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.
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 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.
The US Department of Transportation (DOT) has issued a notice of proposed rulemaking to amend its regulations governing situations in which an aircraft remains on the airport tarmac without an opportunity for passengers to deplane for an extended period. Specifically, it proposes to change the departure delay exemption, carrier reporting requirements and record retention requirements, among others. Comments on the notice of proposed rulemaking must be filed with the DOT by 24 December 2019.
The Federal Aviation Administration (FAA) has begun the process of amending its regulations to require that flight attendants at US airlines receive a rest period of at least 10 consecutive hours between periods of duty lasting 14 hours or less. Under the FAA's current regulations, a flight attendant who is scheduled for a duty period of 14 hours or less must be given a scheduled rest period of at least nine consecutive hours. Comments on the advance notice are due by 12 November 2019.
The Transportation Security Administration's (TSA's) new Action Plan Programme (APP), which recently went into effect, details an alternative framework for addressing security compliance issues. Rather than relying on traditional, penalty-focused civil enforcement action, the APP focuses on achieving a universally desired outcome – namely, increased aviation security. While the APP could prove beneficial to both the TSA and industry, it raises some areas of concern for airlines and other regulated parties.
The US Treasury Department's Office of Foreign Assets Control (OFAC) recently issued its Iran-Related Civil Aviation Industry Advisory. The advisory seeks to inform the civil aviation industry of potential exposure to US enforcement actions and economic sanctions for engaging in or supporting unauthorised exports to Iran or designated Iranian airlines. While no new restrictions have been announced, the advisory's publication could signal that the OFAC is taking a greater interest in the Iranian aviation sector.
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.
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.
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.
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.
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.
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.
The Supreme Court recently granted a writ of certiorari to address whether the Securities and Exchange Commission (SEC) may obtain disgorgement in civil injunctive actions filed in the federal courts. How the court resolves this question may have a significant impact not only on the SEC's enforcement programme, but also on a wide array of other federal regulators that rely on courts invoking similar equitable authority to fashion remedies.
The Financial Industry Regulatory Authority recently censured and fined a Florida-based broker-dealer, including for failing to reasonably supervise sales of complex securities such as structured products and leveraged, inverse and inverse-leveraged exchange-traded funds. This case illustrates the need for broker-dealers to establish and enforce proper surveillance systems and written procedures to ensure the suitability of their sale recommendations.
The North American Securities Administrators Association recently issued a report that provided a warning as to the risks of leveraged or inverse exchange-traded funds. The report urges broker-dealers to tailor their supervisory procedures if they allow exchange-traded fund (ETF) transactions in these products. Among other things, the report concludes that broker-dealers should carefully consider whether to permit purchases of leveraged or inverse ETFs in retail customer accounts.
The Securities and Exchange Commission (SEC) recently proposed amendments to the description of business, legal proceeding and risk factor disclosures that are required pursuant to Regulation S-K. While the SEC's concept release dealt with a wide variety of topics, these latest proposals represent a more measured approach towards modernising and simplifying such disclosure requirements.
Blockstack Token LLC, a wholly owned subsidiary of Delaware public benefit corporation Blockstack PBC, recently became the first company to have an offering of digital assets qualified by the Securities and Exchange Commission under Regulation A. Although Blockstack's is the first Regulation A token offering to be qualified, it demonstrates the potential for other blockchain-based companies to use Regulation A as a viable capital-raising tool.
Division of Corporate Finance staff recently issued a new Staff Legal Bulletin 14K on shareholder proposals and the 'ordinary business' exclusion. The new bulletin contains an enhanced reminder that it has not been approved by the Securities and Exchange Commission and, like all staff guidance, has no legal force or effect, does not alter or amend applicable law and creates no new or additional obligations for any person.
In a recent report, Intelligize examined data from a survey of 171 compliance specialists at public companies to examine how public company compliance officials are adapting their own corporate disclosure and processes to comply with this new regime. Among the issues considered were the impact of 'dry runs', changes to company disclosures and changes in controls.
Audit reports for most public companies will soon be required to disclose critical audit matters, which are intended to make the audit report more informative for investors. However, over the past several years, companies and their audit committees have gone a long way towards increasing the amount of audit-related information that they provide to investors voluntarily. While year to year the changes appear largely incremental, the change over the entire period is considerable.
The Securities and Exchange Commission (SEC) Division of Corporation Finance recently announced that it is revisiting its approach to responding to no-action requests to exclude shareholder proposals. In essence, the SEC may respond to some requests orally rather than in writing and, in some cases, may decline to state a view altogether, leaving the company to make its own determination.
AS 3101, the new auditing standard for the auditor's report that requires disclosure of critical audit matters (CAMs), is effective for audits of large accelerated filers for fiscal years ending on or after 30 June 2019. Deloitte has reported that an average of 1.8 CAMs were disclosed per audit report and that the most commonly disclosed related to goodwill and intangible assets.