Financial Industry Resource Center

SEC Adopts Rules Relating to Net Worth Standard for Accredited Investors

Hunton & Williams LLP — Wed, 04 Jan 2012 10:29:49 -0500

On December 21, 2011, the Securities and Exchange Commission (“SEC”) adopted new rules under the Securities Act of 1933, as amended (the “Securities Act”), as required by Section 413(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”). The rules exclude the value of a person’s primary residence for purposes of determining whether the person qualifies as an “accredited investor” on the basis of having a net worth in excess of $1 million. A copy of the SEC’s release is available here.

ISS Updates its Voting Policies for the 2012 Proxy Season

Hunton & Williams LLP — Wed, 30 Nov 2011 14:58:21 -0500

Institutional Shareholder Services (“ISS”) recently announced its updated voting policies for the 2012 proxy season. The policies will become effective for shareholder meetings held on or after February 1, 2012. While the policies cover various matters, we have summarized below certain policies relating to corporate governance matters that may be of particular interest to corporations.

SEC Adopts Rules For Private Fund Reporting

Hunton & Williams LLP — Mon, 21 Nov 2011 11:09:56 -0500

On October 26, 2011, the Securities and Exchange Commission (“SEC”) adopted new rules under the Investment Advisers Act of 1940, as amended (the “Advisers Act”), as required by Sections 404 and 406 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”). The new rules create a new reporting form — Form PF — to be filed quarterly or annually by registered investment advisers that manage private funds, including hedge funds and private equity funds. A copy of the SEC’s adopting release is available here.

Court Vacates the SEC's Proxy Access Rules

Hunton & Williams LLP — Mon, 25 Jul 2011 09:00:00 -0500

Earlier today, the U.S. Court of Appeals for the D.C. Circuit vacated the Securities and Exchange Commission's ("SEC") proxy access rules, which had been stayed pending the outcome of this litigation. The court found that the SEC "inconsistently and opportunistically framed the costs and benefits of the rule; failed adequately to quantify the certain costs or to explain why those costs could not be quantified; neglected to support its predictive judgments; contradicted itself; and failed to respond to substantial problems raised by commenters." In addition, the unanimous three-judge panel stated that "[b]y ducking serious evaluation of the costs that could be imposed upon companies from use of the rule by shareholders representing special interests, particularly union and government pension funds, we think the Commission acted arbitrarily."

As we previously explained, the proxy access rules would have permitted shareholders who collectively owned at least 3% of a company's shares for a period of three years to include nominees in a company's proxy materials. The court's decision is a rebuke to the SEC, but the SEC could request a rehearing, appeal to the supreme court or revise its analysis without necessarily changing the rules.

Click here for a copy of the decison.

SEC Adopts Whistleblower Rules Under Dodd-Frank

Hunton & Williams LLP — Tue, 14 Jun 2011 11:09:42 -0500

On May 25, 2011, the U.S. Securities and Exchange Commission (SEC) by a 3–2 vote adopted final rules implementing the whistleblower award program of Section 922 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank).i New Regulation 21F requires the SEC to pay cash awards to whistleblowers who voluntarily supply the SEC with original information leading to a judicial or administrative action in which the SEC obtains monetary sanctions over $1 million, subject to certain limitations. Whistleblowers who provide such information are eligible for a cash award of from 10 to 30 percent of the monetary sanctions. Employers are prohibited from retaliating against individuals who provide the SEC with information about possible federal securities law violations, and victims of retaliation are granted an independent cause of action.

ILPA Releases Version 2.0 of its Private Equity Principles

Hunton & Williams LLP — Fri, 11 Feb 2011 09:38:56 -0500

On January 11, 2011, the Institutional Limited Partners Association ("ILPA") released a revised version of its Private Equity Principles (the "ILPA Principles") and the first of its five recommended standardized reporting templates. A copy of the ILPA Principles is available here.

