Developments in Securities Regulation, Corporate Governance, Capital Markets, M&A and Other Topics of Interest. MORE

Rule 10b-17 under the Securities Exchange Act of 1934 (the “Act”) provides that the failure of an issuer to provide advance notice to regulatory authorities in connection with certain actions constitutes a manipulative or deceptive device or contrivance within the meaning of Section 10(b) of the Act.  Under Rule 10b-17(b)(1), an issuer must provide the National Association of Securities Dealers (now FINRA) with 10 calendar days advance notice of certain company-related actions.

FINRA’s part in this advance disclosure system has traditionally been ministerial in nature.  After all, FINRA does not maintain listing standards, and it lacks direct formal jurisdiction over issuers.  Purportedly in response to a growing concern that FINRA’s company-related action processing services could be utilized to further fraudulent activities, Rule 6490, which became effective on September 27, 2010,  clarifies and expands the role of FINRA in this process by providing for FINRA to become more active in the review of advance notice filings and by setting forth limited investigative powers, as well as by attaching fees and monetary penalties to the advance notification process.

Rule 6490 requires issuers of non-exchange listed equity and debt securities (specifically, issuers whose securities are quoted on the OTC Bulletin Board and Pink Sheets) to: 1) provide FINRA with a notification form at least 10 calendar days prior to the record date of the applicable company-related action; 2) pay a filing fee; and 3) supply certain supplemental and supporting documentation. 

The company-related actions to which Rule 6490 applies include:

  • stock splits
  • dividends and distributions of cash or securities
  • spinoffs
  • mergers and acquisitions
  • domicile changes
  • redemptions
  • name changes
  • rights and subscription offerings
  • bankruptcy and liquidation

Under Rule 6490, FINRA now has the authority to exercise discretion in reviewing notifications and to request additional documentation when necessary.  Additionally, FINRA now has the authority to conduct detailed reviews of notifications and delay requests to announce company-related action on a case by case basis.   This more detailed review is only triggered if the FINRA Operations Department believes that one of the following five factors exists with respect to the notification:

  • FINRA believes the forms and other documentation submitted by the issuer are not complete, accurate, or were filed without the appropriate authority;
  • The issuer is not current with its reporting obligations to the SEC or other regulatory authority;
  • FINRA has actual knowledge that parties related to the corporate action are the subject of pending or settled regulatory action or are under investigation by a regulatory body or are pending criminal action related to fraud or securities law violations;
  • FINRA has actual knowledge that persons related to the action may potentially be involved in fraudulent activities related to the securities market or may pose a threat to public investors; or
  • There is significant uncertainty in the settlement and clearance process for the security.

You can read more about the background and rationale for the adoption of this rule in SEC Release No. 34-62434.  Check back at Dodd-Frank.com frequently for the latest news and analysis relating to the implementation of the Dodd-Frank Act.

Today, the CFTC approved, by a 3-2 vote (Commissioners Sommers and O’Malia dissenting), a long-awaited proposed rule defining the terms “swap dealer” and “major swap participant.” Both types of entities will face comprehensive regulation under the swap trading provisions of the Dodd-Frank bill, including registration, reporting, recordkeeping, business conduct, and capital and margin requirements. Although the proposed rule, apparently 145 pages long, will not be published in the Federal Register until next week (the CFTC must wait until the SEC approves an identical version of the rule, scheduled for Friday, December 3), the CFTC shed light on the rule at its open meeting today and issued a fact sheet and Q&A further explaining it.

Swap Dealer

The CFTC intends to adopt a flexible definition of the term “swap dealer” based on the following characteristics:

– swap dealers tend to accommodate demand for swaps from other parties;
– swap dealers are generally available to enter into swaps to facilitate other parties’ interest in entering into swaps;
– swap dealers tend not to request that other parties propose the terms of swaps; rather, they tend to enter into swaps on their own standard terms or on terms they arrange in response to other parties’ interest; and
– swap dealers tend to be able to arrange customized terms for swaps upon request, or to create new types of swaps at their own initiative.

Although Commissioner Sommers expressed interest at the meeting in a requirement that swap dealers have regular clientele, CFTC staff indicated that that would only be a consideration, not a requirement, under the proposed rule.

In addition to the broad characteristics above, the Commission listed the following indicative activities of swap dealers:

– contacting potential counterparties to solicit interest in swaps,
– developing new types of swaps and informing potential counterparties of their availability,
– membership in a swap association in a category reserved for dealers,
– providing marketing materials (such as a web site) that describe the types of swaps one is willing to enter into with other parties, and
– generally expressing a willingness to offer or provide a range of financial products that would include swaps.

De minimis exception

The Commission provided more concrete guidance with respect to the de minimis exception to the swap dealer definition. An entity will be exempt from the definition on the basis of de minimis swap dealing activity if it meets all of the following criteria:

– The aggregate effective notional amount, measured on a gross basis, of the swaps that the person enters into over the prior 12 months in connection with dealing activities must not exceed $100 million.
– The aggregate effective notional amount of swaps in connection with dealing activities with “special entities” (as defined in CEA Section 4s(h)(2)(C) to include certain governmental and other entities) over the prior 12 months must not exceed $25 million.
– The person must not enter into swaps as a dealer with more than 15 counterparties, other than security based swap dealers, over the prior 12 months.
– The person must not enter into more than 20 swaps as a dealer over the prior 12 months.

Concerns about regulatory certainty

Although Chairman Gensler reaffirmed at the meeting that the CFTC had no intention to capture commercial end users, Commissioner O’Malia expressed disappointment in his opening statement at the lack of clarity provided by the swap dealer definition, stating that it would not provided the regulatory certainty such end users have been seeking. In particular, Commissioner O’Malia stated a preference for clear safe harbors by which end users could be assured they would avoid swap dealer designation.

Special concerns about electric industry

Of special interest to the electric industry, Commissioner O’Malia expressed concern at the meeting regarding electric producers and merchants, such as in PJM, being captured as swap dealers under the proposed rule. In response, CFTC staff answered that they realized that the electricity market is “very different” because of, e.g., the need to manage load on transmission lines, and expressed confidence that they could accommodate those differences under the proposed rule. The CFTC expressed interest in its Q&A on the proposed rule in hearing from the public on this and other specific issues.

