SEC Issues Final “Conflict Minerals” Rule
The SEC has issued its final rule to implement the “conflict minerals” disclosure requirements in Dodd-Frank. The SEC originally issued proposed rules with a comment period that was to have ended in January 2011. Final rules were required to be published by April of 2011. The SEC formally extended the public comment period by 30 days and then spent nearly 17 months receiving thousands of letters, meeting with many “interested persons,” and hosting an SEC Roundtable. Dodd Frank amended the SEC Exchange Act of 1934 by adding a requirement that the SEC publish disclosure rules concerning the use of certain minerals that originate in the Democratic Republic of the Congo. To learn more about the disclosures required by the rule, please click here to read the Bulletin published by the Corporate Finance and Securities Client Service Group on August 29, 2012.
The Contraceptive Mandate: What Do Religious Employers Do Now?
In a landmark 5-4 decision announced in June, the United States Supreme Court upheld the key provisions of the Patient Protection and Affordable Care Act (ACA). Perhaps most noteworthy for religious employers are the provisions requiring group health plans to provide preventive health services without charging a co-pay. In August, the Department of Health and Human Resources (HHS) adopted guidelines outlining the required preventive health care for women. That guidance requires coverage for all FDA-approved contraceptive services, including the “morning after” pill and the “week after” pill. Coverage of these services at no cost is required for plan years beginning on or after August 1, 2012. To learn more about the decision and exemptions for certain employers, please click here to read the Alert published by the Religious Organization Team on August 7, 2012.
IRS Releases Proposed Rules on New Comparative Effectiveness Fee for Health Plans
On April 12, 2012 the IRS released proposed regulations regarding the collection of the fee for the Patient-Centered Outcomes Research Trust Fund (the “Fund”) under the Patient Protection and Affordable Care Act. The Fund will be used to pay for the Patient-Centered Outcomes Research Institute which has the goal of helping health care providers and consumers make informed health decisions by synthesizing research comparing the outcome effectiveness of various treatments. To learn more about proposed regulations, the plans that will be impacted and the fee, please click here to read the Alert published by the Employee Benefits and Executive Compensation Client Service Group on April 23, 2012.
The Absolute Priority Rule: An Endangered Species in Individual Chapter 11 Cases?
The absolute priority rule of Section 1129(b) of the Bankruptcy Code is a fundamental creditor protection in a Chapter 11 bankruptcy case. The rule implements the general state-law principle that creditors are entitled to payment before shareholders unless creditors agree to a different result. Recent litigation has raised the issue of whether the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005, which otherwise is a very creditor-friendly statute, modified the Bankruptcy Code in such a way as to eliminate the absolute priority rule if the debtor is an individual. For a discussion of the issue, please click here to read the Alert published by the Bankruptcy, Restructuring and Creditors’ Rights Client Service Group on April 9, 2012.
Estate Planning in 2012
Generally, there are three basic goals of estate, generation skipping transfer and gift tax planning: (1) the reduction of estate and gift taxes upon transfer; (2) the deferral of the estate, generation skipping transfer and gift tax burden; and (3) ensuring for the necessary liquidity to pay the taxes when they become due. As a result of the present low interest rates and the drop in value of most types of assets, there may be opportunities to engage in some estate planning that may not be available to clients when interest rates rise and values are driven higher. To learn about how to take advantage of these opportunities in 2012, while we are sure we have them, please click here to read a memorandum published by Bryan Cave’s Private Client Group on April 10, 2012.
Data Breaches: Will You Be Sued, And Can You Lower Risk?
According to a widely reported study, 90% of organizations have had at least one data breach in the last year and almost 60% had two or more breaches over the year. In light of headlines describing multimillion-dollar data security breach settlements, it is no surprise that businesses fear the worst. For a discussion of the litigation risks, range of liability and how businesses can lower the risks associated with security breaches, please click here to read an article written by the Data Privacy and Security Team attorneys and published in Law 360 on April 25, 2012.
Federal Trade Commission Increases Interlocking Directorates Thresholds
On January 24, 2012, the Federal Trade Commission announced its annual revision of the interlocking directorates thresholds under Section 8 of the Clayton Act. The new thresholds were effective January 27, 2012. The purpose of Section 8 of the Clayton Act is to prevent a “person” from serving as an officer or director of corporations that compete with one another in the marketplace, unless that competition is very limited. For more information on the new thresholds, please click here for the January 27, 2012 Alert published by the Antitrust and Competition Client Service Group.
Premerger Notification Thresholds Increased
Effective February 27, 2012, the jurisdictional thresholds for the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended, will be increased. Pursuant to statutory amendments made in 2000, the thresholds are annually adjusted based on changes in gross national product. One key effect of this year’s indexing is that transactions will only be reported if the Size of Transaction exceeds $68.2 million, an increase over last year’s $66 million threshold. To read more about the 2012 thresholds, please click here for the Alert published by the Antitrust and Competition Client Service Group on January 27, 2012.
