Client Alerts & Publications Archive

In this article, we provide a brief overview of the key reforms under Regulation AB II, followed by a more focused review of the next compliance hurdle that ABS issuers will face — annual compliance checks to determine continued shelf eligibility.

In this edition:

• Standards for Safeguarding Customer Financial Information
• HIPAA Data Breach Notification Deadline — February 29, 2016
• CFPB Issues Additional Guidance on Furnisher Obligations under Regulation V
• Court Denies Motion to Dismiss Complaint Against Compliance Officer for Bank Secrecy Act Violations

The Financial Industry Regulatory Authority, Inc. delayed the implementation of FINRA Rule 2242 (Debt Research Analysts and Debt Research Reports) until April 22, 2016. FINRA Rule 2242 addresses conflicts of interest relating to the publication and distribution of debt research reports.

On Feb. 8, 2016,  the United States Court of Appeals for the Ninth Circuit held that a claim of an “insider,” which is not counted for the purposes of creating an accepting impaired class for confirmation of a contested plan of reorganization, does not retain insider status once transferred to a third party that is not an insider. 

On February 10, 2016, the Government Finance Officers Association alerted its members that the Enforcement Division of the Securities and Exchange Commission has begun contacting issuers in connection with its Municipalities Continuing Disclosure Cooperation initiative. 

On February 9, 2016, the SEC’s Division of Corporation Finance published a guide for issuers of Asset-Backed Securities addressing changes in EDGAR filing procedures to support new and updated filing requirements under Regulation AB II and Exchange Act Rule 15Ga-2.

Law360 republished a Chapman Client Alert.

Pratt's Journal of Bankruptcy Law republished a Chapman Client Alert.

On February 2, 2016, in the third round of settlements with underwriters under its Municipalities Continuing Disclosure Cooperation initiative, the Securities and Exchange Commission issued cease-and-desist orders to 14 underwriting firms.

A recent decision of the U.S. District Court for the Eastern District of Pennsylvania has highlighted once again the regulatory risks that the so-called “true lender” doctrine can create for internet-based lenders who partner with banks to establish exemptions from applicable state consumer protection laws.

On January 20, 2016, the Seventh Circuit held that Illinois real property tax sales cannot be deemed to be for “reasonably equivalent value” as a matter of law. Applying the general rule of §548(a)(1)(B), the Court noted that tax sales do not involve competitive bidding and the bid amount bears no relationship to the value of the underlying real estate.

This Client Alert briefly summarizes some of the primary issues that advisers might consider in their 2016 annual review and update processes. 

The Securities and Exchange Commission recently approved amendments to Financial Industry Regulatory Authority, Inc. rules to apply FINRA Rule 2121 (Fair Prices and Commissions) to government securities. 

On January 14, 2016 the Basel Committee on Banking Supervision published final rules related to the Fundamental Review of the Trading Book. Each member country, including the United States, will have to consider how it will give effect to the FRTB framework.

Law360 republished a Chapman Corporate Governance Quarterly Update.

On January 6, 2016, the staff of the Securities and Exchange Commission’s Division of Investment Management released guidance regarding registered open-end investment company payments to certain financial intermediaries that provide shareholder and recordkeeping services for investors. The staff’s guidance is designed to help fund boards oversee and evaluate whether sub-accounting fees are for distribution or non-distribution services.

The Financial Industry Regulatory Authority recently issued its annual Regulatory Examination Priorities Letter. FINRA member firms should review their policies, procedures and business activities in light of FINRA’s stated 2016 priorities. 

The Securities and Exchange Commission’s Office of Compliance Inspections and Examinations recently released its Examinations Priorities for 2016. Firms should review their policies, procedures and business activities in light of OCIE’s stated 2016 priorities.

The Eleventh Circuit has become the latest federal appellate court to evidence a reluctance to dismiss appeals stemming from bankruptcy court decisions involving consummated plans and settlements based on notions of futility or equitable mootness. 

The Financial Industry Regulatory Authority recently filed with the Securities and Exchange Commission a revised proposal to establish “pay-to-play” rules that would regulate certain activities of FINRA member firms. The revised proposal responds to comments made on a previous FINRA proposal.

This article examines the current treatment of default interest by bankruptcy courts and analyzes how a creditor’s claim for default interest could be treated as part of a chapter 11 plan process. 

The Banking Law Journal republished a Chapman Client Alert.

Recent changes to the tax law will require partnerships to pay tax at the partnership level on certain audit adjustments to partnership income, and these changes may affect government pension plans that invest in partnerships.

With the 2016 proxy season quickly approaching, reporting companies will begin contemplating the various disclosures they will make. Increasingly, audit committees in particular are being asked to voluntarily provide enhanced disclosure relating to how they perform their oversight duties and responsibilities.

