The New York Department of Financial Services formally implemented its Virtual Currency Assessments Rule as 23 NYCRR 102 on Wednesday, April 19, 2023, by publishing a notice of adoption in the State Register. Under the new assessments rule, entities that hold a virtual currency business activity license, the “bitlicense,” will be charged an assessment for their supervision and examination by NYDFS.

As with past banking crises, the recent failures of Silicon Valley Bank and Signature Bank will likely put the directors and officers of affected banking institutions in the proverbial crosshairs as regulators second-guess their decisions and look for potential sources of loss recovery.

The National Labor Relations Board recently ruled in McLaren Macomb that employee severance agreements with overly broad confidentiality and nondisparagement provisions violate the National Labor Relations Act. Recently, NLRB General Counsel Jennifer A. Abruzzo issued a memorandum to all regional directors, officers-in-charge, and resident officers to “assist Regions in responding to inquiries from workers, employers, labor organizations, and the public about implications stemming from the case.”

The recent failures of Silicon Valley Bank and Signature Bank have roiled the banking sector and stock markets. They also have also caused many companies to consider their cash positioning.

In the three days since federal authorities announced sweeping measures to protect depositors of Silicon Valley Bank (SVB) and Signature Bank and help prevent additional bank failures (as discussed in our update of March 12, 2023), the U.S. banking system appears to have stabilized, at least temporarily. 

On February 15, 2023, the U.S. Securities and Exchange Commission published sweeping and controversial proposed amendments to Rule 206(4)-2 under the Investment Advisers Act of 1940. The Proposed Rule reflects the SEC's growing concern about the safekeeping of digital assets by advisers and the uncertainty in the marketplace about the application of the Custody Rule.

The U.S. Department of Justice recently released new guidance announcing several policy changes to further strengthen and clarify its approach to prosecuting corporate crime. This guidance is applicable to all third-party text and social media messaging platforms.

The Federal Reserve Board issued final guidelines for regional Reserve Banks to use when considering applications for Federal Reserve “master accounts”—deposit accounts that enable direct access to the Federal Reserve’s payment systems and provide critical infrastructure to financial institutions operating in the United States.

In an era of industry disruption, active Securities and Exchange Commission (SEC) rulemaking, and heightened market and regulatory focus on environmental, social and governance (ESG) matters, mutual fund, exchange-traded fund (ETF) and other registered fund directors face tough questions as they work to fill vacancies arising on a board. Identifying an independent director candidate that meets the needs of a board at a given time always has been a delicate balance of art and science. Today, some boards are rethinking the formula as they grapple with the proper criteria to consider in developing a candidate pool and selecting from it. This article lays out the regulatory landscape against which long-standing independent director selection best practices were established, identifies key step in the process, and suggests considerations around diversity and specialized skills that fund boards should consider.

On March 9, 2022, the U.S. Securities and Exchange Commission (SEC) issued proposed rules regarding cybersecurity risk management, strategy, governance, and incident disclosure.

As the number of exchange-traded funds (ETFs) continues to grow rapidly across the industry, boards increasingly find themselves at a crossroads in their annual contract review process under Section 15(c) of the Investment Company Act of 1940, as amended (1940 Act), questioning whether they are compelled to consider the delicate question of comparability of fees and other matters between ETFs and mutual funds.

Perkins Coie and Flourish announce the release of a white paper that highlights key regulatory and compliance considerations for RIAs looking to engage with cryptocurrencies.

In their third decade of existence, special purpose acquisition companies (SPACs), have gone from novel to ubiquitous. According to the Wall Street Journal, during the first quarter of 2021 alone, SPACs raised nearly $75 billion and accounted for more than 70 percent of all initial public offerings, a 20 percent increase over 2019.

The Derivatives and Repo Report offers insights into regulatory and transactional issues related to derivatives and repurchase agreements.

On New Year’s Day 2021, Congress passed the Anti-Money Laundering Act of 2020 (AMLA 2020). As we reported last April, the AMLA 2020 included sweeping reforms aimed at strengthening protections against money laundering, terrorism financing, and other illegal activities. In July, we examined the expansive new beneficial ownership reporting requirements added to the Corporate Transparency Act. In this second substantive installment of our multipart series on the AMLA 2020, we examine the changes made to the Bank Secrecy Act (BSA) whistleblower provisions.

