Jim Hamilton's World of Securities Regulation: Corporate & Securities Law

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Corporate & Securities Law

Jim Hamilton's World of Securities Regulation

Opines on every level of securities regulation (federal, state, international, theoretical) covering market players of all types (e.g., accountants, broker-dealers, foreign issuers, hedge funds, market manipulators) who engage all sorts of transactions and activities (acquisitions, financial reporting, private placements, pyramid schemes). Highlights issues of particular importance to securities lawyers and their clients with emphasis on SEC rulemaking, industry trends, and the many curiosities that inhabit this world.
By Jim Hamilton

Post Frequency: 15.3/day

Last Entry: April 01, 2011 at 16:29:00

Member of SIPC Task Force Sees Flaws in SIPA Reform Legislation

Posted on October 01, 2010
As the SIPC Modernization Task Force explores the legislative reforms to the Securities Investor Protection Act, there is already a legislative vehicle available. The Ponzi Scheme Investor Protection Act of 2010, HR 5032, would amend the Securities Investor Protection Act with respect to the duties of a trustee appointed for a, SEC-registered broker or dealer undergoing liquidation...

Business Groups Challenge SEC Proxy Access Rule in Federal Appeals Court

Posted on September 30, 2010
The US Chamber of Commerce and the Business Roundtable have asked a federal appeals court to invalidate the recently adopted SEC proxy access rule, Exchange Act Rule 14a-11. In a petition to the US Court of Appeals for the District of Columbia, the business groups said that Rule 14a-11 is arbitrary and capricious, violates the Administrative Procedure Act, and was adopted without a proper assessment of its effect on efficiency, competition, and capital formation...

Rep. Kanjorski Says Expand SIPA to Customers of Investment Advisers as SIPC Task Force Prepares Legislative Recommendations

Posted on September 29, 2010
Despite the impressive post-Madoff SIPA reforms effected by the Dodd-Frank Act, more reforms of the Securities Investor Protection Act and the entire SIPC regime are needed in order to protect investors. This was the message delivered by House Capital Markets Subcommittee Chair Paul Kanjorski at recent hearings exploring the efficacy of post-Dodd-Frank SIPA legislation...

European Parliament Approves Legislation Creating New EU-Wide Financial Regulatory Regime

Posted on September 28, 2010
The European Patliament has approved legislation creating a European financial regulatory framework with separate regulators for securities, banking and insurance, as well as a European Systemic Risk Board similar to the Financial Stability Oversight Council created by the Dodd-Frank Wall Street Reform and Consumer Protection Act...

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Fifth Circuit Reinstates SEC Insider Trading PIPE-Related Enforcement Action

Posted on September 28, 2010
In an SEC enforcement action alleging insider trading in a PIPE-related case, a Fifth Circuit panel said that it was plausible that the company's largest shareholder agreed not to trade on inside information about the PIPE offering when he agreed to keep the information confidential...

Federal Judge Allows Claims Against AIG Management and Outside Auditor to Go Forward

Posted on September 28, 2010
A federal judge (SD NY) has ruled that an investor's securities fraud action against AIG senior management could proceed since the investor adequately pleaded that the general disclosures cired by the executieves were insufficient to fulfill their disclosure obligations under the federal securities laws in light of the undisclosed ?hard facts critical to appreciating the magnitude of the risks described, \such as, to name but a few, the known weaknesses of company models; the deliberate weakening of risk controls...

SEC Issues Guidance on Dodd-Frank Authorization of PCAOB Oversight of Auditors of Brokers

Posted on September 27, 2010
In one of its post-Madoff reforms, the Dodd-Frank Act authorized the PCAOB to inspect and examine the auditors of broker-dealers. Section 982 of the Act authorized the Board to 2establish, subject to SEC approval, auditing and related attestation, quality control, ethics, and independence standards to be used by registered public accounting firms with respect to the preparation and issuance of audit reports to be included in broker and dealer filings with the Commission pursuant to Rule 17a-53 under the Exchange Act...

Singapore High Court Examines Shareholder Right to Company Accounting Records

Posted on September 24, 2010
The Singapore High Court has noted that apart from the annual audited accounts and accompanying reports, a shareholder normally has no access to the accounting records of the company. The annual audited accounts and accompanying reports are the primary means by which the directors of a company account for their stewardship...

PCAOB Asks Congress to Make Disciplinary Proceedings Public

Posted on September 24, 2010
In a letter to House Financial Services Committee Chair Barney Frank and Ranking Member Spencer Bachus, PCAOB Acting Chair Dan Goelzer asked for legislation amending Sarbanes-Oxley so that Board disciplinary hearing against individual auditors and accounting firms will be public...

