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May 15, 2018 |
CFTC Chairman and Chief Economist Co-Author “Swaps Reg Reform 2.0”

Click for PDF On April 26, 2018, Commodity Futures Trading Commission (“CFTC”) Chairman J. Christopher Giancarlo and the CFTC’s Chief Economist Bruce Tuckman released a co-authored white paper titled Swaps Regulation Version 2.0: An Assessment of the Current Implementation of Reform and Proposals for Next Steps (“White Paper”),[1] which analyzes and assesses the CFTC’s current implementation of the swaps reforms promulgated under the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”).[2]  The White Paper focuses on the following five specific areas of Dodd-Frank swaps reform:  clearing and central counterparties (“CCPs”); swaps data reporting; swaps execution rules; swap dealer capital requirements; and the end-user exception.  The paper’s title is intended to draw an analogy between the need to further refine the CFTC’s swaps regulatory reform under Dodd-Frank and the process undertaken by technology companies when updating or upgrading their software applications.  Indeed, the authors suggest that the CFTC—like a technology company—needs to assess where its Dodd-Frank swaps regulations are working, where those regulations require “updates” and where they require an upgrade or a complete overhaul. As part of its analysis and assessment, the White Paper primarily cites to academic research and market activity in reaching certain conclusions regarding the progress made to date and areas for improvement in the CFTC’s implementation of Dodd-Frank swaps reform.  The authors also cite to the CFTC’s four years of regulatory experience in implementing Dodd-Frank swaps reform in the United States as the basis upon which they make certain recommendations “to recognize success, address flaws, recalibrate imprecision and optimize measures. . . .”[3] Although the White Paper is comprehensive in its scope, it is noteworthy what the paper does not cover.  For instance, while the White Paper includes the authors’ recommendations for further changes to the CFTC’s swaps regulations and guidance, the paper does not propose detailed or prescriptive modifications to specific CFTC rules.  Thus, the paper describes at a high level what the authors envision would result in regulations that are more “economy-focused” and “what’s in the best interest of the markets.”[4] Additionally, the authors make clear that the White Paper does not express the views of the full commission.  Interestingly, however, the White Paper does include significant input from CFTC senior staff across all operating divisions (i.e., the directors of the CFTC’s Division of Market Oversight, the Division of Swap Dealer and Intermediary Oversight, and the Division of Clearing and Risk). Further, the White Paper does not discuss other important Dodd-Frank swaps reform topics such as position limits, the CFTC’s swap dealer de minimis threshold, the bounds of the CFTC’s cross border authority or how best to harmonize the CFTC’s swaps ruleset with the security-based swaps ruleset of its sister agency, the Securities and Exchange Commission. Lastly, the White Paper does not outline the timetable for any proposed changes to the CFTC’s swaps regulations.  In unveiling the White Paper at an industry conference, Chairman Giancarlo noted that the CFTC will likely begin issuing proposals in the areas of trading and swaps data reporting in the early part of the summer of 2018.  Chairman Giancarlo further noted with respect to timing that, “We’re not in the wake of a crisis right now — we need to take the time to get this right.  We have an ambitious timetable, and we will get this done, but we will do this right.”[5] In this client alert, we have summarized below some of the key takeaways from each of the five topical areas covered in the White Paper. Please contact us if you have any questions regarding the White Paper or the CFTC’s widely anticipated reforms to its swaps regulations. Clearing and CCPs The White Paper notes that swaps clearing is probably the most far-reaching and consequential of the swaps reforms adopted under Title VII of Dodd-Frank.  The authors cite data collected by the CFTC in finding that the CFTC’s implementation of Dodd-Frank’s clearing mandate was highly successful based on the increasing volumes of cleared swaps when compared to before the enactment of Dodd-Frank.[6] This section of the White Paper then focuses on the topics of CCP resources to maintain viability under extreme but plausible conditions, CCP recovery when those resources prove insufficient and CCP resolution in the highly unlikely event that a CCP fails.  In short, the authors applaud the substantial progress that CCPs and the CFTC have made in order to ensure that CCPs are safe and sound under extreme but plausible scenarios and the work that CCPs have undertaken to develop credible recovery plans to remain viable without government assistance. In terms of their recommendations to address continuing challenges in this space, the authors assert—without picking winners or losers as between CCPs and their clearing members—that further market-wide discussions are necessary regarding: (1) the development of potential solutions to ensure the liquidity of prefunded resources; (2) the network and systemic effects of defaults; (3) the liquidation costs of defaulted positions; and (4) improving transparency and predictability of CCP recovery plans.  Lastly, the authors note that the CFTC must continue to coordinate with the Federal Deposit Insurance Corporation (“FDIC”) in formulating resolution plans, which would guide the authority vested in the FDIC under Dodd-Frank to intervene upon the highly unlikely event that a CCP fails. Swaps Data Reporting In the section of the White Paper covering swaps data reporting, the authors note that, while the state of data reporting has improved considerably, the CFTC’s current swaps reporting regime is “suboptimal” and “imperfect.”  They cite the lack of uniform data standards and nomenclature as the biggest problems with the regime.  Another cited problem is the fact that the CFTC has not provided sufficient technical specifications to swap data repositories (“SDRs”) in collecting data from reporting parties. The authors then discuss a number of steps that the CFTC has taken within the last few years to improve the effectiveness of its swaps reporting regime, including the CFTC’s cooperation with the global regulatory community, SDRs and reporting counterparties to harmonize uniform data standards, nomenclature and technical guidance.  The paper also mentions the work that CFTC staff has begun as outlined in the CFTC’s 2017 Roadmap to Achieve High Quality Swaps Data (“Roadmap”).[7]  Through the Roadmap consultation process, CFTC staff has heard from a wide range of market participants and interested parties.  Under consideration in the Roadmap are changes to the CFTC’s reporting rules with the goal of making available to the CFTC and to the public more complete, more accurate and higher quality data. Finally, in this section, the authors urge the CFTC to ensure that its swaps reporting reforms will remain technologically neutral in order to allow for technological advancement (e.g., through the use of distributed ledger technology) to make reporting systems more reliable, more automated and less expensive.  They also urge CFTC staff and market participants to continue to collaborate in order to recalibrate the trade data reporting regime so that it is specific, accurate, and useful enough to:  (1) capture systemic risk, market abuse and market manipulation; (2) harmonize with globally accepted risk data fields; and (3) achieve transparency while promoting healthy trading liquidity. Swaps Execution Rules In the section covering swaps execution, the authors repeat many of the same concerns and arguments made by Chairman Giancarlo in his 2015 White Paper on swap trading reforms, which was titled Pro-Reform Reconsideration of the CFTC Swaps Trading Rules: Return to Dodd-Frank, White Paper.[8]  Essentially, they assert that Congress did not mandate that swap execution facilities (“SEFs”) utilize any particular method of trading and execution.  In its final swaps execution rules, however, the CFTC determined that swaps which are “made available to trade” should be subject to the CFTC’s mandatory trade execution requirement and must be traded through specified execution protocols (i.e., an order book or a request-for-quote system to three).  The authors cite to comprehensive industry research in noting that the CFTC’s current swaps execution requirements have stunted swaps trading in the United States, fragmented global trading liquidity, increased market liquidity risk, restricted technological innovation and incentivized a significant amount of price discovery and liquidity to take place off-exchange. To correct these ills, the authors recommend that the CFTC eliminate the requirement that SEFs maintain an order book and permit SEFs to offer any means of interstate commerce for the trading or execution of swaps subject to the CFTC’s mandatory trade execution requirement.  Additionally, they argue that the CFTC also should expand the category of swaps subject to the trading mandate to include all swaps that are subject to the CFTC’s clearing mandate, unless no SEF or designated contract market lists the swap for trading.  Finally, they suggest that the CFTC’s regulatory focus should be on enhancing the professional conduct of swaps execution through licensure, testing and the adoption of professional conduct principles. Swap Dealer Capital In the section covering swap dealer capital, the authors note that while current bank capital rules are extremely relevant to the swaps dealing business and the efficiency of swap markets, there are aspects of the current regime that result in an unintended bias against risk taken through swaps markets.  To correct this bias, the White Paper argues that bank capital rules need to allow firms to rely on internal models instead of a standardized approach.  The paper also argues that the current standardized approach and industry-developed models inappropriately rely on swap notional amounts to measure risk.[9] The authors do not offer one specific recommended approach to correct these concerns.  Instead, the paper offers a couple of remedial approaches.  One approach suggested by the authors to correct these concerns is for regulators to continue to refine—and by necessity complicate—the standardized models imposed on market participants.  Another suggested approach is for regulators to improve their capabilities with respect to approving and monitoring the use of bank internal models. End-User Exception In the last section of the White Paper, the authors assert that Congress intended a robust end-user exception from Dodd-Frank clearing and margin requirements for entities that are unlikely sources of systemic risk.  They further assert that there are a number of entities that currently fall within the Dodd-Frank definition of “financial entity” (and thus are ineligible to elect an exception from those requirements) but should not be captured under the definition because those entities are not sources of systemic risk.  Specifically, the paper identifies bank holding companies, savings and loan holding companies and certain relatively small financial institutions as being broadly and unnecessarily captured under the definition. To reduce the burdens on these categories of end-users, the authors offer a few recommendations.  First, the authors recommend that the CFTC codify into regulation relief for bank holding companies and savings and loan holding companies that is currently provided in CFTC staff no-action relief.[10] Second, the authors recommend that the CFTC exempt certain small financial institutions including pension funds and small insurance companies from clearing and margin requirements through a “material swaps exposure” test, which is similar to the test set forth in the CFTC’s final uncleared margin rules.  Related to their second recommendation, the authors further assert that the CFTC and prudential regulators should consider exempting small financial end-users from uncleared margin requirements by tweaking the material swaps exposure thresholds to address real risk as opposed to risk based on swap notional amounts.  Interestingly, the authors cite to studies suggesting that pension funds and insurance companies should not broadly be excluded from the definition because larger entities might still pose significant risks. Finally, the authors argue that the CFTC should amend the calculation of initial margin for uncleared swaps in the CFTC’s uncleared margin rules so that those rules do not promote a bias against the trading of uncleared swaps.  On this point, the authors argue that Congress did not intend for the CFTC’s and prudential regulators’ uncleared margin rules to favor cleared products.    [1]   J. Christopher Giancarlo and Bruce Tuckman, Swaps Regulation Version 2.0: An Assessment of the Current Implementation of Reform and Proposals for Next Steps (Apr. 26, 2018), available at https://www.cftc.gov/sites/default/files/2018-04/oce_chairman_swapregversion2whitepaper_042618.pdf.    [2]   Dodd-Frank Wall Street Reform and Consumer Protection Act, 124 Stat. 1376, Pub. Law 111-203 (July 21, 2010), as amended.    [3]   White Paper at p.i.    [4]   CFTC Press Release, No. 7719-18, CFTC Chairman Unveils Reg Reform 2.0 Agenda (Apr. 26, 2018), available at https://www.cftc.gov/PressRoom/PressReleases/7719-18.    [5]   Id.    [6]   See White Paper, p.7 (“According to data collected by the CFTC on U.S. reporting entities, about 85% of both new interest rate swaps and new credit default swaps were cleared in 2017. Precise data as far back as 2010 are not available, but the Bank for International Settlements (BIS) estimated minimum global clearing rates at that time of about 40% for interest rate swaps and 8% for credit default swaps.”).    [7]   Staff Advisory, Division of Market Oversight, Roadmap to Achieve High Quality Swaps Data, U.S. Commodity Futures Trading Commission, July 10, 2017, available at http://www.cftc.gov/idc/groups/public/@newsroom /documents/file/dmo_swapdataplan071017.pdf.    [8]   J. Christopher Giancarlo, Pro-Reform Reconsideration of the CFTC Swaps Trading Rules: Return to Dodd-Frank, Jan. 29, 2015, available at https://www.cftc.gov/sites/default/files/idc/groups/public/@newsroom /documents/file/sefwhitepaper012915.pdf.    [9]   The CFTC’s Chief Economist and others have published a paper proposing an alternative approach to measuring swaps risk.  See Richard Haynes, John Roberts, Rajiv Sharma and Bruce Tuckman, Introducing ENNs: A Measure of the Size of Interest Rate Swap Markets (Jan. 2018), available at https://www.cftc.gov/ sites/default/files/idc/groups/public/@economicanalysis/documents/file/oce_enns0118.pdf. [10]   See CFTC Letter 16-01 (Jan. 8, 2016). The following Gibson Dunn lawyers assisted in preparing this client update: Carl Kennedy and Jeffrey Steiner. Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding these developments.  Please contact any member of the Gibson Dunn team, the Gibson Dunn lawyer with whom you usually work in the firm’s Financial Institutions practice group, or any of the following: Arthur S. Long – New York (+1 212-351-2426, along@gibsondunn.com) Michael D. Bopp – Washington, D.C. (+1 202-955-8256, mbopp@gibsondunn.com) Carl E. Kennedy – New York (+1 212-351-3951, ckennedy@gibsondunn.com) Jeffrey L. Steiner – Washington, D.C. (+1 202-887-3632, jsteiner@gibsondunn.com) © 2018 Gibson, Dunn & Crutcher LLP Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

