Helping Clients Access the Capital Markets and Stay Apprised of Regulatory Developments

FINRA Extends Information Request Period for Digital Assets (Virtual Coins and Tokens)‎

On July 18, 2019, the Financial Industry Regulatory Authority (“FINRA”) issued Regulatory Notice 19-24[1], which extended the deadline of FINRA’s previously issued notice that asked members to keep their Regulatory Coordinator informed if the firm, or its associates or affiliates, engaged, or intended to engage, in activities related to digital assets.

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SEC Staff Provides Guidance on LIBOR Transition Risks

On July 12, 2019, the Securities and Exchange Commission (“SEC”) published a staff statement[1] encouraging issuers and other market participants to actively manage their transition away from LIBOR[2] and fully disclose the risks they face from the change.  Currently, private-sector banks report the information used in the formulation of LIBOR, but those banks are expected to cease reporting when their current reporting commitment ends in 2021.

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Joint SEC/FINRA Staff Statement Offers Guidance Relating to Broker-Dealer Custody of ‎Digital Asset Securities

On July 8, 2019, the staffs of the Division of Trading and Markets, U.S. Securities and Exchange ‎Commission (“SEC”) and the Office of General Counsel, Financial Industry Regulatory ‎Authority (“FINRA”) released a joint statement ‎ (the “Joint Statement”) providing guidance ‎with respect to applicable regulations relating to broker-dealer custody of digital asset securities.‎

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Attempt to Limit Directors’ Liability for Setting Their Own Compensation is Rejected

A recent Delaware Court of Chancery decision ‎ on a challenge to Goldman Sachs directors’ ‎setting their own compensation is interesting because the court rejected the company’s attempt to ‎make an end run around current law. The stockholder-approved compensation plan included a ‎novel provision limiting the directors’ liability if they acted “in good faith.”‎

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SEC Proposes Further Relief for Low Revenue Smaller Reporting Companies

On May 9, 2019, the SEC proposed rule changes to the disclosure requirements for smaller reporting companies (SRCs).  Last year, the SEC expanded the number of companies that qualify for scaled disclosure accommodations under SEC rules by increasing the public float and revenue caps in the SRC definition (from $75 million up to $250 million of public float or up to $700 million of public float with $100 million or less in revenues).

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SEC Proposes Changes to Disclosures for Acquisitions and Dispositions

On May 3, 2019, the SEC proposed rule amendments to financial information that investors receive regarding the acquisition and disposition of businesses.  The SEC’s rules requiring target company and pro forma financial statements are complex.  Creating the financial statements often results in significant delay and expense in M&A situations.  The SEC’s proposed changes are intended to address these difficulties.

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Locke Lord QuickStudy: Exchangers Beware: FinCEN Issues First Fine Against a P2P Virtual Currency Exchanger

On April 18, 2019, the Financial Crimes Enforcement Network (“FinCEN”) announced1 a civil monetary penalty against an individual for operating a peer-to-peer virtual currency exchanger. FinCEN assessed a $35,350 civil monetary penalty against Eric Powers of Kern County, California for willfully violating registration and reporting requirements under the Bank Secrecy Act (“BSA”).

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