Major Swap Participant

The Commission proposed more concrete criteria for the term “major swap participant” (“MSP”), setting dollar amount thresholds for uncollateralized exposures in swaps at levels the Commission anticipates will capture only a “handful” of entities (due to Dodd-Frank’s requirement that only non-swap dealers posing systemic risk be categorized as MSPs). The primary criterion by which an entity can be categorized as an MSP is holding a “substantial position” in swaps in any major swap category, not including positions held for “hedging or mitigating commercial risk,” where a substantial position can be either:

– current uncollateralized exposure of $1 billion in either credit swaps, equity swaps, or commodity swaps, or $3 billion in rate swaps (the four “major categories” of swaps); or
– current uncollateralized exposure plus potential future exposure (based on risk formulas) of $2 billion in either credit swaps, equity swaps, or commodity swaps, or $6 billion in rate swaps.

A second criterion by which an entity can be categorized as an MSP is holding outstanding swaps that create substantial counterparty exposure, for which the Commission proposed thresholds of a current uncollateralized exposure of $5 billion or a sum of current uncollateralized exposure and potential future exposure of $8 billion.

The third criterion by which an entity can be categorized as an MSP is being a highly leveraged financial entity maintaining a substantial position in swaps (as defined above) in any major category of swaps, where the Commission has proposed that “highly leveraged” be taken to mean a ratio of total liabilities to equity of either 8 to 1 or 15 to 1.

Hedging or mitigating commercial risk

Of comfort to end users, the Commission has proposed an expansive definition of “hedging or mitigating commercial risk,” which would encompass any swap position that:

– qualifies as bona fide hedging under CEA rules;
– qualifies for hedging treatment under Financial Accounting Standards Board Statement No. 133; or
– is economically appropriate to the reduction of risks in the conduct and management of a commercial enterprise, where the risks arise in the ordinary course of business from:
— a potential change in the value of (i) assets that a person owns, produces, manufactures, processes or merchandises, (ii) liabilities that a person incurs, or (iii) services that a person provides or purchases;
— a potential change in value related to any of the foregoing arising from foreign exchange rate movements; or
— a fluctuation in interest, currency, or foreign exchange rate exposures arising from a person’s assets or liabilities.

Comment Period

The Commission is expected to provide a 60 day period for comment on the proposed rule after its publication. In general, the Commissioners expressed a sense of relief in “getting the definitions out there” for public comment and welcomed public input in the weeks to come, noting that the rule is only a “proposal” at this stage. Given the attention that the swap dealer and MSP definitions have already been given by companies and industry groups in pre-proposal comments and visits to the CFTC, the proposed rule is certain to receive numerous comments and generate significant debate in the weeks to come.

Section 731 of the Dodd-Frank Act amends the Commodity Exchange Act, or CEA, by inserting Sections 4s(f) and 4s(g), which establish reporting, recordkeeping, and daily trading records requirements for swap dealers and major swap participants.

 Section 4s(f)(1) requires swap dealers and major swap participants to “make such reports as are required by [CFTC] rule or regulation regarding the transactions and positions and financial condition of the registered swap dealer or major swap participant.”  Under sections 4s(f)(1)(B)(i) and (ii), the CFTC is authorized to prescribe the books and records requirements of “all activities related to the business of swap dealers or major swap participants,” regardless of whether or not the entity has a prudential regulator.  All books and records are required to be open to inspection and examination by any representative of the CFTC.  Under section 4s(f)(1)(D), books and records relating to security-based swap agreements also must be open to inspection and examination by the SEC.

 Section 4s(g)(1) requires swap dealers and major swap participants to “maintain daily trading records of the swaps of the registered swap dealer and major swap participant and all related records (including records of related cash and forward transactions) and recorded communications, including electronic mail, instant messages, and recordings of telephone calls.”    Section 4s(g)(3) requires that daily trading records for swaps be identifiable by counterparty, and section 4s(g)(4) specifies that swap dealers and major swap participants maintain a “complete audit trail for conducting comprehensive and accurate trade reconstructions.”

The CFTC has issued proposed rules to implement these provisions of the Dodd-Frank Act.

 Proposed Record Keeping Rules

 The records that would be required under the proposed rules would include full and complete transaction and position information for all swap activities, including all documents on which trade information is originally recorded.  Transaction records would be required to be maintained in a manner that is identifiable and searchable by transaction and by counterparty.

 The proposed rules also would require that swap dealers and major swap participants keep basic business records, including, among other things, minutes from meetings of the entity’s governing body, organizational charts, and audit documentation.  Additionally, certain financial records, records of complaints against personnel, and marketing materials would be required to be kept. Finally, swap dealers and major swap participants would be required to maintain records of information required to be submitted to a swap data repository and reported on a real-time public basis.

 Proposed Daily Trading Record Rule

 The proposed rules would prescribe daily trading record requirements, including records of trade information related to pre-execution, execution, and post-execution data.  Pre-execution trade data would include records of all oral and written communications that lead to the execution of a swap.  The proposed rules would require swap dealers and major swap participants to ensure that they preserve all information necessary to conduct a comprehensive and accurate trade reconstruction for each swap, and that they maintain each trade record as a separate electronic file identifiable and searchable by transaction and counterparty.  Execution trade data would include all terms of each executed swap and the date and time, to the nearest minute, that each swap was executed.  Post-execution data would include records of all confirmations, reconciliations, and margining of swaps.

 Under the proposed rules, records to be retained also would include information related to cash or forward transactions used to hedge, mitigate the risk of, or offset any swap held by the swap dealer or major swap participant.

 Proposed Retention and Inspection Rules

 The CFTC also is proposing that all records be kept in accordance with existing CFTC records rules, with the exception of records of, or related to, swap transactions, which would be retained for a longer period of time.

 Check dodd-frank.com frequently for updates on the Dodd-Frank Act and other important securities law matters.

Securities Investor Protection Corporation, or SIPC, has filed with the SEC a proposed bylaw change.  The SEC has published a notice to solicit comments on the proposed bylaw change from interested persons.

Section 4(c)(2) of the Securities Investor Protection Act of 1970, or SIPA, requires SIPC to impose assessments upon its member broker-dealers deemed necessary and appropriate to establish and maintain a broker-dealer liquidation fund administered by SIPC and to repay any borrowings by SIPC used to liquidate a broker-dealer.  Pursuant to this authority, SIPC collects an annual assessment from its members.  The amount of the annual assessment is prescribed by SIPA and the SIPC bylaws.  

