USA updates

Arbitration & ADR

Contributed by Norton Rose Fulbright
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
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.

San Francisco federal judge dismisses class action claims as time barred and pre-empted by Airline Deregulation Act
  • USA
  • 19 December 2018

In an interesting decision that may have significant repercussions for air carriers, a San Francisco federal judge recently dismissed a putative class action brought against Air France based on a limitations provision set out in Air France's General Conditions of Carriage and the pre-emption provisions of the Airline Deregulation Act.


Banking

Contributed by Sidley Austin LLP
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.

New FAQs on customer due diligence requirement
  • USA
  • 04 May 2018

The Financial Crimes Enforcement Network recently issued new frequently asked questions regarding its customer due diligence (CDD) rule. The CDD rule applies to banks, among others, and includes four core elements of CDD, each of which should be included in anti-money laundering programmes.


Capital Markets

Contributed by Morrison & Foerster LLP
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.

FINRA restates and updates guidance regarding pre-inception index performance data
  • USA
  • 09 April 2019

In a recent interpretative letter, the Financial Industry Regulatory Authority (FINRA) provided guidance to a registered broker-dealer as to the use of pre-inception index performance data relating to a proprietary index. The letter restates and updates FINRA's prior guidance as to the use of back-tested index information, including its historic position that the use of this type of information is inappropriate in communications provided to retail investors.

FINRA exam priorities and structured products
  • USA
  • 02 April 2019

The Financial Industry Regulatory Authority (FINRA) recently issued its 2019 Risk Monitoring and Examination Priorities Letter. The letter addresses a variety of issues that all broker-dealers must address, whether they offer structured products or not. The letter clarifies that sales of complex products, including structured products, must be reviewed to see whether they comply with FINRA's suitability rules.


Company & Commercial

Contributed by Cooley LLP
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.

Help is here for audit committees – CAQ offers updated auditor assessment tool
  • USA
  • 22 April 2019

To fulfil their oversight responsibilities, audit committees typically evaluate external auditors at least annually to determine, in part, whether they should be engaged for the subsequent fiscal year. The Centre for Audit Quality (CAQ) recently published an updated External Auditor Assessment Tool. Like many other helpful CAQ tools, this one provides a number of sample questions to help audit committees satisfy their oversight obligations with regard to external auditors.

PCAOB to engage in proactive communications with audit committees
  • USA
  • 08 April 2019

The Public Company Accounting Oversight Board recently issued a staff inspection brief discussing its new strategic plan, which includes conducting an ongoing dialogue with audit committee chairs whose companies' audits are subject to inspection. The board reports that its 2019 inspections will focus on, among other things, firms' technological developments, procedures on new accounting standards and systems of quality control.

Activist CEOs speak out – is there a better way to do it?
  • USA
  • 18 March 2019

There has recently been a lot of pressure on CEOs to voice their views on political, environmental and social issues. According to the global chair of reputation at Edelman, the expectation that CEOs will be leaders of change is high. As such, to the extent that CEOs are considering taking stands on contentious social, political or environmental issues, are there effective ways for CEOs to decide when and how to do it?

Corp Fin no-action letters address ordinary business exception and executive compensation
  • USA
  • 04 March 2019

In October 2018 the Division of Corporation Finance (Corp Fin) issued a staff legal bulletin on shareholder proposals that examined the ordinary business exception under Rule 14a-8(i)(7), addressing (among other topics) the application of the rule to proposals relating to executive or director compensation. Since the government shutdown, Corp Fin has posted several no-action letters that consider the exception in that context – but do they provide any colour or insight?