In his first speech as Director of the SEC's Division of Enforcement, on August 5, 2009, Robert Khuzami announced changes underway in the Division's procedures and organization that are intended to strengthen the agency's enforcement program. Mr.
Client Alert | August 6, 2009
On July 27, 2009, the Securities and Exchange Commission took several actions relating to short selling in anticipation of the expiration of interim final temporary Rules 10a-3T under the Securities Exchange Act of 1934 (the "Exchange Act") and Rule 204T of Regulation SHO. The full text of the press release can be found here. The most significant development is that, after July 31, 2009, institutional investment managers will no longer be required to report short sale and short position information to the SEC on Form SH. The following is a summary of the SEC's actions.Expiration of Short Sale and Short Position ReportingIn October 2008, the SEC adopted interim final temporary Rule 10a-3T, which requires certain institutional investment managers to make dis
Client Alert | July 30, 2009
On July 22, 2009, the Securities and Exchange Commission (the "SEC") unanimously voted at its open meeting to propose for public comment a rule and amendments to various existing rules under the Investment Advisers Act of 1940, as amended (the "Advisers Act"), intended to curtail so-called "pay to play" practices involving investment advisers.
Client Alert | July 28, 2009
In a settled enforcement action instituted July 21, 2009, the SEC provided significant guidance on the filing obligations of institutional investors under Section 13(d) of the Securities Exchange Act of 1934. Specifically, the guidance addresses the meaning of the "ordinary course of business" prong of Rule 13d-1(b)(1)(i) and reflects an expansive interpretation of Section 13(d). The SEC's administrative order found that the respondent, a registered hedge fund adviser, Perry Corp., should have filed a Schedule 13D within 10 days of acquiring beneficial ownership of more than five percent of the shares of Mylan Inc.
Client Alert | July 27, 2009
In a case that raises important questions about the nature and scope of the remedy provided in Section 304 of Sarbanes-Oxley Act of 2002, the SEC on July 22, 2009, filed a civil suit seeking to "claw back" compensation from a former chief executive officer who has not been accused of any securities law violation. The case is SEC v. Jenkins, Case 2:09-cv-01510-JWS (D.
Client Alert | July 27, 2009
On 16 July 2009, Sir David Walker, Senior Adviser at Morgan Stanley International, who has been commissioned by the UK Secretary of State for Business, Enterprise and Regulatory Reform and HM Treasury to undertake an independent review of corporate governance of the UK banking industry, published his consultation document -- A Review of Corporate Governance in UK Banks and Other Financial Industries.
Client Alert | July 23, 2009
Yesterday, the Obama administration (the "Administration") delivered to Congress draft legislation, the Private Fund Investment Advisers Registration Act of 2009. Under the proposed legislation, managers of most hedge funds, private equity funds and venture capital funds in the U.S. would be required to register with the Securities and Exchange Commission (the "SEC") under the Investment Advisers Act of 1940 (the "Advisers Act"). The existing exemption for investment advisers with fewer than 15 clients would be eliminated, and specific information reporting would be required for advisers to any "private fund." A limited exemption will continue to apply to certain "foreign private adviser
Client Alert | July 16, 2009
On July 10, 2009, the Obama Administration delivered to Congress draft legislation to implement its regulatory reform agenda with respect to financial markets regulation. The draft "Investor Protection Act of 2009" largely tracks the Administration's June 17, 2009 framework for Financial Regulatory Reform.Although we are only now seeing the Administration's rough framework for regulatory reform, we can, and should, begin to anticipate the implications of the proposed changes to financial markets regulation with respect to compliance challenges, customer exposure, risk management, and operational burdens.In her article, Financial regulatory reform: anticipating the compliance challenges for broker-dealers, for Complinet (July 15, 2009), Susan Grafton of Gibson Dunn discusses
Client Alert | July 15, 2009
The Gibson, Dunn & Crutcher Financial Markets Crisis Group is closely tracking government responses to the turmoil that has catalyzed a dramatic and rapid reshaping of our capital and credit markets.