SEC Changes Settlement Policy for Enforcement Actions With Parallel Criminal Proceedings
The SEC announced in January a significant change in its settlement policy for civil enforcement actions in which the defendant is also subject to parallel criminal proceedings. Under the SEC’s new policy, any defendant who has admitted to or been found guilty of criminal conduct cannot settle parallel SEC charges without also admitting the SEC’s allegations. For more information on the new policy, please click here to read the Alert published by the White Collar Defense & Investigations and Securities Litigation & Enforcement Client Service Groups on January 13, 2012.
NAD Reviews Use of Facebook’s “Like” Feature in Promotions
In 2010, Facebook offered its users the ability to click a button indicating that they “like” a company or a product. Once clicked, the “liked” product appears on a user’s Facebook Wall and the user’s screen name or icon could also appear on the company’s Facebook page along with other users who liked the product. Companies quickly realized the benefit of being “liked,” and encouraged consumers to “like” their products by making incentives available only to those who liked the product. This practice is often referred to as a “like-gated” promotion. The use of these promotions has raised consumer protection questions, and the National Advertising Division of the Council for Better Business Bureaus (“NAD”) has recently issued its first decision involving a like-gated promotion. To learn more about the decision and allegations considered, please click here to read the Bulletin published by the Internet & New Media Group on January 3, 2012. (more…)
On January 6, 2012, the Advisory Committee on Small and Emerging Companies established by the Securities and Exchange Commission (“SEC”) recommended that the SEC take immediate action to permit general solicitation and general advertising in private offerings of securities under Rule 506 of Regulation D where securities are sold only to accredited investors. Relaxing the current restrictions on general solicitation and advertising would facilitate the ability of companies to raise capital from accredited investors, who are generally viewed as able to fend for themselves. For example, relaxing these restrictions would make it easier for companies to publicize their financing plans and seek funding from investors without any pre-existing relationship.
Rule 506 of Regulation D provides a widely-used safe harbor from the registration requirements of the Securities Act of 1933 for qualifying private offerings. Under current Rule 506, neither the issuer nor any person acting on the issuer’s behalf may offer or sell securities by any form of “general solicitation or general advertising,” and securities sold pursuant to Rule 506 may only be sold to “accredited investors” or persons who, either alone or with a representative, have sufficient knowledge and experience in financial and business matters to make them capable of evaluating the merits and risks of a prospective investment.
The Advisory Committee is of the view that the restrictions on general solicitation and advertising prevent many privately held small businesses and smaller public companies from gaining sufficient access to capital sources and thereby materially limit their ability to raise capital through private offerings. The Advisory Committee noted that the investor protections afforded by the existing restrictions on general solicitation and general advertising are not necessary in private offerings where the securities are sold solely to accredited investors. Because the concepts of general solicitation and advertising are vague, the prohibition increases compliance and diligence costs for issuers of securities who seek to avoid potential activities that might be deemed to constitute general solicitation or advertising and thereby destroy the availability of the Rule 506 safe harbor.
U.S. Supreme Court Upholds Arizona’s Employment Verification Law
On May 26, 2011, the U.S. Supreme Court upheld the Arizona law that sanctions employers for hiring unauthorized aliens and endorsed Arizona’s requirement that employers use the federal E-Verify screening program. A 5-3 majority of the Court found that language in the Immigration Reform and Control Act of 1986 did not pre-empt the Arizona Law. For the answers to frequently asked questions about the Arizona law, please click here to read the Client Alert published by the Labor & Employment Client Service Group on August 4, 2011.
Employers Should Consider Expressly Prohibiting FMLA Fraud
Many employers have updated their FMLA policies to reflect recent amendments to the law and revisions to the regulations. Another aspect of an FMLA policy that merits attention is ensuring that the policy expressly prohibits FMLA fraud and specifies the penalty for the offense. The United States Court of Appeals for the Ninth Circuit issued an unpublished opinion earlier this year that reinforces the need for express fraud prohibition. To learn more about the implications of the opinion, please click here to read the Client Alert published by the Labor & Employment Client Service Group on August 19, 2011.
SEC Proxy Access Rule Vacated by Federal Court
The U.S. Court of Appeals for the District of Columbia Circuit recently set aside and vacated Exchange Act Rule 14a-11 concerning shareholder proxy access, adopted by the SEC on August 25, 2010. On a petition for review, a panel held that the SEC had “failed adequately to consider the rule’s effect upon efficiency, competition and capital formation,” as the SEC was required to do under its enabling statutes. Thus, the Court held that adoption of the Rule was “arbitrary and capricious” and vacated the Rule. To read more about the decision, please click here to read the Alert published by the Corporate Finance and Securities Client Service Group published August 4, 2011.