 The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 amended SIPA to change the minimum assessment from an amount not to exceed $150 to an amount not to exceed 0.02 percent of the gross revenues from the securities business of the SIPC member.  Under Article 6 of the SIPC bylaws, SIPC must assess its members a minimum amount ($150) unless certain conditions apply. Because in some cases an assessment of $150 would exceed 0.02 percent of the gross revenues, the SIPC assessment bylaw must be amended to be consistent with the Dodd-Frank Act.

 Check dodd-frank.com frequently for updates on the Dodd-Frank Act and other important securities law matters.

The Federal Reserve Board has posted detailed information on its public website about more than 21,000 individual credit and other transactions conducted to stabilize markets during the recent financial crisis, restore the flow of credit to American families and businesses, and support economic recovery and job creation in the aftermath of the crisis.

In the Fed’s view, many of the transactions, conducted through a variety of broad-based lending facilities, provided liquidity to financial institutions and markets through fully secured, mostly short-term loans.  The Fed believes purchases of agency mortgage-backed securities, or MBS, supported mortgage and housing markets, lowered longer-term interest rates, and fostered economic growth.  The Fed also believes dollar liquidity swap lines with foreign central banks helped stabilize dollar funding markets abroad, thus contributing to the restoration of stability in U.S. markets.  Other transactions provided liquidity to particular institutions whose disorderly failure could have severely stressed an already fragile financial system.

As provided by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, transaction-level details now are posted from December 1, 2007, to July 21, 2010, in the following programs:

•Asset-Backed Commercial Paper Money Market Mutual Fund Liquidity Facility (AMLF)

•Term Asset-Backed Securities Loan Facility (TALF)

•Primary Dealer Credit Facility (PDCF)

•Commercial Paper Funding Facility (CPFF)

•Term Securities Lending Facility (TSLF)

•TSLF Options Program (TOP)

•Term Auction Facility (TAF)

•Agency MBS purchases

•Dollar liquidity swap lines with foreign central banks

•Assistance to Bear Stearns, including Maiden Lane

•Assistance to American International Group, including Maiden Lane II and III

Check dodd-frank.com frequently for updates on the Dodd-Frank Act and other important securities law matters.

With little fanfare, the CFTC has issued a notice seeking public input on the interagency study required by section 750 of the Dodd-Frank Act with respect to oversight of existing and prospective carbon markets. The study is intended to ensure “an efficient, secure, and transparent carbon market, including oversight of spot markets and derivative markets.” Though not having the near-term regulatory impact of the numerous recent and imminent proposed rules issued by the CFTC to implement Dodd-Frank, the study has the potential to inform regulation of what could be a fundamental market in the future economy (despite a noticeable loss of momentum, at least at the federal level, towards a regulatory regime over carbon emissions)

The interagency working group, headed by the Chairman of the CFTC, also includes the Secretary of Agriculture, Secretary of the Treasury, Chairman of the SEC, Administrator of the EPA, Chairman of FERC, Chairman of the FTC, and Administrator of the Energy Information Administration. The CFTC seeks public comment on the following topics and questions:

1. Section 750 of the Dodd-Frank indicates that the goals of regulatory oversight should be to ensure that carbon markets are efficient, secure and transparent. What other regulatory objectives, if any, should guide the oversight of such markets?

2. What are the basic economic features that might be incorporated in a carbon market that would have an effect on market oversight provisions—e.g., the basic characteristics of allowances, frequency of allocations and compliance obligations, banking of allowances, borrowing of allowances, cost containment mechanisms, etc.?

3. Do the regulatory objectives differ with respect to the oversight of spot market trading of carbon allowances compared to the oversight of derivatives market trading in these instruments? If so, explain further.

4. Are additional statutory provisions necessary to achieve the desired regulatory objectives for carbon markets beyond those provided in the Commodity Exchange Act, as amended by the Dodd-Frank Act, or other federal acts that may be applicable to the trading of carbon allowances?

5. What regulatory methods or tools would be appropriate to achieve the desired regulatory objectives?

6. What types of data or information should be required of market participants in order to allow adequate oversight of a carbon market? Should reporting requirements differ for separate types of market participants?

7. To what extent is it desirable or not desirable to have a unified regulatory oversight program that would oversee activity in both the secondary carbon market and in the derivatives markets?

8. To what extent, if any, and how should a U.S. regulatory program interact with the regulatory programs of carbon markets in foreign jurisdictions?

9. What has been the experience of state regulators in overseeing trading in the regional carbon markets and how would that instruct the design of a federal oversight program?

10. Based on trading experiences in SO2 and NOX emission allowances what regulatory oversight would market participants and market operators, respectively, recommend?

11. Who are the primary participants in the current primary environmental markets? Who are the primary participants in the current secondary allowance and derivatives environmental markets?

Comments must be received on or before December 17, 2010, and the interagency group must submit its study to Congress no later than January 17, 2010.

There are plenty of new things to remember with the Dodd-Frank Act.  But there were pretty far reaching changes to proxy statements last year as well.  In particular, the director qualification disclosure required by Item 401(e) of Regulation S-K has drawn SEC comment.  About all you can tell from the SEC comments we reviewed is the SEC wants specific, not general disclosures.  A review of current disclosures indicates issuers often like to speak in generalities, leaving this as an open point between the SEC and the registrant community.

 SEC Comments

 1.         Hicks Acquisition Company II—September 20, 2010

SEC Comment: We note your response to comment 35 in our letter dated July 27, 2010 and the revised disclosure. Your revised disclosure, however, focuses on the “qualifications to serve on the board of directors” without also discussing why each director or director nominee was chosen to be on the board of directors. Therefore, please revise to briefly discuss the specific experience, qualifications, attributes or skills that led to the conclusion that the director or director nominee should serve as a director. Please see Item 401(e)(1) of Regulation S-K.

 Issuer Response: The Company notes the Staff’s comment and has revised pages 79 and 81 of the Amendment to identify the experience, qualifications, attributes and skills that led the Company to conclude that each director or director nominee should serve as a director.

 2.         Primedia Inc.—-September 29, 2010

SEC Comment:  We note your statement that the biography of each director contains information regarding the person’s knowledge, experience and skills that caused the board to determine that the person should serve as director. Please revise your disclosure to specifically discuss, in the biography of each director, the specific experience, qualifications, attributes or skills that led to the conclusion that the person should serve as a director for the company on an individual basis. Your current disclosure is too general. Refer to Item 401(e)(1) of Regulation S-K and Regulation S-K Compliance & Disclosure Interpretation 116.05.

