The Office of Compliance Inspections and Examinations (OCIE) announced it is examining registrants’ compliance with key whistleblower provisions arising out of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act). Specifically, OCIE, a unit of the Securities and Exchange Commission (SEC), said that in examinations of registered investment advisers and registered broker-dealers, staff are reviewing their use of compliance manuals, codes of ethics, employment agreements and severance agreements – among other aspects of their operations – to determine whether provisions in those documents pertaining to confidentiality of information and reporting of possible securities law violations may raise concerns under Rule 21F-17 (the Rule) of the Securities Exchange Act of 1934. Implemented as a part of the Dodd-Frank Act and effective since 2011, the Rule prohibits “any action to impede an individual from communicating directly with the commission staff about a possible securities law violation, including enforcing, or threatening to enforce, a confidentiality agreement … with respect to such communications.” Protecting whistleblowers providing tips and evidence of wrongdoing to the SEC has been an ongoing priority for the agency, which has brought several enforcement actions recently charging violations of the Rule. As of July 2016, it had issued more than $85 million in monetary recovery to 32 whistleblowers since the program’s inception. See our recent article for a summary of whistleblower-related developments. The OCIE risk alert says staff are focusing on investment advisers’ and registered brokerdealers’ compliance manuals, codes of ethics, employment agreements and severance agreements to see if they contain provisions similar to those uncovered in recent enforcements that were found to violate the Rule. Examples have included provisions that purport to limit the types of information an employee may convey to the SEC or other authorities and those requiring departing employees to waive their rights to any individual monetary recovery resulting from reporting information to the government. Staff will also be on the lookout for problematic provisions that: Require an employee to represent that he or she has not assisted in any investigation involving the registrant. Prohibit any and all disclosures of confidential information, without any exception for voluntary communications with the SEC concerning possible securities laws violations. Require an employee to notify and/or obtain consent from the registrant prior to disclosing confidential information, without any exception for voluntary communications with the SEC concerning possible securities laws violations. Purport to permit disclosures of confidential information only as required by law, without any exception for voluntary communications with the SEC concerning possible securities laws violations. Due to OCIE’s stated focus on registered investment advisers’ and registered broker-dealers’ documentation, covered entities should review their compliance manuals, codes of ethics, employment agreements, severance agreements and other documents with a specific eye for language that may contravene whistleblower protection rules. Investors Left Waiting as English Court Blocks Brexit Background On June 23, 2016, the United Kingdom voted 52% in favor of leaving the European Union (the Referendum). Leaving the EU requires the U.K. to withdraw from the treaties forming the EU via a process set out in Article 50 of the Treaty of Lisbon (Article 50). In short, Article 50 requires an announcement of an intention to leave the EU by the U.K. which in turn starts the clock on a two-year period during which it is intended that any post-exit deals will be negotiated. Upon the expiry of the two-year period (unless unanimously extended by the European Council) the U.K. will no longer be subject to EU legislation or a member of the EU single market (Brexit). Prime Minister Theresa May has indicated that the government plans to trigger Article 50 in Q1 2017 without holding a vote in Parliament to approve that action. Following Brexit, the U.K. will interact with the EU either on the basis of new trade deals or, in the event that new deals cannot be negotiated prior to the expiry of the two-year period, as a nonmember state. Interactions with the EU as a nonmember state without negotiated deals could include tariffs on the sale of goods and services, financial transactions taxes on movement of capital, and restrictions on free movement of people both from the U.K. into the EU and vice versa. From the disquiet fueled by a slump in sterling and the absence of a clear plan and opening negotiating position from the government arose questions over the government’s power to trigger an exit from the EU at all. It is on this basis that a legal challenge was brought against the U.K. government in the High Court of England and Wales, claiming that the government is not permitted to trigger Article 50 without first seeking a vote in Parliament authorizing it to do so (the Opposition). The Opposition centers on two central constitutional issues: the sovereignty of Parliament (i.e., laws can only be enacted by or repealed by Parliament as a whole) and the Royal Prerogative (i.e., the government’s delegated powers from the crown allowing the government to conduct international affairs without the consent of Parliament). This challenge to the Royal Prerogative of the government is unprecedented and – given the precedent, principle and practice-based nature of the British constitution – is raising interesting constitutional questions in the court. Following a hearing in October, on Nov. 3, the High Court found in favor of