SEC Releases "Regulation A+" Proposal

On December 18, 2013, the SEC proposed rules under Title IV of the JOBS Act to amend Regulation A (Rules 251-263 under the Securities Act of 1933 (the "Securities Act")). The proposed rules, which have been referred to informally as Regulation A+, are intended to promote small company capital formation and provide for meaningful investor protection. Proposed Regulation A+ would increase the amount an issuer could raise in an unregistered, public offering in a 12-month period from $5 million to $50 million and are intended to provide smaller companies with improved access to the public capital markets at a lower cost than a traditional registered offering.

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CFTC Court Case and New Rules Establish Bank Duties to Monitor Commodity Brokers

A recent court order in favor of the Commodity Futures Trading Commission (or CFTC) and new rules issued by CFTC establish a standard of liability for depository institutions that fail to fulfill their customer funds protection obligations under the Commodity Exchange Act (or CEA) and, thus, requires them in certain circumstances to monitor the activities of clients that are registered with CFTC as futures commission merchants (or FCMs), commonly known as commodity brokers.  This client alert summarizes the court order and the new rules and, then, discusses the implications for depository institutions and certain related preventive measures that they should consider implementing.

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SEC and CFTC Adopt Rules on Red Flags and Identity Theft

On April 10, 2013, the Securities and Exchange Commission (“SEC”) and the Commodity Futures Trading Commission (“CFTC”) jointly adopted rules that require broker-dealers, mutual funds, investment advisers and certain other regulated entities to adopt programs designed to detect “red flags” and prevent identity theft. These rules implement provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act, that amended the Fair Credit Reporting Act (“FCRA”) to direct the SEC and the CFTC to adopt rules requiring regulated entities to address risks of identity theft. The 2003 amendments to the FCRA required other regulatory authorities to issue identity theft red flags rules, but did not authorize or require the SEC or the CFTC to issue their own rules.

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The Essentials: The CFPB's Final "Ability-to-Repay/Qualified Mortgage" Rules

On January 10, 2013, the Consumer Financial Protection Bureau (the “CFPB”) issued final rules (the “Ability-to-Repay Rules”) amending Regulation Z under the Truth in Lending Act (“TILA”) to implement the ability-to-repay requirement for residential mortgage loans and protections from liability for qualified mortgages and certain other consumer protections as required by Sections 1411, 1412 and 1414 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (the “Dodd-Frank Act”).

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Consumer Financial Protection Bureau Releases Final "Ability-to-Repay/Qualified Mortgage" Rules

On January 10, 2013, the Consumer Financial Protection Bureau (CFPB) released its final “Ability-to-Repay/Qualified Mortgage” rules. The rules and the concurrent proposed amendments were posted on the CFPB’s website following published remarks by Director Richard Cordray and a two-hour “field hearing” in Baltimore, MD. The bureau also promised to publish plain-language booklets and educational videos to help guide lenders through the maze of new rules.

The rules, which are over 800 pages long, are “final” in the sense that they have been revised from the proposed rules that were released for comment last summer, and they are now “official.” However, the rules do not take effect for another year (January 10, 2014), and the bureau issued an additional 184-page “concurrent proposal” containing potential amendments to the new rules that address and/or clarify unresolved issues such as exemptions for certain nonprofit creditors and homeownership stabilization programs, an additional definition of a qualified mortgage for certain loans made and held in portfolio by small creditors such as community banks and credit unions, and inclusion of loan originator compensation in the points and fees calculation. Notwithstanding the pending amendments and delayed effective date, the rules issued last week will have an enormous impact on the mortgage lending business, and their complexity makes prompt commencement of implementation work essential.

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The Consumer Financial Protection Bureau Provides Guidance for Mortgage Advertising

In a joint-agency media conference and press release with the Federal Trade Commission today, the Consumer Financial Protection Bureau used the “rulemaking-through-enforcement” method of regulation to create several de-facto guidelines for what is “unfair, deceptive, or abusive” in mortgage advertising. Bypassing the more arduous rulemaking process, the CFPB published “sample warning letters” that effectively made the following advertising practices illegal:

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CFTC No-Action Letters

On October 11, 2012, the U.S. Commodity Futures Trading Commission (CFTC) issued two interpretive letters and today, issued a no-action letter. The letters were issued to the National Association of Real Estate Investment Trusts (NAREIT), the American Securitization Forum (ASF) and certain persons designated as swap persons and ICE/NYMEX contract persons, respectively.

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Responding to Questions on Swaps Activity and Commodities Regulation

Recently adopted rules under the Dodd–Frank Act establish a comprehensive new regulatory framework for swaps, including their use and those who use them. We have prepared the below questions and answers to help clarify issues regarding the new rules. The questions and answers are not intended to be comprehensive or to address every situation but, rather, are intended to provide a general overview and explanation of matters related to the regulation of swaps.

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New FINRA Rule 5123 Imposes Filing Obligation for Certain Private Placements

New FINRA Rule 5123 will require each FINRA member that sells a security in a private placement, subject to certain exemptions, to file with FINRA a copy of any private placement memorandum, term sheet or other offering document used in connection with such private placement within 15 calendar days after the date of the first sale, or to indicate to FINRA that no such offering documents were used. Due to the exemptions, the regulatory burden of this new requirement will fall primarily on offerings of Section 3(c)(1) private investment funds and other offerings made to individuals or retail investors. A copy of FINRA Regulatory Notice 12-40 (September 2012) (Private Placements of Securities) is available here.

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SEC JOBS Act Implementation

SEC Proposes Rules Relating to General Solicitation and General Advertising for Rule 506 and Rule 144A Offerings.

On August 29, 2012, the Securities and Exchange Commission  proposed amendments to Rule 506 of Regulation D and Rule 144A under the Securities Act of 1933, as required by Section 201(a) of the Jumpstart Our Business Startups Act (“JOBS Act”). The proposed amendments will permit certain unregistered exempt offerings of securities using general solicitation and general advertising. A copy of the SEC’s proposing release is available here.

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