May 4, 2018 |
Efforts to Strengthen U.S. Public Capital Markets Continue – New SIFMA Report Provides Recommendations to Help More Companies Go and Stay Public

Click for PDF On April 27, 2018, the Securities Industry and Financial Markets Association (“SIFMA”), the leading industry group representing broker-dealers, banks and asset managers, along with other securities industry related groups, released a report called “Expanding the On-Ramp: Recommendations to Help More Companies Go and Stay Public” (the “Report”).[1]  In response to the decline in the number of IPOs and the number of public companies generally in the United States over the last twenty years, the Report provides recommendations aimed at reducing perceived impediments to becoming and remaining a public company. As the Report notes, the United States is now home to only about half the number of public companies that existed 20 years ago.  This decline is believed to have had adverse repercussions for the American economy generally, and the jobs market specifically.  For example, the Report cites a 2010 study by IHS Global Insight suggesting that, generally speaking, 92% of a company’s job growth occurs after it completes an IPO.[2]  In addition, the growth of private capital markets at the expense of public capital markets has raised concerns that individual investors are being marginalized.  More specifically, as many of the most innovative companies in the U.S. stay private longer and raise significant amounts of capital privately, the returns generated by such companies appear to accrue disproportionally to institutional, high net worth and other similar investors.  As Securities and Exchange Commission (the “SEC”) Chairman Jay Clayton noted in a July 2017 speech, “the reduction in the number of U.S.-listed public companies is a serious issue for our markets and the country more generally.  To the extent companies are eschewing our public markets, the vast majority of main street investors will be unable to participate in their growth.  The potential lasting effects of such an outcome to the economy and society are, in two words, not good.” To remedy this decline, the Report makes recommendations in five areas: 1.      enhance several provisions of the Jumpstart Our Business Startups Act (the “JOBS Act”); 2.      encourage more research on emerging growth companies (“EGCs”)[3] and other small public companies; 3.      improve certain corporate governance, disclosure, and other regulatory requirements; 4.      address concerns relating to financial reporting; and 5.      tailor the equity market structure for small public companies. 1. Enhancing the JOBS Act Over the past six years, the JOBS Act has demonstrated that rules and regulations around capital raising can be modernized while maintaining investor protections.  Its accomodations have been widely adopted. The Report sets forth four recommendations to further enhance some of the key provisions of the JOBS Act: Extend Title I “on-ramp provisions.” The JOBS Act Title I “on-ramp” provisions  provide a number of significant benefits to EGCs, including confidential review of registration statements and streamlined financial and executive compensation disclosure requirements, among others.  The Report recommends that the benefits available to EGCs be extended from 5 years to 10 years after a company goes public.  The “on-ramp” provisions have been widely utilized by EGCs since enactment.  By increasing the length of time these benefits are available, the Report argues that even more companies may consider going public. Expand the “testing the waters” exemption to all issuers. The Report recommends that Section 5(d) of the Securities Act of 1933 (the “Securities Act”) be modified to permit all issuers, not just EGCs, to engage in “testing the waters” communications with qualified institutional buyers (“QIBs”) or institutional accredited investors to determine interest in a securities offering.  Consistent with this, in April 2018, SEC Director of Corporation Finance Bill Hinman reported to a congressional committee that the SEC is planning to expand the “testing the waters” benefit to all companies.  This change would allow companies to better understand investor interest prior to undertaking the expense of an IPO. Increase exemption for reporting on adequacy of internal controls from 5 to 10 years for EGCs. The JOBS Act gives EGCs a five-year exemption from Section 404(b) of the Sarbanes-Oxley Act, which requires external auditors to attest to the adequacy of the company’s internal control on financial reporting.  The Report recommends that this be extended from 5 years to 10 years for EGCs that have less than $50 million in revenue and less than $700 million in public float.  This change is designed to ensure that internal control reporting requirements, and associated costs, are appropriately scaled to the size of the company. Remove “phase out” rules relating to EGC status. The Report argues that the “phase out” rules related to EGC status should be removed, specifically given the overlap in certain status designations (e.g., companies who qualify as both a large accelerated filer and an EGC face uncertainty as to their status after going public. See Section 4 below).  Instead, issuers should be allowed to maintain their EGC status based on the JOBS Act definition.  The Report suggests that the SEC could still set a public float or other threshold requirement to limit the size of company that could benefit from the change in phase out triggers.[4] 2. Encourage More Research  Research coverage can increase interest from investors in a company, and a lack of research coverage can adversely impact liquidity for certain companies.  However, the Report notes that 61% of all companies listed on a major exchange with less than a $100 million market capitalization have no research coverage.  To address this disparity, the Report makes the following three recommendations: Amend the Securities Act Rule 139 research safe harbor to allow continuing research coverage for all issuers during an offering. The Report recommends that Rule 139 of the Securities Act be amended to provide that continued research analyst coverage does not constitute an offer or sale of securities, before, during, or after an offering by such issuer, regardless of whether the publishing broker-dealer is also an underwriter in the offering.  Currently, only issuers who are eligible to use Form S-3 qualify for the Rule 139 safe harbor.  As the Report notes, if an analyst has already been covering an issuer, there is no obvious logic to distinguishing companies that are S-3 eligible for the purposes of research coverage. Allow investment banking and research analysts to attend “pitch” meetings together. While the JOBS Act permits investment banks and analysts to jointly attend pitch meetings, given other restrictions on the content of what those discussions may contain, bankers and analysts typically refrain from jointly attending pitch meetings with IPO candidates.  The Report proposes that the SEC consider the removal of barriers prohibiting investment banks and analysts from jointly attending these meetings, as long as no direct or indirect promise of favorable research is given.  The Report also endorses reviewing the 2003 global research settlement between many large investment banks and the SEC, self-regulatory organizations, such as Financial Industry Regulatory Authority (“FINRA”), and other regulators regarding research analyst conflicts of interest (the “Global Research Settlement”).  The Global Research Settlement precludes settling firms from having research analysts attend EGC IPO pitch meetings, irrespective of the regulatory easing afforded by the JOBS Act.[5] Investigate why pre-IPO research remains limited. Despite the liberalization of “gun jumping” rules related to research as part of the JOBS Act, the Report states that very few investment banks have published any pre-IPO research.  The Report urges the SEC to investigate why the JOBS Act has not led to an increase in pre-IPO research.  This may be due to existing FINRA rules, the Global Research Settlement, and federal and state law liability concerns.  The Report advocates for the SEC to examine this issue in an effort to increase pre-IPO research coverage. 3. Improve Certain Corporate Governance, Disclosure and other Regulatory Requirements According to the 2011 IPO Task Force, a group convened in response to a capital access roundtable sponsored by the Department of the Treasury, 92% of U.S. public company CEOs have found the “administrative burden of public reporting” to be a significant barrier to completing an IPO.  In addition, pressure from activist investors (often supported by proxy advisory firms) can distract management from carrying out their management duties, which in turn costs shareholders.  In response to these and other pressures, the Report recommends the following eleven improvements to help deal with some of these issues: Institute reasonable and effective SEC oversight of proxy advisory firms. Proxy advisory firms have become so influential over public companies that they have in essence become the standard setters for corporate governance.  Two advisory firms effectively control the market: Institutional Shareholder Services (“ISS”) and Glass Lewis.  According to the Report, these firms operate with significant conflicts of interest and lack transparency, discouraging small and midsized companies from tapping into the public markets.  Legislation introduced in December 2017 would require proxy advisory firms to register with the SEC and to (1) disclose and manage their conflicts of interest, (2) provide issuers with reasonable time to respond to errors or flaws in advisory voting recommendations, and (3) demonstrate that they have the proper expertise to make accurate and objective recommendations.  The Report endorses the passage of this or similar legislation, and at a minimum, recommends the SEC’s withdrawal of the Egan-Jones Proxy Services (avail. May 27, 2004) and Institutional Shareholder Services, Inc. (avail. Sept. 15, 2004) no-action letters that minimize scrutiny of proxy advisory firms with respect to conflicts of interest. Reform shareholder proposal “resubmission thresholds” under Rule 14a-8 of the Securities Exchange Act of 1934 (the “Exchange Act”) to facilitate more meaningful shareholder engagement with management. Rule 14a-8 allows shareholders who own a relatively small amount of company shares to include qualifying proposals in a company’s proxy materials.  Under current law, Rule 14-8a(i)(12) (the “Resubmission Rule”) allows companies to exclude certain shareholder proposals that were voted on in recent years.  Specifically, a company may exclude a resubmitted proposal if in the last five years the proposal: was voted on once and received less than 3% of votes cast; was voted on twice and received less than 6% of votes cast the last time it was voted on; or was voted on three or more times and received less than 10% of votes cast the last time it was voted on. The Report asserts that the proxy process is currently subject to abuse by a “minority of special interests that use it to advance idiosyncratic agendas.”  The Report argues that raising these resubmission thresholds, as the SEC proposed in 1997 (6%, 15%, and 30%), is a “good starting point” to modernize the SEC’s shareholder proposal system. The Report also notes that the SEC should withdraw Staff Legal Bulletin 14H (Oct. 22, 2015), which effectively declawed Rule 14a-8(i)(9) that allowed companies to exclude certain shareholder proposals that directly conflict with a management proposal. Simplify quarterly reporting requirements. Due to the increased size and complexity of annual (Form 10-K) and quarterly (Form 10‑Q) reports, compliance has become increasingly costly and more difficult, especially for smaller companies.  The Report recommends granting EGCs the option of issuing a press release that includes quarterly earnings results in lieu of a full Form 10-Q.  This approach would simplify the quarterly reporting process for EGCs and reduce the burdens related to financial quarterly reporting, while at the same time still providing investors with necessary material information. The “materiality” standard for corporate disclosure should be maintained and certain disclosure requirements should be scaled for EGCs. The Report suggests that the SEC should maintain the longstanding “materiality” standard with respect to corporate disclosures.  The Report points to the conflict minerals and pay ratio rules under the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) as examples of disclosure requirements that veer the application of securities laws away from their original mission to provide material information to investors.The Report also recommends that policymakers continue to scale down disclosure requirements for EGCs.  For example, the Report proposes exempting EGCs from conflict minerals, mine safety, and resources extraction disclosures implemented under the Dodd-Frank Act. Allow purchases of EGC shares to be qualifying investments for purposes of Registered Investment Adviser (“RIA”) exemption determinations. Under the Dodd-Frank Act, venture capital funds were meant to be exempt from the certain costs and requirements to become an RIA.  However, the definition of “venture capital fund” under the Investment Advisers Act is viewed by the Report as narrow, which limits the ability of these funds to invest in EGCs.  The Report argues that shares of EGCs should be considered qualifying investments, which would potentially expand investment in EGCs. Allow issuers of all sizes to be eligible to use Forms S-3 and F-3 for shelf registration. Many EGCs and small issuers are precluded from using the simplified registration statement Forms S-3 and F-3, which allows faster and cheaper access to public capital markets.  The Report, along with the SEC’s Annual Government-Business Forum on Small Business Capital Formation, recommends that all issuers be allowed to use Forms S-3 and F-3.[6]  In addition, the Report suggests eliminating the “baby-shelf” rules applicable to companies with a public float of less than $75 million, which limit the amount of capital a small-market cap company can raise using a shelf registration statement. Address unlawful activity related to short sales. There are currently no disclosure requirements applicable to investors who take short positions in publicly registered stock.  Although short selling can have positive effects on the overall market, the Report argues that such transactions can also lead to abusive activity that unduly harms investors or the reputation of a company.  The Report recommends that the SEC continue to take action against market manipulators who engage in unlawful activity that harms the market and ensure that there is sufficient public information with respect to potential market manipulation. Allow prospective underwriters to make offers of well-known seasoned issuer securities in advance of filing a registration statement. Since 2005, “well-known seasoned issuers” (or “WKSIs”) have been permitted to engage in oral or written communications in accordance with Securities Act Rule 163 in advance of filing a registration statement without violating “gun jumping” rules.  The SEC proposed an amendment in 2009 that would permit underwriters or dealers to engage in communications “by or on behalf of” WKSIs under similar circumstances, which would allow WKSIs to better gauge investor interest and market conditions prior to an offering.  The Report argues that this amendment should be enacted. Make eXtensible Business Reporting Language (“XBRL”) compliance optional for EGCs, smaller reporting companies (“SRCs”), and non-accelerated filers. Public companies are required to provide financial statements in XBRL, which imposes significant costs on EGCs and SRCs, and in the view of the Report, minimal benefit to investors.  Accordingly, the Report recommends exempting EGCs, SRCs, and non-accelerated filers from XBRL reporting requirements. Increase the diversified funds limit for mutual funds’ position in companies from current 10% of voting shares to 15%. Due to the increased size of mutual funds, the diversified fund thresholds have limited mutual funds’ ability to take meaningful positions in small-cap companies.  The Report argues that moving the threshold up from 10% to 15% would make investments in EGCs and other small-cap companies more attractive to mutual funds. Allow disclosure of selling stockholders to be done on a group basis. The Report recommends that disclosure of selling stockholders in registration statements should be permitted on a group or aggregate basis if each selling stockholder is (1) not a director or named executive officer of the registrant, and (2) holds less than 1% of outstanding shares. 4. Financial Reporting The SEC should consider aligning the SRC definition with the definition of a non-accelerated filer and institute a revenue-only test for pre- or low- revenue companies that may be highly valued. In 2016, the SEC proposed increasing the public float cap for SRCs from $75 million to $250 million, but did not do so with respect to non-accelerated filers that are subject to the same limit.  In the Report’s view, raising this cap for SRCs would help promote capital formation and reduce compliance costs for small companies, including scaled disclosure obligations under Regulation S-K for SRCs.  In addition, consideration should be given to whether the exemption available to non-accelerated filers from the requirement for auditor attestation over internal controls should also be extended to SRCs.  In particular, the Report points out that many companies may still choose to comply with auditor attestation requirements, noting that shareholders could also encourage issuers to maintain internal control systems similar to those called for by Sarbanes-Oxley Section 404(b).In addition, the 2016 SRC proposal introduced an alternative “revenue only” test for companies to qualify as an SRC if the company had less than $100 million in revenue, regardless of its public float.  The Report proposes that a revenue-only test should be considered as an alternative standard. Modernize the Public Company Accounting Oversight Board (“PCAOB”) inspection process related to internal control over financial reporting (“ICFR”). In 2007, the SEC issued Commission Guidance Regarding Management’s Report on Internal Controls over Financial Reporting under Section 13(a) or 15(d) of the Exchange Act (the “2007 Guidance”).  The 2007 Guidance was meant to allow companies to prioritize and focus on “what matters most” in assessing ICFR, principally those material issues that pose the greatest risk of material misstatements.  However, companies have continued to experience unintended ICFR-related burdens due to audit processes and PCAOB inspections.  The 2007 Guidance has not been effective due to changing interpretations of PCAOB standards for attestations during the inspection process.  Accordingly, the Report proposes that the 2007 Guidance should be updated to ensure that it is working as originally intended.  The Group also suggests that the PCAOB should consider an ICFR task force to address issues companies face as a result of the PCAOB inspection process and its consequences for audit firms and auditors.  Pre- and post-implementation reviews by the PCAOB would improve audit standard setting, prevent harmful impacts, and address the unintended consequences that result from implementation of new PCAOB auditing standards. 5. Tailoring Equity Market Structure for Small Public Companies While the overall U.S. equity markets have become more efficient due to venue competition and increased liquidity, some of these benefits have failed to reach small and mid-size stocks.  The Report makes two recommendations to address market structure challenges faced by these issuers: Examine tick sizes for EGCs and small capitalization stocks. The Report argues that the SEC should examine the appropriate tick size, which is the minimum price movement of a trading instrument, for EGCs and small capitalization stocks.  The Report notes that while stocks trading in penny increments may be an appropriate trading increment for large capitalization stocks, it may not be the best option for EGCs.  This is because narrower spreads resulting from penny increments may disincentivize market makers from trading in EGCs and small capitalization stocks.  Instead, individual exchanges should have the flexibility to develop tick sizes that are tailored for a limited number of stocks with distressed liquidity.[7] Allow EGCs or small issuers with distressed liquidity the choice to opt out of unlisted trading privileges. The Report recommends that a limited number of SRCs with distressed liquidity be able to opt out of unlisted trading privileges.  This would allow these less frequently traded stocks to focus their trading on fewer exchanges, thus enabling buyers and sellers to more easily find each other, providing more liquidity in these stocks.  This would also enable these companies to reduce fragmentation in trading, and simplify market making for these stocks. Conclusion Since at least 2012, the SEC and Congress have proposed various reforms[8] aimed at improving the attractiveness and competitiveness of the U.S. public capital markets.  In the last year, consistent with Chairman Clayton’s core principles,[9] the SEC has taken steps to further expand the benefits of the JOBS Act and the FAST Act to a broader range of companies, such as allowing non-EGCs to make confidential submissions of initial registration statements, permitting all companies to confidentially submit registration statements in connection with offerings within one year of an IPO and granting more waivers of financial statement requirements.  In addition, there have been a number of legislative proposals intended to further expand the benefits of the JOBS Act and the FAST Act.  The Report is consistent with these themes.  Congress and the SEC must now consider comprehensive reform in this vein and also consider how a complex system of regulations could be further simplified.  Ultimately, a company’s decision whether to go public is driven primarily by business rationales, including valuation, liquidity and investor considerations.  However, reducing the burdens of becoming and staying a public company without compromising investor protection will benefit both companies and investors, help ensure that the U.S. public capital markets remain attractive and competitive in the face of global competition, and provide more diverse investment opportunities for all investors.    [1]   SIFMA, Expanding the On-Ramp: Recommendations to Help More Companies Go and Stay Public, available at https://www.sifma.org/resources/submissions/expanding-the-on-ramp-recommendations-to-help-more-companies-go-and-stay-public (last visited April 27, 2018). Other organizations joining SIFMA in the Report included, among others, the U.S. Chamber of Commerce, the National Venture Capital Association, Biotechnology Innovation Organization (Bio), Technet and Nasdaq.    [2]   Id.    [3]   Under the JOBS Act, EGCs are defined as companies with less than $1.07 billion of annual revenue.    [4]   For a more complete discussion on the transition from EGC status, see our Alert from March 12, 2014, which is available at the following link:  https://www.gibsondunn.com/emerging-from-egc-status-transition-periods-for-former-egc-issuers-to-comply-with-reporting-and-corporate-governance-requirements/    [5]   For a more complete discussion of the interaction between the JOBS Act and the Global Research Settlement, see our alert from October 11, 2012, which is available at the following link: https://www.gibsondunn.com/jobs-act-finra-proposes-rule-changes-relating-to-research-analysts-and-underwriters/    [6]   See generally SEC Government-Business Forum on Small Capital Business Formation, which is available at the following link: https://www.sec.gov/files/gbfor36.pdf    [7]   For additional information, see the SEC’s investor alert titled “Investor Alert: Tick Size Pilot Program – What Investors Need to Know” which is available at the following link: https://www.sec.gov/oiea/investor-alerts-bulletins/ia_ticksize.html    [8]   For more information, see our post from October 13, 2017 titled “SEC Proposes Amendments to Securities Regulations to Modernize and Simplify Disclosure,” which is available at the following link: https://www.gibsondunn.com/sec-proposes-amendments-to-securities-regulations-to-modernize-and-simplify-disclosure/    [9]   See, e.g., “SEC to Tailor Disclosure Regime Under New Chair Clayton” (July 12, 2017), which is available at the following link: https://www.bna.com/sec-tailor-disclosure-n73014461648/ Gibson Dunn’s lawyers  are available to assist in addressing any questions you may have regarding these developments.  Please contact any member of the Gibson Dunn team, the Gibson Dunn lawyer with whom you usually work in the firm’s Capital Markets or Securities Regulation and Corporate Governance practice groups, or the authors: Glenn R. Pollner – New York (+1 212-351-2333, gpollner@gibsondunn.com) Hillary H. Holmes – Houston (+1 346-718-6602, hholmes@gibsondunn.com) Jessica Annis – San Francisco (+1 415-393-8234, jannis@gibsondunn.com) Nicolas H.R. Dumont – New York (+1 212-351-3837, ndumont@gibsondunn.com) Sean Sullivan – San Francisco (+1 415–393–8275, ssullivan@gibsondunn.com) Victor Twu – Orange County, CA (+1 949-451-3870, vtwu@gibsondunn.com) Please also feel free to contact any of the following practice leaders: Capital Markets Group: Stewart L. McDowell – San Francisco (+1 415-393-8322, smcdowell@gibsondunn.com) Peter W. Wardle – Los Angeles (+1 213-229-7242, pwardle@gibsondunn.com) Andrew L. Fabens – New York (+1 212-351-4034, afabens@gibsondunn.com) Hillary H. Holmes – Houston (+1 346-718-6602, hholmes@gibsondunn.com) Securities Regulation and Corporate Governance Group: Elizabeth Ising – Washington, D.C. (+1 202-955-8287, eising@gibsondunn.com) James J. Moloney – Orange County, CA (+1 949-451-4343, jmoloney@gibsondunn.com) Lori Zyskowski – New York (+1 212-351-2309, lzyskowski@gibsondunn.com) © 2018 Gibson, Dunn & Crutcher LLP Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