SEC Proposes Rules Relating to Net Worth Standard for Accredited Investors

Hunton & Williams LLP — Thu, 10 Feb 2011 10:46:16 -0500

On January 25, 2011, the Securities and Exchange Commission ("SEC") proposed new rules under the Securities Act of 1933, as amended (the "Securities Act"), as required by Section 413(a) of the "Dodd-Frank Wall Street Reform and Consumer Protection Act" ("Dodd-Frank"). The proposal excludes the value of a person's primary residence for purposes of determining whether the person qualifies as an "accredited investor" on the basis of having a net worth in excess of $1 million. A copy of the SEC's Proposing Release is available here.

SEC Proposes Rules Relating to Investment Adviser Registration Exemptions and Reporting Requirements

Hunton & Williams LLP — Thu, 16 Dec 2010 11:55:37 -0500

On November 19, 2010, the Securities and Exchange Commission ("SEC") proposed new rules under the Investment Advisers Act of 1940, as amended (the "Advisers Act"), as required by Sections 403, 407, 408 and 410 of the "Dodd-Frank Wall Street Reform and Consumer Protection Act" ("Dodd-Frank"). If adopted as proposed, the "Exemptive Release" would define the scope of the registration exemptions available to advisers to venture capital funds, advisers to private funds with less than $150 million in assets under management in the United States, and foreign private advisers. The "Implementation Release" would require reporting by certain "exempt reporting advisers" (including advisers to venture capital funds and private funds with less than $150 million in assets under management in the United States). Further, the Implementation Release would expand the reporting requirements for registered investment advisers on Form ADV. A copy of the SEC's Exemptive Release is available here and a copy of the SEC's Implementation Release is available here.

SEC Dodd-Frank Implementation -- Proposed Family Office Definition

Hunton & Williams LLP — Tue, 16 Nov 2010 11:00:22 -0500

On October 12, 2010, the Securities and Exchange Commission (“SEC”) proposed new Rule 202(a)(11)(G)-1 (the “Proposed Rule”) to define the term “family office” under the Investment Advisers Act of 1940 (the “Advisers Act”), as required by Section 409 of the “Dodd-Frank Wall Street Reform and Consumer Protection Act” (“Dodd-Frank”). Family offices that comply with the final version of the rules, once they are adopted, will not be required to register or comply with the Advisers Act. A copy of the SEC’s Proposing Release is available here.

SEC Dodd-Frank Implementation -- Proposed Institutional Investment Manager Reporting on Proxy Votes

Hunton & Williams LLP — Tue, 16 Nov 2010 10:34:15 -0500

On October 18, 2010, the Securities and Exchange Commission (“SEC”) proposed new Rule 14Ad-1 (the “Proposed Rule”) under the Securities Exchange Act of 1934 (the “Exchange Act”), as required by Section 951 of the “Dodd-Frank Wall Street Reform and Consumer Protection Act” (“Dodd-Frank”). If adopted as proposed, the Proposed Rule would require certain institutional investment managers, including hedge fund managers and pension fund managers that are required to file Form 13F, to annually file their record of proxy voting with respect to executive compensation shareholder votes. A copy of the SEC’s Proposing Release is available here.

CTFC Proposes New Rules for Consumer Privacy Protection

Hunton & Williams LLP — Mon, 01 Nov 2010 09:29:20 -0500

On October 27, 2010, the U.S. Commodity Futures Trading Commission (the “CFTC”) issued two notices of proposed rulemaking (“NPRMs”), citing Gramm-Leach-Bliley Act (“GLBA”) privacy rules, and marketing and data disposal rules of the Fair Credit Report Act (“FCRA”).

The proposed rules come in the wake of the Dodd-Frank Wall Street Reform and Consumer Protection Act, which places two new categories of covered entities (i.e., “swap dealers” and “major swap participants”) under the CFTC’s jurisdiction. Under the proposals, those entities would be subject to certain GLBA privacy rules that regulate the treatment of consumers’ nonpublic personal information, and sections of the FCRA that address affiliate marketing and data disposal.

Under the proposed marketing rule, CFTC-regulated entities that receive consumer “eligibility information” from an affiliate must not market to consumers unless the consumers are (1) notified in advance about the marketing, and (2) have a reasonable opportunity to opt-out.

