Latest updates

FINRA updates FAQs on new mark-up and mark-down disclosure rules for transactions in fixed-income securities
Morrison & Foerster LLP
  • Capital Markets
  • USA
  • April 03 2018

The Financial Industry Regulatory Authority (FINRA) has updated its guidance on its recent amendments to Rule 2232. The new requirements apply to transactions with retail customers in corporate and agency debt securities. Beginning on the effective date, FINRA will require confirmation disclosure of additional transaction-related information, including mark-ups and mark-downs. The goal of these new rules is to help retail customers to better understand and compare the costs of these transactions.

SEC breaks silence on certain cryptocurrency exchanges
Morrison & Foerster LLP
  • Capital Markets
  • USA
  • March 20 2018

The Securities and Exchange Commission (SEC) recently issued a public statement regarding exchanges and other secondary trading platforms that list or facilitate the trading of coins and tokens online. The statement emphasises that platforms offering the trading of digital assets that are securities must register with the SEC as a national securities exchange or operate under an exemption from such registration.

SEC publishes new guidance on cybersecurity disclosures and compliance practice
Morrison & Foerster LLP
  • Capital Markets
  • USA
  • March 13 2018

In an unusual step that appears to indicate renewed, if not intensified, scrutiny of public companies' cybersecurity practices by the Securities and Exchange Commission, its five commissioners have unanimously issued guidance covering a range of cybersecurity topics, including disclosure obligations, board oversight and risk management controls. Among other things, companies are advised to make cybersecurity training and compliance a priority company-wide.

SEC grants principles-based Section 3(c)(5)(C) relief
Morrison & Foerster LLP
  • Capital Markets
  • USA
  • March 06 2018

In a recent principles-based grant of relief, the Securities and Exchange Commission (SEC) focused on the business activities of the particular issuer, instead of whether a particular asset is a qualifying asset, in determining the availability of the Section 3(c)(5)(C) exemption. Mortgage real estate investment trusts should consider obtaining confirmation from the SEC regarding their own particular business activities in order to avoid any potential future uncertainty.

SEC budget highlights capital formation and small business capital formation
Morrison & Foerster LLP
  • Capital Markets
  • USA
  • February 27 2018

In the recently released Congressional Budget Justification, the Securities and Exchange Commission (SEC) highlighted a number of priorities. The request notes that the Division of Corporation Finance remains focused on measures designed to promote capital formation. It also references the SEC's intent to "propose amendments to further facilitate capital formation through exempt and registered offerings" and refers to proposed amendments to modernise disclosures applicable to real estate companies.

SEC's final rule regarding price quotes and research reports relating to security-based swaps
Morrison & Foerster LLP
  • Capital Markets
  • USA
  • February 20 2018

The Securities and Exchange Commission recently issued a final rule which provides that certain communications relating to security-based swaps (SBS) will not constitute 'offers' for the purposes of Section 5 of the Securities Act 1933. The final rule makes clear that the publication or distribution of certain price quotes relating to SBS, and of certain research reports discussing SBS, will not constitute offers of the related SBS for purposes of Section 5 and thus should not require registration.

SEC releases liquidity rule FAQs
Morrison & Foerster LLP
  • Capital Markets
  • USA
  • January 23 2018

The Security and Exchange Commission Division of Investment Management has released a series of frequently asked questions (FAQs) regarding the new liquidity rule. The FAQs relate to sub-advised funds and exchange-traded funds that meet redemptions through in-kind transfers of securities, positions and assets other than a de minimis amount of cash and are a timely reminder that the compliance date for the liquidity rule is fast approaching.

SEC's regulatory agenda revealed
Morrison & Foerster LLP
  • Capital Markets
  • USA
  • January 16 2018

The Securities and Exchange Commission (SEC) recently published an update to its regulatory agenda for 2018 as part of a broad rulemaking agenda published by the Office of Management and Budget, which lists the rules that agencies and departments intend to propose or finalise within one year. It appears that the SEC will focus on new regulations that streamline or reduce regulation while delaying consideration of rules that could add regulatory burden.

New staff guidance on shareholder proposals
Morrison & Foerster LLP
  • Capital Markets
  • USA
  • January 09 2018

The Securities and Exchange Commission Division of Corporation Finance recently released a staff legal bulletin which provides new guidance on how staff will evaluate arguments for the omission of a shareholder proposal from their proxy materials and the submission of a proposal by a representative on behalf of a shareholder, among other things. Given the significance of the topics addressed, Senior Special Counsel Matt McNair took time to answer questions regarding the guidance.

Don't be afraid to ask – SEC staff ready to respond to Rule 3-13 waiver requests from registrants
Morrison & Foerster LLP
  • Capital Markets
  • USA
  • December 19 2017

Rule 3-13 of Regulation S-X allows the Securities and Exchange Commission (SEC) to permit the omission of financial statements otherwise required by the SEC rules or their substitution by financial statements of a comparable character. The chief accountant of the SEC Division of Corporation Finance has now reminded registrants that the SEC is willing to consider and process Rule 3-13 waiver requests. Under a pilot programme, SEC staff should respond within five days.

