While Filings Are Down, Securities Litigation Remains Robust, As Major Cases Await Resolution, and Congress Creates New Litigation Risks for Public Companies and Their Directors and Officers
Client Alert | August 9, 2010
Printable PDFOn July 27, 2010, U.S. Securities and Exchange Commission ("SEC") Chairman Mary L.
Client Alert | July 28, 2010
After months of intense political wrangling, furious lobbying and cogitation of an unprecedented number of amendments ... industry was led to believe that we were close to a settled form of text for the proposed new EU Alternative Investment Fund Managers (AIFM) Directive. Alas, no. The European Parliament and the European Council have alternative versions of the Directive which are ...
Client Alert | July 26, 2010
On July 15, 2010, the Senate voted (60-39) to approve the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Act"), which is expected to be signed into law next week by President Obama. Included among the Act's sweeping changes to the regulation of the U.S.
Client Alert | July 16, 2010
I. Overview of the First Half of 2010Nearly a year and a half ago, Mary Schapiro took over as Chairman of the SEC with a promise to reinvigorate the Enforcement Division. Shortly thereafter, Robert Khuzami, the Director of the Division of Enforcement, announced a series of initiatives with the goal of making the Enforcement Division more effective. The first six months of this year have seen those initiatives take shape with a reorganization of the Enforcement Division into specialized units and the formal announcement of a cooperation initiative for individuals. But of greater significance is the extent to which the Enforcement Division is filing cases against major financial institutions and senior executives -- and without negotiating settlements in advance of fi
Client Alert | July 12, 2010
In a dramatic move, initially trailed this time last year, the Conservatives (now in coalition with the Liberal Democrats) have confirmed that they will in their term of service, abolish Britain's tripartite financial services regime, to replace it with a form of "twin peaks" style of regulation.
Client Alert | July 8, 2010
The American Jobs and Closing Tax Loopholes Act of 2010 (the "Bill") was passed by the House on May 28, 2010, and includes a provision that generally will tax a portion of the income and gains associated with "carried interests" as ordinary income. While the carried interest provisions of the Bill are substantially similar to legislation proposed last year, there are several important differences. The Senate is expected to take up the Bill during the week of June 7, after the Memorial Day recess.
Client Alert | May 28, 2010
On May 20, 2010, after three weeks of floor debate, five cloture votes, and nearly a year of development, the "Restoring American Financial Stability Act of 2010" passed the Senate by a vote of 59-39.
Client Alert | May 27, 2010
The continuing saga of the Alternative Investment Fund Managers Directive (the Directive) of the European Union is causing heartburn throughout the world's financial capitals.
Client Alert | May 19, 2010
After three and one-half years of litigation and an 18-day bench trial in San Francisco Superior Court, defendants Baker Capital, a private equity firm that invests in growth companies, and its related investment funds ("Baker"), achieved a complete victory against plaintiffs, former controlling stockholders, officers and directors of an internet retailer named Wine.com, Inc.
Client Alert | May 3, 2010
On March 22, 2010, a bill seeking general reform of financial industry regulation in response to the recent financial crisis was adopted on a party-line vote by the Senate Banking Committee as the "Restoring American Financial Stability Act of 2010." It subsequently was reported to the Senate as Senate Bill 3217 (posted on the Committee's website on April 15, 2010).
Client Alert | April 23, 2010
On 1 March, the UK Financial Services Authority ("FSA") published its new framework for financial penalty-setting.
Client Alert | April 1, 2010
On March 30, 2010, the Supreme Court issued its decision in Jones v. Harris Associates L.P., No. 08-586. The Court construed Section 36(b) of the Investment Company Act of 1940, which states that investment advisers to mutual funds are deemed to have a fiduciary duty with respect to the receipt of compensation for services and provides a private cause of action for breach of that duty.
Client Alert | March 30, 2010
Gibson Dunn is closely tracking government responses to the recent turmoil that has catalyzed a dramatic and rapid reshaping of our capital and credit markets.