 Issuer Response:  We would direct the Staff to the disclosure contained on page 15 of the Company’s 2010 Proxy Statement (under the heading “Stockholder Recommendations or Nominations for Director”) with respect to the specific experience, qualifications, attributes and skills that led to the conclusion that each of its director nominees should serve (and were qualified to serve pursuant to the Company’s Corporate Governance Guidelines) as directors of the Company.  This information was placed in this section of our Proxy Statement (and not in the directors’ biographical section of the Proxy Statement) because it corresponds to the specific qualifications required of our directors pursuant to our Corporate Governance Guidelines.  We believed placing this information in this location increased the overall readability of Proposal 1 and emphasized its relevance and importance as it related to compliance with our Corporate Governance Guidelines.

 However, in future filings, beginning with its 2011 Proxy Statement, the Company will revise its disclosure to specifically discuss – in the biography of each director nominee – the specific experience, qualifications, attributes or skills that led to the conclusion that the nominee should serve as a director for the Company on an individual basis.

 Using the disclosure contained in the Company’s 2010 Proxy Statement on pages 6-8 and page 15 as an example, the Company’s disclosure in future filings is expected to include text similar to the following under each individual director’s biography  [Balance omitted]

 3.         SHG Services Inc.—August 24, 2010

SEC Comment:  We note your disclosure that the key experience, qualifications and skills that are expected to be important for persons who will serve on Sabra’s board of directors are the same as those applicable to New Sun. Please revise your disclosure for each director and person nominated or chosen to become a director of Sabra, to briefly discuss the specific experience, qualifications, attributes or skills that led to the conclusion that the person should serve as a director for Sabra. Your reference to the disclosure for New Sun is not sufficient. Please see Item 401(e)(1) of Regulation S-K. 

Issuer Response: The section titled “Management of Sabra—Directors” beginning on page 192 has been revised to provide the disclosure required by Item 401(e)(1) of Regulation S-K.

 4.         Terrex—August 10, 2010

 SEC Comment:  We note the disclosure regarding the qualifications of your directors to serve on your board on pages 4 through 7 of the section “Proposal 1: Election of Directors” of your proxy statement which has been incorporated by reference into your Form 10-K.  It appears that you included only general disclosure in response to Item 401(e) of Regulation S-K.  In future filings, please be more specific in describing the specific experience, qualifications, attributes or skills that led the Board to conclude that each director should serve on your board.

 Issuer Response:  While the Company believes its disclosure regarding the qualifications of its directors complies in all material respects with the disclosure requirements of Item 401(e) of Regulation S-K, it will review its disclosure regarding the qualifications of its directors in its future filings and consider adding more specific information in describing the experience, qualifications, attributes or skills that led the board of directors to conclude that each director should serve on the Company’s board.

 Examples of Disclosure

1.         Dell Inc.

Michael S. Dell.  Director Qualifications

  •   Leadership Experience — Founder, Chairman
            and CEO of Dell
  • Industry Experience — Knowledge of new and
            existing technologies, Dell’s industry and Dell’s
            customers

 Sam Nunn  Director Qualifications

  •      Leadership Experience — CEO of the Nuclear  Threat Initiative; partner of King & Spalding;   extensive experience as a director of global  companies in technology, energy and   consumer products
  •      Finance Experience — Served on the audit  committees of Dell and Scientific Atlanta, Inc.
  •      Industry Experience — Experience as a director   of global companies in technology, energy and   consumer products
  •     Government Experience — United States Senator

 2.         International Business Machines Corporation (IBM)

 W.J. McNerney, Jr.

  • Global business experience as chairman, president and chief executive officer of The Boeing Company
  • Manufacturing and technology experience as former chairman and chief executive officer of 3M Company and senior executive of General Electric Company
  • Affiliation with leading business and public policy association (Business Roundtable)
  • Outside board experience as a director of The Procter & Gamble Company
  • Experience as a university trustee

 S.J. Palmisano

  • Global business experience as chairman, president and chief executive officer of IBM
  • Affiliation with leading business and public policy associations (Business Roundtable and member of the Executive Committee of the Council on Competitiveness)
  • Outside board experience as a director of Exxon Mobil Corporation

 3.         Intel

 Susan L. Decker has been a director of Intel since 2006 and an Entrepreneur-in-Residence at Harvard Business School in Cambridge, Massachusetts, since 2009, where she is involved in case development activities, works with students, and helps develop and teach the Silicon Valley Immersion Program for Harvard Business School students. Ms. Decker served as President of Yahoo! Inc., a global Internet company in Sunnyvale, California, from 2007 to 2009; Executive Vice President of the Advertiser and Publisher Group of Yahoo! Inc. from 2006 to 2007; and Executive Vice President of Finance and Administration, and Chief Financial Officer (CFO) of Yahoo! Inc. from 2000 to 2007. Prior to joining Yahoo!, Ms. Decker was with the Donaldson, Lufkin & Jenrette investment banking firm for 14 years, most recently as the global director of equity research. Ms. Decker is also a member of Berkshire Hathaway Inc. and Costco Wholesale Corporation boards of directors and a member of those companies’ nominating and governance committees. Ms. Decker also served as a member of the board of directors of Pixar Animation Studios from 2004 to 2006.

 Ms. Decker’s experience as president of a global Internet company provides expertise in corporate leadership, financial management, and Internet technology. In her role as a CFO, Ms. Decker was responsible for finance, human resources, legal, and investor relations functions, and she played a significant role in developing business strategy, which experience supports the Board’s efforts in overseeing and advising on strategy and financial matters. In addition, Ms. Decker’s 12 years as a financial analyst and having served on the Financial Accounting Standards Advisory Council for a four-year term from 2000 to 2004, enables her to offer valuable perspectives on Intel’s corporate planning, budgeting, and financial reporting. As a director for other multinational companies, Ms. Decker also provides cross-board experience.

