Capital Markets

  • MiFID II, Research and Extraterritoriality: The SEC, European Commission and FCA Solution

    15 Nov 2017

    On October 26, 2017, the US Securities and Exchange Commission, European Commission and the UK Financial Conduct Authority released, in a coordinated manner, a series of significant orders and guidance to address some of the most problematic extraterritorial effects of the EU’s new financial regulation, MiFID II.

  • SEC Staff Gives Company Boards Central Role in 14a-8 ‘Ordinary Business’ and ‘Economic Relevance’ Exclusions

    6 Nov 2017

    On November 1, 2017, the staff (the “Staff”) of the Division of Corporation Finance of the Securities and Exchange Commission (SEC) issued Staff Legal Bulletin No. 14I (SLB 14I)[1] on shareholder proposals, which sets out a potentially meaningful repositioning of the role that the Staff has played in connection with its review of requests to exclude shareholder proposals under the “ordinary business” and “economic relevance” exclusions of Rules 14a-8(i)(7) and 14a-8(i)(5).

  • Continuity of Contracts and Business on a “Hard” Brexit: Human Rights and Reverse Solicitation to the Rescue!

    31 Oct 2017

    Various industry bodies and regulators, including the Bank of England and Bafin, have recently raised fears that there will be a cliff edge on Brexit for certain types of financial contract, most notably derivatives and insurance, due to the loss of passporting rights.[1] This note explains why, in a no-deal Brexit scenario, this should not be the case. The loss of “passporting” rights and other freedoms under EU treaties should neither frustrate existing contracts nor render the performance of existing cross-border UK-EU contracts illegal nor cause them to be void or voidable.

    We discuss how the right to property under the European Convention on Human Rights (ECHR) and the EU Charter of Fundamental Rights, and the doctrine of “acquired rights” under public international law, protect contractual rights. The protections afforded will shield many contracts entered into between UK and EU-27 parties before Brexit and should therefore permit such contracts to be performed to their full extent in a hard-Brexit scenario. These human rights concepts will mean that, despite the removal of the financial services “passport” upon Brexit, any licensing requirements that spring into force on Brexit for parties performing existing contracts—and any other legislative changes that frustrate contracts—would be contrary to the human rights and other protections afforded to contracts entered into before Brexit.

    UK-based and EU-based businesses should be cognisant of these protections and, moreover, should take additional steps to future-proof their existing contractual agreements before the UK withdraws from the EU so that they can continue to provide a full range of services to their customers.

    Our previous client note on Brexit and the free movement of natural persons considered whether the concept of “acquired rights” would safeguard free movement rights post-Brexit. This note now evaluates the concept, and human rights law, in the context of businesses and contracts, with particular reference to financial sector contracts.

  • The U.S. Government Accountability Office Determines That 2013 Leveraged Lending Guidance Is a Rule

    26 Oct 2017

    On October 19, 2017, the United States Government Accountability Office (GAO) issued an opinion  determining that the 2013 Interagency Guidance on Leveraged Lending, issued jointly by the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, and the Federal Deposit Insurance Corporation, constitutes a “rule” under the Congressional Review Act (CRA). The GAO’s determination was issued at the request of Senator Pat Toomey (R-PA), who inquired by letter whether the 2013 Guidance should be subjected to Congressional approval as a rule under the CRA.

  • EU Proposals to Strengthen the Powers of the European Supervisory Authorities

    26 Oct 2017

    On 20 September 2017, the European Commission made proposals[1] to strengthen the regulatory and supervisory powers of the three European Supervisory Agencies (ESAs) namely the European Securities and Markets Authority (ESMA), European Banking Authority (EBA) and the European Insurance and Occupational Pension Authority (EIOPA). To become legally binding, the proposals must be approved by the European Parliament and the European Council. The proposals are part of the Commission’s plan to create more integrated financial markets, and to complete the Capital Markets Union and Banking Union. The EU has increasingly used regulations to implement new requirements in financial services instead of using directives which require member states to adopt national laws to implement the requirements. The intention has been to iron out local member state discrepancies. However, it is apparent that there are still differences in the application of EU regulations by national regulators and that this leads to distortions across the EU. The Commission considers that more integrated financial markets supervision is necessary and that enhancing the powers of the ESAs is key to achieving that objective.

  • Shearman & Sterling Releases 15th Annual Corporate Governance & Executive Compensation Survey

    24 Oct 2017
    We are proud to announce the publication of our 2017 Corporate Governance & Executive Compensation Survey of the 100 largest U.S. public companies. This year’s Survey, the 15th in our series, examines some of the most important governance and executive compensation practices and identifies best practices and emerging trends. We hope that the data and insights on how leading companies are approaching important governance issues will serve as a tool for our readers to benchmark the corporate governance and compensation practices of their own organizations against those of the companies surveyed.
  • Governance & Securities Law Focus: Asia Edition, October 2017

    Oct 2017

    In this newsletter, we provide a snapshot of the principal Asian, US, European and selected international governance and securities law developments of interest to Asian corporates and financial institutions.

  • SEC Proposes Streamlining Disclosure Requirements

    19 Oct 2017

    On October 11, 2017, the Securities and Exchange Commission (SEC) proposed amendments[1] to Regulation S-K designed to simplify and streamline disclosures made by public companies and reduce compliance costs while continuing to provide all material information to investors. The proposed amendments also seek to reduce duplicative and immaterial disclosure, leverage technology and improve the readability and navigability of disclosure documents. The amendments are part of the SEC’s ongoing disclosure effectiveness review and implement a mandate under the Fixing America’s Surface Transportation (FAST) Act. Many of the proposed amendments were part of report prepared by the SEC staff mandated under the FAST Act.[2]

    Comments on the release are due 60 days after its publication in the Federal Register. Disclosure requirements will not change until the adoption of final rules by the SEC. 

  • Governance & Securities Law Focus: Europe Edition, October 2017

    18 Oct 2017

    In this newsletter, we provide a snapshot of the principal European, US and selected international governance and securities law developments of interest to European corporates.

  • Russell Sacks and Richard Alsop Author Chapter on Investment Banking Compliance

    17 Oct 2017

    Partners Russell Sacks (New York-Financial Institutions Advisory & Financial Regulatory) and Richard Alsop (New York – Capital Markets) recently co-authored a chapter titled “Investment Banking Compliance” for the PLI treatise Broker-Dealer Regulation (2nd ed.). The chapter covers issues in insider trading, managing confidential information, conflicts, compensation structures and other issues in investment banking regulation.


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