The New York Appellate Division has reaffirmed that the manifest disregard doctrine is a "severely limited… doctrine of last resort" that requires more than a mere error of law to warrant vacating an arbitral award. This case involved the acquisition contracts between Daesang and NutraSweet, under which NutraSweet could rescind the deal if it was sued for antitrust law violations. After NutraSweet exercised this right, Daesang commenced an arbitration proceeding for breach of contract.
Unbeknown to many, Section 1782 of Title 28 of the US Code permits parties to obtain discovery in the United States in aid of non-US legal proceedings, including – in some instances – international arbitrations. Such discovery can include documents and sworn testimony (eg, depositions). In conducting an arbitration seated outside the United States (or other non-US legal proceedings), it is useful to understand the mechanics, requirements and key issues of Section 1782 discovery.
California Governor Jerry Brown recently signed into law Senate Bill (SB) 766, Representation by Foreign and Out-of-State Attorneys. The bill, which was passed 69-to-zero by the legislature, clarifies that foreign (ie, not licensed in the United States) and out-of-state (ie, licensed in a US jurisdiction, but not in California) attorneys can represent parties in international arbitrations in California, subject to certain conditions. SB 766 will take effect on 1 January 2019.
The Department of Transportation (DOT) has proposed significant changes to its disability regulations relating to the transportation of service animals by air. The DOT's current regulations require that airlines allow passengers to travel with a wide range of animals in cabin on the basis that they are service animals or emotional support animals. This article sets out the DOT's most significant proposed changes.
The US Treasury Department's Office of Foreign Assets Control (OFAC) recently announced sanctions against Apollo Aviation Group LLC for violation of the then-effective Sudan Sanctions Regulations. The takeaway from the OFAC's Apollo decision is clear: aircraft lessors cannot rely on a boilerplate lease clause to protect them; rather, they must exercise pro-active vigilance over the products that they are leasing out, know their customers and in some cases know their customers' customers.
The US Department of Transportation (DOT) has issued a notice of proposed rulemaking to amend its regulations governing situations in which an aircraft remains on the airport tarmac without an opportunity for passengers to deplane for an extended period. Specifically, it proposes to change the departure delay exemption, carrier reporting requirements and record retention requirements, among others. Comments on the notice of proposed rulemaking must be filed with the DOT by 24 December 2019.
The Federal Aviation Administration (FAA) has begun the process of amending its regulations to require that flight attendants at US airlines receive a rest period of at least 10 consecutive hours between periods of duty lasting 14 hours or less. Under the FAA's current regulations, a flight attendant who is scheduled for a duty period of 14 hours or less must be given a scheduled rest period of at least nine consecutive hours. Comments on the advance notice are due by 12 November 2019.
The Transportation Security Administration's (TSA's) new Action Plan Programme (APP), which recently went into effect, details an alternative framework for addressing security compliance issues. Rather than relying on traditional, penalty-focused civil enforcement action, the APP focuses on achieving a universally desired outcome – namely, increased aviation security. While the APP could prove beneficial to both the TSA and industry, it raises some areas of concern for airlines and other regulated parties.
A federal district judge recently denied a motion to dismiss filed by the US Office of the Comptroller of the Currency (OCC) in a lawsuit brought by the New York State Department of Financial Services, which challenged the OCC's decision to begin accepting applications from fintech companies for special purpose national bank charters.
The five US federal agencies responsible for implementing the Volcker Rule have individually released a related notice of proposed rulemaking. The notice proposes amendments to the Volcker Rule regulations that would implement two statutory changes required by the Economic Growth, Regulatory Relief and Consumer Protection Act. Comments in response to the notice must be received by the agencies within 60 days of its publication in the Federal Register.
In the recent election, the Democrats captured a majority in the House of Representatives and Representative Maxine Waters (D-Calif) is now in line to lead the House Financial Services Committee. As such, it is expected that a significant shift in legislative efforts relating to the financial services industry will occur. During the first Financial Services Committee hearing since the election, Waters announced that deregulation efforts are finished.