 John J. Donahoe has been a director of Intel since 2009 and President and CEO of eBay Inc., a global online marketplace in San Jose, California, since 2008. Mr. Donahoe joined eBay in 2005 as President of eBay Marketplaces, responsible for eBay’s global e-commerce businesses. In this role, he focused on expanding eBay’s core business, which accounts for a large percentage of the company’s revenue. Prior to joining eBay, Mr. Donahoe was the Worldwide Managing Director for Bain & Company, a worldwide management consulting firm based in Boston, Massachusetts, from 2000 to 2005, where he oversaw Bain’s 30 offices and 3,000 employees. In addition to serving on eBay Inc.’s board of directors, Mr. Donahoe is on the board of trustees of Dartmouth College.

 Mr. Donahoe brings senior leadership, strategic, and marketing expertise to the Board from his current position as CEO of a major Internet company and his prior work as a management consultant and leader of a global business consulting firm. In his role at eBay, Mr. Donahoe oversaw a number of strategic acquisitions, bringing business development and M&A experience to the Board.

 4.         Berkshire Hathaway

 The Governance, Compensation and Nominating Committee has established certain attributes that it seeks in identifying candidates for directors. In particular they look for individuals who have very high integrity, business savvy, an owner-oriented attitude and a deep genuine interest in Berkshire. These are the same attributes that Warren Buffett, Berkshire’s Chairman and CEO, believes to be essential if one is to be an effective member of the Board of Directors. In considering candidates for director, the Governance, Compensation and Nominating Committee considers the entirety of each candidate’s credentials in the context of these attributes. In the judgment of the Governance, Compensation and Nominating Committee as well as that of the Board as a whole, each of the candidates being nominated for director possesses such attributes . . .

 WARREN E. BUFFETT, age 79, has been a director of the Corporation since 1965 and has been its Chairman and Chief Executive Officer since 1970. Mr. Buffett is a controlling person of the Corporation. He is also a director of The Washington Post Company and until February 2006, he was also a director of The Coca-Cola Company.

 5.         Apple

 Albert A. Gore, Jr. has served as Chairman of Current TV since 2002, Chairman of Generation Investment Management since 2004 and a partner of Kleiner Perkins Caufield & Byers since 2007. Mr. Gore also is Chairman of the Alliance for Climate Protection.

 Steven P. Jobs is one of the Company’s co-founders and currently serves as its Chief Executive Officer. Mr. Jobs also has been a director of The Walt Disney Company (“Disney”) since May 2006.

  Check dodd-frank.com frequently for updates on the Dodd-Frank Act and other important securities law matters.

Title IV of the Dodd-Frank Act includes many of the amendments to the Investment Advisers Act implemented by the Dodd-Frank Act.   These amendments include provisions that reallocate responsibility for oversight of investment advisers by delegating generally to the states responsibility over certain mid-sized advisers, i.e., those that have between $25 and $100 million of assets under management.    These provisions will require a significant number of advisers currently registered with the SEC to withdraw their registrations with the SEC and to switch to registration with one or more state securities authorities.  An analysis of the SEC’s proposed rules (Release No. IA-3110) is set forth below.

Section 203A of the Investment Advisers Act generally prohibits an investment adviser regulated by the state in which it maintains its principal office and place of business from registering with the SEC unless it has at least $25 million of assets under management, and preempts certain state laws regulating advisers that are registered with the SEC. This provision, enacted in 1996 as part of the National Securities Markets Improvement Act, or NSMIA, eliminated the duplicative regulation of advisers by the SEC and state securities authorities, making the states the primary regulators of smaller advisers and the SEC the primary regulator of larger advisers.

Section 410 of the Dodd-Frank Act creates a new group of “mid-sized advisers” and shifts primary responsibility for their regulatory oversight to the state securities authorities. It does this by prohibiting from registering with the SEC an investment adviser that is registered as an investment adviser in the state in which it maintains its principal office and place of business and that has assets under management between $25 million and $100 million.   Unlike a small adviser, a mid-sized adviser is not prohibited from registering with the SEC: 

  •  if the adviser is not required to be registered as an investment adviser with the securities commissioner (or any agency or office performing like functions) of the state in which it maintains its principal office and place of business;
  • if registered, the adviser would not be subject to examination as an investment adviser by that securities commissioner; or
  • if the adviser is required to register in 15 or more states. 

Section 203A(c) of the Investment Advisers Act, which was not amended by the Dodd-Frank Act, permits the SEC to exempt advisers from the prohibition on SEC registration, including small and mid-sized advisers, if the application of the prohibition from registration would be “unfair, a burden on interstate commerce, or otherwise inconsistent with the purposes” of section 203A.   Under this authority, the SEC has adopted six exemptions from the prohibition on registration.  As a consequence of section 410 of the Dodd-Frank Act, the SEC estimates that approximately 4,100 SEC-registered advisers will be required to withdraw their registrations and register with one or more state securities authorities.

Transition to State Registration

The SEC is proposing a new rule, rule 203A-5, which would require each investment adviser registered with the SEC on July 21, 2011 to file an amendment to its Form ADV no later than August 20, 2011, 30 days after the July 21, 2011 effective date of the amendments to section 203A, and to report the market value of its assets under management determined within 30 days of the filing.   This filing would be the first step by which an adviser no longer eligible for SEC registration would transition to state registration.  It would require each investment adviser to determine whether it meets the revised eligibility criteria for SEC registration, and would provide the SEC and the state regulatory authorities with information necessary to identify those advisers required to transition to state registration and to understand the reason for the transition or basis for continued SEC registration.   An adviser no longer eligible for SEC registration would have to withdraw its SEC registration by filing Form ADV-W no later than October 19, 2011 (60 days after the required refiling of Form ADV).   The SEC expects to cancel the registration of advisers that fail to file an amendment or withdraw their registrations in accordance with the rule.   Finally, the proposed rule would permit the SEC to postpone the effectiveness of, and impose additional terms and conditions on, an adviser’s withdrawal from SEC registration if the SEC institutes certain proceedings before the adviser files Form ADV-W.

The SEC proposes to use its exemptive authority under section 203A(c) to provide for a transitional process with two “grace periods,” the first providing 30 days from the July 21, 2011 effective date of the Dodd-Frank Act for an adviser to determine whether it is eligible for SEC registration and to file an amended Form ADV, and the second providing an additional 60 days (following the end of the first 30-day period) for an adviser to register in the states and to arrange for its associated persons to qualify for investment adviser representative registration, which may include preparing for and passing an examination, before withdrawing from SEC registration.   The SEC is proposing a 90-day transition process, which is shorter than the 180-day transition period that SEC rules currently provide for advisers switching from SEC to state registration, in order to promptly implement this Congressional mandate and accommodate the processing of renewals and fees for state registration and licensing via the IARD system, while allowing for an orderly transition.

