May 2008 Archives
CFTC Authority Extended over Retail Forex and Energy Trading
What This Means
Recently, Congress enacted amendments to the Commodity Exchange Act (CEA) that grant the Commodity Futures Trading Commission (CFTC) extended authority to regulate over-the-counter foreign exchange (forex) trading with retail customers and trading in energy derivatives conducted over the counter and through electronic platforms. As a result of the new CEA provisions, certain futures market participants will have to register their retail forex business with the CFTC. Additionally, futures commission merchants (FCMs) and futures-introducing brokers involved in retail forex and energy trading will want to consider making changes to their compliance procedures and processes. The new provisions of the CEA are scheduled to become effective September 19, 2008. >>> continued
Seventh Circuit “Disapproves” of Gartenberg Factors
PDF version The Seventh Circuit Court of Appeals recently cast some uncertainty over the long-standing factors that fund directors use to determine the proper level of an adviser’s fees as set forth in Gartenberg v. Merrill Lynch. The court affirmed the lower court’s dismissal of a complaint against Harris Associates, the adviser to the Oakmark family of mutual funds. In support of a claim under Section 36(b) of the Investment Company Act of 1940, the plaintiffs argued that, because the funds paid a higher fee than the adviser’s institutional accounts for allegedly similar services, the funds’ fees could not have been the result of arm’s-length bargaining. While the Seventh Circuit agreed with the lower court’s dismissal of this claim, it is unclear how this decision will affect the treatment of Gartenberg by other courts. >>> continued
Speaking Engagement - Introduction to Non-French Private Equity Fund Vehicles
Morgan Lewis’s Ann Baker will present the French Private Equity Association course, “Introduction to non-French Private Equity Fund Vehicles.”
When:
May 23, 2008
For more information, please the conference website.
Speaking Engagement - Annual Meeting of the Association of Life Insurance Counsel
Morgan Lewis’s Louis Singer will be presenting a session titled “Open Your Wallet - The Institutional Investor View on Private Equity.” >>> continued
FINRA Issues Proposals on Rulebook Consolidation
What This Means
FINRA has issued four proposals to consolidate existing NASD and NYSE rules into a single rulebook. Comments on the proposals are due to FINRA by June 13, 2008. The proposals are preliminary—they still must be filed with and adopted by the SEC before they can take effect. However, these proposals represent the first formal steps toward creating a single rulebook for broker-dealers that are FINRA members, which was a main objective of last year’s consolidation of member regulatory functions into a single SRO. FINRA indicated that the creation of this single rulebook will be accomplished in phases, with substantial completion during the next year.
Speaking Engagement - NRS 23rd Annual Spring Compliance Conference
Morgan Lewis’s Ivan Harris and Ryan Helmrich will speak at the 23rd Annual Spring Compliance Conference. Regulatory, legal, and industry professionals will lead discussions regarding new regulatory developments and offer practical, real-world guidance on establishing and updating compliance policies and procedures. Sessions range from intermediate to advanced and are organized in separate investment adviser and broker-dealer tracks. Hot topics and newly emerging areas of compliance requiring extended consideration are presented in pre-conference workshops.
SEC Fires Another Warning Shot over Insider Trading Policies and Procedures
PDF version For well over a year, SEC enforcement and examination officials have emphasized the staff’s focus on insider trading, particularly by securities industry professionals. This focus has proceeded largely on two fronts. The first involves high-profile cases in which industry employees have been charged with engaging in illegal insider trading. The second takes a more preventative approach to insider trading enforcement, and involves cases against broker-dealers and investment advisers that, even in the absence of actual insider trading, have failed to adopt or enforce insider trading policies and procedures. Although this second line of attack has received less attention in the press, a recent SEC enforcement action against Chanin Capital LLC and its chief compliance officer demonstrates that legal and compliance staff should be paying close attention to the effectiveness of their policies and procedures that are designed to prevent insider trading.