Securities Law Related Blogs

On 25 July 2024, the European Supervisory Authorities issued an updated version of its consolidated questions and answers on the SFDR and the SFDR Delegated Regulation. The ESAs have added answers to a number of new questions including: For financial products falling under Article 8 or 9 SFDR, where the financial market participant making available those products is a registered AIFM which has not set up a website, must that registered AIFM establish a website in order to comply with Article 10 of SFDR and Chapter IV of the SFDR Delegated Regulation for those financial products Can a financial market participant rely on disclosures under Article 6(1) second sub-paragraph of the SFDR (which allow financial market participants to disclose in pre-contractual disclosures that it “deems sustainability risks not to be relevant” for its investment decisions) in order to disapply other obligations on taking into account sustainability risks in EU law, such as Article…

On 26 July 2024, the European Central Bank (ECB) issued a press release stating that it had concluded its cyber resilience stress test which found that overall supervised banks have response and recovery frameworks in place, but areas for improvement remain. The outcome of the test will feed into the 2024 Supervisory Review and Evaluation Process, which assesses banks’ individual risk profiles. Supervisors have provided individual feedback to each bank and will follow up with them accordingly.

On 26 July 2024, the FCA published Handbook Notice 121. In this Handbook Notice the FCA briefly covers the following instruments that the FCA Board has approved: Periodic Fees (2024/2025) and Other Fees (No 2) Instrument 2024. UK Listing Rules Instrument 2024 UK Listing Rules (Consequential Amendments) Instrument 2024. Collective Investment Schemes (Schemes Authorised in Approved Countries) Instrument 2024. Access to Cash Sourcebook Instrument 2024 (as amended by the Access to Cash Sourcebook (Amendment) Instrument 2024). Access to Cash Sourcebook (Amendment) Instrument 2024. Decision Procedure and Penalties Manual (Digital Securities Sandbox) Instrument 2024. Payment Optionality (Investment Research) Instrument 2024.

On 26 July 2024, the Financial Conduct Authority (FCA) published several Policy Papers designed to strengthen the UK’s capital markets. Three Consultation Papers (CPs) set out proposed rules for the new Public Offers and Admissions to Trading Regime (POATR), which will replace the existing UK Prospectus Regulation. A Policy Statement (PS) sets out final rules on payment optionality for investment research. POATR The three Consultation Papers are: CP24/13: New regime for public offer platforms (CP24/13). CP24/12: Consultation on the new POATRs (CP24/12). CP24/14: Consultation on the derivatives trading obligation and post-trade risk reduction services (CP24/14). CP24/13 The POATR gives the FCA power to set rules around a new regulated activity of operating as a Public Offer Platform (POP). The Government has proposed to remove the current requirement for an FCA approved prospectus to be published for offers of transferable securities with a total…

Well over a year ago, Dave asked, “Are robots coming for your auditor?” His blog noted that CAQ’s analysis of 2022 audit quality reports showed that some firms had added a discussion about how they employ AI and data analytics to improve audit quality and highlighted a study that showed AI has been effective at improving audit quality while also displacing junior-level audit professionals. As this July 2024 Spotlight details, the PCAOB has also taken note and is considering action in response to these trends — especially the rapidly developing use of GenAI: The PCAOB’s standard-setting agenda includes a research project to assess whether there is a need for guidance, changes to PCAOB standards, or other regulatory actions in light of the increased use of technology-based tools in the preparation and subsequent audit of financial statements. [To that end,] we conducted outreach regarding the current state of integration of GenAI tools in…

Following the demise of Chevron, there’s been an ongoing debate about the impact the end of this 40-year-old doctrine will really have on the lawmaking process, administrative state, and federal court system. It appears that many Senate Democrats are among those who think the end of Chevron could have disastrous consequences. Earlier this week, numerous Senate Democrats introduced the Stop Corporate Capture Act (SCCA), which had first been introduced in the House in 2021. Touted as a bill to “codify Chevron deference,” this press release from Senator Warren’s team highlights that the bill would do much more: Protect Chevron Doctrine – Codify Chevron deference, allowing expert agencies to conduct rulemaking in line with their reasonable interpretation of their authorizing statutes. Modernize and Reform the Regulatory Process – Streamline the White House’s review period for regulations, creating a 120-day time limit…

I’ve been poking around sec.gov to familiarize myself with the new layout and functionality since the upgraded site was unveiled a few weeks ago. I thought I’d share a few useful pages to reference for our blog subscribers who check sec.gov directly. If you don’t, rest assured that we keep combing the website for important updates and sharing them on our blogs! – One of the changes touted by the SEC in this announcement is easier access to past events, saying, “the site improvements include a new events archive that allows users to quickly locate details about previous Commission meetings or other public events, including Sunshine Act notices and archived webcasts.” The Past Meetings & Events page now clearly lists and links into past meetings, events and public appearances by senior officials, for example, this landing page for the latest Investor Advisory Committee. – This new & improved What’s New page is a helpful…