March 14, 2018 |
Important Lessons From ‘In re Oxbow Carbon’ for Drafting Joint Venture Exit Provisions

Dallas partner Robert Little and Dallas associate Eric Pacifici are the authors of “Important Lessons From ‘In re Oxbow Carbon’ for Drafting Joint Venture Exit Provisions,” [PDF] published in Delaware Business Court Insider on March 14, 2018.

March 12, 2018 |
Brexit – converting the political deal into a legal deal and the end state

Click for PDF In our client alert of 8 December 2017 we summarised the political deal relating to the terms of withdrawal of the UK from the EU with a two year transition.  It is important to remember that this “Phase 1” deal only relates to the separation terms and not to the future relationship between the UK and the EU post Brexit. In her Mansion House speech on 2 March 2018 UK Prime Minister Theresa May set out Britain’s vision for a future relationship.  The full text of her speech can be found here.  It continues to make it clear that the UK will remain outside the Single Market and Customs Union. On the critical issue of the Irish border, the UK Government’s position remains that a technological solution is available to ensure that there is neither a hard border within Ireland nor a border in the Irish Sea which would divide the UK.  Neither the EU nor Ireland itself accept that a technological solution is workable, and there remain doubts whether such a solution is possible if the UK is outside the EU Customs Union (or something equivalent to a customs union).  The terms of the political deal in December make it clear that, in the absence of an agreed solution on this issue, the UK will maintain full alignment with the rules of the Single Market and Customs Union. The UK’s main opposition party, The Labour Party, has now shifted its position to support the UK remaining in a customs union. The Government is proposing a “customs partnership” which would mirror the EU’s requirements for imports and rules of origin. Theresa May has acknowledged both that access to the markets of the UK and EU will be less than it is today and that the decisions of the CJEU will continue to affect the UK after Brexit. On a future trade agreement, the UK’s position is that it will not accept the rights of Canada and the obligations of Norway and that a “bespoke model” is not the only solution. There is, however, an acknowledgement that, if the UK wants access to the EU’s market, it will need to commit to some areas of regulation such as state aid and anti-trust. Prime Minister May has confirmed that the UK will not engage in a “race to the bottom” in its standards in areas such as worker’s rights and environmental protections, and that there should be a comprehensive system of mutual recognition of regulatory standards. She has also said that there will need to be an independent arbitration mechanism to deal with any disagreements in relation to any future trade agreement. Theresa May has also said that financial services should be part of a deep and comprehensive partnership. The UK will also pay to remain in the European Medicines Agency, the European Chemicals Agency and the European Aviation Safety Agency but will not remain part of the EU’s Digital Single Market. Donald Tusk, the European Council President, has rejected much of the substance of the UK’s position, stating that the only possible arrangement is a free trade agreement excluding the mutual recognition model at the heart of the UK’s proposals.  Crucially, however, he has said that there would be more room for negotiation should the UK’s red lines on the Customs Union and Single Market “evolve”. It is clear that this is an opening position for the two sides in the negotiations and that there is a long history of EU negotiations being settled at the very last minute.  The current timetable envisages clarity on the final terms of the transition and the “end state” by the European Council meeting on 18/19 October 2018. This client alert was prepared by London partners Charlie Geffen and Nicholas Aleksander and of counsel Anne MacPherson. We have a working group in London (led by Nicholas Aleksander, Patrick Doris, Charlie Geffen, Ali Nikpay and Selina Sagayam) that has been considering these issues for many months.  Please feel free to contact any member of the working group or any of the other lawyers mentioned below. Ali Nikpay – Antitrust ANikpay@gibsondunn.com Tel: 020 7071 4273 Charlie Geffen – Corporate CGeffen@gibsondunn.com Tel: 020 7071 4225 Nicholas Aleksander – Tax NAleksander@gibsondunn.com Tel: 020 7071 4232 Philip Rocher – Litigation PRocher@gibsondunn.com Tel: 020 7071 4202 Jeffrey M. Trinklein – Tax JTrinklein@gibsondunn.com Tel: 020 7071 4224 Patrick Doris – Litigation; Data Protection PDoris@gibsondunn.com Tel:  020 7071 4276 Alan Samson – Real Estate ASamson@gibsondunn.com Tel:  020 7071 4222 Penny Madden QC – Arbitration PMadden@gibsondunn.com Tel:  020 7071 4226 Selina Sagayam – Corporate SSagayam@gibsondunn.com Tel:  020 7071 4263 Thomas M. Budd – Finance TBudd@gibsondunn.com Tel:  020 7071 4234 James A. Cox – Employment; Data Protection JCox@gibsondunn.com Tel: 020 7071 4250 Gregory A. Campbell – Restructuring GCampbell@gibsondunn.com Tel:  020 7071 4236 © 2018 Gibson, Dunn & Crutcher LLP Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

March 1, 2018 |
Joint Venture Traps to Avoid

Houston partners Gerry Spedale and Hillary Holmes are the authors of “Joint Venture Traps to Avoid,” [PDF] published in Midstream Business in March 2018.