the Opposition, effectively blocking the government’s right to invoke Article 50 at its whim and without the approval of Parliament. As expected, the government has appealed the ruling and a full hearing of the Supreme Court is scheduled for five days, beginning Dec. 5, 2016. Summary of Submissions In submissions, the government insists that the Royal Prerogative gives it the power to trigger Article 50 and begin the Brexit negotiation process, arguing that the triggering of Article 50 simply starts the negotiation of an international trade deal, something within the government’s powers. In order to support the view that triggering Article 50 is tantamount to legislative change (thus not needing parliamentary approval), the government has indicated that any final deal negotiated by the government will be presented to Parliament to be ratified. The Opposition has raised slightly more complex arguments to overcome the issue of Royal Prerogative, asserting that pursuant to the European Communities Act 1972 (the ECA), EU law is adopted into English law as a matter of course and, as a result, various EU laws confer rights on British citizens (such as the Charter of Fundamental Rights of the European Union). Taking this view, at the end of the two-year exit period, the Opposition argues that the triggering of Article 50 will have necessarily revoked the rights conferred on British citizens by European legislation (to the extent the ECA makes such legislation effective in the U.K.), directly changing a law enacted by Parliament. On this analysis, the triggering of Article 50 thus requires Parliament to authorize the government to trigger Article 50 as a matter of constitutional principle. With respect to the government’s assertion that Parliament will be consulted to ratify any final deal with the EU, the Opposition has highlighted that the mechanics of the Article 50 process are such that if Parliament were to reject any final deal, the U.K. would still leave the EU by default, and therefore Article 50 is in and of itself the mechanism for changing the ECA and should be subject to a vote in Parliament. Decision by the Court The constitutional question of Royal Prerogative and parliamentary sovereignty was central to the decision. The court reasoned that given the significance of the constitutional changes introduced by the ECA, it was unfathomable that Parliament, when enacting the ECA, had contemplated that the legislation would be open to repeal at the will of a future government without the need for a vote. The court held that when a constitutional issue is at hand, there is a presumption that silence will be interpreted as protecting constitutional principles rather than eroding them. Moreover, the more significant a constitutional principle, the greater the need for express, unambiguous statements permitting acts that may be viewed as contradictory to the constitutional backdrop. In the case of the sovereignty of Parliament, the court stated, there is no constitutional principle of greater significance and, therefore, where an act of government threatens to undermine parliamentary sovereignty, there must be unequivocal permission for the government to implement that act. Consequences Regardless of the outcome in the High Court, it was always expected that the case would be appealed to the Supreme Court due to the significance of the issues put before the court and lasting implications of Brexit. However, there was limited confidence regarding the government being blocked by the High Court before this case was heard and as such, the decision of the High Court has changed the playing field. Although any conclusive outcome will not be confirmed until the Supreme Court has ruled on the case, the following issues may be worth considering at this time: Until the Supreme Court finally rules on the case, it is unlikely that financial market participants will begin implementing Brexit contingencies. It is not clear what will happen if the government is blocked by the Supreme Court from triggering Article 50 without a vote in Parliament. Indications are that Parliament will vote not to trigger Article 50 without some form of deal on the table, but when asked to vote, some MPs may reconsider the significance of the Referendum, particularly given the Eurosceptic conservative pressure and Labour’s northern strongholds having voted largely to leave the EU. Any political negotiation to reach a majority vote in Parliament to trigger Article 50 would likely be long and difficult. If Parliament does vote not to trigger Article 50, it is unclear what the government will do. From a political perspective, it is possible that the government could call a general election with the intention of gaining a clear mandate to trigger Article 50 and implement Brexit. However, it would take time to call a general election and, given the relatively even split in opinion nationally regarding Brexit, a general election does not present itself as a low-risk strategy. The Brexit mechanism is, at a minimum, likely to take two years. In the event that the government is blocked from triggering Article 50 and has to explore alternatives, this time frame will slip further. It is not clear how markets will react to further uncertainty. In addition, it is also not clear whether the Supreme Court upholding the High Court ruling will cause financial institutions and other businesses to reconsider their Brexit contingency plans. Ultimately, the takeaway message at this stage is that uncertainty is the only thing that is certain in the short term. A decision from the Supreme Court is not expected until January 2017, and in any event, if the Supreme Court upholds the High Court