Client Alerts & Publications Archive

The Securities and Exchange Commission recently approved proposed rule changes by the Financial Industry Regulatory Authority, Inc. that would revise certain filing requirements of FINRA Rules 2210, 2213 and 2214. 

A recent bankruptcy court decision in the Aéropostale bankruptcy case pending in the bankruptcy court for the Southern District of New York may provide some comfort to secured creditors seeking to credit bid in a sale process commenced by a debtor pursuant to Section 363 of the U.S. Bankruptcy Code. 

This update includes:

• Weekly Health Care Criminal and Civil Fraud Enforcement Round-Up
• First Circuit Rules That HHS Had Right to Recoup Disproportionate Share Overpayments Payments from Maine Hospitals 
• Vermont’s All Payer ACO Approved by CMS to Begin in January 2017 

On October 27, the Department of Labor issued its first wave of FAQs to address certain questions that have arisen with respect to the DOL’s previously issued fiduciary rule. Generally, the Rule broadly defines who is a fiduciary under the Employee Retirement Income Security Act and the Internal Revenue Code.

The Municipal Securities Rulemaking Board recently issued a notice seeking guidance on its strategic priorities for 2017. The MSRB’s notice seeks comment on potential areas where the MSRB should focus its strategic goals and how it should prioritize its core activities. 

The second edition of Chapman's book is a valuable resource for municipal debt marketplace participants, including state and local government officials, municipal credit analysts, credit enhancers, investors, legislators, and administrators.

The Financial Industry Regulatory Authority announced that it is conducting a sweep examination on broker-dealer firms to look into incentives and business practices that may encourage employees to engage in inappropriate cross-selling activities. 

This update includes:

• Obamacare Enrollment Predicted to Increase by 9% in 2017 Open Enrollment
• Skilled Nursing Facility Provider to Pay $145 Million to Resolve False Claims Act Allegations
• Dignity Health and Catholic Health Initiatives in Alignment Talks

Earlier this month, the Sixth Circuit provided to creditors of municipalities emerging from bankruptcy proceedings additional assurance that they can rely on the bankruptcy plan approved by a court.

The U.S. Court of Appeals for the D.C. Circuit heard oral argument yesterday in a consolidated case arguing that the Federal Communication Commission has overstepped its bounds in its most recent interpretation of the Telephone Consumer Protection Act.

On October 11, the U.S. Court of Appeals for the D.C. Circuit issued an important decision involving the Consumer Financial Protection Bureau. Not only did the Court find that the agency’s structure was unconstitutional, it also ruled that the CFPB violated due process, and is subject to the statutes of limitations embodied in the laws it seeks to enforce. 

This update includes:

• Weekly Health Care Criminal and Civil Fraud Enforcement Round-Up
• Transition to Value-Based Reimbursement Continues as CMS Releases MACRA Final Rule
• HHS Publishes Guidance on HIPAA and Cloud Computing

The Securities and Exchange Commission voted last Thursday to adopt changes to enhance liquidity risk management by open-end funds, including mutual funds and exchange-traded funds.

Last week, the IRS contemporaneously released two pieces of guidance related to the question of whether qualifying regulated investment company income could include indirect commodities income through controlled foreign corporations or derivative exposure to commodities. 

Last week, the U.S. Sixth Circuit Court of Appeals provided to creditors of municipalities emerging from bankruptcy proceedings additional assurance that they can rely on the bankruptcy plan approved by the court.

This update includes:

• Weekly Health Care Criminal and Civil Fraud Enforcement Round-Up
• Vermont Granted Tentative Approval for All Payer Reimbursement System
• CMS Issues Final Rule for Long-Term Care Facilities
• MedPAC Unsatisfied with Savings Generated by Medicare Shared Saving Program ACOs

The Illinois Constitution is clear that the right to a trial by jury “shall remain inviolate” — but does a state law limiting the number of individuals required to serve on a jury interfere with this fundamental right? 