February 14, 2018 |
Webcast: IPO and Public Company Readiness: Oil and Gas Industry Issues

Oil and gas prices are recovering and there is a friendlier regulatory climate in Washington for capital raising. Times may never be better for considering an initial public offering for your company. There are many advantages and challenges to becoming a public company. This panel identifies the issues and opportunities for companies in the oil and gas sector to consider in deciding whether to become a public company. View Slides [PDF] PANELISTS: Hillary Holmes focuses on securities offerings and SEC and governance counseling for master limited partnerships (MLPs) and corporations in all sectors of the oil & gas energy industry. She represents public companies, private companies, MLPs and investment banks in all forms of capital raising transactions, including IPOs, registered offerings of debt and equity securities, private placements of debt and equity securities, and spin-offs. She also advises boards of directors, conflicts committees, and financial advisors of energy companies in complex transactions. Gerry Spedale focuses on capital markets, mergers and acquisitions, joint ventures and corporate governance matters for companies in the energy industry, including MLPs. He has extensive experience representing issuers and investment banks in both public and private debt and equity offerings, including initial public offerings, convertible note offerings and offerings of preferred securities. He also has substantial experience in public and private company acquisitions and dispositions and board committee representations. James Chenoweth counsels clients regarding tax-efficient structuring of energy transactions, including MLPs, IPOs and follow-on offerings, as well as acquisitions and dispositions, taxable sales and the formation of joint ventures, particularly in the oil and gas upstream and midstream sectors. James represents clients regarding the funding, formation, transfer and acquisition of upstream drilling joint ventures in cash and carry transactions and similar arrangements forming tax partnerships in various shale plays, including the Eagle Ford, Utica, Three Forks, Marcellus and Niobrara. Brian Lane counsels companies on the most sophisticated corporate governance and regulatory issues under the federal securities laws. He is nationally recognized in his field as an author, media commentator, and conference speaker. Brian ended a 16 year career with the Securities and Exchange Commission as the Director of the Division of Corporation Finance where he supervised over 300 attorneys and accountants in all matters related to disclosure and accounting by public companies (e.g. M&A, capital raising, disclosure in periodic reports and proxy statements). In his practice, Brian has advised on dozens of IPOs. MCLE CREDIT INFORMATION: This program has been approved for credit in accordance with the requirements of the New York State Continuing Legal Education Board for a maximum of 1.0 credit hour, of which 1.00 credit hour may be applied toward the areas of professional practice requirement.  This course is approved for transitional/non-transitional credit. Attorneys seeking New York credit must obtain an Affirmation Form prior to watching the archived version of this webcast.  Please contact Jeanine McKeown (National Training Administrator), at 213-229-7140 or jmckeown@gibsondunn.com to request the MCLE form. Gibson, Dunn & Crutcher LLP certifies that this activity has been approved for MCLE credit by the State Bar of California in the amount of 1.0 hour. California attorneys may claim “self-study” credit for viewing the archived version of this webcast.  No certificate of attendance is required for California “self-study” credit.

January 1, 2018 |
Public Company Virtual-Only Annual Meetings

Palo Alto partner Lisa Fontenot is the author of “Public Company Virtual-Only Annual Meetings,” [PDF] published in The American Bar Association’s The Business Lawyer Vol.73, Winter 2017-2018.

December 8, 2017 |
Brexit – Initial deal agreed

The UK Government and the European Commission have issued a joint report setting out the progress of the phase 1 negotiations for the Brexit divorce terms. This report is being put forward with a view to the European Council recommending the commencement of phase 2 negotiations on the future trading relationship between the UK and the EU.  It is issued with the caveat that “nothing is agreed until everything is agreed”. A copy of the text of the UK-EU report is here. The key provisions are: Citizens’ rights: All EU citizens resident in the UK and all UK citizens resident in the EU at the date of Brexit will have ongoing rights to remain together with their immediate families (and future children) subject to various restrictions. After Brexit there will be a simple registration system for EU citizens coming to live and work in the UK. Ireland and Northern Ireland: In the absence of alternative agreed solutions (i.e. a satisfactory free trade deal between the UK and the EU), the UK will maintain full alignment with the rules of the single market and the customs union which support North-South cooperation in Ireland; the UK will also ensure that no new regulatory barriers develop between Northern Ireland and the rest of the UK. Financial settlement: There is no specific figure but the broad principles of the financial settlement have been agreed.  The UK government currently estimates the bill at around £35-£40 billion. Other high-level provisions relate to ongoing EU judicial procedures, the functioning of the EU institutions, agencies and bodies and police and judicial cooperation in criminal matters. The EU has dropped its demand for the divorce settlement to come under the direct jurisdiction of the Court of Justice of the European Union (CJEU).  However, the UK will pay “due regard” to European court rulings on citizens’ rights.  For at least eight years, British courts may also refer questions on EU law to the CJEU. The European Council is expected to approve the joint report on 14/15 December 2017.  This will mean negotiations can move on to details of a transitional period and the final post-Brexit EU-UK relationship. There are reports that the UK is expected to remain within the single market and customs union for a two year transitionary period.  Whilst there is no certainty on what will follow, there is a possibility that the EU and UK concessions on Ireland and Northern Ireland may help the UK to strike a long-term deal on staying in the customs union and single market (the so-called “soft Brexit”). There is still much to be discussed.  “We all know breaking up is hard, but breaking up and building a new relationship is harder,” commented Donald Tusk, European Council president.  “The most difficult challenge is still ahead.” This client alert was prepared by London partners Stephen Gillespie, Charlie Geffen and Nicholas Aleksander and of counsel Anne MacPherson. We have a working group in London (led by Stephen Gillespie, Nicholas Aleksander, Patrick Doris, Charlie Geffen, Ali Nikpay and Selina Sagayam) that has been considering these issues for many months.  Please feel free to contact any member of the working group or any of the other lawyers mentioned below. Ali Nikpay – Antitrust ANikpay@gibsondunn.com Tel: 020 7071 4273 Charlie Geffen – Corporate CGeffen@gibsondunn.com Tel: 020 7071 4225 Stephen Gillespie – Finance SGillespie@gibsondunn.com Tel: 020 7071 4230 Philip Rocher – Litigation PRocher@gibsondunn.com Tel: 020 7071 4202 Jeffrey M. Trinklein – Tax JTrinklein@gibsondunn.com Tel: 020 7071 4224 Nicholas Aleksander – Tax NAleksander@gibsondunn.com Tel: 020 7071 4232 Alan Samson – Real Estate ASamson@gibsondunn.com Tel:  020 7071 4222 Patrick Doris – Litigation; Data Protection PDoris@gibsondunn.com Tel:  020 7071 4276 Penny Madden QC – Arbitration PMadden@gibsondunn.com Tel:  020 7071 4226 James A. Cox – Employment; Data Protection JCox@gibsondunn.com Tel: 020 7071 4250 Gregory A. Campbell – Restructuring GCampbell@gibsondunn.com Tel:  020 7071 4236 Selina Sagayam – Corporate SSagayam@gibsondunn.com Tel:  020 7071 4263 © 2017 Gibson, Dunn & Crutcher LLP Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

December 1, 2017 |
Sentiment Analysis & Natural Language: Processing Techniques for Capital Markets & Disclosure

New York counsel Nicolas H.R. Dumont is the author of “Sentiment Analysis & Natural Language: Processing Techniques for Capital Markets & Disclosure,” [PDF] published by The Corporate Governance Advisor in December 2017.

November 1, 2017 |
Webcast: IPO and Public Company Readiness: Regulatory Compliance Issues

​Public companies face unique challenges as they confront and seek to manage OFAC, AML and FCPA compliance risk. Disclosure obligations and market reactions can intensify the pressures arising from alleged or actual violations of these laws. Companies preparing to go public must assess their compliance programs in order to avoid or mitigate incidents that could harm their business, disrupt the IPO process or damage their reputation as a newly public company. Companies also must be prepared to successfully respond to the scrutiny regarding compliance issues in the diligence and disclosure process associated with an IPO. Our highly experienced and distinguished panel of Gibson Dunn partners from the Capital Markets, Financial Institutions and White Collar Defense and Investigations Practice Groups will provide invaluable and practical advice and tips on how companies can prepare for public company reporting and scrutiny of their compliance programs. View Slides [PDF] PANELISTS Stephanie L. Brooker is a partner in the Washington, D.C. office of Gibson, Dunn & Crutcher where she is Co-Chair of Gibson Dunn’s Financial Institutions Practice Group and a member of the White Collar Defense and Investigations Practice Group. Ms. Brooker is a former Director of the Enforcement Division at the U.S. Department of Treasury’s Financial Crimes Enforcement Network (FinCEN) and a former federal prosecutor, where she served as the Chief of the Asset Forfeiture and Money Laundering Section in the U.S. Attorney’s Office for the District of Columbia, tried 32 criminal trials, and briefed and argued criminal appeals. Ms. Brooker’s practice focuses on internal investigations, regulatory enforcement, white collar criminal defense, and compliance counseling involving anti-money laundering (AML)/Bank Secrecy Act (BSA), sanctions, anti-corruption, securities, tax, and wire fraud. Joel M. Cohen is a partner in the New York office of Gibson, Dunn & Crutcher where he is Co-Chair of Gibson Dunn’s White Collar Defense and Investigations Practice Group and a member of its Securities Litigation, Class Actions and Antitrust and Competition Practice Groups. Mr. Cohen’s experience includes all aspects of FCPA/anti-corruption issues, insider trading, securities and financial institution litigation, class actions, sanctions, money laundering and asset recovery, with a particular focus on international disputes and discovery. Mr. Cohen was the prosecutor of Jordan Belfort and Stratton Oakmont, which is the focus of “The Wolf of Wall Street” film by Martin Scorsese. He was an adviser to OECD in connection with the effort to prohibit corruption in international transactions and was the first Department of Justice legal liaison advisor to the French Ministry of Justice. Andrew L. Fabens is a partner in the New York office of Gibson, Dunn & Crutcher where he is Co-Chair of Gibson Dunn’s Capital Markets Practice Group and a member of the Securities Regulation and Corporate Governance Practice Group. Mr. Fabens advises companies on long-term and strategic capital planning, disclosure and reporting obligations under U.S. federal securities laws, corporate governance issues and stock exchange listing obligations. He represents issuers and underwriters in public and private corporate finance transactions, both in the United States and internationally. Stewart L. McDowell is a partner in the San Francisco office of Gibson, Dunn & Crutcher where she is Co-Chair of Gibson Dunn’s Capital Markets Practice Group and a member of the Steering Committee of the Securities Regulation and Corporate Governance Practice Group. Ms. McDowell’s represents business organizations as to capital markets transactions, mergers and acquisitions, SEC reporting, corporate governance and general corporate matters. She represents both underwriters and issuers in a broad range of both debt and equity securities offerings, in addition to buyers and sellers in connection with U.S. and cross-border mergers, acquisitions and strategic investments. Adam M. Smith is a partner in the Washington, D.C. office of Gibson, Dunn & Crutcher where his practice focuses on international trade compliance and white collar investigations with a focus on economic sanctions and export controls. Mr. Smith served as Senior Advisor to the Director of the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) and as the Director for Multilateral Affairs on the National Security Council. While at OFAC he played a primary role in all aspects of the agency’s work, including briefing Congressional and private sector leadership on sanctions matters, shaping new Executive Orders, regulations, and policy guidance for both strengthening sanctions and easing measures. Mr. Smith counsels a global roster of clients in the financial, services, manufacturing and technology sectors to help them understand, navigate and comply with increasingly complex financial regulations. Peter W. Wardle is a partner in the Los Angeles office of Gibson, Dunn & Crutcher where he is Co-Chair of Gibson Dunn’s Capital Markets Practice Group. Mr. Wardle represents issuers and underwriters in equity and debt offerings, in addition to both public and private companies in mergers and acquisitions, including private equity, cross border, leveraged buy-out, distressed and going private transactions. He also advises clients on a wide variety of general corporate and securities law matters, including corporate governance issues. MCLE CREDIT INFORMATION: This program has been approved for credit in accordance with the requirements of the New York State Continuing Legal Education Board for a maximum of 1.50 credit hours, of which 1.50 credit hours may be applied toward the areas of professional practice requirement.  This course is approved for transitional/non-transitional credit. Attorneys seeking New York credit must obtain an Affirmation Form prior to watching the archived version of this webcast.  Please contact Jeanine McKeown (National Training Administrator), at 213-229-7140 or jmckeown@gibsondunn.com to request the MCLE form. Gibson, Dunn & Crutcher LLP certifies that this activity has been approved for MCLE credit by the State Bar of California in the amount of 1.50 hours. California attorneys may claim “self-study” credit for viewing the archived version of this webcast.  No certificate of attendance is required for California “self-study” credit.