decision, that period of uncertainty will simply continue. Auditor Faces SEC Proceeding Over Venture Fund Fees In the latest example of an independent auditing firm receiving unwanted regulatory attention, the Securities and Exchange Commission’s (SEC) Enforcement Division launchedadministrative proceedings against a PricewaterhouseCoopers audit partner in connection with his work on behalf of a venture capital fund. The allegations – part of a recent trend of enforcement actions against various gatekeepers and, in particular, auditors – demonstrate that the SEC’s emphasis on private funds’ compliance policies and procedures extends beyond the funds themselves to the work performed by various service providers to the funds. Independent auditors provide expert oversight of investment funds’ public disclosures and reporting practices, providing investors with essential information and reassurance that their interests are adequately protected. In particular, investors in private funds place significant reliance on the accuracy of the audited financial statements issued by the auditors of the fund. The SEC’s focus on the role of gatekeepers is particularly significant in the venture capital fund area, where most of the investment advisers are not subject to inspection by the SEC since many of them can rely on an exemption from registration with the SEC as an investment adviser. As a result, auditor activities have come under increased scrutiny from the SEC and other agencies. In this instance, the SEC alleged the auditor failed to follow generally accepted auditing standards while examining millions of dollars that were drawn down from a venture capital fund under the guise of “advanced” management fees. In addition, while serving as engagement partner for the independent audits of the fund’s financial statements from 2009 to 2012, the auditor allegedly “failed to inquire [whether the fund’s adviser] had the authority to take the unusual payments, nor did he scrutinize the rationale for the payments” and failed to ensure that the transactions were properly disclosed in the fund’s financial statements. The allegations were brought pursuant to Section 4C of the Securities Exchange Act of 1934 and Rule 102(e)(1)(ii) of the SEC’s Rules of Practice. Upon learning about the payments, the SEC indicated that the auditor failed to make appropriate inquiries into the reason for them despite their “significant and unusual nature,” representing a lack of due professional care. The San Francisco-based biotech venture capital fund at the center of the case sued its investment adviser and certain individuals that owned and controlled the investment adviser in 2015, claiming the misconduct caused it more than $30 million in losses as a result of funds that were embezzled to pay personal expenses and support other business entities over the course of several years. With respect to claims brought by the SEC, the investment adviser and these individuals reached an approximate $6 million settlement with the SEC in March 2016, in which they neither admitted nor denied the regulator’s allegations. PricewaterhouseCoopers has not been charged by the SEC. However, the firm stated it fully supports the auditor as he contests the SEC’s allegations, adding the payments the SEC is questioning “were repeatedly and accurately disclosed, year after year, in financial statements provided by the fund to its highly sophisticated investors.” The auditor now faces an administrative proceeding that could result in his suspension from appearing or practicing before the SEC as an accountant, including the audits of publicly traded companies’ financial statements. Other auditors have run afoul of regulators in recent months. For example, one firm agreed to pay $11.8 million to settle SEC allegations it disregarded red flags of deceptive accounting practices at an oil-services company, while another settled allegations of fraudulent audit reports regarding municipal bond offerings by a town in New York. These cases and others highlight the SEC’s and other regulators’ focus on the fundamental role of gatekeepers and independent auditors, in particular, within financial markets and underscore their importance in protecting investors by scrutinizing the operations and decisions of investment funds. Ending the 10b-5 Holdup: Aéropostale Rejects Debtor’s Attack on Traders In an August 2016 decision in the Aéropostale bankruptcy case, the Bankruptcy Court for the Southern District of New York held that allegations of insider trading did not justify equitable subordination and were not “cause” to deny a credit bid. The decision helps bridge the gap between the treatment of insider trading allegations in bankruptcy court and their treatment everywhere else. If followed, the decision would also eliminate the sometimes extortionate practices employed by issuers, under the guise of enforcing the anti-fraud provisions of the securities laws, to frustrate the exercise of creditor rights in the bankruptcy process. For more than six decades, it has been black-letter law outside of bankruptcy court that an issuer cannot sue those trading in its own securities under Securities Exchange Act § 10(b). Only a purchaser or seller in the class of traded securities has standing to pursue a private right of action under Rule 10b-5 (the “Rule”). The classic Supreme Court case of Blue Chip Stamps v. Manor Drug Stores remains the law of the land in this regard, despite suggestions that its holding be modified to allow issuers and others who have not traded in the securities to pursue nonmonetary relief under the Rule. In bankruptcy cases, however, debtors and other parties seeking to extort concessions from bondholders