Recent guidance from financial industry regulators reminds market participants to remain mindful of their business, compliance, and operational obligations when incorporating technology vendors as a fundamental part of their infrastructure.

In October 2020, the U.S. Securities and Exchange Commission (the SEC) adopted Rule 18f-4 under section 18 of the Investment Company Act of 1940 (the 1940 Act) to regulate the use of derivatives by open-end registered investment companies other than money market funds, business development companies (BDCs), and closed-end investment companies (Funds).

This first substantive installment in our multipart series addresses arguably the most significant implication of AMLA 2020: a new and expansive requirement to disclose corporate beneficial ownership, set out by the Corporate Transparency Act.

On April 15, 2021, in response to the ongoing COVID-19 situation, the U.S. Internal Revenue Service issued a temporary deviation from the handwritten signature requirement for a limited list of tax forms. This issue includes elections under Section 83(b) of the Internal Revenue Code, allowing taxpayers and representatives to use electronic or digital signatures when signing such forms. The IRS memorandum was issued about a month after Perkins Coie LLP, Carta.com, and other coalition partners sent a letter to the IRS specifically requesting such temporary relief.

Over the past few weeks, the U.S. Securities and Exchange Commission has taken several actions that put climate change front and center, reflecting the importance to many investors of climate change related disclosures. 

The U.S. Supreme Court recently cast doubt on the criminal convictions of the one-time “King of Political Intelligence” David Blaszczak and three others for their role in an insider trading scheme.

The U.S. Securities and Exchange Commission (SEC or the Commission) on December 22, 2020, amended the main advertising rule under the Investment Advisers Act of 1940 (the Advisers Act) as part of a rulemaking package (collectively, the Rulemaking).

The U.S. Securities and Exchange Commission (SEC) recently announced that it adopted final rules to simplify the “patchwork” framework for exempt offerings under the Securities Act of 1933.

A discussion on the ISDA’s new LIBOR fallback protocol and guidance for FCMs holding virtual currencies and single security futures.

In this episode, Dean Harvey to discusses how AI is being used in asset management and by regulated financial services intermediaries.

The recent advent of non-transparent, semitransparent, and other actively managed exchange traded funds (ETFs) within existing mutual fund complexes raises the issues discussed below that the boards of mutual funds in such complexes currently face.

The SEC and FINRA announced several regulatory developments this summer relating to cybersecurity, artificial intelligence, and digital assets.

On Friday, July 31, 2020, the Internal Revenue Service (IRS) issued proposed regulations under Section 1061 of the Internal Revenue Code.

When a mysterious individual, or group, under the moniker of Satoshi Nakamoto published a white paper describing an “electronic peer-to-peer cash system” called Bitcoin to an obscure cryptography mailing list in 2008, the last thing on his, her, or their mind was likely the U.S. federal securities laws, much less a rule under the Investment Advisers Act of 1940 (Advisers Act), known as the “Custody Rule.”

On June 10, 2020, the Financial Industry Regulatory Authority (FINRA) issued a summary report regarding the existing and emerging uses of artificial intelligence (AI) by securities industry market participants.

In the wake of severe market volatility resulting from the COVID-19 pandemic, self-regulatory organizations and government agencies continue to provide guidance analyzing and interpreting the effects of the pandemic on market participant activities.

The CFTC Division of Enforcement (Division) of the U.S. Commodity Futures Trading Commission (CFTC) issued new guidance (Guidance) on May 20, 2020, that reflects the considerations of the Division when recommending civil monetary penalties (CMPs) to the CFTC in enforcement actions.

The U.S. Securities and Exchange Commission (SEC) on May 15, 2020, voted to adopt amendments to the national market system plan governing the consolidated audit trail (the CAT NMS Plan).

The U.S. Securities and Exchange Commission (SEC) recently settled enforcement actions against two private equity fund advisers within days of each other.