Client Alert | July 15, 2009
On 6 July 2009, the UK's financial services regulator, the Financial Services Authority (FSA), continued its "credible deterrence philosophy" by issuing a consultation paper (CP09/19) outlining proposals to change its current policy on determining the level of civil financial penalties imposed for regulatory breaches. These new proposals are consistent with the FSA's other recent indications that it can no longer be seen as a light-touch enforcer (see our previous client update: "The UK Financial Services Authority Demonstrates "Credible Deterrence Philosophy" with Prosecutions").What is somewhat startling about the FSA's proposals is quite how harsh they could potentially be in practice, for both corporations and individuals, but particularly for indivi
Client Alert | July 10, 2009
On June 10, 2009, the Securities and Exchange Commission ("SEC") released a proposal to amend the SEC's proxy rules to permit shareholders to nominate directors in a company's proxy materials (also known as "proxy access"). This significant proposal has the potential to dramatically change the manner in which corporate directors are nominated and elected. The proposal contains extensive requests for comment, and the SEC Commissioners have urged interested parties to provide feedback on the proposal. This alert discusses significant aspects of the proposal upon which companies and directors may wish to comment. The comments received on these issues are likely to have a substantial effect on any final rules adopted by the SEC. Accordingly,
Client Alert | July 10, 2009
Without question, the first six months of 2009 have been a period of sharply increased enforcement activity at the Securities and Exchange Commission. The financial crisis, the new administration, new SEC leadership, increased funding and the focus of Congress and the media have all combined to encourage heightened government scrutiny. And even though it has only been a few months since a new Chairman took office, already there are tangible signs that the SEC has taken a more aggressive enforcement posture. In this alert, we review the changes the new SEC leadership has instituted and is considering, the observable impact of the new administration on enforcement activity and significant cases in key areas that reflect the agency's evolving enforcement program.I.
Client Alert | July 9, 2009
At an open meeting held on July 1, 2009, the Securities and Exchange Commission ("SEC") approved two sets of rule proposals and one final rule amendment. These include: Proposed amendments to the SEC's proxy rules to implement legislation requiring companies that have received financial assistance under the Troubled Asset Relief Program ("TARP") to hold an advisory shareholder vote on executive compensation (also known as "Say on Pay");Proposed amendments to the SEC's proxy rules enhancing compensation and corporate governance disclosures and addressing certain rules governing proxy solicitations; andApproval of changes to New York Stock Exchange ("NYSE") Rule 452 that eliminate broker discretionary voting in director elections.The SEC un
Client Alert | July 2, 2009
"What do we want?" "Gradual Change!"; "When do we want it?" "In due course." So goes the apocryphal English protest cry. There is nothing gradual about the proposals afoot to centralise policy-making on prudential supervision of financial firms at an EU level.
Client Alert | June 22, 2009
Washington, D.C. partner Susan K. Grafton and New York associate Dana H. Hamada are the authors of "Survey of Financial System Regulatory Reform Proposals and Legislation" [PDF] prepared for the ALI-ABA Broker-Dealer Regulation Seminar that took place in New York on June 18, 2009.
Client Alert | June 18, 2009
The Gibson, Dunn & Crutcher Financial Markets Crisis Group is tracking closely government responses to the turmoil that has catalyzed dramatic and rapid reshaping of our capital and credit markets.
Client Alert | June 17, 2009
The UK Financial Services Authority's new regime for disclosure of positions in contracts for difference (CfDs) came into force on 1 June 2009.
Client Alert | June 5, 2009
For the past several months, we have advised you of various plans announced by the Securities and Exchange Commission ("SEC") to revitalize its enforcement activities (see Gibson Dunn's May 11, 2009 Update on newly appointed Direct of Enforcement Robert Khuzami's plans). Demonstrating the adage that actions speak louder than words, the SEC on June 1, 2009 obtained a jury verdict against the former CEO of Kmart Corp for misleading investors about inventory levels and liquidity levels as the company was approaching a January 2002 bankruptcy filing. The SEC proceeded with the trial even though it dealt with conduct that took place over seven years ago, an arbitration panel had absolved the CEO of similar charges in 2005, and after the CFO had consented to
Client Alert | June 4, 2009
This week Pequot Capital Management announced that it will wind down in the wake of public disclosures that the government has reopened a previously closed investigation of potential insider trading. The announcement is a stark reminder of the high costs that can be imposed by a pending government investigation irrespective of the outcome and reinforces the need to (1) prevent investigations, and, if they cannot be avoided, (2) conclude them successfully and rapidly.
Client Alert | May 28, 2009
Today, the Securities and Exchange Commission ("SEC") approved the publication of proposed amendments to the SEC's proxy rules to permit shareholders to nominate directors in a company's proxy materials (also known as "proxy access"). The proposals include: (1) a federal proxy access right that would preempt state law and a company's charter and bylaws; and (2) an amendment to Rule 14a-8 to permit proxy access shareholder proposals.
Client Alert | May 20, 2009
On May 14, 2009, the U.S. Securities and Exchange Commission held an open meeting to consider proposed amendments to rule 206(4)-2 under the Investment Advisers Act of 1940. According to Andrew J.
Client Alert | May 15, 2009
This May 2009 alert focuses on Congress' expected creation of an independent commission to examine the domestic and global causes of the U.S. financial and economic crisis.