often use accusations of insider trading to threaten sanctions against the traders. These allegations are used purely for tactical advantage. The debtor has not been harmed. The shareholders have not been harmed. Neither would have standing outside of bankruptcy court to sue under 10b-5. Invariably, no bondholder who might have been harmed – no buyer or seller of the (allegedly) improperly traded security – appears to complain. Yet the mere allegation of insider trading – whether founded or not – threatens potential civil and even criminal sanction, which in the contemporary legal environment can have disastrous consequences for funds and other traders. This happened most notoriously in the Washington Mutual bankruptcy case, where the court initially held that a committee of equityholders had standing to complain of alleged insider trading by bondholders. This initial holding led to five months of litigation and a settlement providing material value to the shareholders on the condition that the court vacate its original holding so as to eliminate the precedent. Aéropostale is a useful corrective against this behavior. In Aéropostale, funds together with their affiliates, including one entity that was a supplier to the debtors (the funds and related entities are collectively referred to as the “Lender Related Entities”): Agreed to supply a substantial percentage of the debtor’s inventory, conditioned on minimum liquidity. Extended secured credit to the debtors, subject to the same liquidity condition. Held material amounts of the debtor’s stock. Had representatives on the board. Aéropostale’s liquidity cratered, and certain of the Lender Related Entities froze their credit line, disposing of their stock at the same time. Aéropostale and certain subsidiaries filed as debtors for Chapter 11 and moved to sell substantially all of their assets. The debtors sought to equitably subordinate the claims of the Lender Related Entities on the grounds that certain of the related funds had sold their stock in violation of Rule 10b-5, and argued that such alleged violation constituted “cause” to deny the funds the right to credit bid their credit line claims. Bankruptcy Judge Lane ruled against the debtors on both points. On equitable subordination, he held that insider trading was not sufficient to justify equitable subordination without “evidence in the record to establish tangible harm to the debtors or the creditors sufficient of equitable subordination.” The court reasoned: The Court does not disagree that ... a company has an interest in its confidential information ... However [the cases cited] ... do not address the type of harm that bankruptcy courts consider in an equitable subordination analysis – whether the misconduct “resulted in injury to the creditors of the bankrupt or conferred an unfair advantage on the claimant.” The Debtors argue that by selling their stock in Aéropostale, [the Lender Related Entities] undermined the integrity and the public’s regard of the Debtors ... But this is not the type of harm that courts are concerned about when determining whether to equitably subordinate a claim. The cases cited by the Debtors ... focus on the integrity of the marketplace and whether there has been harm from a public policy point of view and are thus not relevant to the inquiry before this Court. Once again, there has been no evidence of a harm here that could serve as a basis for relief in this bankruptcy case. Judge Lane also questioned whether the Lender Related Entities did in fact “misappropriate” the debtors’ nonpublic information when, in fact, the debtors had permitted their own officers to trade during the same period with the same information. Finally, Judge Lane rejected the debtors’ argument that insider trading constituted “cause” sufficient to deny the Lender Related Entities the right to credit bid their secured claims under Section 363(k). There was no allegation that the funds had obtained any unfair advantage over the sale process, and the evidence showed that the funds had not interfered in the sale process. Insider trading was therefore irrelevant. It is to be hoped that other courts pay attention to Aéropostale. If insider trading provides no cause of action to issuers outside Chapter 11, then, absent evidence of damage to the debtor, insider trading should not provide any cause of action inside Chapter 11. The Supreme Court limited suits under Rule 10b-5 to purchasers and sellers to avoid other plaintiffs, including issuers, from generating “largely groundless claim[s] ... representing an in terrorem increment of the settlement value.” Those concerns apply equally to the use of insider trading allegations by uninjured debtors and other nonparties to the relevant trades or trading markets. The More Things Change in Marijuana Investment Law, the More Things Stay the Same Voters in eight states legalized marijuana on November 8: recreational marijuana in California, Maine, Massachusetts and Nevada and medical marijuana in Arkansas, Florida, Montana and North Dakota. More than one-fifth of all Americans now live in states with legal recreational marijuana markets, a number that nearly quadrupled in size overnight. Investors hoping to capitalize on new opportunities nonetheless face continued risks. This article summarizes the current state of the market and highlights certain of the ongoing obstacles to investing in marijuana companies. Marijuana Investment Activity Update The total marijuana market (recreational and medical) is on pace to reach $7 billion in sales this year, and some analysts predict it could exceed $20 billion by 2020. Revenues will of course depend on how quickly new licenses are issued. States