July 20, 2017 |
French Market Update – July 2017

France is great again? Many of you have read positive articles on the new government in France and its freshly elected President, Emmanuel Macron. Is it real? First, one needs to understand the context: a quasi-unknown individual a year ago, Mr. Macron has stunned all by winning the first, then second, round of the presidential election, as an "anti-populist", pro-European, candidate. Almost as surprisingly, his party (called "Republic on the Move!"), which has been in existence for less than a year, won an absolute majority (with 350 seats over 577) in the subsequent parliamentary election, held on June 11 and 18, 2017, reducing, for example, the Socialist representatives to 28 from 280 in 2012. This, in turn, means that for the next five years, Mr. Macron has both a mandate and an ability to implement his program. France, in electing him with such latitude, rejected the extreme right (with a Frexit program) and the extreme left (with a very high taxation program). One of Mr. Macron’s key strengths has been his "extreme centrist" positioning, based on the simple concept that necessary policies are neither leftist or rightist ones; they are just common sense and should be supported by all reasonable politicians regardless of their original party. He also promoted a very large number of non-politicians to political positions, thus considerably altering the political landscape. Being an ex-Rothschild banker, Mr. Macron is guided by a resolute desire to "open the country for business" and eliminate the disincentives to investment in France, particularly at a time when Brexit causes potential issues for businesses based in the UK. He also understands the need to act fast, and intends to pass his most emblematic promises, aiming at triggering a supply-side shock and boosting confidence, before the end of 2017. What are these promises? An extensive labor reform to "move the rules of the game" aiming at lowering the unemployment rate to 7% at the end of his term in 2022. Proposed measures include caps on financial penalties for companies sued for firing employees, allowing businesses more flexibility to define internal working rules, merging the various employee representative bodies currently existing in French business organizations to improve social dialogue. To achieve this reform expeditiously, the French Government wants to use a special procedure to pass the measures this Summer without extended debate in parliament. The details of the reform are expected to be announced at the end of August. Strong workers antagonism is likely, but the climate has changed and popular support for movements has weakened.  Tax reform aimed at restoring France’s attractiveness: Among the key signals sent to the business community: a decrease of the corporate income tax (from 34.3% today to 25% in 2022), and, as from 2019, the replacement of the tax credit for competitiveness and employment (CICE) by a substantial reduction in the employers’ social contributions.     Another aspect of the proposed tax reform will be the replacement of the general wealth tax by a special wealth tax limited to real estate and the creation of a "flat tax" on capital gains and dividends at a rate of about 30%. The purpose of this proposal is to favor financial investments over real estate ones.  These long-awaited measures will kick-in as soon as 2018. A 50-billion euro investment program: Although not yet fully financed, this plan will likely rely on the existing program "Investing for the Future" launched by President Sarkozy and on a new wave of privatizations. This program embraces huge investments in training (up to €15bn), supports to the ecological transition, the digitalization of the healthcare system, investments in infrastructures (such as transports) and modernization of the State services, all of which will favor future business fluidity. A large number of these projects will be open for bidding to non-French entities. An additional 10 billion euro "innovation program" is planned to invest into Cleantech, Greentech, AI, all in order to attract and retain start-ups. A new momentum for foreign investments in France After seven years of profound economic crisis, and five years of French bashing due to the former president’s administration, his tax increases and anti-business stance, France now benefits a true shift in perception. These changes have the effect to make France a desirable investment target, especially for business and real estate. Opportunities for foreign investors are relatively cheap, especially given the quality of the administration, education, health and infrastructure and the stability of the political system. France has numerous fundamental strengths including its central location in Europe, excellent communication and transport infrastructure, significant industrial achievements in a wide range of sectors, high productivity, and a well-qualified workforce. All these strengths support opportunities for foreign investments, from the United States and elsewhere. 2017 marks Gibson Dunn’s 50th year in France.  With 45 lawyers, whose expertise covers all aspects of business law, such as corporate transactions, restructuring/insolvency, private equity, litigation, compliance, public law and regulatory, technology and innovation, and finance, as well as tax and real estate, our Paris office,  is well-positioned to assist all the Firm’s clients as their strategy shifts towards France. Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding the issues discussed in this update. For further information, please contact the Gibson Dunn lawyers with whom you usually work, or the following authors in the firm’s Paris office: Bernard Grinspan (+33 1 56 43 13 00, bgrinspan@gibsondunn.com) Judith Raoul-Bardy (+33 1 56 43 13 00, jraoulbardy@gibsondunn.com) © 2017 Gibson, Dunn & Crutcher LLP Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

June 9, 2017 |
What the UK Election Result Means for Brexit

Theresa May’s decision to call a snap[1] UK general election has backfired.  The Conservatives emerged as the biggest party in yesterday’s UK general election but lost their overall majority.  Theresa May’s authority and leadership have been greatly weakened, perhaps even fatally damaged, by the shock result.  The Conservatives won 319[2] (down from 331) seats in the House of Commons.  A governing party needs 326 seats out of 650 seats for a majority.   The Labour party gained 29 seats, enjoying their biggest increase in the share of the vote since 1945.  A so-called "progressive alliance" between them and such of the minority parties as have indicated a willingness to work in coalition with Labour would not be sufficient to command an outright majority in the House of Commons. As leader of the largest party in Parliament, Theresa May has been asked by Queen Elizabeth (as head of state) to form a government, relying on Northern Ireland’s Democratic Unionist Party (DUP) for support.  The DUP have won 10 of the 18 Westminster seats contested in Northern Ireland whilst the nationalist  Sinn Féin party have won seven.  Given that Sinn Féin MPs do not take their seats in the House of Commons, the Conservatives and the DUP should together have 326 out of 643 MPs, giving the two parties a combined majority of nine. Theresa May has vowed to offer a "period of stability" and has said she has no plans to resign.  Arlene Foster, leader of the DUP, has confirmed her party’s in principle support for a Conservative-led administration and has committed her party to preserving the Union and bringing stability to the UK.  Detailed discussions of the terms of the Conservative-DUP understanding will begin shortly. When Theresa May called the election on 18 April she had a majority of 17 MPs in the House of Commons and was 20 percentage points ahead of Labour in the polls.  She called the snap election in the hope of increasing her majority and strengthening her hand in Brexit talks with the EU.  But her position has been severely weakened.  Her wafer thin majority (taking DUP support into account) will make it even more difficult for her to make the awkward compromises that will be needed to reach a Brexit deal with the other EU member states. It is possible that her leadership position will be challenged by Conservative MPs once an administration has been formed and the new session of Parliament has been opened.  Many MPs feel that this was an unnecessary election which has drastically weakened the strength of the Conservative government, and they hold Mrs. May and her closest advisers directly responsible for that.  It is possible that a new Conservative Prime Minster could seek a fresh mandate through another general election or that the Conservative-DUP pact could break down such that no government can be formed and a second general election has to be held. Formal Brexit discussions between the UK and the EU are due to begin on 19 June 2017 (which is also the date for the opening of the next UK Parliament).  Delays in forming a new UK government, or even a second general election in 2017, could impede these Brexit talks, squeezing an already tight negotiation timetable.  The UK government triggered Article 50 (the official legal notification to the EU that the UK is going to leave the bloc) on 29 March 2017.  It means that, unless otherwise agreed with the EU member states, the UK will be out of the EU by the end of March 2019 – even if no withdrawal agreement is in place.  It is unclear whether Article 50 can be withdrawn once invoked. It is not clear if the UK will stick to the Brexit policy mapped out before the election when Theresa May said the UK would leave Europe’s single market and customs union.  There is a possibility that the hung parliament could result in the UK stepping back from the "hard Brexit" stance taken by Theresa May and/or in the EU imposing a softer Brexit on the UK by virtue of the UK’s weaker negotiating position.  The provisions in the UK Finance Bill which were deferred because of the election are likely to be enacted later this year. These include the corporate interest restriction rules, the shareholding exemption reforms and the reformed inheritance tax rules for non-UK domiciliaries with interests in UK residential property.    [1]   The Fixed-term Parliaments Act 2011 introduced fixed-term elections to the UK Parliament.  Under the Act, Parliamentary elections must be held every five years, beginning on the first Thursday in May 2015, then 2020 and so on.  However, the Act provides that a snap election can be called when the government loses a confidence motion or when a two-thirds majority of MPs vote in favour.    [2]   Subject to final confirmation following Kensington seat recount.   This client alert was prepared by London partners Stephen Gillespie, Charlie Geffen and Nicholas Aleksander and of counsel Anne MacPherson.   We have a working group in London (led by Stephen Gillespie, Nicholas Aleksander, Patrick Doris, Charlie Geffen, Ali Nikpay and Selina Sagayam) that has been considering these issues for many months.  Please feel free to contact any member of the working group or any of the other lawyers mentioned below. Ali Nikpay – AntitrustANikpay@gibsondunn.comTel: 020 7071 4273 Charlie Geffen – CorporateCGeffen@gibsondunn.comTel: 020 7071 4225 Stephen Gillespie – FinanceSGillespie@gibsondunn.com Tel: 020 7071 4230 Philip Rocher – LitigationPRocher@gibsondunn.com Tel: 020 7071 4202 Jeffrey M. Trinklein – TaxJTrinklein@gibsondunn.com Tel: 020 7071 4224 Nicholas Aleksander – TaxNAleksander@gibsondunn.com Tel: 020 7071 4232 Alan Samson – Real EstateASamson@gibsondunn.comTel:  020 7071 4222 Patrick Doris – Litigation; Data ProtectionPDoris@gibsondunn.comTel:  020 7071 4276 Penny Madden QC – ArbitrationPMadden@gibsondunn.comTel:  020 7071 4226 James A. Cox – Employment; Data ProtectionJCox@gibsondunn.com Tel: 020 7071 4250   Gregory A. Campbell – RestructuringGCampbell@gibsondunn.com Tel:  020 7071 4236 Selina Sagayam – Corporate SSagayam@gibsondunn.comTel:  020 7071 4263 © 2017 Gibson, Dunn & Crutcher LLP Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