Since the enactment of the Dodd-Frank Act, SEC staff have received inquiries from state-registered advisers and advisers registering for the first time expressing concern that they might be required to register with the SEC (because their assets under management are more than $30 million) only to have to withdraw their registration next year when the SEC implements section 410 of the Dodd-Frank Act (raising the threshold for SEC registration to $100 million of assets under management). To avoid such regulatory burdens, the SEC will not object if any state-registered or newly registering adviser is not registered with the SEC if, on or after January 1, 2011 until the end of the transition process (which would be October 19, 2011 under proposed rule 203A-5), the adviser reports on its Form ADV that it has between $30 million and $100 million of assets under management, provided that the adviser is registered as an investment adviser in the state in which it maintains its principal office and place of business, and it has a reasonable belief that it is required to be registered with, and is subject to examination as an investment adviser by, that state.   Such advisers should remain registered with, or in the case of a newly registering adviser, apply for registration with, the state securities authorities.

Amendments to Form ADV

Item 2 of Part 1A of Form ADV requires each investment adviser applying for registration to indicate its basis for registration with the SEC and to report annually whether it is eligible to remain registered.  Item 2 reflects the current statutory threshold for registration with the SEC as well as SEC current rules. The SEC proposes to revise Item 2 to reflect the new statutory threshold and the revisions the SEC proposes to make to related rules as a result of the Dodd-Frank Act.   More specifically, the SEC proposes to amend Item 2 to require each adviser registered with the SEC (and each applicant for registration) to identify whether, under section 203A, as amended, it is eligible to register with the SEC because it:

  •  is a large adviser (having $100 million or more of regulatory assets under management);
  • is a mid-sized adviser that does not meet the criteria for state registration and examination;
  • has its principal office and place of business in Wyoming (which does not regulate advisers) or outside the United States;
  •  meets the requirements for one or more of the exemptive rules under section 203A of the Act (as proposed to be amended);
     is an adviser (or subadviser) to a registered investment company;
  •  is an adviser to a business development company and has at least $25 million of regulatory assets under management; or 
  •  has some other basis for registering with the SEC.

The SEC also expects to modify the IARD system, which is used to register investment advisers with applicable state or federal authorities, to prevent an applicant from registering with the SEC, and an adviser from continuing to be registered with the SEC, unless it represents that it meets the eligibility criteria set forth in the Investment Advisers Act and the SEC rules.

Assets Under Management

In most cases, the amount of assets an adviser has under management will determine whether the adviser must be registered with the SEC or the states. Section 203A(a)(2) of the Investment Advisers Act defines “assets under management” as the “securities portfolios” with respect to which an adviser provides “continuous and regular supervisory or management services.”   Instructions to Form ADV provide advisers with guidance in applying this provision, including a list of certain types of assets that advisers may (but are not required to) include.  The SEC is proposing revisions to these instructions in order to implement a uniform method to calculate assets under management that can be used under the Investment Advisers Act for purposes in addition to assessing whether an adviser is eligible to register with the SEC.  The SEC also proposes to amend rule 203A-3 to continue to require that the calculation of “assets under management” for purposes of Section 203A be the calculation of the securities portfolios with respect to which an investment adviser provides continuous and regular supervisory or management services, as reported on the investment adviser’s Form ADV.

The SEC proposes to require all advisers to include in their regulatory assets under management securities portfolios for which they provide continuous and regular supervisory or management services, regardless of whether these assets are proprietary assets, assets managed without receiving compensation, or assets of foreign clients, all of which an adviser currently may (but is not required to) exclude.   In addition, the SEC would not allow an adviser to subtract outstanding indebtedness and other accrued but unpaid liabilities, which remain in a client’s account and are managed by the adviser.

The SEC is proposing changes in order to preclude some advisers from excluding certain assets from their calculation and thus remaining below the new assets threshold for registration with the SEC. The changes would result in some advisers reporting greater assets under management than they do today, but the assets the SEC would require advisers to include in their assets under management are, in fact, assets managed by the adviser and allowing advisers to exclude such assets may have substantially more significant regulatory consequences than when the rules were first adopted. The SEC believes the management of such assets, for example, may suggest that the adviser’s activities are of national concern or have implications regarding the reporting for the assessment of systemic risk, a matter Congress considered important in enacting amendments to the Investment Advisers Act in the Dodd-Frank Act.  The SEC, moreover, is proposing that advisers be required to include these assets so that the calculations would be more consistent among advisers.  The SEC also believes that requiring that these assets be included in the calculation would better achieve the objective of the Dodd-Frank Act regarding which advisers must register with the SEC, which advisers must register with the states, and which advisers are exempt from SEC registration.

Switching Between State and SEC Registration

Rule 203A-1 currently contains two means of preventing an adviser from having to switch frequently between state and SEC registration as a result of changes in the value of its assets under management or the departure of one or more clients.   First, the rule provides for a $5 million buffer that permits an investment adviser having between $25 million and $30 million of assets under management to remain registered with the states and does not subject the adviser to cancellation of its SEC registration until its assets under management fall below $25 million.   Second, the rule permits an adviser to rely on the firm’s assets under management reported annually in the firm’s annual updating amendments for purposes of determining its eligibility to register with the SEC, allowing an adviser to avoid the need to change registration status based upon fluctuations that occur during the course of the year.  If an adviser is no longer eligible for SEC registration, the rule provides a 180-day grace period from the adviser’s fiscal year end to allow it to switch to state registration.

The SEC proposal would amend rule 203A-1 to eliminate the $5 million buffer for advisers having between $25 million and $30 million of assets under management, but to retain the ability of an adviser to avoid the need to change registration status based upon intra-year fluctuations in its assets under management for purposes of determining its eligibility to register with the SEC.   The SEC believes the current buffer seems unnecessary in light of Congress’s determination generally to require most advisers having between $30 million and $100 million of assets under management to be registered with the states.   Moreover, at this time, the SEC believes  it is not necessary to increase the $100 million threshold in order to provide a similar buffer for advisers crossing that threshold and becoming registered with the SEC under the amended statutory provisions.   The SEC believes that the requirement that advisers only assess their eligibility for registration annually and the grace periods provided to switch to and from state registration will be sufficient to address the concern that an investment adviser with assets under management approaching $100 million or affected by changes in other eligibility requirements will frequently have to switch between state and federal registration.