This update includes:

• Weekly Health Care Criminal and Civil Fraud Enforcement Round-Up
• GAO Report Highlights Electronic Health Record Vulnerability to Cyber Threats and Recommends HHS Update and Strengthen its HIPAA Guidance and Oversight
• CMS Seeking Comments by October 11, 2016 Regarding Updates to the Voluntary Self-Referral Disclosure Protocol

Corporate boards increasingly are considering whether it is in the best interests of the board, the company and its shareholders to establish a separate risk committee. Investors, proxy advisory firms and other corporate governance advocates also have developed expectations with respect to board risk oversight responsibilities.

On April 4, the Municipal Securities Rulemaking Board and the Financial Industry Regulatory Authority issued a joint regulatory notice reminding firms they regulate of their obligation to determine whether state and local government obligations acquired through direct purchase or “bank loan” transactions constitute municipal securities for federal securities law purposes.

The Municipal Securities Rulemaking Board recently published its 2016 Compliance Advisory for Brokers, Dealers and Municipal Securities Dealers. The Compliance Advisory outlines several MSRB rules that the MSRB believes present key compliance risks for brokers, dealers and municipal securities dealers. 

After several years of securities industry efforts, the Securities and Exchange Commission has formally proposed a rule change that would shorten the standard settlement cycle for most broker-dealer securities transactions from three business days after the trade date to two business days after the trade date. 

Today, many shareholders may feel that the traditional investor communication and relations model is not adequate. Often, written communications are viewed as impersonal and outdated and shareholder meetings typically occur only annually and are rarely seen as leading to meaningful dialogue.  

Municipal Securities Rulemaking Board Rule G-15(f) prohibits a broker, dealer or municipal securities dealer from effecting a customer transaction in municipal securities in an amount lower than the minimum denomination of the issue stated in offering documents, subject to two current exceptions.

Despite the Supreme Court cautioning that the “reasonably equivalent value” principle would in most cases remain similar to a market-value definition, and refusing to force its holding on other forced-sale proceedings, on Sept. 8, 2016, the Ninth Circuit became the third federal appeals court to extend BFP’s holding to real estate tax sales.

This update includes:

• Potential Penalties for False Claims Act Violations Continue to Rise
• Medicaid Fraud Control Unit FY 2015 Annual Report Highlights Criminal and Civil Fraud Recoveries; Civil Settlements, Judgments and Recovery Amounts Have Decreased
• OIG Data Brief Indicating Escalating Medicare Billings for Home Respiratory Ventilators May Result in Targeted Program Integrity Efforts
• Comment Period for New Bundled Payment Models Closing October 3rd 

The services agreements under which midstream oil and gas companies operate are routinely structured as long-term contracts requiring a large initial expenditure. In these cases, the midstream service providers’ investment is only recouped over the life of the agreement, and early termination or rejection of such agreements can be devastating.

On September 20, 2016, 21 states filed a suit to block the Department of Labor’s rule for “white collar” overtime exemptions from going into effect. The four‑count complaint pending in the Eastern District of Texas seeks a declaratory judgment that would prohibit the rule from going into effect, or at least prohibit the rule from applying to the states.

The Municipal Continuing Disclosure Cooperation initiative, as named by the Securities and Exchange Commission in March, 2014, has attracted much attention in the municipal industry and with good reason. 

On September 8, 2016, the Ninth Circuit held in In re Tracht Gut, LLC v. L.A. Cnty. Treasurer & Tax Collector that California real estate tax sales are for reasonably equivalent value and cannot be set aside as fraudulent transfers.  

The Securities and Exchange Commission is seeking comments on proposed Municipal Securities Rulemaking Board rule changes that would require dealers to disclose bond mark-ups and mark-downs on retail customer trade confirmations. 