April 21, 2017 |
What the UK’s Snap General Election Means for Brexit

The UK prime minister Theresa May has called a surprise general election for 8 June 2017[1].  Earlier this week she won a House of Commons vote by 522 to 13 to override the standard five year fixed term between general elections. Theresa May is hoping the early election will convert her current working majority of 17 MPs in the House of Commons into a much bigger majority (with some predictions of a "landslide" victory).  The prime minister says this will strengthen her hand in Brexit negotiations and provide the "strong and stable leadership" the country needs. Brexit negotiations will begin in earnest after the elections in France (the first round takes place on 23 April 2017, with the top two candidates facing each other in a second run-off on 7 May 2017) and Germany (24 September 2017).  A Conservative victory will not mean more leverage over the EU.  But a strong majority may free Theresa May from unwanted interference during the talks, from both within and outside her party.  Theresa May became Prime Minister after David Cameron resigned following last June’s Brexit referendum and without winning an election.  If Theresa May can extend her party’s narrow majority in Parliament, she will have consolidated her party’s power and secured an electoral endorsement of her Brexit negotiating stance. The prime minister’s requirement for restrictions on free movement of people may make it difficult for the UK to remain in the EU single market and the customs union.  If Theresa May wins a bigger majority, she will claim a personal mandate for her "hard" Brexit; and pro-EU MPs, particularly in the Conservative party, may be increasingly reluctant to oppose her. The House of Lords will still have a "soft" Brexit majority but, without backing in the House of Commons, it will be much more difficult politically and constitutionally for the unelected second chamber to hold the government to account. A strong electoral win will also make it more difficult for MPs to oppose the concessions that Theresa May will inevitably have to make during the complex negotiations with the EU.  In particular, it should mean Theresa May is less reliant on those in her party demanding a clean break from the EU no matter the economic cost (the so-called "cliff edge" dreaded by banks and businesses). Unless otherwise agreed with the EU member states, the UK will be out of the EU by end March 2019.  A larger majority of Conservative MPs may more readily accept a transitional arrangement at that stage, allowing the UK more time to negotiate whilst accepting interim terms from the EU that are likely to be similar to existing arrangements. Theresa May’s decision to call a snap election means the next UK general election will be delayed from 2020 to 2022. This affords the Conservatives some breathing space.  The Conservatives did not want to be negotiating an exit deal with the EU whilst beginning to campaign for the next general election, with concerns that an impending election might put the prime minister "over a barrel" during the final negotiations.  Labour, the UK’s official opposition party, has said it will lay out its position on Brexit in its election manifesto.  However the party is perceived to be in disarray under Jeremy Corbyn’s leadership and it is widely expected to lose a number of seats to the Conservatives in the June election.  There is a  risk that the election increases support for independence in Scotland.  A majority of voters in Scotland wanted to remain in the EU and Scotland’s First Minister Nicola Sturgeon has said that she will "make Scotland’s voice heard".  Another strong Scottish National party performance in the general election will no doubt boost its demands for a second referendum on Scottish independence. That said, the Conservatives currently hold just one seat in Scotland.  If the Conservatives manage to gain more support in Scotland on a unionist platform, they will argue Nicola Sturgeon should rethink her independence plans. Theresa May’s leadership has until now been dominated by Brexit.  The election campaign will allow Theresa May to set out in full her vision for domestic policy.  David Cameron’s previous spending commitments on health, education and state pensions may be revised.  The election may also give the prime minister a mandate to roll-back some of the constitutional initiatives introduced in the Tony Blair administration, including the incorporation of the European Convention on Human Rights into UK domestic law and the introduction of the Freedom of Information Act in 2000.    [1]   UK Parliament – MPs approve an early general election This client alert was prepared by London partners Stephen Gillespie, Charlie Geffen and Nicholas Aleksander and of counsel Anne MacPherson.   We have a working group in London (led by Stephen Gillespie, Nicholas Aleksander, Patrick Doris, Charlie Geffen, Ali Nikpay and Selina Sagayam) that has been considering these issues for many months.  Please feel free to contact any member of the working group or any of the other lawyers mentioned below. Ali Nikpay – AntitrustANikpay@gibsondunn.comTel: 020 7071 4273 Charlie Geffen – CorporateCGeffen@gibsondunn.comTel: 020 7071 4225 Stephen Gillespie – FinanceSGillespie@gibsondunn.com Tel: 020 7071 4230 Philip Rocher – LitigationPRocher@gibsondunn.com Tel: 020 7071 4202 Jeffrey M. Trinklein – TaxJTrinklein@gibsondunn.com Tel: 020 7071 4224 Nicholas Aleksander – TaxNAleksander@gibsondunn.com Tel: 020 7071 4232 Alan Samson – Real EstateASamson@gibsondunn.comTel:  020 7071 4222 Patrick Doris – Litigation; Data ProtectionPDoris@gibsondunn.comTel:  020 7071 4276 Penny Madden QC – ArbitrationPMadden@gibsondunn.comTel:  020 7071 4226 James A. Cox – Employment; Data ProtectionJCox@gibsondunn.com Tel: 020 7071 4250   Gregory A. Campbell – RestructuringGCampbell@gibsondunn.com Tel:  020 7071 4236 Selina Sagayam – Corporate SSagayam@gibsondunn.comTel:  020 7071 4263 © 2017 Gibson, Dunn & Crutcher LLP Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

March 29, 2017 |
UK Government Triggers Article 50

The UK government has today triggered Article 50 – the official legal notification to the EU that the UK is going to leave the bloc[1].  This means that, unless otherwise agreed with the EU member states, the UK will be out of the EU by end March 2019. The Supreme Court ruled in January 2017 that the UK government could not invoke Article 50 without first obtaining the approval of Parliament.  The European Union (Notification of Withdrawal) Act 2017 has now been approved by Parliament and received Royal Assent on 16 March 2017.  This Act is now law, and it authorises the Prime Minister to give notice under Article 50. The UK now has two years to negotiate the terms of its new relationship with the EU.  This incredibly complex process will involve unpicking 43 years of political, economic, legal  and regulatory integration with the EU. A broad outline of the Brexit deal being sought by the UK government was given in a White Paper on 2 February 2017[2].  However the White Paper sets out only very high level aims and is light on any detail.  The White Paper states that the UK will not  stay in the EU’s single market as it would mean the UK staying under the auspices of the Court of Justice of the European Union and having to allow unlimited EU immigration. But the UK will instead pursue an ambitious and comprehensive free trade agreement and a new customs agreement. The UK Parliament will have to ratify the eventual withdrawal agreement.  On the EU-side, the final agreement must be agreed by the Council of the European Union (through a so-called qualified majority vote, being 72% of EU member states representing at least 65% of the EU population) and the European Parliament.  In addition, if the final draft is considered a "mixed agreement" that covers issues over which both the EU and a member state have responsibility (e.g., security or foreign policy issues), the agreement will need to be ratified by the parliament of every member state; this means every EU country would have a veto.  If no deal is reached within the two-year period, the negotiating period can be extended by unanimous agreement of the European Council.  The UK will otherwise leave the EU with no withdrawal agreement in place. A legal challenge has begun in the High Court in Dublin to determine whether Article 50 can be withdrawn once invoked.  Tax barrister Jolyon Maugham and others are hoping the Irish courts will make a referral to the Court of Justice of the European Union on the issue.  If the CJEU were to rule that Article 50 is revocable, it would enable the UK to reject the outcome of Brexit negotiations should they not prove acceptable to the UK Parliament or voters, and remain in the EU.  Scotland’s First Minister Nicola Sturgeon has said that it is "democratically unacceptable" that Scotland faces being taken out of the EU when a majority of voters in Scotland wanted to remain.  The Scottish Parliament has voted this week to back Nicola Sturgeon’s call for a second referendum on independence from the United Kingdom (her SNP government won the vote with the support of the Scottish Greens, despite opposition from the Conservatives, Labour and Liberal Democrats).  Nicola Sturgeon will now ask for permission from the UK Parliament to hold a second referendum on Scottish independence between the autumn of 2018 and the spring of the following year.  That would coincide with the expected conclusion of the Brexit negotiations.  The UK government has already said it will block a vote within two years (saying "now is not the time"), but may leave the doors open for a vote after the Brexit deal is done.  There is some suggestion that Nicola Sturgeon accepts this position, albeit not publicly.  Sinn Fein (the second largest party in the Northern Irish Assembly) has called for a referendum on Northern Ireland leaving the UK and joining the Republic of Ireland.  In Wales, Plaid Cymru (the third largest party in the Welsh Assembly, after Labour and Conservatives) has stated that "all options should be on the table" following Brexit. In brief – key players for Brexit negotiations UK Theresa May, UK Prime Minister David Davis, Secretary of State for Exiting the European Union Liam Fox, Secretary of State for International Trade Boris Johnson, Secretary of State for Foreign and Commonwealth Affairs UK Civil Service, including Department for Exiting the EU and Department for International Trade EU The European Council (comprising heads of the 28 member states together with its President Donald Tusk and the President of the European Commission Jean-Claude Juncker) defines the EU’s overall direction and priorities.  The Council of the European Union (made up of ministers from member states) negotiates and adopts legislation and concludes international agreements.  Didier Seeuws, a Belgian diplomat, has been appointed by the Council to lead its taskforce on Brexit. The European Commission (the EU’s "civil service") supports the Council in undertaking negotiations.  Michel Barnier, former Vice-President of the European Commission and former French Europe Minister, has been appointed by the Commission as its European Chief Negotiator for Brexit. The European Parliament (comprising elected MEPs from each member state) scrutinises, amends and adopts legislation and international agreements.  The European Parliament has elected Guy Verhofstadt, a former Belgian Prime Minister and MEP, to act as its representative during negotiations. Subject to French (7 May 2017) and German (24 September 2017) elections this year, the French President and German Chancellor are expected to play key roles in the negotiations.    [1]   https://www.gov.uk/government/publications/prime-ministers-letter-to-donald-tusk-triggering-article-50    [2]   https://www.gov.uk/government/publications/the-united-kingdoms-exit-from-and-new-partnership-with-the-european-union-white-paper This client alert was prepared by London partners Stephen Gillespie, Charlie Geffen and Nicholas Aleksander and of counsel Anne MacPherson.  We have a working group in London (led by Stephen Gillespie, Nicholas Aleksander, Patrick Doris, Charlie Geffen, Ali Nikpay and Selina Sagayam) that has been considering these issues for many months.  Please feel free to contact any member of the working group or any of the other lawyers mentioned below. Ali Nikpay – AntitrustANikpay@gibsondunn.comTel: 020 7071 4273 Charlie Geffen – CorporateCGeffen@gibsondunn.comTel: 020 7071 4225 Stephen Gillespie – FinanceSGillespie@gibsondunn.com Tel: 020 7071 4230 Philip Rocher – LitigationPRocher@gibsondunn.com Tel: 020 7071 4202 Jeffrey M. Trinklein – TaxJTrinklein@gibsondunn.com Tel: 020 7071 4224 Nicholas Aleksander – TaxNAleksander@gibsondunn.com Tel: 020 7071 4232 Alan Samson – Real EstateASamson@gibsondunn.comTel:  020 7071 4222 Patrick Doris – Litigation; Data ProtectionPDoris@gibsondunn.comTel:  020 7071 4276 Penny Madden QC – ArbitrationPMadden@gibsondunn.comTel:  020 7071 4226 James A. Cox – Employment; Data ProtectionJCox@gibsondunn.com Tel: 020 7071 4250   Gregory A. Campbell – RestructuringGCampbell@gibsondunn.com Tel:  020 7071 4236 Selina Sagayam – Corporate SSagayam@gibsondunn.comTel:  020 7071 4263 © 2017 Gibson, Dunn & Crutcher LLP Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

March 1, 2017 |
Renewed Focus on Routes to Going Public

​Washington, D.C. counsel Jeff Steiner and San Francisco associate Sean Sullivan are the authors of "Renewed Focus on Routes to Going Public," [PDF] published in the Daily Journal on March 1, 2017.

February 28, 2017 |
Webcast: IPO and Public Company Readiness: Cybersecurity

​Public companies face unique challenges as they confront and seek to manage cybersecurity risk. Disclosure obligations and market reactions can intensify the pressures arising from cyber threats and incidents. Companies preparing to go public must assess their cybersecurity readiness in order to avoid or mitigate incidents that could harm their business, disrupt the IPO process or damage their reputation as a newly-public company. Companies must also be prepared to successfully respond to the scrutiny regarding cybersecurity issues in the diligence and disclosure process associated with an IPO. Our panel of Gibson Dunn partners from the Capital Markets and the Privacy, Cybersecurity and Consumer Protection practice groups provides practical advice and tips on how companies can protect their information and customers and prepare for public company reporting and scrutiny of their cybersecurity protection measures. View Slides [PDF] Who should view this program: In-house counsel, directors, senior executives, corporate secretaries and others responsible for regulatory compliance and cybersecurity at public companies and private companies preparing for an IPO. PANELISTS: Andrew L. Fabens is a partner in the New York office of Gibson, Dunn & Crutcher, where he is Co-Chair of Gibson Dunn’s Capital Markets Practice Group. Mr. Fabens advises companies on long-term and strategic capital planning, disclosure and reporting obligations under U.S. federal securities laws, corporate governance issues and stock exchange listing obligations. His experience encompasses initial public offerings, follow-on equity offerings, investment grade, high-yield and convertible debt offerings and offerings of preferred, hybrid and derivative securities. In addition, he regularly advises companies and investment banks on corporate and securities law issues, including M&A financing, spinoff transactions and liability management programs. Mr. Fabens is ranked as a leading Capital Markets lawyer by Chambers USA: America’s Leading Lawyers for Business, The Legal 500 US and Chambers Global: The World’s Leading Lawyers for Business. Stewart L. McDowell is a partner in the San Francisco office of Gibson, Dunn & Crutcher, where she is Co-Chair of Gibson Dunn’s Capital Markets Practice Group. Ms. McDowell’s practice involves the representation of business organizations as to capital markets transactions, mergers and acquisitions, SEC reporting, corporate governance and general corporate matters. She has significant experience representing both underwriters and issuers in a broad range of both debt and equity securities offerings. She also represents both buyers and sellers in connection with U.S. and cross-border mergers, acquisitions and strategic investments. Alexander H. Southwell is a partner in the New York office of Gibson, Dunn & Crutcher, where he is Chair of Gibson Dunn’s Privacy, Cybersecurity and Consumer Protection Practice Group. An experienced trial and appellate attorney, Mr. Southwell served as an Assistant United States Attorney in the United States Attorney’s Office for the Southern District of New York. His practice focuses on counseling a variety of clients on privacy, information technology, data breach, theft of trade secrets and intellectual property, computer fraud, national security, and network and data security issues, including handling investigations, enforcement defense, and litigation. In particular, Mr. Southwell regularly advises companies victimized by cyber-crimes and counsels on issues under the Computer Fraud and Abuse Act, the Economic Espionage Act, the Electronic Communications Privacy Act, and related federal and state statutes. Mr. Southwell was named a Law360 “MVP” in Privacy in both 2015 and 2016 – one of five “elite attorneys” recognized – for his “successes in high-stakes litigation”; ranked in White Collar Litigation by Chambers USA, and selected as a Cybersecurity and Data Privacy Trailblazer in 2015 by The National Law Journal. Peter W. Wardle is a partner in the Los Angeles office of Gibson, Dunn & Crutcher, where he is Co-Chair of Gibson Dunn’s Capital Markets Practice Group. Mr. Wardle’s practice includes representation of issuers and underwriters in equity and debt offerings, including IPOs and secondary public offerings, and representation of both public and private companies in mergers and acquisitions, including private equity, cross-border, leveraged buy-out, distressed and going private transactions. He also advises clients on a wide variety of general corporate and securities law matters, including corporate governance issues.   MCLE CREDIT INFORMATION: This program has been approved for credit in accordance with the requirements of the New York State Continuing Legal Education Board for a maximum of 1.0 credit hour, of which 1.0 credit hour may be applied toward the areas of professional practice requirement.  This course is approved for non-transitional credit only. Attorneys seeking New York credit must obtain an Affirmation Form prior to watching the archived version of this webcast.  Please contact Jeanine McKeown (National Training Administrator), at 213-229-7140 or jmckeown@gibsondunn.com to request the MCLE form. Gibson, Dunn & Crutcher LLP certifies that this activity has been approved for MCLE credit by the State Bar of California in the amount of 1.0 hour. California attorneys may claim “self-study” credit for viewing the archived version of this webcast.  No certificate of attendance is required for California “self-study” credit.

