On July 2, 2012, the U.S Securities and Exchange Commission announced the scheduling of an open meeting for August 22, 2012, for the purpose of adopting final rules regarding disclosure and reporting obligations with respect to (i) the use of conflict minerals and (ii) payments to governments made by resource extraction issuers, both as mandated by the Dodd-Frank Act (Sections 1502 and 1501, respectively). At the same meeting, the SEC plans to consider rules eliminating the prohibition against general solicitation and general advertising in securities offerings conducted pursuant to Rule 506 of Regulation D and Rule 144A under the Securities Act of 1933, as mandated by Section 201(a) of the Jumpstart Our Business Startups Act (JOBS Act). The open meeting notice is available at this link: http://sec.gov/news/openmeetings/2012/ssamtg082212.htm. For a discussion of the JOBS Act’s impact on the general solicitation rules, see Catherine T. Dixon, “Title II of the JOBS Act: Are Reports of the Death of General Solicitation Premature?”, Insights (June 2012).
The SEC has adopted rules requiring disclosure of compensation consultant conflicts of interest and directing the NYSE and Nasdaq to propose standards relating to the independence of compensation committees and evaluation of adviser independence. The disclosure rule applies to proxy statements in connection with an annual or special meeting to be held for the election of directors on or after January 1, 2013. The exchanges must propose their independence standards by September 25, 2012; whether they will be in effect for the 2013 proxy season is not yet clear. The new rules were adopted substantially as proposed in March 2011. We discuss in this alert, the new rules and certain actions that should be taken now to prepare.
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On April 5, 2012, President Obama signed into law the Jumpstart Our Business Startups Act (the JOBS Act). The new legislation enlarges the menu of choices that private companies will have to raise capital while also reducing the burdens on “emerging growth companies” that ultimately resort to the public markets. It also offers benefits for private investment funds. Many aspects of the JOBS Act are effective immediately; others require rulemaking by the SEC, generally on an expedited basis.
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Click here for a PDF of the related article A SIFI in Three Easy Steps? FSOC Approves Final Rule for Nonbank SIFI Designations appearing in The Banking Law Journal, May 2012
On April 3, 2012, the Financial Stability Oversight Council (“FSOC”) voted to approve its long-awaited Final Rule implementing Section 113 of the Dodd-Frank Act, the controversial provision that directs the federal government to identify systemically important financial institutions (“SIFIs”) outside the traditional banking sector that could pose a threat to the U.S. financial system. Once designated by a two-thirds majority of the FSOC (including an affirmative vote of the Treasury Secretary), each “nonbank financial company,” often referred to in short-hand as a “nonbank SIFI,” would be placed under Federal Reserve Board (“Fed”) supervision, as well as become subject to a host of enhanced prudential measures—including capital, liquidity, leverage, stress testing, resolution planning, and risk management requirements. The FSOC’s recent approval of the Final Rule—as well as its accompanying interpretive Guidance—marks the start of an important first step in the application of enhanced SIFI regulation beyond large bank holding companies with assets of $50 billion or greater.
The FSOC issued its Final Rule following consideration of over forty public comments to its Notice of Proposed Rulemaking (the “Proposed Rule”), released in October, 2011.
The Final Rule establishes a three-step process comprising three individual “stages” by which the FSOC will apply two “Determination Standards” (one based on actual or potential material financial distress and the other based on the nature, scope, size, scale, concentration, interconnectedness or mix of activities) to analyze whether a company may pose a threat to the financial stability of the U.S., along with a six-category analytic framework to determine whether a company should be deemed a nonbank SIFI. In an effort to increase the transparency of the process, the FSOC issued accompanying Guidance providing additional [click to continue…]
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Weil partner Walter Zalenski will speak on the new Consumer Financial Protection Bureau (CFPB), established by the Dodd-Frank Reform Act, at the Risk Management Association’s 6th Annual Governance, Compliance, and Operational Risk Conference (GCOR VI), to be held in Cambridge, Massachusetts on April 25-26, 2012.
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