On August 25, after approximately five years of litigation concluding with a 25-day bench trial, Judge Peter G. Sheridan issued the opinion of the U.S. District Court for the District of New Jersey in the first trial of a “manager-of-managers” theory of liability for breach of fiduciary duty.

On August 22, the Internal Revenue Service released new safe harbor guidelines for determining whether a management contract results in private business use of property for purposes of the federal income tax rules relating to tax-exempt bonds.

The Securities and Exchange Commission recently approved new Financial Industry Regulatory Authority, Inc. pay‑to-play rules to regulate activities of FINRA member firms that engage in distribution or solicitation activities with government entities on behalf of investment advisers.

The Securities and Exchange Commission recently adopted changes to certain aspects of the reporting, disclosure and recordkeeping obligations of registered investment advisers including changes to Form ADV. 

The Financial Industry Regulatory Authority, Inc. recently proposed amendments to its gifts, non-cash compensation and business entertainment rules. 

The Securities and Exchange Commission is seeking comments on proposed Financial Industry Regulatory Authority, Inc. rule changes that would require members to disclose bond mark-ups and mark-downs on retail customer trade confirmations.

On August 24, 2016, the Securities and Exchange Commission issued cease-and-desist orders to 71 municipal issuers and obligated persons in response to voluntary self-reporting of potential misrepresentations in municipal bond offering documents regarding compliance with prior disclosure obligations under the SEC’s Municipalities Continuing Disclosure Cooperation initiative. 

In merger and acquisition and other commercial agreements, the parties often agree to undertake “commercially reasonable efforts” in support of the transaction. In a recent case, the Delaware Chancery Court analyzed whether a prospective acquirer violated its agreement to use “commercially reasonable efforts.”    

The Internal Revenue Service issued Notice 2016-10 to address foreign tax credits and regulated investment companies. The Internal Revenue Code does not provide guidance on the question of how a RIC should treat refunds of foreign tax when it has made an election to pass the foreign tax credit to its shareholders. Notice 2016-10 begins to address this question.

On June 22, President Obama signed into law the first major amendment to the Toxic Substances Control Act since its enactment forty years ago. The amendment, the Frank R. Lautenberg Chemical Safety for the 21st Century Act, is commonly referred to as “TSCA Reform.”

Federal law creates an exemption from environmental liability for lenders under the federal Comprehensive Environmental Response, Compensation, and Liability Act, which provides that a party who owns or operates a facility can be held responsible for cleaning up hazardous waste at or from the facility regardless of whether that party caused or contributed to the contamination.

On August 1, the Municipal Securities Rulemaking Board released details from its most recent quarterly meeting. Among other things, the press release from the meeting stated that the MSRB will not pursue rulemaking with regard to its concept proposal to require municipal advisors to disclose information about bank loans entered into by their municipal issuer clients. 

The Board of Governors of the Federal Reserve adopted a final rule to include certain U.S. municipal securities as high-quality liquid assets for purposes of the liquidity coverage ratio rule to which large banks are subject.

Following the implementation of Dodd-Frank's rules and regulations and the initial wave of SEC examinations of municipal advisors, management and compliance personnel are navigating through the rules while continuing to run their business and service clients.

“Board refreshment” is currently a hot corporate governance topic. This corporate governance update focuses on director succession planning and the critical role it plays in board refreshment.  

A recent decision of the Maryland Court of Appeals could require marketplace lenders and others who arrange for federal or state banks to fund consumer loans to consumers residing in Maryland to obtain licenses as “credit services businesses” and could prohibit them from arranging those loans at interest rates exceeding the applicable Maryland usury caps.

On July 18, the U.S. Treasury and the Internal Revenue Service published final arbitrage regulations that contain revisions to the tax-exempt bond regulations relating to, among other things, working capital financings.

The Securities and Exchange Commission’s Office of Compliance Inspections and Examinations recently issued a Risk Alert announcing that they will be undertaking an examination initiative focused on the risk that registered advisers may be making conflicted recommendations to their clients.