January 24, 2017 |
UK Supreme Court Rules Parliament Must Hold Vote on Article 50

The Supreme Court (the UK’s highest court) has ruled today that parliament must vote on whether the UK can start the process of leaving the European Union.  The Supreme Court held by a majority of eight to three that the UK government cannot trigger Article 50 – the official legal notification to the EU that the UK is going to leave the bloc – without an act of parliament authorising it to do so.  The landmark decision upholds a High Court ruling handed down last November.  The UK government had argued that royal prerogative powers mean MPs do not need to vote on triggering Article 50.  The Supreme Court rejected this.  Withdrawal from the EU will fundamentally change the UK’s constitutional arrangements because it will cut off the source of EU law: "Where, as in this case, implementation of a referendum result requires a change in the law of the land, and statute has not provided for that change, the change in the law must be made in the only way in which the UK constitution permits, namely through parliamentary legislation." The Supreme Court also ruled that UK ministers are not legally compelled to consult the devolved governments of Scotland, Wales and Northern Ireland before triggering Article 50.  The Supreme Court unanimously held that relations with the EU are reserved to the UK government and parliament, not to the devolved institutions. The government’s parliamentary bill on Article 50 is likely to be very short.  Whilst MPs will probably be reluctant to ignore last June’s (non-binding) EU referendum result and block the bill, they may seek to impose additional conditions.  Labour leader Jeremy Corbyn has said his party would seek to amend it "to make demands on rights, protections and market access".  The SNP has vowed to put forward fifty "serious and substantive" amendments to the bill. The Article 50 bill will be given an accelerated passage through both Houses of Parliament.  This means the Supreme Court ruling may not change the government’s timetable for triggering Article 50 by end March 2017 (so that the UK would be out of the EU by end March 2019). If the government struggles to achieve parliamentary consensus, the Prime Minister could call an early general election to secure an electoral mandate for Brexit. The Supreme Court did not give its views on whether the UK may change its mind on Brexit, even after triggering Article 50.  A legal challenge is expected to begin in the High Court in Dublin later this month to determine whether Article 50 can be withdrawn once invoked.  Tax barrister Jolyon Maugham and others are hoping the Irish courts will make a referral to the European Court of Justice on the issue.  If the ECJ was to rule that Article 50 is revocable, it would enable the UK to reject the outcome of Brexit negotiations should they not prove acceptable to parliament or voters, and remain in the EU. The full judgment of the Supreme Court is here together with the court’s summary for the media. This client alert was prepared by London partners Stephen Gillespie,Charlie Geffen and Nicholas Aleksander and of counsel Anne MacPherson.  We have a working group in London (led by Stephen Gillespie, Nicholas Aleksander, Patrick Doris, Charlie Geffen, Ali Nikpay and Selina Sagayam) that has been considering these issues for many months.  Please feel free to contact any member of the working group or any of the other lawyers mentioned below. Ali Nikpay – AntitrustANikpay@gibsondunn.comTel: 020 7071 4273 Charlie Geffen – CorporateCGeffen@gibsondunn.comTel: 020 7071 4225 Stephen Gillespie – FinanceSGillespie@gibsondunn.com Tel: 020 7071 4230 Philip Rocher – LitigationPRocher@gibsondunn.com Tel: 020 7071 4202 Jeffrey M. Trinklein – TaxJTrinklein@gibsondunn.com Tel: 020 7071 4224 Nicholas Aleksander – TaxNAleksander@gibsondunn.com Tel: 020 7071 4232 Alan Samson – Real EstateASamson@gibsondunn.comTel:  020 7071 4222 Patrick Doris – Litigation; Data ProtectionPDoris@gibsondunn.comTel:  020 7071 4276 Penny Madden QC – ArbitrationPMadden@gibsondunn.comTel:  020 7071 4226 James A. Cox – Employment; Data ProtectionJCox@gibsondunn.com Tel: 020 7071 4250   Gregory A. Campbell – RestructuringGCampbell@gibsondunn.com Tel:  020 7071 4236 Selina Sagayam – Corporate SSagayam@gibsondunn.comTel:  020 7071 4263 © 2017 Gibson, Dunn & Crutcher LLP Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

November 22, 2016 |
Business Yet to Get a True Fix on Brexit Consequences

London partner Charlie Geffen and Dubai partner Hardeep Plahe are the authors of "Business Yet to Get a True Fix on Brexit Consequences" [PDF] published on November 22, 2016 by Gulf News.

November 15, 2016 |
The Trump Presidency: Selected Initial Observations and Considerations