The proposed disposal rule would require relevant entities to create and employ written policies and procedures regarding the proper safeguarding and disposal of consumer information they possess or maintain.

Comments from the public must be received by December 27, 2010, and the CFTC has proposed an effective date of July 21, 2011.

Responding to Questions on the Transfer of Residential Mortgage Loans in Securitizations

Hunton & Williams LLP — Tue, 19 Oct 2010 16:50:02 -0500

Recently, in addition to questions regarding certain residential mortgage foreclosure processing improprieties, concerns have been expressed regarding the validity of certain transfers of residential mortgage loans in securitization transactions. We believe that these concerns are unfounded. To help clarify issues regarding the assignment process for residential mortgage loans, we have prepared the following questions and answers. These questions and answers are not intended to be comprehensive or to address every issue or situation but, rather, are intended to provide a general overview and explanation of matters related to mortgage loan transfers.

SEC Proxy Access Seminar: Video Now Available

Hunton & Williams LLP — Wed, 06 Oct 2010 13:10:28 -0500

The Securities and Exchange Commission recently adopted its final rule on "proxy access," perhaps the most sweeping reform in decades regarding the way directors of public companies are elected. On September 21, 2010, Hunton & Williams hosted a panel on the SEC's proxy access rule and related corporate governance implications of the Dodd-Frank Wall Street Reform Act. Panelists included a proxy solicitor, senior in-house counsel of a public company, an executive compensation consultant and our corporate governance attorneys.

SEC Adopts Final Rules on Proxy Access and Facilitation of Nominations of Directors by Shareholders

Hunton & Williams LLP — Thu, 26 Aug 2010 13:44:06 -0500

On August 25, 2010, the Securities and Exchange Commission (“SEC”) adopted final rules to facilitate nominations of directors by shareholders, including so-called “proxy access” rules. As adopted, the rules permit any shareholder or group of shareholders that has owned three percent or more of the company’s voting stock for at least three years to include director nominees in that company’s proxy materials. Shareholders will be entitled to include the greater of one nominee or the number of nominees that represent twenty-five percent of the total number of the company’s directors. As explained in the SEC’s 451-page release, the rules are mandatory and will become effective sixty days after publication in the federal register, though the SEC granted a three-year reprieve to “smaller reporting companies.” The rules fundamentally affect the manner in which directors are elected and deserve close attention.

Three Bills Introduced to Repeal Section 929I of the Dodd-Frank Financial Reform Bill

Hunton & Williams LLP — Fri, 06 Aug 2010 13:37:21 -0500

As reported in BNA’s Privacy Law Watch on July 29, 2010, three bills were introduced by House Republicans to repeal Section 929I of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”). Section 929I of the Dodd-Frank Act has been a source of controversy because it gives the SEC significant latitude to sidestep FOIA requests by providing that the SEC "shall not be compelled to disclose" certain information it obtains pursuant to the '34 Act when conducting surveillance, risk assessments or other regulatory and oversight activities.

Important Developments in the Municipal Bond Market

Hunton & Williams LLP — Tue, 27 Jul 2010 15:58:24 -0500

A number of regulatory and legislative developments will alter the municipal securities market significantly in the upcoming months. Among these developments are amendments to Rule 15c2-12 of the Securities and Exchange Act of 1934 that will enlarge the continuing disclosure obligations of municipal bond issuers, increased post-issuance diligence obligations for issuers of Direct Pay Build America Bonds, guidance on potential offsets by the Federal government to subsidy payments owed to issuers of Direct Pay BABs, and the effects of the provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. This client alert summarizes these recent developments and offers an overview of consequent changes in the operation of the municipal marketplace for the remainder of this calendar year.

In addition, this alert addresses the status of the extension of authorization for certain tax credit bond structures originally enacted by the American Recovery and Reinvestment Act of 2009 ("ARRA"), including Build America Bonds and Recovery Zone Bonds, as well as the extension of certain favorable tax law provisions under ARRA relevant to municipal bonds in general.