The Chancery Court recently dismissed breach of fiduciary duty claims arising out of a $400 million reduction in the purchase price to be paid to target stockholders as a result of post-signing equity awards to insiders that allegedly violated the terms of the merger agreement.  In In re Anaplan, Inc. Stockholders Litigation, (Del. Ch.; 6/24), […]

Global N/A EU 1 August 2024 –EU Artificial Intelligence Act comes into force on 1 August 2024. UK 31 July 2024 – The Consumer Duty comes into effect for closed products and services on 31 July 2024.The first annual governing body report is also due by this date. 31 July 2024 – On 28 November 2023, the FCA published a package of measures setting out its final rules and guidance on Sustainability Disclosure Requirements and investment labels. Firms may start using investment labels with accompanying disclosures from 31 July 2024. 31 July 2024 – The final FCA rules and guidance to support the implementation of the Overseas Funds Regime will come into force on 31 July 2024. 1 August 2024 – On 29 February 2024, the Financial Services and Markets Act 2023 (Commencement No. 5) Regulations 2024 were made and published on legislation.gov.uk. This statutory instrument contains the fifth set of commencement regulations made under the Financial…

California's Revised Uniform Limited Liability Company Act provides "The law of the state . . . under which a foreign limited liability company is formed governs all of the following: The organization of the limited liability company, its internal affairs, and the authority of its members and managers."  Cal. Corp. Code § 17708.01(a).  Notably, the statute does not define what constitutes an LLC's internal affairs. In Gill v. Marsh USA, Inc., 2024 WL 3463351, a Delaware LLC filed a counterclaim against a former employee.  As an initial matter, U.S. District Court Judge Richard Seeborg ruled that the viability of the counterclaim turned on the choice of law under which the claim arises, and the parties dispute whether Delaware or California law is applicable.   The LLC contended that California law governs this claim because it does not arise out of a failure or breach related to the actual governance of the company. …

Over the past two decades, regulators, lawmakers, and stakeholders have increasingly urged companies to give greater weight to the broader interests of society alongside traditional financial goals. As a result, a notable percentage of firms – 64 percent of the top 250 U.S. companies in 2023 – have included ESG and other non-financial corporate responsibility metrics in their executive incentive plans[1]. Nonetheless, little is known about what prompts a firm to include non-financial corporate responsibility targets in executive compensation contracts. Finding out more is important because scholars[2] and stakeholders[3] have expressed concerns that non-financial targets, which are susceptible to manipulation and difficult to verify, may serve as a façade, potentially enabling managers to secure higher payouts and extract undue gains at shareholders’ expense. In a recent study, we examine the role of industry-specific risks and propose that a…

Lorena KernKatja Bullemer-WülfertThe German Bundestag, or Federal Parliament, passed a reform of the Capital Markets Model Case Act (KapMuG) on June 13, 2024, and Germany’s Federal Council (Bundesrat) passed it on July 5, 2024. The reform is expected to take effect before the previous version expires on August 31, 2024. In the following guest post, Lorena Kern and Katja S. Bullemer-Wülfert of the DRRT law firm take a look at the reformed KapMuG and consider the possible implication of the reformed Act’s new provisions. A version of this article previously was published as a DRRT law firm client alert. I would like to thank Lorena and Katja for allowing me to publish their article on this site. I welcome guest post submissions from responsible authors on topics of interest to this site’s readers. Please contact me directly if you would like to submit a guest post. Here is Lorena and Katja’s article. ******************** After a heated…

Gianluca De Berardinis (CRD: 4893776) is a formerly registered broker last employed with Morgan Stanley Wealth Management (CRD# 149777) of New York, NY. He was previously employed briefly with Quad Capital, LLC (CRD# 148927), also of New York. He has been in the industry since 2012. De Berardinis failed to respond to FINRA’s requests for information. FINRA followed with letters of suspension and association, which became a permanent and indefinite bar from association with any FINRA member in all capacities on March 15, 2024. No additional information is available. De Berardinis voluntarily resigned from Morgan Stanley on 6/23/2023. Morgan Stanley alleges in the Form F5 that he was involved in both selling away and taking unauthorized withdrawals from a customer’s brokerage account. In his broker comment, De Berardinis stated that he left to open his own registered investment advisory firm. There are three customer disputes in De Berardinis’ CRD. The most…