There is widespread speculation regarding what President-elect Donald Trump and a Republican-controlled Congress will choose to prioritize and pursue in 2017 and beyond.  With the majority of pollsters and media observers incorrectly forecasting a victory for Hillary Clinton, many are just now beginning to assess how they will operate under, and the potential opportunities presented by, the policies of the Trump administration and the Republican-led Congress.  We would like to share with you some of our initial observations about the potential effects that may be forthcoming in the near term.  With Republicans claiming the White House and maintaining control of both the House of Representatives and the Senate, we expect a flurry of legislative and administrative activity consistent with campaign promises made by the Trump campaign.  This is likely to include efforts to deregulate in a number of areas, a repeal of certain parts of the Affordable Care Act, a possible overhaul of certain aspects of the tax code, an infrastructure financing package, the renegotiation of free trade agreements, including NAFTA, and changes to banking and securities regulation.  There are, however, still many questions about what the President-elect will be able to accomplish legislatively given that the Republican majority in the Senate will be operating with at least two fewer seats and that some campaign positions, like opposition to NAFTA, are not shared by a number of fellow Republicans.  Congressional leadership is talking about moving an Affordable Care Act repeal/replace bill and a tax bill through the budget reconciliation process.  While that strategy certainly is possible, it is not clear how its execution might impact the willingness of Senate Democrats to negotiate towards other legislative achievements.  Notwithstanding their control of both chambers, Republicans will need Democratic support to move legislation outside of the reconciliation process, where filibusters are likely to occur absent bipartisan agreements on bill language.  It will also be interesting to see how policy is actually shaped over the next few years, particularly given that Mr. Trump’s positions on certain issues are likely to differ from what has previously been considered "traditional" Republican orthodoxy. The influence of Senate Democrats may have a tempering effect on the sweeping nature of the proposals that Republicans have put forth in the campaign.  For example, Senate Democrats may seek to negotiate and limit changes to the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank), whose reform is expected to be a key Republican legislative priority.  That said, Republicans may well have at least a four-year window in which to enact legislative priorities, as political observers note that the House of Representatives is unlikely to change hands in the 2018 midterm elections and Senate Democrats will be defending 25 seats (including a number in states that voted for President-elect Trump), while the Republicans will be defending only eight in mid-term elections. In addition to legislation, wide-ranging regulatory changes are anticipated as a result of the President’s power to fill senior positions in federal agencies.  The President-elect’s transition team is just beginning to make announcements about the individuals who will play key roles in the Trump administration, and many positions will require Senate confirmation.  President-elect Trump’s stated commitment to draft individuals with significant private sector experience for senior leadership positions in the Executive Branch may contribute to a regulatory environment that is viewed as business-friendly across a number of federal agencies.  In particular, we would expect a new emphasis on cost-benefit analyses of particular regulations, which in turn will provide an additional avenue for challengers of those regulations to seek relief in court.  And, given the slim Republican Senate majority, it is quite possible that significant regulatory changes will come more quickly than legislative ones. While no one can predict the medium- to long-term implications of this election, we can be sure that the next few years will be a time of change in the legal and regulatory environment in which our clients operate.  A few of our initial observations on selected areas of law and industries are set forth below.  As more information becomes available on specific legislative and regulatory proposals over the next few weeks, we will provide additional analysis and commentary on these and other areas. The Securities and Exchange Commission and Other Securities Matters  Preliminary Considerations.  The central role of the Securities and Exchange Commission (the SEC) in how businesses operate and grow in America means that we can expect the direction of the SEC to change.  It will likely be some time before the SEC’s direction takes shape and the SEC is operating with a full complement of five Commissioners, which will include a new Chair (who will likely be a Republican).  Since January, only three out of five Commission seats have been occupied, as several Senators have blocked confirmation of two recent nominees that are highly unlikely to be confirmed before the end of the Obama administration.  Yesterday, SEC Chair Mary Jo White announced that she will step down on January 20 when President-elect Trump is inaugurated.  Michael Piwowar, the sole Republican on the Commission, is expected to be appointed Chair for at least an interim period.  The term of the other remaining Commissioner, Democrat Kara Stein, expires in 2017. In the longer term, the process of identifying and confirming three nominees for the Commission will likely take several months, particularly if relations between the parties in the Senate are polarized.  Until that time, the SEC will be left to operate with just two commissioners, and as a result, will have difficulty proposing any new regulations or changes to existing ones. Once the SEC is more fully operational, following the appointment of new Commissioners, we expect to see a focus on increased deregulation and more self-regulation initiatives. For example, there may be renewed efforts to revise various disclosure-related sections of Dodd-Frank and a scaling back of related SEC regulations.  Any efforts to amend SEC rules that have already been adopted, such as those related to CEO pay ratios (which are to go into effect in 2017 and require disclosure by public companies the following year) and conflict minerals, would require a new rulemaking process including a period of public notice and comment.  In addition, the SEC staff may be active in publishing interpretations and other guidance to facilitate compliance with existing rules and provide greater context with respect to how companies should comply with these rules. Other initiatives that have been generally disfavored by the Republicans, such as proposed rules to implement a universal proxy card and the rulemaking petition advocating corporate political spending disclosure, are unlikely to move forward under the new SEC leadership.  Under Republican leadership, the SEC’s disclosure simplification project is likely to result in more trimming of, rather than adding to, the disclosure obligation landscape, if the project moves forward at all.  In addition, President Trump and the Republican-led Congress may seek to reduce, or least stop the growth in, the SEC’s annual budget.  That could have an impact on a number of aspects of the SEC’s work.  For example, recent years saw a steady rise in the number of enforcement actions, but a budget cut could potentially reduce the number and scope of new investigations. Regulation of the Capital Markets.  A number of financial market observers have speculated that Republican leadership in Washington may lead to a further easing of the regulation of capital raising, particularly by smaller companies.  Indeed, Republicans in the House of Representatives may dust off and expand the scope of previous legislative initiatives aimed at reducing burdens and costs associated with raising capital in the public markets and the requirements of being a public company.  Current uncertainties, and potentially volatile stock and bond markets, could drive deal making in the near term.  For example, the volatility could lead companies to seek to position themselves to more quickly access the market and take advantage of market windows, including through shelf registration statement takedowns and through the establishment and use of at-the-market (ATM) programs and medium term note (MTN) programs.  Companies may also choose to be ready to take advantage of potential opportunities for share or bond repurchases presented by volatile markets.  In addition, some observers have speculated that changes with respect to trade policy could result in a devaluation of the U.S. dollar versus other currencies, particularly those in Asia.  That devaluation, should it occur, could attract foreign investors who may seek to engage in private-placement-public-equity (PIPE) transactions, among other investment methods, to invest in domestic growth companies, particularly in the technology and biotech industries. Enforcement Actions.  While President-elect Trump’s campaign did not offer detailed proposals with respect to the SEC’s Division of Enforcement, there are already initial indications of potential changes for that division.  Former SEC commissioner Paul Atkins is a member of President-elect Trump’s transition team reviewing federal financial agencies.  As a past Commissioner (and in the years since), Atkins has criticized many aspects of financial regulation (including, in particular, significant components of Dodd-Frank) and has been a critic of SEC enforcement priorities and initiatives.  For example, Atkins has pushed the Enforcement Division to focus greater attention on traditional "retail" securities fraud cases, such as Ponzi schemes and penny stock fraud.  We can expect greater prioritization of straightforward fraud and misappropriation investigations and less emphasis on expanding the boundaries of the federal securities laws through novel enforcement actions. Atkins and other Republican-appointed Commissioners have also criticized the assessment of large fines on public companies, which have been a mainstay of enforcement actions in recent years. The Republican Congress is also likely to seek changes to the reach of Dodd-Frank, which will have some impact on enforcement.  For example, under Dodd-Frank, private equity and hedge funds managers became subject to SEC examinations, a number of which resulted in enforcement referrals.  The revision of provisions relating to the regulation of private funds could take the wind out of recent enforcement efforts to sanction inadequate disclosures of fees and expenses by these funds.  Similarly, the increasing use of administrative proceedings rather than federal court trials in the wake of Dodd-Frank may be curtailed, with more contested actions being brought in court.  Further, the significant impact of whistleblowers, who are entitled to sizable cash awards under Dodd-Frank, may see some changes as well. Tax Matters President-elect Trump’s tax proposals seek to make a number of changes that are premised on the notion that lower tax rates will help to stimulate the economy and fuel growth.  While high-income taxpayers would benefit substantially from his plan, middle- and lower-income families  could also see significant tax reductions under the President-elect’s campaign proposals, especially after taking into account the various child and elder care provisions.  Given the recent Congressional requirement for revenue neutrality and economic data estimating multi-trillion dollar increases in the federal deficit that could result from the plan, however, whether the extent of the tax cuts included his plan will survive the legislative process remains uncertain.  Many speculate that a Trump administration will either repeal or substantially amend certain regulations issued in the period leading up to this election.  These could include the recently issued regulations under Sections 385 and 7874 of the Internal Revenue Code, which address the treatment of related party debt and corporate inversions.  Also potentially on the chopping block are the recently proposed regulations under Section 2704, which if finalized in their proposed form would increase the valuation of interests in closely held businesses for estate tax purposes.  The following is a general summary of the major aspects of President-elect Trump’s tax plan.  Some tax reductions may be scaled back, and additional tax breaks (beyond those specifically referenced in the plan) may be eliminated or curtailed.  Individuals.  President-elect Trump’s current plan would lower the maximum marginal ordinary income tax rate from 39.6 percent to 33 percent, reduce the number of tax brackets from 7 to 3 and eliminate both the alternative minimum tax and the 3.8 percent investment income tax.  The maximum 20 percent tax on capital gains would remain unchanged.  Trump’s plan calls for a 15 percent tax rate on business income for businesses that "want to retain their profits in the business," which presumably includes the income of flow-through entities, such as tax partnerships and S corporations owned by individuals, but is short on specifics with respect to implementation.  Questions include whether the new tax rate would apply only to income used to increase "business" assets, as opposed to income distributed or converted to cash or other liquid investments. Several tax breaks would be available for families with children or caring for the elderly, limited to those making less than $500,000 ($250,000 for single filers) per year.  Several other benefits would apply to lower income families, including 50 percent government matching funds (with limits) for dependent care savings accounts.  These seemingly generous tax breaks will be tempered, however, including by the fact that personal exemptions would be eliminated (with an increase in the standard deduction to $30,000 for married joint filers), and only $200,000 ($100,000 for single returns) of itemized deductions would be allowed.  Finally, so-called "carried interest"–typically a percentage of investment fund profits paid to the fund sponsor in excess of the sponsor’s capital investment percentage–would be taxed as ordinary income, a topic that has been on the legislative radar for years. The possibility of lower tax rates and a cap on itemized deductions means that taxpayers may want to consider accelerating itemized deductions into 2016, although many other issues come into play in making this decision, including the effect of alternative minimum tax and certain tax credits.  We expect these proposals will lead to increased charitable giving before year end. Businesses.  As mentioned above, under President-elect Trump’s current proposals business income would be subject to a maximum 15 percent rate (subject to the "retained in the business" issue), and the corporate alternative minimum tax would be eliminated.  Depreciation deductions would be replaced with immediate write-offs for U.S. manufacturers, but those taxpayers would not be entitled to deduct interest expense.  Perhaps the hottest topic of the Trump proposals is the ability of U.S. corporations with untaxed, undistributed earnings of non-U.S. subsidiaries to distribute those earnings at a tax rate of only 10 percent as opposed to the current 35 percent.  This will enable corporations to bring money back to the U.S. that is currently being held offshore.  The plan also calls for the elimination of "corporate tax expenditures," but includes no details regarding what those expenditures entail other than that the research and development tax credit would be retained.  Some speculate Trump favors a territorial tax system that is expected to eliminate the ability of corporations to avoid income tax by shifting earnings to low-tax foreign countries.  Other tax expenditures subject to repeal could include the low-income housing credit, last-in first-out inventory accounting and the ability to defer tax using like-kind exchanges of property. Estates.  President-elect Trump’s plan would repeal the estate tax, but would limit the "basis step-up" at death to estates worth less than $10,000,000.  While the specifics of the plan are not entirely clear, estates valued in excess of $10,000,000 would not receive the basis step-up, and therefore appreciation in the assets of those estates would be subject to tax upon a taxable disposition.  Whether the first $10,000,000 of value on estates valued in excess of $10,000,000 would escape this treatment and how the proposal would apply to married couples are two questions that remain outstanding based on the current language of the proposals.  The plan would also limit the ability to reduce the size of an estate by contributing assets to certain private charities. Industry-Specific Considerations Legislative and regulatory changes will certainly affect businesses across all industries in the next few years.  While the extent to and speed with which these changes will be made remain unknown, there are a few early observations we can offer with respect to a few of the industries in which our clients operate as described below, which we will update as the policy implications become more clear.  Energy.  President-elect Trump campaigned heavily on boosting traditional domestic energy production and seeking to reduce regulations on the oil, gas, and coal industries.  Specifically, he has expressed support for opening public lands for drilling and mining and for reducing regulations on hydraulic fracturing (fracking) in an effort to increase production.  The midstream sector may also benefit from his support of energy-related infrastructure projects, including the opening of new pipelines.  He has also expressed support for repealing regulations on the coal industry while reducing governmental support for the renewable energy sector, including the elimination of subsidies to wind and solar firms.  Beyond his domestic initiatives, Trump’s foreign policy plans include uncertainties for the energy industry, including opposition to the Paris Accord on climate change and opposition to lifting sanctions on Iran, implicating foreign oil production levels. Banking.  With respect to bank and derivatives regulation, the effects of the election are still unclear.  While the election was marked by negative sentiments towards both Wall Street and the regulatory agencies that supervise its activities, few of the specific policy proposals articulate what reform would entail.   That said, during the campaign, President-elect Trump made clear his general view that overregulation of all sectors of the economy was hampering growth and job creation, and thus a deregulatory agenda is to be expected.  In the short term, we can expect there will be a slowdown in the remaining required regulatory implementation of Dodd-Frank, where there is still substantial agency action needed, even though six years have passed since the statute was enacted.  With respect to the Dodd-Frank statute itself, at this time it appears reform is more likely than outright repeal, given that the Republicans do not have a filibuster-proof majority in the Senate.  Potential areas for bipartisan legislation include relief for community and regional banks, narrowing the extraterritorial application of Title VII of Dodd-Frank’s derivatives market reforms, and, possibly, imposing additional constraints on agency rulemaking.  There will likely be support for requiring more cost-benefit analysis when financial regulations are proposed, which in turn would give the market participants additional arguments when challenging such rulemakings.  The question is, however, whether Democrats will support greater cost-benefit analysis requirements.  For more extended analysis of the likely effects of the election on the financial services industry, please see our client alert available at: http://www.gibsondunn.com/publications/Pages/Financial-Regulatory-Reform-Under-a-Trump-Presidency–What-We-Know-and-What-to-Expect.aspx. Healthcare.  A Trump presidency is being viewed as a boon for the healthcare and biotech industries.  Both the Dow and S&P Biotech Indexes have risen over 10 percent in the days following the election.  In his 100-day Action Plan, the President-elect has promised to reform the FDA by cutting the red tape associated with the drug approval process.  While the action plan is short on specifics, a streamlined approval process would allow more drugs to enter the market at a faster rate, which would be quite beneficial to drug companies.  Trump’s victory also eliminates concerns held by many healthcare and biotech companies regarding Clinton’s aggressive drug price control and cost-containment agenda.  In terms of taxes, President-elect Trump promised to lower the business tax rate from 35 to 15 percent and the repatriation rate to 10 percent.  This would allow large pharmaceutical companies to bring back the billions of dollars currently trapped overseas and would likely incite a mergers and acquisitions binge in the biotech industry.  Of course, one of Trump’s signature campaign promises was to repeal or overhaul the Affordable Care Act.  We believe that there is a reasonable chance Trump will attempt to accomplish this pledge during his first 100 days in office. Technology.  As a candidate, President-elect Trump offered relatively few specific plans with respect to the technology industry and policies addressing intellectual property and other matters of importance to the industry.  Proposed changes to the tax code, as discussed above, that have been of interest to congressional Republicans for years could result in repatriation of some of the estimated $2 trillion that American companies currently hold offshore.  That cash could be put to use in enhanced research and development initiatives or for acquisitions.  A Trump administration may also seek to scale back Obama-era reforms regarding net neutrality and the FCC or simply choose not to enforce them.  One of President Obama’s signature initiatives involved reclassifying broadband providers as Tier II common carriers and preventing internet service providers from speeding up, blocking or throttling internet traffic in exchange for payment. Although not a campaign issue, some congressional Republicans have pursued bills to limit the FCC’s authority and to eliminate, rewrite or relax existing rules.  President-elect Trump’s immigration policies will likely affect technology companies, which heavily recruit overseas engineers and coders to meet domestic labor shortages. Trump’s policy in this regard is uncertain: he has both opposed H-1B specialty occupation non-immigrant visas and supported highly skilled immigration to the U.S.  Additionally, technology and other sale transactions with foreign buyers from certain countries, including China, may face a stiffer review when seeking approval from the Committee on Foreign Investment in the United States (CFIUS). Gibson Dunn has established a working group that will continue to monitor the developing situation in Washington, D.C. and provide insight and analysis to you in the months to come. The following Gibson Dunn lawyers assisted in the preparation of this client update:  Marc Fagel, Paul Issler, Stewart McDowell, Ryan Murr, Robyn Zolman, Arthur Long, Beth Ising, James Moloney, Lori Zyskowski, Sean Sullivan and Melanie Gertz.      Gibson Dunn’s lawyers are available to assist in addressing any questions you may have regarding these developments.  Please contact the Gibson Dunn lawyer with whom you usually work, or the following: San Francisco:Marc J. Fagel (+1 415-393-8332, mfagel@gibsondunn.com)Stewart L. McDowell (+1 415-393-8322, smcdowell@gibsondunn.com)Ryan Murr (+1 415-393-8373, rmurr@gibsondunn.com)Sean Sullivan (+1 415–393–8275, ssullivan@gibsondunn.com) Washington, D.C.:Michael D. Bopp (+1 202-955-8256, mbopp@gibsondunn.com)Thomas H. Dupree, Jr. (+1 202-955-8547, tdupree@gibsondunn.com)Elizabeth Ising – (+1 202-955-8287, eising@gibsondunn.com)Brian J. Lane (+1 202-887-3646, blane@gibsondunn.com)Ronald O. Mueller (+1 202-955-8671, rmueller@gibsondunn.com)John F. Olson (+1 202-955-8522, jolson@gibsondunn.com)Benjamin Rippeon (+1 202-955-8265, brippeon@gibsondunn.com)William S. Scherman (+1 202-887-3510, wscherman@gibsondunn.com)Joshua H. Soven (+1 202-955-8503, jsoven@gibsondunn.com) New York:Andrew L. Fabens (+1 212-351-4034, afabens@gibsondunn.com)Jose W. Fernandez (+1 212-351-2376, jfernandez@gibsondunn.com)Arthur S. Long (+1 212-351-2426, along@gibsondunn.com)Lori Zyskowski (+1 212-351-2309, lzyskowski@gibsondunn.com) Dallas:Ronald Kirk (+1 214-698-3295, rkirk@gibsondunn.com) Denver:Robyn E. Zolman (+1 303-298-5740, rzolman@gibsondunn.com) Los Angeles:Paul S. Issler (+1 213-229-7763, pissler@gibsondunn.com)Peter W. Wardle (+1 213-229-7242, pwardle@gibsondunn.com) Orange County: James J. Moloney (+1 949-451-4343, jmoloney@gibsondunn.com) © 2016 Gibson, Dunn & Crutcher LLP Attorney Advertising:  The enclosed materials have been prepared for general informational purposes only and are not intended as legal advice.

November 3, 2016 |
Horses for Courses Strategy Should Prevail in Deals

​Dubai partner Hardeep Plahe is the author of "Horses for Courses Strategy Should Prevail in Deals" [PDF] published on November 3, 2016 by Gulf News.