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Court Recognizes "Commercial Reasonableness" in Finding for Bank in Data Security Breach Case People's United Bank, the nation's largest regional bank headquartered in New England, won a key victory in a data security breach case that had been followed for two years by the national banking associations, as well as by American Banker and other industry publications. Patco Construction Company Inc., a commercial customer of the bank, brought suit alleging that the bank was responsible when third-party cybercriminals allegedly breached Patco's computer system, stealing passwords and challenge question answers allegedly through the use of keylogging malware, and executed a series of fraudulent withdrawals from Patco's checking account. Patco filed suit against People's United in 2009, alleging negligence, breach of contract, breach of fiduciary duty, unjust enrichment and conversion. In May 2011, Magistrate Judge John Rich recommended that the court grant People's United's motion for summary judgment on all six counts and deny Patco's cross-motion for summary judgment. In a detailed 70-page opinion, Magistrate Judge Rich found that People's United had "demonstrated that the security procedures that it had in place as of May 2009 were commercially reasonable" under Article 4A of the UCC and that the rest of Patco's claims were preempted. On August 3, 2011, Judge Brock Hornby upheld the Magistrate's recommendation. "This was one of the first cases of its kind in the United States to deal with online hacking of bank accounts," said Goodwin partner Brenda Sharton, who led the litigation team representing People's United. "People's United Bank's online banking security system is state of the art and among the best in use. Through this decision, the court recognized the commercial reasonableness of that system under the law." You can contact Brenda at 617.570.1214 to discuss this case. |
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Federal Banking Agencies Issue Guidance Concerning S&P's Downgrade of U.S. Debt The FRB, FDIC, OCC and NCUA (the "Federal Banking Agencies") jointly issued regulatory guidance in connection with Standard & Poor's announcement that it had lowered the long-term credit rating on debt issued by the U.S. government and federal agencies from AAA to AA+. The Federal Banking Agencies stated that for risk-based capital purposes, the risk weights "for Treasury securities and other securities issued or guaranteed by the U.S. government, government agencies and government-sponsored entities will not change." The Federal Banking Agencies also noted that the treatment of the foregoing securities under federal banking regulations, e.g., Regulation W, will also be unaffected. |
ISSUES DURING THE MOST RECENT QUARTER
- SEC Proposes Changes to Advisers Act Rule Permitting Performance Fees
- SEC Seeks Public Comment on Short Sale Disclosure
- FDIC Board of Directors Approves Notice of Proposed Rulemaking on Retail Foreign Exchange Transactions That is Similar to NPR on the Same Topic Previously Issued by OCC
- FINRA Fines Broker-Dealer for Late Delivery of Mutual Fund Prospectuses to Customers
- SEC Chairman Testifies that Private Adviser Registration under Dodd-Frank Expected to Occur in Q1 2012
- SEC Requests Public Comment on the Feasibility of Assigned Credit Ratings for Structured Finance Products
Comments are due by September 13, 2011.
- CFTC Extends Comment Period for Proposed Margin Regulations
- CFTC Reopens and Extends Dodd-Frank Act Rulemaking Comment Periods
- Reporting of Securities Holdings on Treasury Form SLT to Commence with Reports as of September 30 instead of June 30
- SEC Settles Administrative Proceedings Based on Omissions in Adviser's Responses to RFPs
- OCC Issues Interpretive Letter Concluding that a National Bank May Dispose of DPC Real Estate by Transferring the Property to the Bank's Community Development Corporation Subsidiary
- CFTC Codifies Exemptive Relief for Commodity ETFs
- SEC Approves FINRA Proposal to Amend New Rule 5131 to Simplify the Spinning Prohibition and Delay Implementation of Two Provisions
Implementation of FINRA Rule 5131's spinning prohibition and its prohibition on the acceptance of market orders for the purchase of IPO shares in the secondary market prior to the commencement of trading for the IPO shares was delayed until September 26, 2011.
- SEC Proposes Additional Regulations for Credit Rating Agencies and for Third-Party Due Diligence Providers, Issuers and Underwriters of Asset-Backed Securities
- Recent Bank Regulatory Developments Affecting Preemption
- SEC Adopts Final Rules Implementing Dodd-Frank Whistleblower Provisions
The final rules are effective August 12, 2011.
- FINRA Announces Extension of Implementation Date of New Know Your Customer and Suitability Rules and Provides Answers to Frequently Asked Questions
The implementation date of new FINRA Rules 2090 (Know Your Customer) and 2111 (Suitability) was extended to July 9, 2012.