Client Alert | May 13, 2009
The Securities and Exchange Commission's newly-appointed Director of the Division of Enforcement, Robert Khuzami, outlined a plan of aggressive enforcement of securities laws during his testimony to the U.S.
Client Alert | May 11, 2009
The New York Stock Exchange has amended its immediate release policy governing listed companies' disclosure of material information. As amended, the policy, which is set forth in NYSE Rule 202.06, allows companies to comply with the policy by using any method of disclosure allowed by Regulation Fair Disclosure (FD), rather than exclusively by press release as under the former rule.
Client Alert | May 6, 2009
The Gibson, Dunn & Crutcher Financial Markets Crisis Group is closely tracking government responses to the turmoil that has catalyzed a dramatic and rapid reshaping of our capital and credit markets.
Client Alert | May 4, 2009
The European Union (EU) has become the first jurisdiction to propose a comprehensive framework for direct regulation and supervision of the entire investment funds industry – the proposed Directive on Alternative Investment Fund Managers.The EU already has an established regime for regulating investment funds known as UCITS (Undertakings for Collective Investment in Transferable Securities).
Client Alert | May 1, 2009
The financial crisis and change in Administration have created a "perfect storm" in which significant changes in corporate governance are unfolding at both the state and federal level. As discussed below, Delaware has enacted changes in its General Corporation Law concerning stockholders' ability to nominate director candidates in a company proxy statement and to provide for reimbursement of proxy contest expenses, among other things, and the Securities and Exchange Commission ("SEC") is considering its own proxy access rule, as well as enhanced disclosure requirements relating to directors' experience, board leadership, risk oversight and compensation. In addition, we anticipate that corporate governance legislation will be introduced in Congress shortly.
Client Alert | April 30, 2009
On March 25, 2009, the Securities and Exchange Commission's Division of Corporation Finance (the "Division") issued new and revised interpretations regarding the operation of pre-established trading plans and instructions designed to satisfy Rule 10b5-1(c) under the Securities Exchange Act of 1934 (the "Exchange Act"), which provides an affirmative defense from insider trading liability. These revisions were made in the context of the Division updating its Compliance and Disclosure Interpretations ("CDIs") under the Exchange Act to include the Division's existing Rule 10b5-1 interpretations (which were issued as "frequently asked questions" in May of 2001 and December of 2000). The Exchange Act CDIs are available at http://www.sec.go
Client Alert | April 24, 2009
The Financial Services Authority (FSA), the UK's financial services regulator, has in the past month given three signals it is no light-touch enforcer.
Client Alert | April 9, 2009
Today, the Securities and Exchange Commission unanimously approved publication of a release proposing multiple price tests and circuit breakers to limit short selling.
Client Alert | April 8, 2009
The Financial Accounting Standards Board ("FASB") voted on April 1 to issue and on April 2 voted to prepare final drafts of additional staff guidance that will modify a number of financial accounting standards relating to:1.
Client Alert | April 3, 2009
The Gibson, Dunn & Crutcher Financial Markets Crisis Group is closely tracking government responses to the turmoil that has catalyzed a dramatic and rapid reshaping of our capital and credit markets.
Client Alert | April 2, 2009
SummaryOn March 30, 2009, the SEC staff issued two no-action letters regarding the solicitation of proxies to vote in the election of directors in a situation where two dissident shareholders had submitted separate "short slates" of director nominees for election at the same annual meeting. The no-action letters permit a soliciting shareholder to "round out" its short slate of directors with the nominees of other dissident shareholders, under an expansive reading of the proviso to the "bona fide nominee" rule in Exchange Act Rule 14a-4(d). Such proviso had historically been interpreted only to permit a soliciting shareholder to "round out" its short slate with nominees of the registrant.The effect of the no-action letters is to facilit
Client Alert | April 2, 2009
Last week, the Department of the Treasury and the FDIC announced their Public-Private Investment Fund (PPIF) concept, intended to remove troubled assets from banks. Significant details of the proposal remain undefined, and public comment is sought.As announced, private investors and the Treasury will invest side-by-side in PPIFs, and will share in both profits and losses. Treasury financing also will be available. Additionally, PPIFs may issue FDIC-guaranteed debt. Details of the capitalization of PPIFs, the terms of the potential investments and financing, the accounting and regulatory implications for banks that sell assets to PPIFs and related matters have not been finalized. Similarly, while officials have stated that compensation limits will not apply to
Client Alert | March 30, 2009
The staff of the New York Stock Exchange (NYSE) has corrected its advice that was the basis for our earlier client alert on this subject, so we are reissuing this alert to reflect the NYSE's corrected advice.
Client Alert | March 26, 2009
The Gibson, Dunn & Crutcher Financial Markets Crisis Group is closely tracking government responses to the turmoil that has catalyzed a dramatic and rapid reshaping of our capital and credit markets.