This is the third and final part of our update series on the CFTC’s recent Guidance related to the “actual delivery” of a digital asset for purposes of the retail commodity transaction provisions of the Commodity Exchange Act. We conclude this series with an overview of the Guidance.

The Securities and Exchange Commission delivered its long-promised and needed update to guidance on determining the fair value of securities under the Investment Company Act of 1940 on April 21, 2020.

In Part 2 of our update series, we explore the history and background of the regulation of retail commodity transactions (RCTs) and virtual currencies, with the goal of providing an analytical context for the Guidance.

On March 24, 2020, the U.S. Commodity Futures Trading Commission (the CFTC) finalized long-awaited interpretive guidance regarding what constitutes the “actual delivery” of a digital asset in the context of a retail commodity transaction (RCT) under Section 2(c)(2)(D) of the Commodity Exchange Act. 

The U.S. Securities and Exchange Commission (SEC) announced on April 20, 2020, that it had voted to issue two exemptive orders relating to the implementation of the National Market System Plan Governing the Consolidated Audit Trail (CAT NMS Plan), in part, to address effects of COVID-19 on the securities markets.

Since the start of the COVID-19 pandemic in the United States, the U.S. Securities and Exchange Commission (SEC) has increasingly exercised its authority under the Securities Exchange Act of 1934 (the Exchange Act) to suspend the trading in certain securities.

The U.S. Securities and Exchange Commission’s (SEC) Office of Compliance Inspections and Examinations (OCIE) issued a risk alert (the risk alert) on April 7, 2020, regarding examinations that will focus on broker-dealers’ compliance with Regulation Best Interest (Reg BI).

On March 12, 2020, the Securities and Exchange Commission announced a settlement with Texas-based exempt reporting adviser Naya Ventures, LLC and its two founders for failure to disclose several conflicts of interest and failure to take measures required by Naya Ventures Fund I, L.P.’s governing documents.

In light of the recent novel coronavirus (COVID-19) outbreak and the challenges it presents for boards of directors to safely travel, the SEC issued an order on March 13, 2020, exempting all registered investment companies and business development companies, including their advisers and principal underwriters, from the in-person meeting requirements of certain provisions under the Investment Company Act of 1940.

The U.S. Court of Appeals for the Second Circuit issued an opinion in United States v. Blaszczak on December 30, 2019 that could significantly affect the prosecution of criminal insider trading cases.

In August 2019, investments in passive funds surpassed those in traditional actively managed funds for the first time. According to Morningstar, assets in index-tracking US equity funds grew to about $4.27 trillion, compared with almost $4.25 trillion in funds managed by active managers.

The SEC held an open meeting on August 21, 2019, and approved two items: (1) guidance regarding the proxy voting responsibilities of investment advisers under the Investment Advisers Act of 1940 and related proxy voting disclosures required under the Investment Company Act of 1940; and (2) interpretation and guidance on the applicability of rules on proxy voting advice under the Securities Exchange Act of 1934. 

The following update highlights recent corporate governance hot topics and trends for directors of public companies.

The staffs of the Division of Trading and Markets of the SEC and FINRA published a joint statement on July 8, 2019, articulating primary regulatory concerns regarding broker-dealers’ ability to comply with financial responsibility rules in the context of digital asset securities.

Perkins Coie partnered with PitchBook and National Venture Capital Association (NVCA) on the newly published Venture Monitor.

The U.S. Securities and Exchange Commission (SEC) Strategic Hub for Innovation and Financial Technology (FinHub) published a framework on April 3, 2019, for analyzing whether a digital asset is offered and sold as a security under the federal securities laws.

The SEC’s Division of Investment Management has relaxed certain in-person voting requirements for fund boards, subject to certain conditions, in a no-action letter to the Independent Directors Council (the IDC) issued on February 28, 2019.

The end of the year has been a very busy time for the SEC in the digital asset space. From speeches to the issuance of joint statements to enforcement actions, there are many things to highlight, discuss and consider.

Does your company handle data analytics to target California consumers? If so, it is imperative that you pay close attention to the California Consumer Privacy Act (CCPA) that goes into effect on January 1, 2020. The CCPA goes well beyond the General Data Protection Regulation (GDPR); however, if you’ve achieved compliance with the GDPR, you are well on your way to achieving CCPA compliance.

