On October 20, the European Commission tabled proposals to revise the Market Abuse Directive (MAD). The proposals seek to address five broad problems with MAD identified by the European Commission: (i) gaps in the regulation of new markets, platforms and OTC trading in financial instruments; (ii) gaps in the regulation of commodities and commodity derivatives; (iii) a current inability on the part of Regulators to enforce MAD; (iv) a lack of legal certainty which is currently undermining the effectiveness of MAD and (v) current administrative burdens placed on small and medium sized companies by MAD. Click here to read more.
Orrick Alert
The MiFID II Proposals – 10 Key Points
On October 20, the European Commission tabled proposals to significantly revise the Markets in Financial Instruments Directive (MiFID). These proposals (known as MiFID II) are intended to: (i) make financial markets more efficient and resilient; (ii) take account of technological developments since MiFID was implemented in November 2007; (iii) increase transparency of both equity and non-equity markets and (iv) reinforce supervisory powers and introduce a stricter framework for commodity derivatives markets and strengthen investor protection. Click here to read more.
Implementation of the Volcker Rule Provisions Affecting Private Fund Sponsorship and Ownership
During the week of October 10, the Fed, the FDIC, the OCC, and the SEC proposed rules implementing Section 619 of the Dodd-Frank Act, otherwise known as the “Volcker Rule”. The Volcker Rule generally prohibits a banking entity from engaging in proprietary trading or acquiring or retaining any ownership interest in, or sponsoring a private fund. This Alert provides a summary of some of the most significant provisions of the rulemaking that directly impact the sponsorship of, and ownership of interests in, private funds by banking entities, including securitization transactions. Click here to read the full alert.
Derivatives Month in Review
Click here to view highlights regarding important legal, regulatory and other newsworthy developments in the area of derivatives.
Regulation of Investment Advisers to Real Estate Funds in the Wake of the Dodd-Frank Act
Sponsors of private real estate funds may be subject to new federal registration requirements because of recent regulatory changes effected by the Dodd-Frank Act and companion SEC regulations. Click here to read more.
Life Settlements Alert
On September 20, 2011, the Delaware Supreme Court answered three certified questions directly impacting life settlement investments. The questions were presented to the Supreme Court in two companion cases pending in the federal district court of Delaware, PHL Variable Ins. Co. v. Price Dawe 2006 Insurance Trust and Lincoln Nat’l Life Ins. Co. v. Joseph Schlanger 2006 Insurance Trust. Click here to read more.
IRS Issues Proposed Regulations Addressing Treatment of Credit Default Swaps and Swap Exclusion Under Section 1256
On September 15, 2011 the Treasury Department issued proposed regulations that would add credit default swaps as well as non-financial indexed derivatives to a revised definition of a notional principal contract. Click here to read more.
SEC Proposes Rule Prohibiting Material Conflicts of Interest in Securitization Transactions
On September 19, the SEC issued proposed Rule 127B, as required under Section 621 of the Dodd-Frank Act, to prohibit material conflicts of interest in connection with certain securitizations. The proposed rule would prohibit certain persons who create and distribute an ABS, including a synthetic ABS, from engaging in transactions within one year after the date of the first closing of the sale of ABS that would involve or result in a material conflict of interest with respect to any investor. Please click here to access the proposed rule. The deadline for comments on the proposed rule is December 19.
Please click here to access our complete update, which includes an overview of the proposed rule and the SEC’s proposed interpretive framework regarding application of the proposed rule and its exceptions.
SEC’s Office Of The Whistleblower Begins Processing Tips: What Companies Should Do Now
Sean McKessy, Chief of the SEC’s Office of the Whistleblower, and Mark Cahn, General Counsel for the SEC, recently outlined the Office of the Whistleblower’s activities and priorities in public remarks. For more information, click here.
ABS Issuers and the Rule 3a-7 Exclusion from the Investment Company Act
On August 31, the SEC issued an advance notice of proposed rulemaking on possible amendments to Rule 3a-7 of the Investment Company Act of 1940. Click here to read more.