Client Alerts & Publications Archive

The Financial Industry Regulatory Authority, Inc. recently issued a Regulatory Notice providing guidance on liquidity risk management practices that FINRA expects member firms to consider and implement in preparation for adverse circumstances. 

On September 17, 2015, the SEC adopted final amendments to Rule 2a-7 under the Investment Company Act of 1940. The amendments eliminate references to credit ratings in the Rule and make changes to the issuer diversification requirements of the Rule.

The Securities and Exchange Commission’s Office of Compliance Inspections and Examinations recently issued a Risk Alert providing information on the areas of focus for the SEC staff’s second round of cybersecurity examinations of registered investment advisers and broker-dealers. 

According to Giving USA, Americans gave an estimated $358.38 billion to charity in 2014, surpassing the peak last seen in 2007 prior to the Great Recession.

The National Futures Association recently submitted an interpretive notice proposal to the Commodity Futures Trading Commission that would require NFA members to establish information systems security programs.

The Banking Law Journal republished a Chapman Client Alert.

The Financial Crimes Enforcement Network recently proposed rulemaking to prescribe minimum standards for anti-money laundering programs.

The Financial Industry Regulatory Authority, Inc. recently announced the adoption of amendments to its equity research rules and entirely new rules governing debt research. 

The Securities and Exchange Commission’s Office of Compliance Inspections and Examinations recently issued a Risk Alert summarizing deficiencies in controls of certain broker-dealers related to sales of structured products to retail investors. 

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

On August 13, 2015, the Securities and Exchange Commission issued a cease-and-desist order against Edward D. Jones & Co., L.P., in response to alleged improper trading practices by the St. Louis-based broker-dealer. 

The Securities and Exchange Commission is seeking comments on proposed rule changes by the Financial Industry Regulatory Authority, Inc. addressing external personal accounts opened or established by associated persons of FINRA member firms. 

The Columbia Law School Blue Sky Blog republished a Chapman Insights article. 

In the case of Madden v. Midland Funding, LLC, the Second Circuit narrowly interpreted the scope of federal preemption of state usury laws under the National Bank Act as such laws apply to certain non‑bank loan assignees.

Though the RadioShack proceeding sheds light on how bankruptcy courts may interpret an agreement among lenders, unfortunately, it still remains unclear as to whether U.S. bankruptcy courts will assert jurisdiction to consider arguments arising under an agreement among lenders.

The Internal Revenue Service Office of Tax Exempt Bonds has announced a new sequester reduction in amounts paid to issuers of direct pay bonds for which issuers elected to receive a direct payment from the U.S. Treasury pursuant to Section 6431 of the Internal Revenue Code. 

Tax freeze legislation recently passed by the Illinois Senate would impact every taxing district in the State if it ultimately becomes law.

On August 3, 2015, President Obama announced the Environmental Protection Agency’s final rule to cut carbon emissions from the nation’s power plants under the Clean Air Act. 

The Financial Industry Regulatory Authority recently issued a Regulatory Notice to remind firms that their written supervisory procedures should identify the process for detecting, resolving, and preventing the consequences of short positions and fails-to-receive in municipal securities. 

On July 13, 2015, the United States Court of Appeals for the Eleventh Circuit reversed lower court orders that had precluded a lender from collecting accrued default interest from a debtor as a condition for reinstatement of the loan under a confirmed plan of reorganization. 

According the U.S. Census Bureau, the number of unmarried, cohabiting couples in the United States has nearly doubled in the last decade. Since they are not subject to the rights and obligations that accompany a marital relationship, partners committing to a serious relationship should consider the need to affirmatively plan for themselves, each other, and any children.

In this edition:

• Telephone Consumer Protection Act Declaratory Ruling
• CFPB First Monthly Complaint Report
• Treasury Department Inquires about Marketplace Lending

In a move intended to fortify the rights of holders of California municipal general obligation debt as well as lower borrowing costs for California municipalities, California Governor Jerry Brown signed SB 222 into law earlier this month.

The Securities and Exchange Commission recently published orders approving two rule proposals by the Financial Industry Regulatory Authority, Inc. governing equity and debt research analysts and research reports.

The Securities and Exchange Commission is seeking comments on a proposed rule change by the Financial Industry Regulatory Authority, Inc. that would amend FINRA Rule 2210 (Communications with the Public).

Law360 republished a Chapman Client Alert.

Recently, before awarding bondholders any amounts on account of a make-whole provision upon a debt prepayment, courts have repeatedly insisted on clear language in the credit documents requiring such payment notwithstanding a bankruptcy filling and a related automatic acceleration.