Public companies use their investor relations websites to conveniently disseminate important corporate news and information, and many investors and other interested parties in turn rely on those websites as a primary source of such news and information. To continue reading the full article, click here.

In a flurry of enforcement activity in the digital asset space, the SEC and FINRA, a self-regulatory organization for broker-dealers, announced three new enforcement actions addressing digital asset practices last month.

The 2017 Tax Cuts and Jobs Act, signed by President Trump last month, significantly affects the ability of the managers of investment funds to receive long-term capital gains with respect to their carried interest.

In its most significant action since issuing the DAO Report in July 2017, the SEC again took aim at initial coin offerings on December 11, 2017, when, through its new Enforcement Cyber Unit, the SEC entered into an administrative settlement with Munchee, Inc., for conducting unregistered offers and sales of securities.

Less than two decades ago, fund groups wrestled with whether it was worthwhile to create websites.

Click here to read full article.

The SEC’s Division of Investment Management issued a no-action letter on January 11, 2017 explicitly permitting brokers to set their own commission rates for sales of so-called “clean shares” of mutual funds.

The SEC’s Division of Investment Management released a Guidance Updateon December 19, 2016, addressing certain procedural issues that have arisen in connection with the so-called “Fiduciary Rules” adopted by the U.S. Department of Labor.

The SEC announced two administrative settlements in June, with a fund administrator that provided accounting and fund administration services to several private funds based on its alleged failure to heed red flags and correct faulty accounting by two private fund managers.

This update was republished in the Journal of Investment Compliance May 2017 issue, " SEC Charges Private Fund Administrator With Gatekeeping Failures ."

The Investment Company Institute’s annual Mutual Funds and Investment Management Conference heralded springtime and a fresh approach to the regulation of registered funds. 

The SEC’s recent aggressive enforcement posture against chief compliance officers has raised many concerns, including whether the SEC’s actions are actually chilling robust compliance efforts.

This update was featured in Today's General Counsel on 03.17.2016 as "Is SEC Monday Morning Quarterbacking, By Targeting Compliance Officers?"

The SEC recently announced an administrative settlement against Commonwealth Capital Management, LLC (CCM), a mutual fund adviser, and the members of the boards of two mutual funds for their failure to properly evaluate fund advisory contracts.

In December 2014, the Securities and Exchange Commission (SEC) proposed rules to implement Title V and Title VI of the Jumpstart Our Business Startups Act (JOBS Act), which permit early stage companies to defer registration . . . 

Family office key employees have new flexibility under recent SEC guidance regarding the nature and range of persons who can properly be involved in the administration of their trusts.

Family offices have existed for over a century and have been formed to implement very important, complex objectives, including investment management, corporate succession, estate, gift, and income tax planning and charitable giving.

The Chief Counsel of the SEC’s Division of Trading and Markets recently issued an important no-enforcement letter regarding the status of a person engaged in effecting transactions in connection with the transfer of ownership of a privately held company. This SEC letter is notable not only for the conclusions that it reaches but also for the fact that it follows a significant speech by the same SEC staff lawyer regarding the same and related broker-dealer status questions.

The Securities and Exchange Commission (SEC) took a giant step in fulfilling its rulemaking obligation under the 2012 Jumpstart Our Business Startups (JOBS) Act last week when it released proposed Regulation Crowdfunding.

On September 23, 2013 the new Securities and Exchange Commission (SEC) rules permitting general solicitation and advertising of private securities offerings pursuant to the Jumpstart Our Business Startups Act of 2012 (JOBS Act) go into effect.

As a result of ongoing efforts to improve the informational value of the auditor’s reporting model, on August 13, 2013 the Public Company Accounting Oversight Board (PCAOB) proposed two new auditing standards for public comment that would expand the scope of the auditor’s report on a company’s audited financial statements and require the auditor to perform an evaluation of other information included in the company’s annual report filed with the SEC.