- SEC Proposes New Condition for Rule 506 Safe Harbor That Would Disqualify Offerings Involving Felons and Other "Bad Actors"
- OCC Issues Notice of Proposed Rulemaking to Prepare for Integration of OTS on July 21, 2011
- Bank Regulators Propose Margin and Capital Requirements for Registered Swap Dealers, Major Swap Participants, Security-Based Swap Dealers, and Major Security-Based Swap Participants
- FinCEN Notice 2011-1 (Revised) Extending Filing Date Related to Exceptions for Certain Individuals with Signature or Other Authority over a Foreign Financial Account
The date for filing FBARs by certain individuals with signature or other authority only over certain foreign financial accounts was extended to June 30, 2012.
- FINRA Issues Complaint Charging Sole Distributor of REIT with Soliciting Investors without Fully Investigating Suitability and Related FINRA Advertising Rule Violations
- Basel Committee Modifies Credit Valuation Adjustment Capital Charge
- Barney Frank Urges SEC to Consider Fiduciary Standard Appropriate for Broker-Dealers and Not Merely Based on Investment Adviser Model
- Agencies Extend Risk Retention Rulemaking Comment Period
- DOL Proposes Extension of Effective Dates for New Service Provider and Participant-Level Retirement Plan Fee Disclosure Requirements
- FDIC Board of Directors Creates Advisory Committee on Systemic Resolutions
- FDIC Issues Letter Encouraging FDIC-Supervised Banks Who Have Class of Equity Securities Registered with FDIC to Use FDIC Electronic System to Provide Securities Exchange Act and FDIC Securities Filings to the FDIC
- Federal District Court Grants Motion to Dismiss Shareholder Suit Alleging Excessive Advisory and Distribution Fees, Citing Failure to Plead Facts Supporting the Gartenberg Factors
- Narrowly Divided U.S. Supreme Court Issues Decision in Securities Fraud Suit Against Mutual Fund Adviser
- SEC to Consider Final Action on Advisers Act Rulemaking under Dodd-Frank at June 22 Open Meeting
- Federal Banking Agencies Propose Guidance on Stress Testing for Large Banking Firms
- Federal Banking Agencies Issue Guidance on Advanced Measurement Approaches for Operational Risk
- SEC Staff Issues No-Action Letter Providing Relief to Investment Adviser and Mutual Funds Seeking to Invest in Certain Foreign Funds in Excess of the Limits of Section 12(d)(1)(A) of the Investment Company Act of 1940
- SEC Readopts Existing Section 13 and 16 Beneficial Ownership Rules to Clarify Their Continuing Application to Security-Based Swaps in Light of New SEC Rulemaking Powers under Dodd-Frank
- FRB Issues Proposed Rule that Would Require the Largest Bank Holding Companies to Submit Annual Capital Plans for FRB Review
- FINRA Encourages Firms to Assist Investment Advisers Seeking to Identify Participant-Directed Government Plan Investors in their Mutual Funds for Pay-to-Play Compliance
- CFTC Votes to Postpone Effectiveness of Various Elements of New Dodd-Frank Regulatory Framework for Swaps; SEC to Take Related Action for Security-Based Swaps
The CFTC's postponements extend until December 31, 2011 or the effectiveness of final related rulemaking, whichever is earlier.
- IRS Extends Filing Date for Prior Year FBARs for Individuals with Signature Authority; FinCEN Extends FBAR Filing Date for Officers or Employees of Registered Investment Advisers
The deadline for filing FBARs with respect to 2009 or earlier calendar years for a person having signature authority over, but no financial interest in, a foreign financial account in 2009 or earlier calendar years was extended until November 1, 2011. For an officer or employee of a registered investment adviser with signature or other authority over, but no financial interest in, a foreign financial account of a person that is not a registered investment company, the deadline for filing an FBAR for calendar year 2010 and FBARs for calendar year 2009 or earlier calendar years for which the filing deadline was properly deferred under Notice 2009-62 or Notice 2010-23 was extended to June 30, 2012.
- Banking Agencies Adopt Final Rule Establishing Risk-Based Capital Floor for Large Financial Institutions
The final rule became effective July 28, 2011.
- NASAA Revises Proposed State Adviser Registration Exemptions
- Massachusetts Issues Consent Order Alleging Selective Dissemination of Unpublished Short Term Trading Ideas to Favored Customers by the Research Department of a Major Broker-Dealer
- FRB Adopts Final Rule and Interim Final Rule Concerning Capital Requirements for Small Bank Holding Companies Organized as S-Corps or in Mutual Form
- CFTC Issues Proposed Order Postponing Effectiveness of Various Elements of New Dodd-Frank Regulatory Framework for Swaps; SEC Issues Exemptive Relief Regarding Compliance with Dodd-Frank Security-Based Swap Provisions
- New ERISA Litigation Update Available
- SEC Adopts Dodd-Frank Related Rules Affecting Investment Advisers
In general, obligations under the new Advisers Act rules take effect as of March 30, 2012. For additional detail, particularly regarding other transition-related dates, see the June 30, 2011 Goodwin Procter Alert.
