Securities Regulation and Corporate Governance Monitor

Securities Regulation

European Parliament and Council Back New Alternative Investment Fund Rules

| Posted by Gibson, Dunn & Crutcher LLP Topic(s): EU Regulation; Investment Act/Investment Advisors Act; Securities Regulation

The continuing saga of the Alternative Investment Fund Managers Directive (the Directive) of the European Union is causing heartburn throughout the world’s financial capitals.

Despite strong rhetoric from the Conservative Party whilst in opposition, the UK’s newly elected Conservative-Liberal coalition government quietly agreed to the next phase of the implementation of the Directive, perhaps aware that it could not assemble enough votes to block adoption of positions on the Directive using the Qualified Majority Vote system.

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Restoring American Financial Stability Act of 2010 – A Comprehensive Review of the U.S. Senate Banking Reform Bill

| Posted by Gibson, Dunn & Crutcher LLP Topic(s): Corporate Governance; Dodd Frank; Executive Compensation; Securities Regulation; Whistleblower Rules

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. 

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A Summary of the Financial Reporting and Disclosure Implications of the Health Care Reform Legislation

| Posted by Gibson, Dunn & Crutcher LLP Topic(s): Securities Regulation

On March 23, 2010, President Obama signed into law the Patient Protection and Affordable Care Act. Seven days later, the president signed into law a reconciliation measure, the Health Care and Education Reconciliation Act of 2010. The passage of the Patient Protection and Affordable Care Act and the reconciliation measure (collectively, the "Act") has resulted in comprehensive health care reform legislation. The effects of the Act on the U.S. economy could be as sweeping as those resulting from the passage of Medicare and Social Security.

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The Four ‘Ds’: Deterrence, Discipline, Disgorgement … and Dawn Raids — Latest on the UK Financial Services Authority’s Enforcement Regime

| Posted by Gibson, Dunn & Crutcher LLP Topic(s): Investment Act/Investment Advisors Act; Securities Regulation; UK Regulation

On 1 March, the UK Financial Services Authority ("FSA") published its new framework for financial penalty-setting. Explaining the tri-partite objectives of the new policy of deterrence, discipline and disgorgement, Margaret Cole (Director of Enforcement and Financial Crime) said:

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Supreme Court Clarifies Standards for Judicial Review of Mutual Fund Fees

| Posted by Gibson, Dunn & Crutcher LLP Topic(s): Investment Act/Investment Advisors Act; Securities Regulation

On March 30, 2010, the Supreme Court issued its decision in Jones v. Harris Associates L.P., No. 08-586.  The Court construed Section 36(b) of the Investment Company Act of 1940, which states that investment advisers to mutual funds are deemed to have a fiduciary duty with respect to the receipt of compensation for services and provides a private cause of action for breach of that duty. 

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Financial Regulatory Reform: Chairman Dodd Releases New Legislation to Reform Financial Services Industry Regulation and Enhance Consumer Protection

| Posted by Gibson, Dunn & Crutcher LLP Topic(s): Corporate Governance; Dodd Frank; Executive Compensation; Securities Regulation; Whistleblower Rules

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.

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SEC Amends E-Proxy Rules

| Posted by Gibson, Dunn & Crutcher LLP Topic(s): Compensation Committee; Securities Regulation

The Securities and Exchange Commission ("SEC") recently approved amendments to its notice and access (e-proxy) rules that are designed to increase participation in the e-proxy process.  Under the prior e-proxy rules, the SEC mandated the exact form and content that had to appear on the Notice of Internet Availability (the "Notice").  Concerns have been expressed that the Notice rules limited the ability of issuers to communicate effectively about the e-proxy process, which resulted in lower shareholder participation rates for e-proxy, particularly among retail investors. 

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SEC Votes 3-2 to Adopt Alternative Uptick Rule

| Posted by Gibson, Dunn & Crutcher LLP Topic(s): Securities Regulation

Today, the Securities and Exchange Commission voted 3-2 to adopt a short sale-related circuit breaker solution (the “Alternative Uptick Rule”) to limit excessive short selling pressure on individual stocks.  The SEC’s press release is available at http://www.sec.gov/news/press/2010/2010-26.htm. The Alternative Uptick Rule, Securities Exchange Act Rule 201 of Regulation SHO, was formally proposed by the Commission in August 2009, see Release No. 34-60509 (Aug. 17, 2009), available at  http://www.sec.gov/rules/proposed/2009/34-60509.pdf.1

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SEC Issues Interpretive Guidance on Climate Change Disclosures

| Posted by Gibson, Dunn & Crutcher LLP Topic(s): Securities Regulation

At a meeting held on January 27, 2010, the Securities and Exchange Commission (“SEC”) approved by a 3-2 vote an interpretive release (the “Interpretive Release”) providing guidance to public companies on the SEC’s existing disclosure requirements as they apply to climate change matters.  The Interpretive Release makes clear that companies who have not done so should establish a process for assessing whether and to what extent climate change matters are material to the company and, if so, include appropriate disclosures in their SEC filings.[1]  This is especially critical for calendar-year companies who will be filing their Annual Reports on Form 10-K in the coming weeks.  The Interpretive Release is available at http://www.sec.gov./rules/interp/2010/33-9106.pdf.

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