On June 30, 2015, the Wage and Hour Division of the Department of Labor released a Notice of Proposed Rulemaking that overhauls the Fair Labor Standards Act’s overtime regulations. 

Pratt's Journal of Bankruptcy Law published an article written by Chapman attorneys. 

In a decisive opinion, the U.S. Court of Appeals for the First Circuit affirmed a lower court ruling that the Puerto Rico Public Corporations Debt Enforcement and Recovery Act is preempted by the U.S. Bankruptcy Code and therefore unconstitutional. 

On May 20th, the IRS released draft updates to the U.S. Model Income Tax Convention.

On June 8, 2015, Long Beach Community College District in California paid the Internal Revenue Service $1,013,000 as a result of the private activity use of certain real property acquired by the District with proceeds of tax-exempt certificates of participation issued in 2001. 

A recent decision in the Southern District of New York interpreting the Trust Indenture Act will likely provide bondholders additional leverage in out-of-court restructurings.

In this edition:

• Servicemembers Update
• CFPB Consumer Complaint Narratives
• Private Student Loans and Cosigners

The U.S. Supreme Court’s 6-3 split decision in Baker Botts LLP v. Asarco LLC will have long standing implications for all bankruptcy professionals’ compensation, potentially making it much more costly for all professionals retained in chapter 11 cases.

On June 29, 2015, the Supreme Court issued a ruling declaring that the Environmental Protection Agency interpreted the Clean Air Act unreasonably in refusing to consider costs when deciding whether to regulate power plant emissions in relation to the EPA’s Mercury and Air Toxics Standards.

The Securities and Exchange Commission recently set the compliance date for the ban on certain payments to third-party solicitors under Rule 206(4)-5 of the Investment Advisers Act of 1940 as July 31, 2015.

The staff of the Securities and Exchange Commission’s Division of Investment Management recently published guidance on investment adviser Code of Ethics exceptions to personal securities transaction reporting for securities transactions occurring in certain types of trusts or investment management accounts where the beneficiary or account holder has limited or no discretionary investment authority. 

Private schools that are exempt from federal income taxation must file an annual information return with the IRS concerning their racial nondiscrimination policies. Schools that file the annual information return, Form 990, Return of Organization Exempt from Income Tax may satisfy this annual filing requirement on Schedule E.

Form 5578 is a half-page form simply certifying that a private school has complied with the racial nondiscrimination guidelines set forth by the Internal Revenue Service. The failure of a private school to annually file this form may jeopardize the school's tax-exempt status under Section 501(c)(3).

The purpose of this article is to provide a general overview of how royalty-backed securitizations work and to encourage further use of royalty-backed securities by leaders in the music, business, and financial industries.

On June 24, 2015, Prop. Treas. Reg. §1.148-1(f) addressing the definition of “Issue Price” was published in the Federal Register. The Internal Revenue Service is accepting comments on the Proposed Regulation through September 22, 2015.

On June 18, 2015, the Securities and Exchange Commission issued cease-and-desist orders to 36 underwriting firms in response to voluntary self-reporting of potential misrepresentations in municipal bond offering documents regarding compliance by issuers with prior disclosure obligations under the SEC’s Municipalities Continuing Disclosure Cooperation initiative. 

The Financial Industry Regulatory Authority is requesting comment on a revised proposal to adopt a new FINRA rule that would consolidate and clarify former National Association of Securities Dealers and New York Stock Exchange rules regarding discretionary accounts and transactions.

On June 18, 2015, the Securities and Exchange Commission issued cease-and-desist orders to 36 underwriting firms in response to voluntary self-reporting of misrepresentations in municipal bond offering documents regarding compliance with prior disclosure obligations under its Municipalities Continuing Disclosure Cooperation initiative.

In Delaware, arms-length negotiations may no longer be sufficient to protect an unwitting lender from a derivative claim brought by a borrower’s shareholder with respect to certain change of control defaults contained in credit agreements.

On June 12, 2015, the Securities and Exchange Commission issued a release seeking public comment to help inform its review of the listing and trading of new, novel, or complex exchange-traded products.

Under current law, affiliated creditors holding debt arising from the same loan transaction will not likely be lumped together when determining the number of creditors that have voted to approve or reject a plan, particularly where such affiliates held such debt prior to a bankruptcy filing and assert their claims through separate proofs of claim.

The Financial Industry Regulatory Authority recently issued a Regulatory Notice announcing that it had added additional guidance to the FINRA Rule 2210 questions and answers webpage to provide additional guidance on advertising and other communications with retail investors.