Updated Claim Procedure Requirements for Non-Grandfathered Health Plans
The Internal Revenue Service, Department of Health and Human Services and Department of Labor have revised the interim final regulations governing internal claims and appeals and external reviews for non-grandfathered group health plans under the 2010 health reform law. The have also revised the forms for adverse benefit determinations and updated the list of state consumer assistance programs. Many of the changes ease the burden of plan administration. To learn more, please click here to read the Alert published by the Employee Benefits & Executive Compensation Client Service Group on July 1, 2011.
IRS Issues Guidance on Health Plan Excise Tax Returns, Code Section 162(m)
On June 24, 2011, the IRS finalized rules on automatic extensions for Form 8928 Excise Tax Returns for employer-sponsored health plans and also released guidance on performance-based compensation plans of public companies. For highlights of the rules, please click here to read the Alert published by the Employee Benefit & Executive Compensation Client Service Group on July 7, 2011.
FTC Suit Signals Increased Scrutiny of Advertising Endorsements
In May, the FTC brought suit against a company that sold a promissory note business system based upon the allegation that the company used consumer testimonials that could not be substantively substantiated, and that the company did not adequately disclose the typical performance that consumers were likely to achieve. This marks the thirteenth case this year in which the Commission has alleged that a company has deceptively used testimonials and endorsements. To read more, please click here for the Bulletin published by the Consumer Protection Group on July 5, 2011.
EPA Issues The Cross-State Air Pollution Rule To Reduce Power Plant Emissions In the Eastern United States
In July the U.S. Environmental Protection Agency (EPA) issued the Cross-State Air Pollution Rule (Cross-State Rule), requiring power plants in 27 states to reduce their emissions of nitrogen oxides and power plants in 23 of these states to also reduce their emissions of sulfur dioxide. The purpose of the rulemaking is to ratchet down power plant emissions that contribute to elevated concentrations of ozone in downwind states. For a summary of the relevant provisions of the Clean Air Act and the new Cross-State Rule, please click here to see the Bulletin published by the Environmental Client Service Group on July 22, 2011.
SEC Issues Final “Say-on-Pay” and “Golden Parachute” Rules
On January 25, 2011, the Securities and Exchange Commission released its final “say-on-pay” and related golden parachute rules to implement the provisions of Section 951 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. For a summary of the rules, please click here to read the Bulletin published by the Corporate Finance and Securities Group on January 27, 2011.
SEC Issues Proposed Rules for “Conflict Minerals” Disclosure
The Securities and Exchange Commission has issued proposed rules to implement the “conflict minerals” disclosure requirements in Section 1502 of the Dodd-Frank Wall Street Reform and Consumer Protection Act. Section 1502 amended the Securities Exchange Act of 1934 (the “Exchange Act”) by adding Section 13(p). Section 13(p) requires the SEC to promulgate disclosure rules concerning the use of certain minerals that originate in the Democratic Republic of the Congo or its adjoining countries (the “DRC countries”). For more information on the proposed rules, please click here to read the Client Alert published by the Corporate Finance and Securities Client Service Group on January 3, 2011.
When All Appropriate Inquiry Isn’t Enough: Court Highlights the Significance of Other Factors in the Bona Fide Prospective Purchaser Defense
Anyone who has been involved in a real estate transaction relating to commercial or industrial property has likely dealt with conducting “All Appropriate Inquiry” into the site, which generally includes the preparation of a Phase I Environmental Site Assessment and may include Phase II sampling work. All Appropriate Inquiry (“AAI”) is one necessary component of the “bona fide prospective purchaser” (“BFPP”) defense established under the 2002 Brownfields amendments to Comprehensive Environmental Response, Compensation and Liability Act (“CERCLA”). The BFPP defense is intended to protect property owners from liability for contamination that clearly occurred prior to their period of ownership. However, conducting AAI is not the only prerequisite to establishing a BFPP defense. The BFPP requirements beyond AAI are highlighted in Ashley II of Charleston, LLC v. PCS Nitrogen, et al., 2010 U.S. Dist. LEXIS 104772 (D.S.C. Sep. 30, 2010), one of the first cases to address in detail the BFPP defense. To learn more about this case, please click here to read the Client Alert published by the Environmental Client Service Group on January 3, 2011.
Criminal Action Against In-House Lawyer Underscores Risks in Dealing with Government Investigations
Lawyers who deal with government investigators and regulators should take note of a recent federal criminal action charging a former in-house lawyer at GlaxoSmithKline for statements she made while representing the company in a government investigation. For more information, please click here to read the Client Alert published by the White Collar Defense & Investgations, Securities Litigation and Enforcement practice group on November 29, 2010.