Client Alert | March 17, 2010
On February 26, 2010, the Financial Crimes Enforcement Network (FinCEN) proposed revising the regulations implementing the Bank Secrecy Act to clarify which persons will be required to file Reports of Foreign Bank and Financial Accounts ("FBARs") and which accounts will be reportable. IRS Announcement 2010-16, 2010-11 IRB 1; IRS Notice 2010-23, 2010-11 IRB 1. The proposed rule would include a definition of United States persons and definitions of bank, securities, and other financial accounts in a foreign country. In addition, the proposed rule would exempt certain persons with signature or other authority from filing the FBAR. Finally, it would clarify that private equity funds and hedge funds are not "commingled funds" for which an FBAR filing
Client Alert | March 2, 2010
Today, the Securities and Exchange Commission voted 3-2 to adopt a short sale-related circuit breaker solution (the "Alternative Uptick Rule") to limit excessive short selling pressure on individual stocks. The SEC's press release is available at http://www.sec.gov/news/press/2010/2010-26.htm. The Alternative Uptick Rule, Securities Exchange Act Rule 201 of Regulation SHO, was formally proposed by the Commission in August 2009, see Release No.
Client Alert | February 24, 2010
On February 1, 2010, the Obama Administration released the fiscal year 2011 Budget of the United States. This update summarizes the principal tax provisions identified in the Budget. The prospects for passage of these proposals is uncertain and depends in large part on the priorities of Congress and the Administration and the need for specific revenue offsets. Moreover, the inclusion of a proposal in the Budget does not necessarily provide a clear path to enactment. We invite your questions about specific details of these and any other tax-related provisions of the Budget.
Client Alert | February 3, 2010
In our "Mid-Year Review of SEC Enforcement," we reviewed the transformation that had begun at the SEC's Division of Enforcement under the agency's new Chairman, Mary Schapiro, and the Division's new Director, Robert Khuzami, as well as the measurable increase in enforcement activity that had resulted. Since then, Mr.
Client Alert | January 12, 2010
In his presentation of Pre-Budget Report -- Securing the Recovery: Growth & Opportunity (PBR), released on Wednesday, the UK's Chancellor of the Exchequer, Alistair Darling, unveiled a one-off "bank payroll tax" of 50 per cent on bank bonus payments which takes effect immediately and runs (unless extended!) until 5 April 2010.In the 216 page report, HM Treasury proudly notes that the UK has been at the forefront of international financial regulatory reform through its Presidency of the G20.
Client Alert | December 11, 2009
New York partner Mark K. Schonfeld is the author of "Courting Cooperators: The SEC's Effort to Motivate Individual Cooperation" [PDF] published in the December 9, 2009 issue of BNA's Corporate Counsel Weekly.Reproduced with permission from Corporate Counsel Weekly Newsletter, 24 CCW 376(Dec.
Client Alert | December 9, 2009
Gibson, Dunn & Crutcher is closely tracking key legislative matters as the first session of the 111th Congress draws to a close. This update focuses on H.R.
Client Alert | December 8, 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 | November 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 | October 22, 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 | October 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 | September 17, 2009
On August 3, 2009, the Securities and Exchange Commission (the "SEC") published for comment new Rule 206(4)-5 under the Investment Advisers Act to prohibit "pay to play" arrangements by most investment advisers.
Client Alert | August 7, 2009
On August 7, 2009, the Internal Revenue Service ("IRS") announced that it was further extending the deadline for filing Reports of Foreign Bank and Financial Accounts ("FBARs") for calendar year 2008 and prior years for certain U.S. persons.