Capital formation bills pass House Financial Services Committee
Morrison & Foerster LLP
  • Capital Markets
  • USA
  • December 05 2017

The House Financial Services Committee recently approved 23 bills. These included various bills to facilitate capital formation and reduce certain regulatory requirements, such as the Regulation A+ Improvement Act and the Corporate Governance Reform and Transparency Act 2017.‎ The chair of the committee stated that the bills "will provide smaller businesses with greater access to the capital markets so those businesses can grow and create jobs".

Recent SEC and FINRA actions relating to survivor's options
Morrison & Foerster LLP
  • Capital Markets
  • USA
  • November 28 2017

A seasoned investment banker established a hedge fund and solicited terminally ill patients to open brokerage accounts as joint tenants with rights of survivorship. Upon the death of a patient, the investment banker exercised the survivor's option and assigned the profits to the hedge fund. The Securities and Exchange Commission filed charges against those behind this investment strategy for possible securities law violations, which were recently dismissed by an SEC administrative law judge.

Securities rating agency not entitled to refund of erroneously remitted sales tax
Morrison & Foerster LLP
  • Capital Markets
  • USA
  • November 21 2017

A New York state administrative law judge recently upheld the denial of a securities rating agency's request for a refund of sales tax. The judge rejected the agency's argument that it had paid the sales tax on behalf of its customers, finding that it did not demonstrate that the tax had not been collected from its customers. The decision seems to elevate form over substance, as it seems logical to conclude that it was the agency that bore the cost of (and actually paid) the sales tax.

SEC solves Section 28(e) MiFID II compliance conundrum – for now
Morrison & Foerster LLP
  • Capital Markets
  • USA
  • November 07 2017

In a series of recent no-action letters, the Securities and Exchange Commission published guidance to address concerns by US broker-dealers and investment advisers about how to comply with EU Markets in Financial Instruments Directive rules that limit the use of soft dollars. The long-awaited guidance provides some clarity for financial institutions faced with the dilemma of how to comply with conflicting US and EU regulatory requirements.

Bipartisan congressional legislation introduced aimed at increasing IPO activity
Morrison & Foerster LLP
  • Capital Markets
  • USA
  • October 17 2017

Congressmen Ted Budd and Gregory Meeks recently introduced a bipartisan bill, HR 3903, in the US House of Representatives. The bill proposes amendments to the Securities Act 1933, as amended, to increase initial public offering and follow-on activity. The proposed legislation extends three JOBS Act provisions currently available to emerging growth companies to all issuers.

SEC chief accountant gives remarks on initial coin offerings
Morrison & Foerster LLP
  • Capital Markets
  • USA
  • October 10 2017

Securities and Exchange Commission Chief Accountant Wesley Bricker recently gave a speech at the Association of International Certified Professional Accountants National Conference on Banks and Savings Institutions. Bricker dedicated a portion of the speech to discussing the importance of broker-dealer compliance, as well as regulatory and financial reporting requirements relating to initial coin offerings.

Office of Investor Advocate addresses FASB's proposal to remove definition of 'materiality'
Morrison & Foerster LLP
  • Capital Markets
  • USA
  • October 03 2017

Stephen Deane of the Office of the Investor Advocate recently gave a speech addressing two proposed updates issued by the Financial Accounting Standards Board (FASB) in 2015 that refer to materiality as a legal concept – or rather, rely on the courts to provide the definition of 'materiality'. The FASB held a public roundtable on the proposed updates in March 2017, but they remain under consideration.

SEC approves NYSE proposed rule change requiring advance notice of dividend and stock distribution announcements
Morrison & Foerster LLP
  • Capital Markets
  • USA
  • September 12 2017

The Securities Exchange Commission recently approved the New York Stock Exchange's (NYSE's) proposed rule change amending several sections of its NYSE Listed Company Manual. The changes require listed companies to provide notice to the NYSE at least 10 minutes before making any public announcement about a dividend or stock distribution made at any time, rather than just during the hours of operation of the immediate release policy, which had been the case previously.

Division of Investment Management eases compliance deadline for new ADV filing requirement
Morrison & Foerster LLP
  • Capital Markets
  • USA
  • September 05 2017

Currently pending amendments to Form ADV have a compliance date of October 1 2017 and, as of that date, an adviser filing an initial Form ADV or an amendment to an existing Form ADV must use the revised Form ADV. The staff of the Division of Investment Management recently gave some breathing room to advisers who do not have enough information to respond to new questions required by the recent amendments to Form ADV.

Access to capital and liquidity
Morrison & Foerster LLP
  • Capital Markets
  • USA
  • August 29 2017

The Security and Exchange Commission's Division of Economic and Risk Analysis recently presented a report to Congress regarding the effects of the Dodd-Frank Act on access to capital for consumers, investors and businesses, and market liquidity. Although the report is principally focused on liquidity, it does provide some interesting statistics regarding the primary issuance of equity securities.