Qualified Retirement Plans: Year-End Compliance
Although 2010 has been dominated by new healthcare-related laws and regulations requiring significant design changes to group health plans, as discussed in a prior alert, qualified retirement plans are not immune to new requirements that must be addressed by the end of 2010. For more information, please see the Client Alert published b y the Employee Benefits and Executive Compensation Client Service Group on November 30, 2010.
SEC Proposed Whistleblower Rules Attempt to Balance Competing policy Considerations
The Securities and Exchange Commission has now issued proposed rules to implement the whistleblower provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank“). Dodd-Frank amended the Securities Exchange Act of 1934 by adding Section 21F. Section 21F directs the SEC to pay awards to whistleblowers who provide the SEC with information about securities laws violations that lead to successful enforcement actions. Proposed Regulation 21F defines statutory terms, establishes the standards and procedures for rewarding eligible whistleblowers and generally seeks to explain the program. For more information on the proposed rules, please click here to see the Client Alert published by the Corporate Finance and Securities Client Service Group on November 11, 2010.
SEC Proposes “Family Office” Exemption from Definition of Investment Advisers
On October 12, 2010, the U.S. Securities and Exchange Commission (the “SEC”) proposed Rule 202(a)(11)(G)-1 (the “Proposed Rule”) under the Investment Advisers Act of 1940, as amended (the “Advisers Act”) to define family offices for purposes of excluding them from the definition of “investment adviser.” For more information on the Rule, please click here to see the Client Alert published by the Private Client practice group on November 1, 2010.
IRS Has Announced its 2011 Cost-of-living Adjustments for Retirement Plans
On October 28 the IRS issued a press release announcing its 2011 cost-of-living adjustments for retirement plans. For a chart reflecting the qualified plan limits for years 2008-2011, please click here to see the Employee Benefits & Executive Compensation Group’s Client Alert published October 28, 2010.
SEC Issues Proposed “Say-on-Pay” and “Golden Parachute” Rules
The SEC has released its proposed “say-on-pay” and related golden parachute rules to implement the provisions of Dodd-Frank set forth in new Section 14A of the Securities Exchange Act of 1934. The comment period will close on November 18, 2010 and the SEC plans to issue final rules in early 2011. For a discussion of the proposed rules, please click here to read the Bulletin published by the Corporate Finance and Securities Group on October 20, 2010.
Employee Benefits Provisions of the Small Business Jobs Act of 2010
On September 27, 2010, the Small Business Jobs Act of 2010 was signed into law. While the Act mainly focuses on providing tax and other assistance to small businesses, it also includes provisions aimed at promoting retirement preparation that are not limited to small business. For a discussion of these provisions, please click here to read the Employee Benefits & Executive Compensation goup’s client alert Alert published October 4, 2010.
SEC Adopts Rules Allowing Shareholders Access to Company Proxy Materials
On August 25, 2010, the Securities and Exchange Commission voted to adopt new rules that will require companies to include in their proxy materials nominations for election as directors submitted by eligible shareholders, subject to certain conditions. For more information, please see the Client Alert published by the Corporate Finance and Securities Client Service Group August 26, 2010.
Enforcement Landmines for Private Funds in Dodd-Frank
By now, most “private” or “hedge” fund managers know that the Dodd-Frank Wall Street Reform and Consumer Protection Act requires SEC registration of most advisers to private funds, effective July 2011. But SEC registration is not the only aspect of the new law that fund managers need to be aware of. Other provisions of the law will have significant effects on funds. For more information, please see the Client Alert published by Securities Litigation and Enforcement Alternative Investments Team.
Regulations Issued Under Health Care Reform on Preventive Services and Internal claims and Appeals, and Extended Review Procedures
The Departments of Treasury, Labor and Health & Human Services (the “Departments”) recently issued two more batches of interim final regulations under the Patient Protection and Affordable Care Act as amended (the “Act”). This new guidance addresses (i) the preventive services coverage mandate, and (ii) the new internal claims and appeals and external review processes. For more information, please see the Client Alert published by the Employee Benefits and Executive Compensation Group August 5, 2010
USDA to Hold Meeting for Public Input on Codex Processed Fruits and Vegetables Standards
On August 18, 2010, USDA announced a public meeting to provide information and receive comments on agenda items and draft U.S. positions that will be discussed at the 25th Session of the Codex Committee on Processed Fruits and Vegetables. For more information, please see the August 19, 2010 Food Regulatory and Policy Bulletin published by the Food and Drug Administration Practice
During China Visit, FDA Commissioner’s Focus Not on Heparin Investigation
FDA Commissioner Margaret Hamburg’s recent trip to China focused primarily on avenues of collaboration and cooperation between the FDA and Chinese regulators rather than on the current investigation into the contaminaiton of heparin. For information on this and other issues, please see the August 27, 2010 Drugs and Devices Regulatory and Policy Bulletin published by the Food and Drug Administration Practice.