Senate Passes Legislation Eliminating SEC Dodd-Frank FOIA Exemptions and Broadening Definition of Financial Institution

Posted on September 23, 2010
The Senate has passed legislation by unanimous consent eliminating SEC exemptions from FOIA bestowed by Section 929I of the Dodd-Frank Act. The legislation is sponsored by Judiciary Committee Chair Patrick Leahy (D-Vt) and has strong bi-partisan report...

FDIC Says US Covered Bond Legislation Falls Short on Key Principles

Posted on September 23, 2010
Legislation creating a US covered bond market is gaining momentum in Congress and may well pass before the 111th Congress adjourns sometime in December after an almost certain lame duck session concludes. Recent hearings before the Senate Banking Committee revealed that Chairman Chris Dodd wants to explore alternatives to securitization, which covered bonds offer...

New NASAA President to Represent States on the Financial Stability Oversight Council

Posted on September 23, 2010
In a news release today, the North American Securities Administrators Association (NASAA) announced that NASAA President-elect David Massey will represent state securities regulators on the new Financial Stability Oversight Council (FSOC). Created by the recently-enacted Dodd-Frank Wall Street Reform and Consumer Protection Act, the FSOC will monitor emerging risks to U...

Congress Clears Legislation on SEC Dodd-Frank FOIA Exemptions for President's Signature

Posted on September 23, 2010
The House has joined the Senate in passing legislation eliminating broad SEC FOIA exemptions contained in the recently passed Dodd-Frank Wall Street Reform and Consumer Protection Act. The Senate passed S 3217 earlier this week by unanimous consent and the House took up the Senate bill and passed it by voice vote...

Baucus Extenders Legislation Would Reform Hedge Fund Managers Carried Interest

Posted on September 21, 2010
Senator Max Baucus (D-Montana), Chair of the Senate Finance Committee, has introduced a new iteration of the tax extenders legislation that, like previous iterations, reforms carried interest taxation of hedge fund managers and other asset fund managers...

Current and Former SEC Chairs Defend Commission's FOIA Exemption in Dodd-Frank

Posted on September 21, 2010
With legislation repealing or modifying Section 929I of Dodd-Frank looming, current and former SEC Chairs have spoken of the Commission's need for the FOIA exemptions that thE statute confers. In testimony before the House Financial Services Committee, SEC Chair Mary Schapiro said that Sec...

Indiana Summarizes Each U.S.A. Provision

Posted on September 21, 2010
An administrative order released by the Indiana Securities Division on September 17, 2010 provides a brief synopsis of, and the purpose for, each provision of the Indiana Uniform Securities Act of 2008. Please contact the Securities Division at (317) 232-6681 to receive a copy.

Securities Industry Supports SEC FOIA Exemption in Dodd-Frank Against Legislative Assault

Posted on September 21, 2010
With legislation curtailing the SEC's FOIA exemption in Dodd-Frank being advanced by prominent House and Senate leaders, the securities industry has spoken out in favor of the FOIA exemption in Section 929I of Dodd-Frank. Almost immediately after the passage of Dodd-Frank, a controversy erupted over the scope of the SEC's FOIA exemption in Sec, 929I, The securities industry supports the SEC's position that Sec...

Leahy Legislation Repealing SEC Dodd-Frank FOIA Exemptions Reported Out of Judiciary Committee

Posted on September 17, 2010
The Senate Judiciary Committee has reported out bi-partisan legislation to repeal SEC exemptions from FOIA bestowed by Section 929I of the Dodd-Frank Act. The legislation is sponsored by Committee Chair Patrick Leahy (D-Vt) and has strong bi-partisan report...

Hedge Fund Industry Generally Supports SEC Proposals on Single Stock Circuit Breakers

Posted on September 15, 2010
The US hedge fund industry supports the SEC and self-regulatory organizations? proposals to adopt uniform market-wide single stock circuit breakers and clearly erroneous trade rules. In a letter to the SEC-CFTC Advisory Committee on Emerging Regulatory Issues, the Managed Funds Association said that the proposed reforms will prevent market disruptions during times of market stress, help restore confidence in the markets and limit harm to investors...

SEC Adopts Rule on SOX 404(c) Exemption for Small Issuers

Posted on September 15, 2010
The Securities and Exchange Commission has adopted a final rule to implement Section 989G of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Release No. 33-9142 http://www.sec.gov/rules/final/2010/33-9142.pdf). Section 989G affords small issuers an exemption from the internal controls auditor attestation requirement of Section 404(b) of the Sarbanes-Oxley Act of 2002...

