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".
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.
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.
In June 2017 the Financial Instruments and Exchange Act was amended to introduce the so-called 'fair disclosure' rule in Japan. The amendments address recent cases of selective disclosure of material information by issuers to sell-side analysts and investors' requests to introduce similar fair disclosure rules to those of other jurisdictions. The Financial Services Agency recently published a draft implementing order, ordinance and guidelines for public comment.
A recent Financial Services Authority (OJK) regulation sets out new disclosure obligations that apply to issuers and public companies in Indonesia and creates a new penalty regime for non-compliance. The regulation is significant for investors with an interest in the Indonesian Stock Exchange and is consistent with other measures that the OJK has taken to improve transparency and align the reporting obligations of issuers and public companies with international standards.
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.
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.
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.
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.
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.
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.
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.
The ranking member of the House Committee on Financial Services, Congresswoman Maxine Waters, recently introduced the Bad Actor Disqualification Act 2017. This draft legislation directs the Securities and Exchange Commission to implement more rigorous and public processes for granting waivers that restore certain benefits to bad actors. These benefits include reduced oversight, reduced disclosure requirements and limited liability.
Securities and Exchange Commission Chair Jay Clayton recently spoke at the US Chamber of Commerce Centre for Capital Markets Competitiveness. During the panel, Clayton discussed a variety of issues, including bad actors and retail fraud, enforcement, proxy reports and disclosure effectiveness, company lifecycles, the effectiveness of the US capital markets, compliance costs and cybersecurity.
The Securities and Exchange Commission (SEC) recently announced that the Division of Corporation Finance will permit all companies to submit draft registration statements relating to initial public offerings for review on a non-public basis. All issuers may submit a registration statement in draft form for an initial registration, as well as for offerings made within the first year after a company has become an SEC reporting company.
The Securities and Exchange Commission (SEC) recently announced a new policy that essentially extends the confidential submission accommodation made available to emerging growth companies to all issuers. As of July 10 2017, the SEC will review a draft initial Securities Act registration statement and related revisions on a non-public basis.
Following the adoption of Bill of Law 7022, the new Act on Market Abuse recently entered into force. The act significantly increases the administrative and criminal penalties for infringements of market abuse provisions and designates the Luxembourg financial sector regulator as the competent authority for the purposes of the EU Market Abuse Regulation. It also extends the definition of 'regulated information' provided for in the Act on Transparency Requirements for Issuers.
The Financial Industry Regulatory Authority (FINRA) recently announced the Securities Exchange Commission's approval of a variety of its proposed rule amendments relating to the upcoming move of the US securities markets to the T+2 settlement cycle. FINRA has also issued an investor alert to help to explain to investors the impact of the upcoming market-wide changes.
The Financial Industry Regulatory Authority (FINRA) recently released for comment three regulatory notices that propose amendments to various FINRA rules affecting capital formation. This initiative is part of the comprehensive self-evaluation and improvement initiative that FINRA announced several months ago called the FINRA 360 initiative. The initiative, FINRA's recent request for comment on its engagement efforts and these regulatory notices certainly reflect a new tone.
The Financial Services Authority (OJK) recently amended public companies' obligation to report on their shareholding by way of OJK Regulation 11/POJK.04/2017 regarding Reporting on Public Company Ownership or on Every Change in Share Ownership. The regulation aims to bring public companies' reporting obligations in line with international standards.