USA updates

Arbitration & ADR

Contributed by Norton Rose Fulbright US LLP
New York Appellate Division confirms narrow scope of manifest disregard doctrine
  • USA
  • 30 May 2019

The New York Appellate Division has reaffirmed that the manifest disregard doctrine is a "severely limited… doctrine of last resort" that requires more than a mere error of law to warrant vacating an arbitral award. This case involved the acquisition contracts between Daesang and NutraSweet, under which NutraSweet could rescind the deal if it was sued for antitrust law violations. After NutraSweet exercised this right, Daesang commenced an arbitration proceeding for breach of contract.

Disclosure in international arbitration: using US courts to obtain discovery for non-US proceedings
  • USA
  • 23 May 2019

Unbeknown to many, Section 1782 of Title 28 of the US Code permits parties to obtain discovery in the United States in aid of non-US legal proceedings, including – in some instances – international arbitrations. Such discovery can include documents and sworn testimony (eg, depositions). In conducting an arbitration seated outside the United States (or other non-US legal proceedings), it is useful to understand the mechanics, requirements and key issues of Section 1782 discovery.

California loosens restrictions on counsel in international arbitrations
  • USA
  • 23 August 2018

California Governor Jerry Brown recently signed into law Senate Bill (SB) 766, Representation by Foreign and Out-of-State Attorneys. The bill, which was passed 69-to-zero by the legislature, clarifies that foreign (ie, not licensed in the United States) and out-of-state (ie, licensed in a US jurisdiction, but not in California) attorneys can represent parties in international arbitrations in California, subject to certain conditions. SB 766 will take effect on 1 January 2019.


Aviation

Contributed by Cozen O'Connor
No fun in the sun: Trump administration further restricts aviation traffic to Cuba
  • USA
  • 10 July 2019

The Department of Treasury's Office of Foreign Assets Control (OFAC) and the Department of Commerce's Bureau of Industry and Security recently announced rules designed to further restrict travel to Cuba, including eliminating a sub-category of authorised travel to Cuba entitled 'people-to-people educational travel'. These changes significantly restrict non-commercial aviation traffic to Cuba going forward for all persons subject to the OFAC's jurisdiction.

Reflections on Boeing's exposure following 737 MAX crashes
  • USA
  • 08 May 2019

A software issue is suggested to have played a role in the two horrific crashes involving the new Boeing 737 MAX. With this in mind, what potential theories of civil liability could Boeing be subject to by passengers and airlines that have suffered significant losses as a result of what appears to be a design flaw in this software? Further, what theories allow for criminal liability?

DOT denies petitions to initiate consumer protection rulemakings
  • USA
  • 03 April 2019

The Department of Transportation (DOT) recently denied three petitions to initiate rulemakings on various consumer protection issues proposed by FlyersRights, a consumer advocacy group. The DOT's decision to refuse to propose new regulations is consistent with the Trump administration's efforts to reduce regulatory burdens on industry. Nonetheless, the DOT appeared to be sympathetic to consumer protection concerns raised by FlyersRights.

California federal court declares drones are aircraft
  • USA
  • 06 February 2019

A recent decision from the Central District of California in Philadelphia Indemnity Insurance Company v Hollycal Production, Inc is somewhat groundbreaking in its significance, primarily because it is the first to address in a precedential context the long-held assumption that drones are, in fact, aircraft.

It's a bird… it's a plane… it's OSHA?
  • USA
  • 09 January 2019

The Occupational Safety and Health Administration (OSHA) is modernising its enforcement tools with the use of camera-equipped drones. OSHA requires each of the agency's 10 regions to designate a staff member as an unmanned aircraft programme manager to oversee training requirements and evaluate reports submitted by drone teams. It further requires that drone crews follow Federal Aviation Administration requirements.


Banking

Contributed by Sidley Austin LLP
Court permits New York DFS suit against OCC regarding fintech charter
  • USA
  • 24 May 2019

A federal district judge recently denied a motion to dismiss filed by the US Office of the Comptroller of the Currency (OCC) in a lawsuit brought by the New York State Department of Financial Services, which challenged the OCC's decision to begin accepting applications from fintech companies for special purpose national bank charters.

Volcker Rule: agencies propose to implement community bank exemption and revise name-sharing rule
  • USA
  • 18 January 2019

The five US federal agencies responsible for implementing the Volcker Rule have individually released a related notice of proposed rulemaking. The notice proposes amendments to the Volcker Rule regulations that would implement two statutory changes required by the Economic Growth, Regulatory Relief and Consumer Protection Act. Comments in response to the notice must be received by the agencies within 60 days of its publication in the Federal Register.

US election results: five key matters for financial services industry
  • USA
  • 07 December 2018

In the recent election, the Democrats captured a majority in the House of Representatives and Representative Maxine Waters (D-Calif) is now in line to lead the House Financial Services Committee. As such, it is expected that a significant shift in legislative efforts relating to the financial services industry will occur. During the first Financial Services Committee hearing since the election, Waters announced that deregulation efforts are finished.