In response to the SEC’s first civil complaint arising from online virtual currency trading, alleged Bitcoin Ponzi schemer Trendon Shavers recently challenged the district court’s authority to hear the case.

On July 23, 2013, the SEC ventured into the electronic currency world by filing a civil complaint against virtual currency “trader” Trendon Shavers and his company, Bitcoin Savings and Trust, in the U.S. District Court for the Eastern District of Texas.

When enacted on April 5, 2012, Title II of the Jumpstart Our Business Startups Act of 2012 (JOBS Act) endeavored to lift the long-standing ban on general solicitation and advertising for private securities offerings under Rule 506 and Rule 144A, so long as the securities are sold only to accredited investors under Rule 506 or qualified institutional buyers (QIBs) under Rule 144A.

In a self-described “unexpected” ruling for the defendants in the consolidated LIBOR proceedings, Judge Naomi Reice Buchwald has dismissed the private plaintiffs’ antitrust and Racketeer Influenced and Corrupt Organizations Act (RICO) claims and significantly narrowed the scope of the Commodity and Exchange Act (CEA) claim.

In the wake of the recent admissions by Barclays Bank PLC that its traders sought to manipulate the London Interbank Offered Rate ("LIBOR"), corporations and other investors are only now beginning to appreciate the magnitude of the scandal and to consider how it might impact their own investments.

As forecast, on March 27 the U.S. House passed the Senate's amended version of the Jumpstart Our Business Startups Act (the JOBS Act), clearing the way for President Obama to sign the bill into law, which he is expected to do in the coming days.

As indicated in a prior update, on June 22, 2011, the SEC adopted a rule (Rule) defining the term "family office" for purposes of identifying entities eligible for exclusion from registration as an investment adviser under the Investment Advisers Act of 1940 (Advisers Act).  In connection therewith, the staff of the Division of Investment Management (Staff) recently provided responses to select questions regarding the definition of a "family office" under the Rule.  Highlighted below are (i) summaries of the Staff's responses to a few of the more pertinent questions, and (ii) a reminder with respect to a few provisions of the Rule which may cause the unsuspecting family office to inadvertently fall outside of the registration exclusion

Just as more professionals have started taking advantage of social media to develop and grow their business, the financial services industry is following suit.  However, given the highly regulated nature of this industry, financial services professionals must be aware of special regulatory considerations when utilizing social networking tools.

On July 22, 2011, the U.S. Court of Appeals for the D.C. Circuit issued its highly anticipated opinion in the challenge to SEC Rule 14a-11 brought by the Business Roundtable and the U.S. Chamber of Commerce. Rule 14a-11 would have required companies subject to the Exchange Act’s proxy rules to include in their proxy materials shareholder nominees for director who met specified conditions. In the strongly worded opinion, written by Judge Ginsburg, the court vacated Rule 14a-11, characterizing the SEC proxy access rule as “arbitrary and capricious” and stating that the SEC had failed “adequately to assess the economic effects” of Rule 14a-11. The court did not address the constitutional challenges raised by the plaintiffs under the First Amendment.

At an open meeting of the Securities and Exchange Commission (SEC) on June 23, 2011, the SEC Commissioners approved a new rule defining “family offices.” Title IV of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) excluded family offices from the definition of investment adviser under the Investment Advisers Act of 1940 (Advisers Act) and thereby exempted family offices from the registration requirements under the Advisers Act, as amended by the Dodd-Frank Act. However, Section 409 of the Dodd-Frank Act also directed the SEC to adopt a rule defining the term “family office” in order to identify the entities eligible for the exclusion. On June 23, 2011, the SEC adopted such a rule.

On November 19, 2010, the Securities and Exchange Commission released two companion releases proposing new rules related to registration requirements for investment advisers to private funds, including hedge funds, private equity funds and other pooled investment vehicles.

On November 19, 2010, the Securities and Exchange Commission proposed a new rule, based on requirements under the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the Financial Reform Act, defining “venture capital funds” for purposes of exempting advisers to these funds from registering under the Investment Advisers Act of 1940.

A proxy season post-mortem on all the latest ESG issues. The program covered the tools needed to nimbly move forward in a rapidly shifting environment.