European Commission Proposes Derivatives Legislation Broadly Consistent with Dodd-Frank Act

Posted on September 15, 2010
The European Commission has proposed derivatives legislation that is broadly consistent with Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The draft would require that detailed information on OTC derivative contracts entered into by EU financial and non-financial firms be reported to trade repositories and made accessible to regulators and that trade repositories publish aggregate positions by class of derivatives accessible to all market participants...

Senator Hagan Explains Volcker Provisions of Dodd-Frank Act

Posted on September 14, 2010
Senator Kay Hagan (D-NC) was pleased to see that the Volcker Rule as modified by the Dodd-Frank Act will permit banking entities several years to bring their full range of activities into conformance with the new rule. In particular, Section 619(c)(2) ensures that the new investment restrictions under Section 619(d)(1)(G)(iii) and Section 619(d)(4), including the numerical limitations under section 619(d)(4)(B)(ii), will only apply to a banking entity at the end of the period that is 2 years after the section?s effective date...

IASB Proposes Change to Standard on Accounting for Income Tax Against Backdrop of Broad IASB-FASB Review of Tax Accounting Standards

Posted on September 13, 2010
As the IASB and FASB conduct an ongoing fundamental review of the financial standard for accounting for income tax, the IASB has proposed a specific significant amendment to its international accounting standard for income tax, IAS12, that would provide an exception to the principle that the measurement of deferred tax liabilities and deferred tax assets should reflect the tax consequences that would follow from the manner in which the entity expects to recover or settle the carrying amount of its assets and liabilities...

There is Growing Int'l Consensus Among Audit Committees on the High Value of Outside Auditors

Posted on September 13, 2010
A report issued by the Accounting and Corporate Regulatory Authority (ACRA) of Singapore found that company audit committees place a very high value on the outside independent audit of the company?s financial statements. The external audit by an independent audit firm is regarded as extremely valuable by the audit committees, noted ACRA, predominantly for the assurance it brings them that the financial statements prepared by management present a true and fair view of the company?s financial position and results to its shareholders...

US Hedge Fund Industry Supports EU Legislative Draft for Derivatives Regulation

Posted on September 13, 2010
The US hedge fund industry generally supports draft EU legislation requiring the clearing and reporting of derivatives. In a letter to the European Commission, the Managed Funds Association enthused that the increased clearing of OTC derivatives will lead to greatermarket transparency and competition, as well as diminished counterparty and systemic risks...

Legislation Requiring Proxy Disclosure of Company?s Political Donations Reported Out to House Floor

Posted on September 11, 2010
Legislation requiring a shareholder vote on a company?s proposed political budget has been favorably reported out of the House Financial Services Committee to the House floor. The Shareholder Protection Act, HR 4790, responds to January?s Supreme Court decision in Citizens United v...

Legislation Moving Through Congress Would Create US Covered Bond Market

Posted on September 11, 2010
Bi-partisan legislation creating a US covered bond market has been reported out to the House floor and has a good chance of being passed during the final months of the 112th Congress. The legislation is designed to enhance liquidity in the secondary markets, reduce financing pressure, and more broadly reform the mortgage-backed securitization process...

Senator Dodd Explains that SEC Ombudsman's Mandated List of Duties in Dodd-Frank Is Not Exhaustive

Posted on September 09, 2010
Section 919D of the Dodd-Frank Act creates the SEC Ombudsman under the Office of the Investor Advocate. Senator Dodd noted that, under Section 919D, the Ombudsman will act as a liaison between the Commission and any retail investor in resolving problems that retail investors may have with the Commission or with self-regulatory organizations and review and make recommendations regarding policies and procedures to encourage persons to present questions to the Investor Advocate regarding compliance with the securities laws...

UTAH Updates Stock Exchange Names

Posted on September 09, 2010
The names of the national stock exchanges for purposes of exemption were updated by the Utah Securities Division to reflect current federal securities law. Securities listed on the New York Stock Exchange, NYSE Amex Equities, NASDAQ Global, NASDAQ Global Select, NASDAQ Capital Market, Chicago Board Options Exchange or Philadelphia Stock Exchange are exempt from registration...

Wisconsin Adopts Rule Changes for Annual Rules Revision

Posted on September 09, 2010
Rule amendments pertaining primarily to investment adviser solicitation activities were adopted by the Wisconsin Securities Division, effective October 1, 2010, upon the Division completing its annual revision of rules. The text of the solicitation provision, housed within the investment adviser prohibited conduct rule, is based on language developed by the Regulatory Policy and Review Group of the North American Securities Administrators Association (NASAA)...

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