On August 16, 2011, the Public Company Accounting Oversight Board (“PCAOB”) issued a Concept Release on Auditor Independence and Audit Firm Rotation (“Concept Release”). The Concept Release, available at http://pcaobus.org/Rules/Rulemaking/Docket037/Release_2011-006.pdf, solicits public comment on steps it could take under its existing authority to enhance auditor independence, objectivity, and professional skepticism, including, most notably, imposing for the first time mandatory audit firm rotation on public companies.
Securities Regulation
The SEC’s Final Whistleblower Rules: The Floodgates Open on a New Wave of Whistleblower Claims, as the SEC Authorizes Massive Bounties to Anonymous Tipsters
New York partner Jonathan C. Dickey and associate Brian M. Lutz are authors of “The SEC’s Final Whistleblower Rules: The Floodgates Open on a New Wave of Whistleblower Claims, as the SEC Authorizes Massive Bounties to Anonymous Tipsters” [PDF] published in the July/August 2011 issue of Thomson Reuters’ Securities Litigation Report.
SEC Adopts New Rules to Replace Use of Credit Ratings in Short-Form Eligibility Criteria
On July 26, 2011, the Securities and Exchange Commission ("SEC") adopted new rules to eliminate an issuer’s credit rating as one of the "transaction requirement" criteria by which an issuer can qualify for the short-form registration process on Forms S-3 and F-3. The new rules correspondingly modify Forms S-4 and F-4 to the extent that these forms reference the amended contents of Forms S-3 and F-3. The SEC also adopted conforming amendments to Rules 134, 138, 139 and 168 to remove the safe harbor for including credit ratings in communications by issuers and broker/dealers. The new rules were adopted pursuant to Section 939A of the Dodd‑Frank Act ("Dodd-Frank"), which requires the SEC to modify its regulations to "remove any reference to or requirement of reliance on credit ratings and to substitute in such regulations such standard of credit-worthiness" as the SEC deems appropriate.
The Securities and Exchange Board of India Once Again Takes the View That Put/Call Options Are Unenforceable under Indian Law
In a letter dated May 23, 2011, the Securities and Exchange Board of India (“SEBI”, and such letter, the “SEBI Letter”) took the view that put/call options governing the shares of an Indian public listed company are unenforceable. This is consistent with the view SEBI had taken previously, in an unpublished letter dated March 18, 2011, issued in connection with the proposed acquisition by UK based Vedanta Resources Plc. (an English company) and others of a majority stake in Cairn India Limited.[1]
SEC Finalizes Investment Adviser Registration Exemptions and Grants Extension to New Registrants
New York partner Edward Nelson, Washington, D.C. partner C. William Thomas and New York associate Ebonie Hazle are the authors of "SEC Finalizes Investment Adviser Registration Exemptions and Grants Extension to New Registrants" [PDF] published in the August 1, 2011 issue of BNA’s Securities Regulation & Law Report.
The Securities and Exchange Board of India Has Proposed New Takeover Regulations
On July 28, 2011, the Securities and Exchange Board of India ("SEBI") proposed new Takeover Regulations based on recommendations of the Takeover Regulations Advisory Committee ("TRAC"). While a takeover code in India has been in place since 1997 (revised and amended from time to time), SEBI constituted the TRAC in September 2009 to review the existing regulations and make them more relevant for present day transactions. While TRAC submitted its report in 2010, SEBI proposed the new Takeover Regulations subsequent to its internal deliberations. The major changes to the existing Takeover Regulations, inter alia, include:
2011 Mid-Year Securities Litigation Update
In the first half of 2011, the United States Supreme Court decided a trio of securities class action cases, and what may be the most significant class certification decision in several decades; new case filings continue to trend upward; and major “credit crisis” cases are beginning to be resolved
2011 Mid-Year Securities Enforcement Update
I. Overview of the First Half of 2011
Robert Khuzami, the Director of the Division of Enforcement (the “Division”) of the SEC, recently took stock of the SEC’s accomplishments in the two years since he began his term. Specifically, he focused on the Division’s restructuring, calling it the “most significant” since the Division’s creation almost 40 years ago.[1] In describing the restructuring, he noted that it was composed of many initiatives that were intended to achieve a series of common goals including: achieving a better understanding of the products, markets, transactions and practices policed by the Commission; identifying and terminating fraud and misconduct more quickly; increasing efficiency in the use of resources; and maximizing the Division’s deterrent impact by swiftly addressing threats as they develop and before they can permeate entire business lines or industries.[2]
The SEC Finalizes Its Private Fund Adviser Registration Rules and Related Exemptions
On June 22, 2011, the Securities and Exchange Commission (the “SEC” or the “Commission”) voted to adopt final rules[1] to implement amendments to the Investment Advisers Act of 1940 (the “Advisers Act”) contained in Title IV of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank”).[2]
With One Month to Spare, the SEC Will Consider Final Private Fund Adviser Registration Rules
On June 22, the SEC will meet to consider adopting final rules and rule amendments to implement the requirements of Title IV of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The Commission’s press release is available at http://sec.gov/news/openmeetings/2011/ssamtg062211.htm.