with new regimes do not have to recreate the wheel, in terms of tax rates, licensing procedures, safety requirements, etc., as early-adopter states (Colorado, Washington) have created the road map, and the new state propositions included detailed provisions for the regulation of marijuana. These states can therefore jump out of the gate with a running start once licenses are issued in 2017 or early 2018. Meanwhile, attitudes toward marijuana will also affect sales, and recent polling by Gallup shows 60% of Americans support legalizing marijuana, historically high levels. Finally, competition from the underground market, mostly on price, continues to be an issue, but the price of legal marijuana is falling as the number of retail dispensaries rises and the cost of production falls. Yet despite the momentum, marijuana companies still lack adequate access to capital and financial services. This is because marijuana’s federal illegality creates money-laundering issues and poses reputational and other risks for many traditional institutional investors. Although the big banks have not ventured into the market, there has been restrained interest, particularly in the medical marijuana field, that may develop once federal obstacles are removed. In the meantime, to fill the void, several specialized funds have completed or are currently seeking, in the wake of the state election results, to complete financing rounds, including Tuatara Capital, which successfully closed a $93 million raise, and Privateer Holdings, which used proceeds from a March 2015 $75 million raise to invest in Leafly (a review aggregator for marijuana strains), Marley Natural (a brand licensed from Bob Marley’s family) and Tilray (a Canadian medical marijuana company) and has recently raised another $40 million. This activity is part of a larger landscape of investment that one company (Viridian Capital Advisors) estimated to total more than 250 capital raises worth over $800 million in 2016. Equity raises substantially outnumbered debt raises, perhaps in part because marijuana businesses are generally prohibited by Section 280E of the Internal Revenue Code from taking business tax deductions, so interest payments on debt do not offset income (see below discussion), and perhaps because investors want to be positioned to capitalize on their investment in marijuana. Some investors are interested in the market but have focused on products and services ancillary to the marijuana industry because such investments have less regulatory uncertainty and business risk. Microsoft made headlines for announcing it was partnering with Kind Financial to provide software that will help marijuana-related businesses comply with “seed to sale” tracking laws and regulations. Marijuana agricultural equipment has seen much activity, headlined by Scotts Miracle-Gro’s 2015 $135 million acquisition of two hydroponics equipment manufacturers. Although many pharmaceutical companies have opposed liberalization policies, others have invested millions researching drugs containing synthetic cannabinoids, such as GW Pharmaceuticals’ Sativex. And in October, a marijuana-focused real estate investment trust filed disclosures with the Securities and Exchange Commission as part of a $175 million public offering, describing plans to acquire marijuana-growing facilities and engage in leaseback deals with marijuana companies, thereby freeing capital for marijuana companies to focus on growing and retail operations. Investors are also watching Canadian and Mexican policies with interest because of the potential for sales and because prohibition policies will become increasingly difficult to enforce as American neighbors liberalize their policies. In Canada, medical marijuana has been legal since 2001 and recreational marijuana is expected to be legalized by the spring of 2017. In Mexico, the Supreme Court in 2015 found the world’s first constitutional right for marijuana use, which, together with President Enrique Peña Nieto’s proposal to legalize marijuana, has bolstered legalization momentum in the country. Marijuana Regulatory Update The marijuana industry’s growth has been, and continues to be, held back by federal policy, including marijuana’s classification as a Schedule 1 drug, which means marijuana businesses: May generally not take business tax deductions because of Section 280E of the Internal Revenue Code (which prohibits deductions for businesses trafficking in controlled substances) – although Section 280E does not prohibit a deduction for cost of goods sold, it precludes all other traditional business expense deductions. Struggle to access banking services; those who do often pay steep fees to offset banks’ regulatory and compliance burdens. Have little recourse if federal enforcement policy changes. In response to a 2015 letter by eight U.S. senators calling for the DEA to review marijuana’s classification, the DEA in the summer of 2016 ultimately declined to reclassify marijuana, relying on analysis by the Department of Health and Human Services that there is no currently accepted medical use of marijuana. Despite this decision, now that more than half the states have legalized medical marijuana and scientific research will be easier going forward (the University of Mississippi no longer has a monopoly on producing marijuana to be used for clinical trials seeking federal approvals), marijuana may yet be reclassified in the future. Reclassification will also depend on President-elect Trump’s political appointments and policies – he has recently expressed support for states’ rights on medical marijuana, but he has also referred to Colorado’s regime as a “real problem” – so time will tell how the new