July 2006 Archives
The First Case of Its Kind: Morgan Lewis Team Wins
In the first post-Enron “stock drop” case to go to judgment following a trial, DiFelice v. US Airways, Inc., Case No. 1:04cv889 (E.D. Va. June 26, 2006), a Morgan Lewis team headed by Labor and Employment Law partners Charles C. Jackson and Christopher A. Weals prevailed at trial in an ERISA class action brought against US Airways, Inc. (http://www.usairways.com). The court held that US Airways did not breach its fiduciary duties under ERISA by continuing to permit voluntary investment in the stock of its parent corporation, US Airways Group, Inc., in the company’s 401(k) plan during the months leading up to US Airways’ bankruptcy in 2002.
SEC Proposes to Narrow Exceptions to Regulation SHO’s Close-Out Requirements
On July 14, 2006, the SEC issued a proposal to amend Regulation SHO under the Securities Exchange Act of 1934, which governs short selling of securities. The proposed amendments would narrow the exceptions to the "close-out" requirements of Regulation SHO for options market makers and for grandfathered positions.
SEC Issues Extension of Relief Granted to Broker-Dealers Allowing Reliance on Investment Advisers to Perform Customer Identification and Verification
On July 11, 2006, the SEC issued a letter to the Securities Industry Association extending no-action relief allowing broker-dealers to fully rely on SEC registered investment advisers to perform some or all of their Customer Identification Program obligations.
SEC Adopts Revised Soft Dollars Safe Harbor
On July 12, 2006, the SEC adopted a revised interpretation of Section 28(e) of the Securities Exchange Act of 1934, substantially as proposed in October 2005. The details of the SEC’s action remain sketchy in many areas pending issuance of the formal release adopting the interpretation. The following summary is based on the discussions in the SEC’s open meeting regarding the proposed interpretation.