Exemptions from the Prohibition on Registration with the SEC

Section 203A(c) of the Investment Advisers Act provides the SEC with the authority to permit investment advisers to register with the SEC even though they would be prohibited from doing so otherwise.  Under this authority, the SEC has adopted six exemptions in rule 203A-2 from the prohibition on registration.   The SEC believes its authority under this provision was unchanged by the Dodd-Frank Act and therefore extends to the new mid-sized adviser category in section 203A(a)(2) of the Act, as amended.   As a result, as currently drafted, each of these exemptions would, by its terms, apply to mid-sized advisers–exempting them from the prohibition on registering with the SEC if they meet the requirements of rule 203A-2. The SEC is proposing amendments to three of the exemptions to reflect developments since their adoption, including the enactment of the Dodd-Frank Act.

NRSROs.  The SEC proposes an amendment to eliminate the exemption in rule 203A-2(a) from the prohibition on SEC registration for nationally recognized statistical rating organizations, or NRSROs. Since the SEC adopted this exemption, Congress amended the Investment Advisers Act to exclude NRSROs from the Investment Advisers Act and provided for a separate regulatory regime for NRSROs under the Securities Exchange Act of 1934, or Exchange Act. Only one NRSRO remains registered as an investment adviser under the Act and reports that it has more than $100 million of assets under management and thus would not rely on the exemption.

Pension Consultants.  The SEC proposes to amend the exemption available to pension consultants in rule 203A-2(b) to increase the minimum value of plan assets from $50 million to $200 million.   Pension consultants typically do not have “assets under management,” but the SEC has required these advisers to register with it because their activities have a direct effect on the management of large amounts of pension plan assets. The SEC had the threshold at $50 million of plan assets for these advisers to ensure that, in order to register with the SEC, a pension consultant’s activities are significant enough to have an effect on national markets.  The SEC proposes to increase this threshold to $200 million in light of Congress’s determination to increase from $25 million to $100 million the amount of “assets under management” that requires all advisers to register with the SEC.   This threshold would maintain a ratio to the statutory threshold that is the same as the ratio of the $50 million plan asset threshold and $25 million assets under management threshold currently in place. As a result, advisers currently relying on the pension consultant  exemption advising plan assets of less than $200 million may be required to register with one or more states.

Multi-state Advisers.   The SEC proposes to amend the multi-state adviser exemption to align the rule with the multi-state exemption Congress built into the mid-sized adviser provision under section 410 of the Dodd-Frank Act.    Under rule 203A-2(e), the prohibition on registration with the SEC does not apply to an investment adviser that is required to register in 30 or more states. Once registered with the SEC, the adviser remains eligible for SEC registration as long as it would be obligated, absent the exemption, to register in at least 25 states.   The Dodd- Frank Act provides that a mid-sized adviser that otherwise would be prohibited may register with the SEC if it would be required to register with 15 or more states.

The SEC believes that this provision of the Dodd-Frank Act reflects a Congressional view on the number of states with which an adviser must be required to be registered before the regulatory burdens associated with such regulation warrant registration solely with the SEC and application of the preemption provision.   Thus, the SEC is reconsidering the threshold of its multi-state exemption, and proposes to amend rule 203A-2(e) to permit all investment advisers required to register as an investment adviser with 15 or more states to register with the SEC.   The SEC also proposes to eliminate the provision in the rule that permits advisers to remain registered until the number of states in which they must register falls below 25 states, and it is not proposing a similar cushion for the 15-state threshold.   The Dodd-Frank Act contains no such cushion for mid-sized advisers.   The SEC also believes that the requirement that advisers only assess their eligibility for registration annually and the grace periods provided to switch to and from state registration may be sufficient to address the concern that an investment adviser required to register in 15 states would frequently have to switch between state and federal registration.

Elimination of Safe Harbor.  Rule 203A-4 provides a safe harbor from SEC registration for an investment adviser that is registered with the state securities authority of the state in which it has its principal office and place of business, based on a reasonable belief that it is prohibited from registering with the SEC because it does not have sufficient assets under management.  Investment advisers have not, in the SEC’s experience, asserted, as a defense, the availability of this safe harbor, which protects only against enforcement actions by the SEC and not any private actions, and the SEC is not proposing to extend it to the higher threshold established by the Dodd-Frank Act.  This rule was designed for smaller advisory businesses with assets under management of less than $30  million, which may not employ the same tools or otherwise have a need to calculate assets as precisely as advisers with greater assets under management.  The SEC views it as unlikely that an adviser would be reasonably unaware that it has more than $100 million of regulatory assets under management when it is required to report its regulatory assets under management on Form ADV.

Mid-Sized Advisers.  Section 203A(a)(2) of the Investment Advisers Act, as amended by the Dodd-Frank Act, will prohibit mid-sized advisers from registering with the SEC, but only if:

  • the adviser is required to be registered as an investment adviser with the securities commissioner (or any agency or office performing like functions) of the state in which it maintains its principal office and place of business; and 
  • if registered, the adviser would be subject to examination as an investment adviser by such commissioner, agency, or office.

 Mid-Sized Advisers—Required to be Registered. The Dodd-Frank Act does not explain how to determine whether a mid-sized adviser is “required to be registered” or is “subject to examination” by a particular state securities authority.   The SEC proposes to incorporate into Form ADV an explanation of how it construes these provisions.  Under section 203A(a)(1) of the Investment Advisers Act, an adviser that is not regulated or required to be regulated as an investment adviser in the state in which it has its principal office and place of business must register with the SEC regardless of the amount of assets it has under management.   The SEC has interpreted “regulated or required to be regulated” to mean that a state has enacted an investment adviser statute, regardless of whether the adviser is actually registered in that state.   This interpretation has two relevant consequences. First, advisers with a principal office and place of business in Wyoming, or in foreign countries, must register with the SEC regardless of whether they have assets under management and would not otherwise be eligible for one of  the SEC’s exemptive rules.  Second, some smaller advisers exempt from state registration are not subject to registration with either the SEC or any of the states.