Concerned about your investment in Strategic Storage Growth Trust III?  Are you concerned about your investment in Strategic Storage Growth Trust III? If so, The White Law Group may be able to help you by filing a FINRA Dispute Resolution claim against the brokerage firm that sold you the investment.   Strategic Storage Growth Trust III, sponsored by SmartStop Self Storage REIT, has elected to qualify as a REIT for federal income tax purposes. Its primary investment strategy focuses on growth-oriented self-storage facilities and related real estate investments in the United States and Canada. The company filed a Form D to raise capital from investors in 2022.   The Risks of Reg D Private Placement Investments- Strategic Storage Growth Trust III  Reg D private placements are typically sold by brokerage firms in exchange for a large up front commission, usually between 7-10%, as well as additional “due diligence fees” that can range from…

On 26 July 2024, the European Supervisory Authorities (ESAs) published a Final Report on draft regulatory technical standards (RTS) to specify the elements which a financial entity needs to determine and assess when subcontracting ICT services supporting critical or important functions as mandated by Article 30(5) of the Digital Operational Resilience Act (DORA). Article 30(2)(a) DORA requires from financial entities that: “…the contractual arrangements on the use of ICT services shall include at least the following elements […] a clear and complete description of all functions and ICT services to be provided by the ICT third-party service provider, indicating whether subcontracting of an ICT service supporting a critical or important function, or material parts thereof, is permitted and, when that is the case, the conditions applying to such subcontracting.” Article 30(5) of DORA provides: “the ESAs shall, through the Joint…

Marion Adams III (Marion Strickler Adams CRD# 1392435, aka “Ma’on Adams”) is a previously registered broker and investment advisor whose last employer was The Jeffrey Matthews Financial Group, L.L.C. (CRD# 41282) of Mobile, AL. His prior employers were Raymond James & Associates, Inc. (CRD# 705) and Morgan Keegan & Company, Inc. (CRD# 4161), also of Mobile. Adams has been in the industry since 1985. FINRA investigated after receiving the Form U5 sent in by Raymond James after they allowed Adams to voluntarily resign on 10/7/21. This followed allegations that Adams “may have misappropriated assets” from a client’s estate while previously acting as an executor for the estate. FINRA received the Form U5 on November 5, 2021, and sent a letter to Adams on December 22, 2023. The letter requested on-the-record testimony scheduled for February 6, 2024. Adams refused to appear. On February 7, 2024, Adams’ attorney spoke by phone with…

On 25 July 2024, the Prudential Regulation Authority (PRA) published Policy Statement PS12/24 on its approach to rule permissions and waivers. In PS12/24, the PRA sets out its final statement of policy (SoP) on the topic, along with feedback to Consultation Paper CP3/24. The PRA explained in CP3/24, published on 31 January 2024, that its aim in setting out its approach in a SoP is to help improve clarity and transparency over the criteria the PRA will use to assess applications under s138BA of the Financial Services and Markets Act 2000. This has an overarching objective of lowering costs and increasing the speed of s138BA rule permissions. Following the responses it received to CP3/24, the PRA has made two amendments to the draft SoP, to clarify: What the PRA generally expects to include in a subject specific SoP. That there may be exceptional circumstances where it may be appropriate to grant a s138BA permission for which it has not set out a criteria despite the…

On 24 July 2024, the Payment Systems Regulator (PSR) published Policy Statement PS24/4 setting out its finalised new guidance on how it will make decisions on whether to grant exemptions or extensions to a specific direction or requirement.  Background The PSR uses specific directions and requirements to require firms to make changes that improve payments for people and businesses in the UK. It consulted in May 2024 on proposed guidance setting out factors that it would use to decide whether to grant an extension or exemption to parties affected by one of the specific directions or specific requirements.  The finalised guidance Following the consultation, the PSR has made some limited revisions to its draft rules to provide additional clarity on its approach. The final guidance is set out in PS24/4, along with a summary of the consultation responses, the PSR’s response to the issues raised by respondents, and the revisions made to the guidance. …

On 24 July 2024, the Financial Conduct Authority (FCA) published Policy Statement PS24/8, which sets out the final rules for its access to cash regime. Background The FCA consulted in December 2023 on establishing an access to cash regulatory regime, which would require banks and building societies designated by the Government to assess and fill gaps, or potential gaps, in access to cash. These proposals followed the granting to the FCA of a new remit and powers under the Financial Services and Markets Act 2023, to ‘seek to ensure reasonable provision’ of cash deposit and withdrawal services for personal and business current accounts across the UK. The final rules Under the new rules, banks and building societies will be required to: Assess cash access and understand if additional services are needed, when changes are being made to local services. Respond to local residents, community organisations and representative groups, who will be able…

According to a recent Institutional Investor article, private equity funds are sitting on a mountain of dry powder – or at least some of them are.  The article says that PE & VC funds have added nearly $50 billion to their cash reserves since December 2023. That’s double the amount they added during the previous […]