New York State Department of Financial Services challenges OCC authority on fintech charters
  • USA
  • 12 October 2018

In July 2018 the Office of the Comptroller of the Currency (OCC) announced its decision to begin accepting applications from fintech companies for special purpose national bank charters (the Fintech Charter Decision). The New York State Department of Financial Services recently filed a federal court complaint seeking to enjoin further actions by the OCC to implement the Fintech Charter Decision and related actions, arguing that such acts are lawless, ill-conceived and destabilising for financial markets.

OCC to issue fintech charters
  • USA
  • 24 August 2018

The Office of the Comptroller of the Currency (OCC) recently announced – to much anticipation – that it will begin accepting applications from fintech companies for special purpose national bank charters (commonly referred to as 'fintech charters'). However, state banking regulators are likely to once again challenge the OCC's authority to grant fintech charters, which could create some uncertainty for early applicants.


Capital Markets

Contributed by Morrison & Foerster LLP
SEC clarifies investment adviser standard of conduct
  • USA
  • 16 July 2019

The Securities and Exchange Commission recently issued an interpretive release designed to reaffirm, and in some cases clarify, the standard of conduct that investment advisers owe to their clients. While the interpretive release includes no new regulation, it clarifies the type of disclosure, policies and procedures that advisers should adopt to ensure that they continue to operate in a manner that is consistent with their fiduciary obligations.

SEC proposes changes to 'accelerated filer' and 'large accelerated filer' definitions
  • USA
  • 11 June 2019

The Securities and Exchange Commission (SEC) recently proposed amendments to the 'accelerated filer' and 'large accelerated filer' definitions adopted under the Securities Exchange Act 1934. The SEC believes that it can promote capital formation for smaller reporting issuers by more appropriately tailoring the types of issuer that are included and revising the transition thresholds for accelerated and large accelerated filers.

SEC adopts FAST Act amendments to streamline disclosure requirements
  • USA
  • 30 April 2019

The Securities and Exchange Commission (SEC) recently adopted rule amendments to modernise and simplify certain disclosure requirements in Regulation S-K and related rules and forms. These amendments were adopted pursuant to a 2015 Fixing America's Surface Transportation Act (FAST Act) directive and are based in part on the SEC's report to congress under the FAST Act. The amendments will require issuers' immediate attention as they prepare for upcoming filings.

SEC announces settlements resulting from Share Class Selection Disclosure Initiative
  • USA
  • 23 April 2019

The Securities and Exchange Commission (SEC) recently announced settlements with 79 investment advisers who self-reported violations of the Investment Advisers Act in connection with the SEC Division of Enforcement Share Class Selection Disclosure Initiative. The advisers collectively agreed to return more than $125 million in fees and prejudgment interest to clients.

SEC proposes to expand 'test-the-waters' accommodation
  • USA
  • 16 April 2019

The Securities and Exchange Commission recently proposed a rule and related amendments under the Securities Act that would permit issuers to engage in oral or written communications with potential investors that are, or are reasonably believed to be, qualified institutional buyers or institutional accredited investors, either prior to or following the filing of a registration statement, to determine whether such investors have an interest in a contemplated securities offering registered under the Securities Act.


Company & Commercial

Contributed by Cooley LLP
Spot survey shows use of ESG metrics in incentive compensation plans
  • USA
  • 22 July 2019

A compensation consultant recently conducted a spot survey of 135 companies which looked at the prevalence and type of environment, social and governance (ESG) metrics used in incentive compensation plans, including metrics relating to the environment, employee engagement and culture and diversity and inclusion. Efforts to link ESG factors to executive compensation have been a common thread in numerous shareholder proposals.

ISS takes early look at 2019 proxy season
  • USA
  • 15 July 2019

With 70% of the Russell 3000 annual meetings completed, Institutional Shareholder Services (ISS) has taken an early look at the 2019 proxy season. ISS found increases in opposition to director elections and say-on-pay proposals, as well as increases in the number of and withdrawal rates for environmental and social (E&S) proposals relative to governance proposals. In addition, the disparity between the levels of support for E&S proposals and the historically more popular governance proposals has narrowed dramatically.

Is there a business case for environmental social governance?
  • USA
  • 08 July 2019

Do companies that ignore long-term environmental or social costs in the pursuit of near-term profits pay another price in foregoing potentially long-term sustainable profit opportunities? A recent business case for environmental social governance from Stanford University's Rock Centre for Corporate Governance suggests that, properly analysed, sustainability can not only affect externalities, but also benefit businesses.

New PCAOB guidance on auditor communications regarding CAMs
  • USA
  • 01 July 2019

The Public Company Accounting Oversight Board recently published new guidance on auditors' communication of critical audit matters (CAMs) in auditors' reports. The guidance includes new frequently asked questions relating to how auditors should describe their principal considerations in determining CAMs, the relationship between CAMs and company disclosures and the treatment of recurring CAMs.

Is 'stale' a reason for 'male and pale' boards?
  • USA
  • 20 May 2019

California's new board gender diversity mandate is expected to fuel a greater effort towards board gender diversity. Under the new law, public companies will be required to have at least one woman on their board of directors by the close of 2019. That minimum increases to two women by 31 December 2021 if the company has five directors and to three women if it has six or more directors. While the first of its kind in the United States, this mandate may not be the last.