Dodd-Frank Wall Street Reform and Consumer Protection Act

Hunton & Williams LLP — Thu, 22 Jul 2010 17:40:18 -0500

This week, President Obama signed into law the "Dodd-Frank Wall Street Reform and Consumer Protection Act" (the "Act"). The Act contains a number of significant provisions that affect the securitization industry. One change with immediate effect is the repeal of Rule 436(g) of the Securities Act of 1933, which currently excludes NRSROs from being treated as "experts" when their ratings are included in a registration statement. The legislation also contains a 5 percent risk retention requirement for securitizations, other than those involving "qualified residential mortgage" or loans originated under approved underwriting standards indicating low credit risk. The Act calls for the issuance of regulations regarding the application of risk retention provisions and the specification of underwriting standards. We will be monitoring these developments and will provide updates to you as the picture becomes clearer.

First, the legislation will require advisers to certain private funds, including hedge funds, private equity funds, venture capital funds and various other investment vehicles, to register under the Investment Advisers Act of 1940, and to respond to increased reporting and disclosure requirements, as we have outlined in our client alert "Dodd-Frank Act Impacts Private Fund Advisers."

Second, the Act includes expansive financial industry regulatory reforms, including new restrictions on the private investment fund activities of banking entities and their affiliates, known as the "Volcker Rule," described in our client alert "Volcker Rule Will Impact Private Fund Industry."

Third, the Act contains a number of provisions regarding executive compensation, corporate governance and enforcement provisions that are applicable to most public companies, as discussed in more detail in our client alert "Executive Compensation, Corporate Governance and Enforcement Provisions of The Dodd-Frank Act Affecting Public Companies."

Fourth, the legislation calls for changes in the regulatory landscape for "main street" financial institutions and their holding companies, as we have detailed in our client alert "Impact of the Dodd-Frank Act on Main Street."

Fifth, the legislation substantially alters the regulation of over-the-counter ("OTC") derivatives markets, in ways that will not be fully understood until extensive rulemaking, required by the legislation, is complete. A description of these changes is found in our client alert "OTC Derivatives Reform: Wall Street Transparency and Accountability Act of 2010."

OTC Derivatives Reform: Wall Street Transparency and Accountability Act of 2010

Hunton & Williams LLP — Wed, 21 Jul 2010 18:24:21 -0500

Title VII of H.R. 4173, the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank"), substantially alters the regulation of over-the-counter ("OTC") derivatives markets. Financial reform, particularly as it relates to derivatives, had the initial purpose of mitigating systemic risk and interconnection concerns in the financial markets. Congress and regulators, nevertheless, are taking the opportunity in Dodd-Frank to address other perceived issues in the OTC derivatives markets and in the commodities sector.

Pres. Obama Signs Dodd-Frank Financial Overhaul Bill Into Law

Hunton & Williams LLP — Wed, 21 Jul 2010 14:26:53 -0500

Today President Barack Obama signed into law the financial overhaul legislation known as the Dodd-Frank Wall Street Reform and Consumer Protection Act (HR 4173). Now that the bill has become law, today marks the beginning of study periods and rule making time frames in the bill for various regulators.

Click here for the legislation as passed by Congress.

Impact of the Dodd-Frank Act on Main Street

Hunton & Williams LLP — Tue, 20 Jul 2010 18:28:15 -0500

On July 15, 2010 the Senate passed the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Act"), which represents the most sweeping change to banking law since Congress adopted the Financial Institutions Reform, Recovery and Enforcement Act of 1989 ("FIRREA"), if not before. FIRREA was the congressional action designed to "forever prevent" another banking catastrophe. Many statements from the late 1980s, such as the elimination of "too big to fail" ("TBTF"), have echoed in the debate over "systemically important" financial institutions. Hopefully, the Act's Financial Stability Oversight Council and the orderly liquidation authority over nonbanks that pose systemic risk will have more success than the FIRREA tools that were not effectively employed to prevent the subprime bubble.