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 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.
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.
The US Department of Transportation recently announced the reconstitution of the Aviation Consumer Protection Advisory Committee (ACPAC), including a new subcommittee: the National In-Flight Sexual Misconduct Task Force. The first ACPAC meeting will be held in January 2019 to discuss best practices and protocols for air carriers relating to sexual assault handling, reporting and data collection on board commercial aircraft.
The new Federal Aviation Administration Reauthorisation Act, signed into law by President Trump, will affect aviation-related consumer protection. The Department of Transportation must revise its existing regulations to clarify the laws regarding compensation, establish minimum dimensions for passenger seats that are necessary for passenger safety, prioritise boarding for pregnant women and refine airlines' practice involving pushchairs, among other issues.
The new Federal Aviation Administration Reauthorisation Act, signed into law by President Trump, will affect airlines' obligations to accommodate passengers with disabilities. The Department of Transportation must, among other things, develop an airline passengers with disabilities bill of rights to explain the protections afforded to passengers with disabilities during air travel and conduct a review of service animal requirements.
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 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.
President Trump recently signed into law the Economic Growth, Regulatory Relief and Consumer Protection Act. While much of the act was designed to provide smaller financial institutions and community banks with relief from regulations implemented under the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act, Title V includes provisions designed to encourage capital formation. Among other things, the act expands the scope of the blue sky registration exemption.
According to the Securities and Exchange Commission, its recent release proposing an interpretation of the standard of conduct for investment advisers is intended to "reaffirm – and in some cases clarify – certain aspects of the fiduciary duty that an investment adviser owes to its clients under section 206" of the Investment Advisers Act 1940. However, the proposed interpretation, if adopted, appears to expand the parameters of the fiduciary duty standard and could require advisers to take on additional regulatory obligations.
The Financial Industry Regulatory Authority (FINRA) recently issued proposed amendments to Rule 2111's quantitative suitability provisions. According to FINRA, the proposal is designed to more effectively counter the problem of 'churning' or excessive trading in customer accounts. The proposal arrives shortly after the Securities and Exchange Commission's proposal of Regulation Best Interest and illustrates how these two regulators must coordinate in order to avoid inconsistent sets of rules.
The Financial Industry Regulatory Authority (FINRA) has updated its guidance on its recent amendments to Rule 2232. The new requirements apply to transactions with retail customers in corporate and agency debt securities. Beginning on the effective date, FINRA will require confirmation disclosure of additional transaction-related information, including mark-ups and mark-downs. The goal of these new rules is to help retail customers to better understand and compare the costs of these transactions.
On the heels of the release of Staff Legal Bulletin (SLB) 14J, Corp Fin recently posted two no-action letters that shed further light on the ordinary business exclusion under Rule 14a-8(i)(7). In SLB 14J, the staff had addressed the nature of the board analysis which they would find most helpful in evaluating a no-action request to exclude a shareholder proposal under Rule 14a-8(i)(7), as well as micromanagement as a basis for exclusion under that same rule. The latest response letters provide further clarity in this regard.
The Centre for Audit Quality (CAQ), working with Audit Analytics, recently released a new edition of its annual Audit Committee Transparency Barometer, which, over the past five years, has measured the robustness of audit committee disclosures in proxy statements among companies in the S&P Composite 1500. According to the CAQ, the bottom line is that the level of voluntary transparency has continued to increase steadily in most areas.
The Division of Corporation Finance (Corp Fin) recently updated its compliance and disclosure interpretations (CDIs) relating to smaller reporting companies. In connection with these updates, Corp Fin has also withdrawn a number of CDIs. Under the new amendments, companies can now be both accelerated filers and smaller reporting companies. Further, in determining whether a company is a smaller reporting company, its annual revenues should be calculated on a consolidated basis.
A recent study showed that in 2018, 428 new directors were elected to boards of companies in the S&P 500 – the most new directors since 2004 – representing an increase of 8% from 2017. Further, 57% of boards added at least one new director and 22% appointed more than one new director. However, overall turnover remained modest. While these new directors added fresh skills, qualifications and perspectives, the study concluded that progress regarding boardroom diversity has been mixed.
While the number of virtual-only annual meetings has increased, critics continue to contend that virtual-only meetings limit an important shareholder right, precluding shareholders from direct eye-to-eye engagement with management and the board. With this in mind, a group of interested representatives of retail and institutional investors, public companies, proxy advisers and legal counsel have developed a set of best practices designed to ensure that the needs of all constituents are satisfied.