The SEC believes that Congress was concerned with the latter consequence when it passed this provision of the Dodd-Frank Act.   The bills originally introduced and passed in the House and Senate increased up to $100 million the threshold for SEC registration under the “regulated or required to be regulated” standard that is used today in section 203A(a)(1). Accordingly, some advisers with a significant amount (more than $25 million) of assets under management could have escaped oversight by either the SEC or any of the states by taking advantage of state registration exemptions.   Perhaps to avoid this possibility, the Conference Committee included a provision to prohibit a mid-sized adviser from registering with the SEC if, among other things, it is “required to be registered” as an adviser with the state securities authority where it maintains its principal office and place of business.   A mid-sized adviser that can and does rely on an exemption under the law of the state in which it has its principal office and place of business such that it is “not required to be registered” with the state securities authority must register with the SEC, unless an exemption from registration with the SEC otherwise is available.   An adviser not registered under a state adviser statute in contravention of the statute, however, would not be eligible for registration with the SEC.

The SEC is proposing changes to Form ADV to require a mid-sized adviser filing with the SEC to affirm, upon application and annually thereafter, that it is not required to be registered as an adviser with the state securities authority in the state where it maintains its principal office and place of business.  An adviser reporting that it is no longer able to make such an affirmation thereafter would have 180 days from its fiscal year end to withdraw from SEC registration.  Thus, the rule would operate to permit an adviser to rely on this affirmation reported in its annual updating amendments for purposes of determining its eligibility to register with the SEC.

Mid-Sized Advisers-Subject to Examination.  Not all state securities authorities conduct compliance examinations of advisers registered with them.  Congress therefore determined to require a mid-sized adviser to register with the SEC if the adviser is not subject to examination as an investment adviser by the state in which the adviser has its principal office and place of business.

The SEC does not intend either to review or evaluate each state’s investment adviser examination program.  Instead, the SEC  will correspond with each state securities commissioner (or official with similar authority) and request that each advise the SEC whether an investment adviser registered in the state would be subject to examination as an investment adviser by that state’s securities commissioner (or agency or office with similar authority). The SEC believes that the states, being most familiar with their own circumstances, are in the best position to determine whether advisers in their state are subject to examination.   Using the responses that the SEC receives, the SEC will identify for advisers filing on IARD the states in which the securities commissioner did not certify that advisers are subject to examination and incorporate that list into IARD to ensure that only mid-sized advisers with their principal office and place of business in one of those states (or, as discussed above, mid-sized advisers that are not registered with the states where they maintain their principal office and place of business) will register with the SEC.

Check dodd-frank.com frequently for updates on the Dodd-Frank Act and other important securities law matters.

The CFTC has issued a proposed rule concerning the rights of counterparties of swap dealers (“SDs”) and major swap participants (“MSPs”) with respect to the segregation of collateral supplied for margining, guaranteeing, or securing uncleared swaps. Under the proposed rule:

– An SD or MSP must notify each counterparty at the beginning of a swap transaction that the counterparty has the right to require segregation of the funds or other property that it supplies to margin, guarantee, or secure its obligations; and
– At the request of the counterparty, the SD or MSP must segregate such funds or other property with an independent third party.

The right to segregation applies only to initial margin (defined as “an amount calculated based on anticipated exposure to future changes in the value of a swap”), not variation margin (defined as “an amount calculated to cover the current exposure arising from changes in the market value of the position since the trade was executed or the previous time the position was marked to market”).

The notification must be made to certain senior decisionmakers, i.e. the Chief Risk Officer, CEO, or highest level decisionmaker for the counterparty, in that order of preference. The SD or MSP must obtain confirmation of receipt of its notification and the election to require segregation or not, before the terms of the swap are confirmed, and maintain records of such confirmation and election. An SD or MSP is required to notify a particular counterparty of its segregation right only once in any calendar year. A counterparty’s election to require segregation, or not, may be changed at its discretion upon written notice.

Turnover of control of segregated margin by the custodian, shall be made promptly to either party upon presentation of a statement in writing, made under oath or penalty of perjury, stating that such party is entitled to such control pursuant to an agreement between the parties. The other party shall be immediately notified of the turnover. Any other withdrawal of such margin shall only be made pursuant to an agreement between the parties, with immediate notification given to the non-withdrawing party. Initial margin may only be invested consistent with the CFTC’s rule 1.25 governing exchange-traded futures, though the parties have flexibility to structure the investment within the confines of the rule. The SD or MSP must report to a counterparty quarterly regarding its compliance with the agreement’s collateral requirements with respect to unsegregated margin.

The rules also clarify that securities held in a portfolio margining account carried as a futures account are customer property and that owners of those accounts are customers for purposes of the commodity broker provisions of the Bankruptcy Code. Finally, the rules change the time period in CFTC regulations during which the Commission can approve a transfer of customer funds in a commodity broker bankruptcy from five business days to seven calendar days.

On Tuesday, November 23, Treasury Secretary Tim Geithner, in his capacity as chairperson of the Financial Stability Oversight Council, or FSOC, hosted the second meeting of the FSOC at the U.S. Department of the Treasury.  The meeting included a closed press session and an open press session, which consisted of an update on mortgage servicing and foreclosure issues and votes on several resolutions to advance implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act.  These resolutions included approval of the publication of an Advance Notice of Proposed Rulemaking regarding authority to designate financial market utilities as systemically important, the Council’s committee structure and minutes of the inaugural Council meeting.

 Sections 112(a)(2)(J) and 804(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act give the FSOC the authority to identify and designate as systemically important a financial market utility if the FSOC determines that the failure, or a disruption to the functioning, of a financial market utility could create or increase the risk of significant liquidity or credit problems spreading among financial institutions or markets and thereby threaten the stability of the financial system of the United States.

 Section 803(6) of the Dodd-Frank Act generally defines a “financial market utility” as any person that manages or operates a multilateral system for the purpose of transferring, clearing, or settling payments, securities, or other financial transactions among financial institutions or between financial institutions and that person.  The utility-like arrangements used to settle financial transactions, whether involving payments, securities, derivatives, or other similar financial instruments, are critical parts of the financial infrastructure for the economy and are integral to the soundness of the financial system and overall economic performance.    The importance of these arrangements has been highlighted by the recent period of market stress.  The Advance Notice of Proposed Rulemaking  discussed above invites public comment on the criteria and analytical framework that should be applied by the FSOC in designating financial market utilities under the Dodd-Frank Act.

 The CFTC issued this statement on the Advance Notice of Proposed Rulemaking.

 Check dodd-frank.com frequently for updates on the Dodd-Frank Act and other important securities law matters.