon had argued that the proposal was vague and that it already publishes carbon-related information for shareholders, including a 2014 report on its website entitled, “Energy and Carbon – Managing the Risks.” The SEC determined that those reports do not go far enough. Reuters.

Ex-Valeant CFO Denies Claim That His ‘Improper Conduct’ Contributed to Misstatement of Financial Results

On March 21st, CFO reported that former Valeant Pharmaceuticals CFO Howard Schiller contended that he is not to blame for the incorrect recognition of $58 million in revenue that caused the drug company to restate its financial results. Valeant has said that it will restate its results for 2014 and 2015 after concluding that approximately $58 million in sales to specialty pharmacy company Philidor were incorrectly recognized when drugs were delivered to Philidor rather than when they were dispensed to patients. In a March 21st press release, Valeant placed some of the blame on Schiller. CFO.