In December 2014, the Securities and Exchange Commission approved a new Municipal Securities Rulemaking Board best execution rule for transactions in municipal securities and related amendments applicable to “sophisticated municipal market professionals."

In September, the IRS issued final regulations to clarify that controlled groups under the rules for regulated investment companies may consist of only two entities. This may cause unanticipated attributions of ownership, which would disqualify some RICs from beneficial tax treatment.

On November 2, 2015 President Obama signed the Bipartisan Budget Act of 2015, replacing a longstanding set of statutory provisions governing the audit and adjustment of partnership income tax returns.

The Municipal Securities Rulemaking Board recently adopted amendments to MSRB Rule G-20 on gifts, gratuities and non-cash compensation. The rule changes become effective on May 6, 2016.

Today, the Illinois State Board of Education approved allocation guidelines and an application process for Qualified School Construction Bonds. Pursuant to such guidelines and process, ISBE expects to allocate $495,602,000 in volume limitation for QSCBs to school districts.

Law360 republished a Chapman Client Alert.

Many individuals no longer face a federal estate tax or need to be concerned with dividing assets between spouses for tax planning purposes. But for individuals residing in Illinois, and even non-residents who own Illinois property, not only is there still an estate tax, but the exemption is much smaller.

On November 2, 2015, the Delaware bankruptcy court ruled that where a majority of bondholders direct an indenture trustee to withdraw its confirmation objections, the remaining minority who did not file independent objections to confirmation may not step in to press the indenture trustee’s objections. 

The Municipal Securities Rulemaking Board recently proposed amendments to MSRB Rules G-12 and G-15 that would shorten the settlement cycle from T+3 (trade date plus three business days) to T+2 (trade date plus two business days) for transactions in municipal securities. 

A recent decision of the Maryland Court of Special Appeals could impact marketplace and other lenders who arrange for federal or state banks to fund consumer loans in Maryland at rates in excess of the applicable Maryland usury caps. 

On October 22, 2015, the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency, and the Farm Credit Administration approved a final rule establishing margin requirements for Uncleared Swaps. The Federal Reserve and Federal Housing Finance Agency followed suit on October 30. The Final Rule becomes effective on April 1, 2016.

On October 26, 2015, the Department of the Treasury released Final Regulations on allocation and accounting, and certain remedial actions, for purposes of the private activity bond restrictions that apply to tax-exempt bonds.

Insights: The Corporate & Securities Law Advisor republished an issue of Chapman's Corporate Governance Quarterly Update.

At a meeting on October 22, 2015, the FDIC Board approved a final rule regarding Treatment of Financial Assets Transferred in Connection with a Securitization or Participation. 

At a meeting today the FDIC Board approved a joint final rule establishing margin requirements for swaps that are not cleared through a clearinghouse.

On October 1, 2015, the Tax Exempt and Governmental Entities Division of the Internal Revenue Service released its Tax Exempt and Governmental Priorities for Fiscal Year 2016. 

The Financial Industry Regulatory Authority is requesting comment on a revised proposal to amend FINRA Rule 2232 governing trade confirmation disclosures. The amendments would require member firms to disclose a “reference price” on customer confirmations for principal transactions in corporate and agency debt securities with retail customers.

The FDIC has announced an open session meeting of its Board of Directors to take place at 10:00 AM on Thursday, October 22, 2015.

The FDIC has announced an open session meeting of its Board of Directors to take place at 10:00 AM on Thursday, October 22, 2015.

The Securities and Exchange Commission recently approved a proposed rule change by the Financial Industry Regulatory Authority, Inc. that would amend FINRA Rule 2210 to require each of a member’s websites to include a readily apparent reference and hyperlink to BrokerCheck.

On September 30, 2015, in the second round of settlements with underwriters under its Municipalities Continuing Disclosure Cooperation initiative, the Securities and Exchange Commission issued cease-and-desist orders to 22 underwriting firms. 

The Financial Industry Regulatory Authority, Inc. recently filed a proposed rule change with the Securities and Exchange Commission to apply FINRA rules on bond mark-ups and commissions to transactions in exempted securities that are government securities.

No particular notice is required before commencing a mortgage foreclosure suit relating to commercial property, and many of the rules intended to help keep homeowners in their homes do not apply. But what about the odd situation where a commercial property is used by the mortgagee as a primary residence?

The Securities and Exchange Commission recently proposed new rules and amendments designed to enhance liquidity risk management requirements for certain open-end management investment companies, including mutual funds and exchange-traded funds.

The Municipal Securities Rulemaking Board recently proposed amendments to MSRB Rule G-15 that would require brokers, dealers and municipal securities dealers to disclose the mark-up or mark-down on retail customer confirmations for specified principal transactions.