government will enforce marijuana laws. Looking Forward We will continue to monitor this exciting and rapidly evolving market. If you have any questions about marijuana investment law or any of the contents of this article, please don’t hesitate to reach out to one of the authors or any of your Kramer Levin contacts. AMF Reforms Premarketing Rules to Draw Investment Funds to France The Autorité des marchés financiers (AMF), France’s stock market regulator, recently released a report produced in partnership with the French Asset Management Association (AFG) with the view to facilitate the development at the international level of those asset management players that have chosen to domicile their funds in France, thereby strengthening the pivotal role of Paris as a financial center. The report – a result of the French Routes and Opportunities Garden (FROG) workshop, consisting of AMF officials and industry representatives from prominent banks and investment funds – proposes seven concrete innovations, some of which are of a regulatory nature. Some of them have already been adopted by the AMF. Introduction of the Premarketing Regime One of them was the introduction of the “premarketing” concept. As a consequence, the AMF adjusted its policy to make it easier to launch new funds in France, adapting its definition of the act of marketing units or shares in undertakings for collective investment in transferable securities (UCITS) or alternative investment funds (AIF) in France. Indeed, managers often seek to communicate with potential investors to gauge the level of interest in potential investment funds. However, in order to do so, they needed to comply with regulations governing the marketing activities of funds, making it difficult for managers to conduct presentations or other exchanges with prospective investors without complying with extensive and potentially expensive regulatory burdens. As a result of the FROG group’s efforts, the revised rules now allow asset management companies to contact either a maximum of 50 potential investors or nonprofessional investors whose initial subscription is equal to or greater than €100,000 to assess their interest prior to the launch of a UCITS or an AIF. Doing so will not constitute marketing, so long as the investors are not given a subscription form and/or documentation containing any definitive information. The AMF also updated DOC-2014-04, its guide to regimes for marketing UCITS and AIFs, to include the following exemptions from marketing rules that are not linked with the launch of a fund: Participation by a management company in conferences or meetings of professional investors, provided the investors are not asked to invest in a specific product. OTC trades between investors. The purchase, sale or subscription of units or shares in UCITS or AIFs in the context of a management company’s compensation policy, units or shares in UCITS or AIFs on behalf of the management company’s management team, or carried interest shares. A management company responding to a request for proposal by a professional investor that is a legal entity. Other Recommendations The other recommendations included in the FROG report were: 1. Choose from a complete, unique catalogue of fund subscription solutions with a legislative change for the registered intermediary. 2. Benefit from a governance charter dedicated to investment funds, the main competitive advantage being asset management players are able to transform their common funds into a French SICAV (open-ended investment company) and thus satisfy a fundamental demand from investors for improved governance practices. 3. Develop one’s activities by having expanded delegation possibilities. 4. Apply adapted rules for the communication of management fees, with the possibility to split into two sections, financial management fees and administrative fees, taking into account international practices. 5. Manage in the best way one’s investment strategy, in line with the market conditions and in the best interest of holders, with French funds being able to benefit from an enhanced range of liquidity management tools, thanks to the addition of the redemption gates mechanism. 6. Decide on the absence or use of fund classification with the option for French managers to rely on the classifications defined in the French regulations as a marketing pitch for their funds and an investor information tool. AMF’s efforts to attract foreign investment to France also comes amid uncertainty surrounding the long-term effects of Brexit. Many global banks and funds are either considering relocating or have decided on relocating their current London-based operations to continental Europe, with Germany, Ireland and Luxembourg among the destinations being considered for those concerned about maintaining access to the European common market. On that theme, the FROG report suggests the French asset management ecosystem should be on the list, with its regulator, management companies, depositaries, intermediaries and financial services providers contributing to create an attractive environment that would allow funds to continue to benefit from marketing and cross-border management mechanisms of the European Union. It also states that the Paris financial center offers “legal certainty” in the launch of new funds. Although Brexit likely remains years away, the AMF’s efforts to attract investment funds to France demonstrates the highly competitive environment that has been created as a result of the referendum and the spread of UCITS and AIFs. As France seeks to attract private equity and venture capital funds to Paris, other financial hubs in the common market may consider offering similar incentives.