Client Alert | August 7, 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
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
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 June 24, 2009, the Internal Revenue Service ("IRS") announced that it was extending the June 30, 2009 deadline for filing Reports of Foreign Bank and Financial Accounts ("FBAR"), TD F 90-22.1, to September 23, 2009, for certain taxpayers, i.e., taxpayers that properly report and pay tax on 2008 income, but that only recently learned that they have FBAR filing obligations and do not have sufficient time to gather the information necessary to complete the form. The extension follows remarks made in mid-June by IRS representatives and confirmed on Friday, June 26, by an IRS spokesperson that, based on the instructions to the revised FBAR form that was issued in October 2008, foreign hedge funds and private equity funds are included in the definition of forei
Client Alert | June 29, 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
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
Congressman Sander Levin (D-Mich.) recently reintroduced legislation in the House that would tax income and gains associated with "carried interests" as ordinary income.
Client Alert | April 7, 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 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
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
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
Yesterday, Senators Charles Grassley (R-IA) and Carl Levin (D-MI) introduced the Hedge Fund Transparency Act ("HFTA"), which would require hedge funds, private equity and other private funds with $50 million or more in assets, or assets under management, to register with the Securities and Exchange Commission ("SEC"), notwithstanding the availability of exemptions from registration for privately offered funds under Sections 3(c)(1) and 3(c)(7) of the Investment Company Act of 1940 ("1940 Act"), as renumbered.
Client Alert | January 30, 2009
Responding to market conditions in September 2008, the U.S. Securities and Exchange Commission (the "SEC" or "Commission") and other regulatory and governmental authorities around the globe took dramatic steps to address the market turmoil resulting from potentially manipulative short selling. The measures released in September 2008 have been updated, particularly in the U.K.
Client Alert | January 19, 2009
I. Hedge Fund Enforcement Update A. Introduction 1. 2008--A Watershed Year in Hedge Fund Enforcement By virtually any measure, 2008 was a watershed year on the hedge fund enforcement front. Driven by the turmoil that has reshaped our capital and credit markets, enforcement efforts soared to new heights.
Client Alert | January 9, 2009
In connection with regulatory reform legislation anticipated to be introduced in the 111th Congress, consideration will be given to enacting proposals to further legislate the swaps market and, in particular, credit default swaps ("CDS") and the over-the-counter ("OTC") derivatives market.
Client Alert | December 23, 2008
Washington, D.C. of counsel Susan Grafton and associate S. Joy Dowdle are the authors of "Adapting to the Regulatory Clamp Down on Short Selling: The Investment Manager's Perspective" [PDF] published in the November 2008 issue of IAA"s Compliance Corner.
Client Alert | November 3, 2008
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 | October 23, 2008
Many of our clients have been facing unprecedented new challenges as a result of the dramatic economic events that have occurred over the last month. The financial markets continue to evolve in Washington on a real-time basis and the daily volatile gyrations in the stock markets around the world have led to uncertainty, anxiety and issues of first impression for many of our clients. We believe that the events that occur in the coming months will shape not only the financial futures of many of our clients and their competitors, but also the world economy.
Client Alert | October 20, 2008
As a result of President Bush's signing of the Emergency Economic Stabilization Act of 2008 (H.R. 1424), the Securities and Exchange Commission's Division of Trading and Markets announced today that the prohibition on short sales in the securities of financial institutions will expire at 11:59 p.m.
Client Alert | October 3, 2008
* Updated to reflect additional regulatory guidance and action. Responding to current market conditions, the U.S. Securities and Exchange Commission (the "SEC" or "Commission") and other regulatory and governmental authorities around the globe have taken dramatic steps to address the current market turmoil resulting from potentially manipulative short selling.
Client Alert | September 26, 2008
On Friday, September 19, 2008, the Securities and Exchange Commission announced a "sweeping expansion" of its ongoing investigation of possible manipulation of the price of equity securities of financial institutions, to determine whether certain market participants engaged in illegal activity to enhance the value of short positions. SEC Chairman Christopher Cox stated that the investigation will look into the activity of investors with significant short positions in equity markets and positions in credit default swaps. This expansion, according to Chairman Cox, supplements ongoing SEC investigations concerning the origination and securitization of sub prime mortgage loans, the involvement of credit rating agencies and insurers in the securitization proce
Client Alert | September 24, 2008