In July 2018 the Office of the Comptroller of the Currency (OCC) announced its decision to begin accepting applications from fintech companies for special purpose national bank charters (the Fintech Charter Decision). The New York State Department of Financial Services recently filed a federal court complaint seeking to enjoin further actions by the OCC to implement the Fintech Charter Decision and related actions, arguing that such acts are lawless, ill-conceived and destabilising for financial markets.
The Office of the Comptroller of the Currency (OCC) recently announced – to much anticipation – that it will begin accepting applications from fintech companies for special purpose national bank charters (commonly referred to as 'fintech charters'). However, state banking regulators are likely to once again challenge the OCC's authority to grant fintech charters, which could create some uncertainty for early applicants.
To mark the new year, registered investment advisers and funds should take a look back at the activity undertaken by the Securities and Exchange Commission (SEC) and its staff during 2019 and carefully consider steps to be taken to implement new and amended regulations adopted by the SEC throughout the year. The start of a new year is also a good time to evaluate what remains on the SEC's regulatory agenda.
The Financial Industry Regulatory Authority (FINRA) recently released its 2019 Report on Examination Findings and Observations. The report intends to reflect key findings and observations identified in FINRA's recent examinations of broker-dealers. The report also describes practices that FINRA has deemed to be effective and that could help firms to improve their compliance and risk management programmes.
The Securities and Exchange Commission recently charged a Switzerland-based securities dealer for offering and selling unregistered security-based swaps to US investors using bitcoins and for failing to transact its swaps on a registered national exchange. This case illustrates that the use of new technology and terminology does not exempt investment-product dealers from having to comply with US federal securities laws.
The Supreme Court recently granted a writ of certiorari to address whether the Securities and Exchange Commission (SEC) may obtain disgorgement in civil injunctive actions filed in the federal courts. How the court resolves this question may have a significant impact not only on the SEC's enforcement programme, but also on a wide array of other federal regulators that rely on courts invoking similar equitable authority to fashion remedies.
The Financial Industry Regulatory Authority recently censured and fined a Florida-based broker-dealer, including for failing to reasonably supervise sales of complex securities such as structured products and leveraged, inverse and inverse-leveraged exchange-traded funds. This case illustrates the need for broker-dealers to establish and enforce proper surveillance systems and written procedures to ensure the suitability of their sale recommendations.
While company managements have long engaged with shareholders at annual meetings and investor presentations, the notion of director engagement with shareholders is a more recent development. But why is shareholder engagement increasingly being added to corporate director job descriptions? This article posits several theories for the trend and identifies the most common engagement topics, provides data on the frequency of engagement and highlights emerging practices relating to director engagement.
A recent discussion on the Business Roundtable's adoption of a new statement on the purpose of a corporation concluded by observing (rhetorically) that the question raised by the statement was what all of the signatories would actually do to fulfil their corporate social responsibility commitments. Apparently, some non-governmental organisations are now asking that question for real and, ironically, one of the first recipients is a well-known leader of the pack on commitments to all stakeholders.
In July 2019 Representative Carolyn Maloney contacted Securities and Exchange Commission Commissioner Robert Jackson to solicit his views on legislation that would require public companies to disclose their corporate political spending. In his recent response, Jackson declared that the absence of transparency about political spending has led to a lack of accountability, allowing executives to spend shareholder money on politics in a way that serves the interests of insiders, not investors.
A recent Rock Centre for Corporate Governance paper suggests that the disconnect between observed pay levels and the public's view of executive compensation is stark. The paper was based on a survey conducted in October 2019 of 3,078 individuals – nationally representative by gender, age, race, political affiliation, household income and state residence – to understand the views that US citizens have on executive compensation.
Studies of former partners of audit firms who have assumed management positions at audit clients have raised concerns, at least pre the Sarbanes-Oxley Act, about potentially lower audit quality, perhaps reflecting audit firms' reluctance to challenge aggressive accounting decisions made by their former partners. But what happens when a former partner joins the audit client's audit committee?