During the midst of the financial crisis, the continued existence, much less powers, of the Securities and Exchange Commission were in doubt. But in the Dodd-Frank Wall Street Reform and Consumer Protection Act, the Commission emerged with expanded jurisdiction over hedge funds, credit ratings agencies, and governance of public companies, among other areas.
Dodd Frank
Executive Compensation, Corporate Governance and Other Securities Disclosure Provisions in the Dodd-Frank U.S. Financial Regulatory Reform Act
On July 21, 2010, President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Act," available here), the most far-reaching financial regulatory reform legislation in decades. The Act affects not only the financial services industry but also all public companies. This Memorandum focuses on the Act’s executive compensation, corporate governance and other securities disclosure provisions applicable to public companies. This Memorandum also discusses the steps that public companies should consider taking now in light of the Act’s provisions. We have included as Exhibit A a chart listing the provisions described in this Memorandum and as Exhibit B the statutory text of these provisions. [1]
Derivatives Regulation under the Dodd-Frank Wall Street Reform and Consumer Protection Act
Throughout the financial regulatory reform debate, designing a regulatory framework for the derivatives market has been one of the most contentious issues. While the business community has supported bringing transparency, accountability, and stability to the market, it has been concerned that Congress and regulators could impose burdens on derivatives trading that would disincent businesses from hedging their own risks. The derivatives title in the conference report, passed by the Senate on July 15, 2010, is generally opposed by business groups as applying many of the same costs and requirements on end-users as will be applied to swap dealers. How much the final position will burden companies depends largely on the implementation of the law by regulators.
The Dodd-Frank Wall Street Reform and Consumer Protection Act (H.R. 4173) from the Broker-Dealer’s Perspective
Although still subject to Senate approval, the House of Representatives’ June 30, 2010 vote to approve the Bill* moves broker-dealers that much closer to sweeping changes to their business and operations. Only a limited number of provisions will be effective immediately upon the President’s signing of the Bill into law. Accordingly, the overall impact of financial regulatory reform cannot be fully determined until regulators undertake required rulemaking and also determine whether — and to what extent — to exercise delegated rulemaking authority.
The Final “Volcker Rule” under the Dodd-Frank U.S. Financial Regulatory Reform Bill
The "Dodd-Frank Wall Street Reform and Consumer Protection Act" ("Dodd-Frank") was approved by the U.S. House of Representatives on June 30, 2010 and is expected to be passed by the U.S. Senate in coming weeks. The bill contains a version of the "Volcker Rule" (the "Rule") — so named for former Federal Reserve Chairman Paul Volcker — that differs in material respects from the version originally introduced from the Senate bill into the House-Senate Conference. As in earlier versions, the Rule invokes Chairman Volcker’s core concept of separating certain risk activities from the federal bank subsidy.
Executive Compensation and Corporate Governance Provisions in the Dodd-Frank U.S. Financial Regulatory Reform Bill
On June 30, 2010, the U.S. House of Representatives approved the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Bill," available here), the most far-reaching financial regulatory reform legislation in decades. This alert presents a chart on the corporate governance and executive compensation provisions contained in the Dodd-Frank Bill. In addition to summarizing each provision, the chart: (1) states whether the legislation requires rulemaking by the Securities and Exchange Commission ("SEC") to implement the provision (note that in many cases the SEC may adopt or amend its rules in response to a provision even if not required by the legislation); (2) provides the effective date of the provision; and (3) describes the types of companies to which the provision would apply.
Preparing for the Conference: A Comprehensive Review of the Senate Financial Reform Bill
On May 20, 2010, after three weeks of floor debate, five cloture votes, and nearly a year of development, the "Restoring American Financial Stability Act of 2010" passed the Senate by a vote of 59-39. Three Republicans (Sens. Collins, Grassley and Snowe) voted with all but one present Democrat (Sen. Feingold) to pass the bill and move the center of the debate on to conference.
Corporate Governance and Executive Compensation Provisions in Senate Financial Regulatory Reform Bill
On May 20, 2010, the U.S. Senate passed the Restoring American Financial Stability Act of 2010 (the “Senate Bill”), the most significant financial regulatory reform legislation in decades. This legislation impacts not only the financial services industry but also all public companies. This memorandum focuses on the corporate governance and executive compensation provisions that will apply to public companies if the Senate Bill is enacted, and points out how the Senate Bill differs from the financial regulatory reform bill passed by the House of Representatives in December 2009 (the “House Bill”; available here). This memorandum also addresses the steps that companies should consider taking now in order to be prepared to comply with these provisions and the implementing rules and regulations to be adopted by the Securities and Exchange Commission (“SEC”) and the exchanges.
Restoring American Financial Stability Act of 2010 – A Comprehensive Review of the U.S. Senate Banking Reform Bill
On March 22, 2010, a bill seeking general reform of financial industry regulation in response to the recent financial crisis was adopted on a party-line vote by the Senate Banking Committee as the "Restoring American Financial Stability Act of 2010." It subsequently was reported to the Senate as Senate Bill 3217 (posted on the Committee’s website on April 15, 2010). The Senate Bill has been, and will continue in the near term to be, the subject of much public debate and partisan negotiation.
Financial Regulatory Reform: Chairman Dodd Releases New Legislation to Reform Financial Services Industry Regulation and Enhance Consumer Protection
Gibson Dunn is closely tracking government responses to the recent turmoil that has catalyzed a dramatic and rapid reshaping of our capital and credit markets. We are providing updates on key regulatory and legislative issues, as well as information on legal and oversight issues that we believe could prove useful as firms and other entities navigate these changing times.