Client Alert | March 23, 2009
The Securities and Exchange Commission ("SEC") recently published for comment a proposed amendment to New York Stock Exchange LLC ("NYSE") Rule 452, Giving Proxies by Member Organizations, that would limit the ability of brokers to cast discretionary votes in uncontested director elections. The result could be significant for many issuers, especially those that have adopted a majority voting standard in uncontested director elections. Because Rule 452 applies to brokers, the proposed amendment, if adopted, will impact not only issuers listed on the NYSE, but also issuers listed on other exchanges such as NASDAQ. Set forth below is a summary of the proposed amendment, as well as practical considerations for issuers and others to weigh in commenting on t
Client Alert | March 13, 2009
Washington, D.C. partner Barry R. Goldsmith, associates Daniel H. Ahn and Brian D. Boone are authors of "Hedge Funds in the Crosshairs: The Year in Review" [PDF] published in the March 11, 2009 issue of BNA's Securities Law and Regulation.
Article | March 11, 2009
Significant proposed amendments to the Delaware General Corporation Law dealing with proxies and stockholder meetings, among other items, have been submitted to the Delaware State Bar Association for approval.
Client Alert | March 5, 2009
In recent years, Securities and Exchange Commission ("SEC") enforcement investigations have become extended and enforcement actions have often been commenced five years or more after the events that form the basis for the claim. As a result, lawyers for persons who are involved in SEC investigations are frequently asked to sign agreements tolling the running of the statute of limitations. On February 26, 2009, the United States Court of Appeals for the Seventh Circuit issued a significant decision in Securities and Exchange Commission v. Koenig (Docket No.
Client Alert | March 5, 2009
The Gibson, Dunn & Crutcher Financial Markets Crisis Group is closely tracking government responses to the turmoil that has catalyzed a dramatic and rapid reshaping of our capital and credit markets.
Client Alert | March 4, 2009
The Gibson, Dunn & Crutcher Financial Markets Crisis Group is closely tracking government responses to the turmoil that has catalyzed a dramatic and rapid reshaping of our capital and credit markets.
Client Alert | February 25, 2009
The Gibson, Dunn & Crutcher Financial Markets Crisis Group is closely tracking government responses to the turmoil that has catalyzed a dramatic and rapid reshaping of our capital and credit markets.We are providing updates on key regulatory and legislative issues, as well as information on legal issues that we believe could prove useful as firms and other entities navigate these challenging times.
Client Alert | February 25, 2009
New York partner Mark K. Schonfeld is the author of "Back to the Future: Chairman Schapiro Ends Pilot Program for Corporate Penalties, Eliminates Commission Pre-authorization, Allows Staff to Negotiate" [PDF] published in the February 23, 2009 issue of BNA Inc.'s Securities Regulation and Law.
Client Alert | February 23, 2009
The American Recovery and Reinvestment Act of 2009 (the "Stimulus Act") is expected to be signed into law by President Obama today. The approximately 11oo pages of the Stimulus Act include a number of tax provisions.
Client Alert | February 17, 2009
The Gibson, Dunn & Crutcher Financial Markets Crisis Group is closely tracking government responses to the turmoil that has catalyzed a dramatic and rapid reshaping of our capital and credit markets.
Client Alert | February 17, 2009
The Gibson, Dunn & Crutcher Financial Markets Crisis Group is tracking closely government responses to the turmoil that has catalyzed dramatic and rapid reshaping of our capital and credit markets.
Client Alert | February 10, 2009
First Steps in "Empowering" the Enforcement StaffIn her first speech as Chairman of the Securities and Exchange Commission, Mary Schapiro announced today two changes to the enforcement process at the SEC intended to "empower" the staff of the Enforcement Division. First, Chairman Schapiro announced an end to a two-year "pilot" program which had required the Enforcement staff to obtain a special set of approvals from the Commission in cases involving civil monetary penalties against public companies as a sanction for securities fraud. Second, Chairman Schapiro announced a plan to provide more rapid approval of formal orders of investigation authorizing the staff to issue subpoenas. Although these changes affect only the internal procedures of
Client Alert | February 6, 2009
The Gibson, Dunn & Crutcher Financial Markets Crisis Group is tracking closely government responses to the turmoil that has catalyzed dramatic and rapid reshaping of our capital and credit markets.
Client Alert | February 4, 2009
Our Program:This complimentary briefing addresses the latest challenges in-house counsel, directors and senior executives face in developing, implementing and monitoring effective compliance programs in the current environment of financial crisis coupled with a change of administration and the shift in programs and priorities that are sure to follow.
Client Alert | February 3, 2009