- SEC Adopts Amendments to Form ADV and Changes to "Pay-to-Play" Regulations in Connection with Dodd-Frank Act Implementation
An adviser filing an amendment to Form ADV after January 1, 2012 must use revised Form ADV. All advisers registered on January 1, 2012, regardless of their fiscal year end, must file an amendment on revised Form ADV by March 30, 2012. An investment adviser filing an initial application for registration after the IARD is re-programmed to accommodate filing of the revised Form ADV (perhaps as early as November 2011 according to the adopting release) must use the revised form.
- Two Federal District Courts Dismiss Derivative Suits Based on Alleged Unlawfulness of Asset-Based Rule 12b-1 Payments by Mutual Fund Distributor to Selling Broker-Dealers
- Court of Appeals Rules for FDIC in Unpublished Opinion Concerning Losses to FDIC Insurance Fund as a Result of Negligent Audit of First National Bank of Keystone
- FINRA Proposes Adoption of Supervision Rules Consolidating Rules from NASD and NYSE Rulebooks and Other Guidance
Comments are due by August 26, 2011.
- Bank Regulators Extend Comment Period on Proposed Rulemaking on Margin and Capital Requirements for Registered Swap Dealers, Major Swap Participants, Security-Based Swap Dealers and Major Security-Based Swap Participants
- Oversight Body of Basel Committee Issues Statement on Capital Surcharge for Largest Banks
- Massachusetts State Court Dismisses Two Separate Class Actions by Holders of Common Shares in Closed-End Funds Alleging Injury from Redemption of the Funds' Auction Rate Preferred Shares
- FFIEC Releases Supplemental Guidance on Internet Banking Authentication
- SEC Settles Administrative Proceedings Over Pricing of Securities Backed by Subprime Mortgages in Mutual Fund and Closed-End Fund Portfolios as FINRA and State Authorities Take Related Action
- SEC Proposes Amendments to Broker-Dealer Financial Reporting Rule
- Goodwin Procter Issues Client Alert on New SEC Rules Implementing Advisers Act Registration Exemptions
The Final FRB Rules become effective on October 1, 2011.
- Final Form SLT and Instructions Now Available
- Goodwin Procter Issues Consumer Financial Services Alert Concerning FRB's Adoption of Final Durbin Rules
- SEC Issues Additional Guidance, Interim Relief and Exemptions Relating to Security-Based Swaps
- SEC Approves Extension of Temporary Exemptions for Eligible Credit Default Swaps to Facilitate Operation of Central Counterparties to Clear and Settle Credit Default Swaps
The new expiration date is April 16, 2012.
- SEC Issues Temporary Exemption from Registration Requirements for Entities Providing Certain Clearing Services for Security-Based Swaps
- SEC Proposes Business Conduct Standards for Security-Based Swap Dealers and Major Security-Based Swap Participants
Comments are due by August 29, 2011.
- CFTC Posts Discussion Draft of Proposed No-Action Relief Designed to Ease Dodd-Frank Transition
- Federal Banking Agencies Issue Guidance on Counterparty Credit Risk Management
- FDIC Brings Suit Against Former CEO of IndyMac; Former Washington Mutual Senior Officers Seek Dismissal of FDIC Suit on Grounds That They Should Be Protected by Business Judgment Rule
- SEC Staff Provides No-Action Relief from Advisers Act Registration to a Wholly-Owned Subsidiary Advising Foreign Funds Whose Sole Investor Was Adviser's Parent
- SEC Staff Posts FAQ on Mid-Sized Advisers
- FinCEN Issues Guidance on Actions that U.S. Financial Institutions Should Take as a Result of Recent Unrest in Syria
- SEC Provides Limited Extension of Compliance Deadlines for New Risk Management Control Requirements Applicable to Broker-Dealers with Market Access
The new compliance date for (i) the requirements of Rule 15c3-5 under the Securities Exchange Act of 1934 as they apply with respect to fixed income securities and (ii) the requirements of Rule 15c3-5(c)(1)(i) as it applies with respect to all securities, is November 30, 2011.
- SEC Issues Order Increasing "Qualified Client" Income and Net Worth Thresholds for Performance-Based Advisory Fees
The order is effective as of September 19, 2011.
- FRB Issues Final Rule Repealing Regulation Q, Effective July 21, 2011
- California Provides Continuation of its Private Adviser Exemption from State Registration through January 17, 2012
- GAO Issues Report on Feasibility of Forming a Self-Regulatory Organization to Provide Primary Oversight of Private Fund Investment Advisers
- SEC Adopts Interim Final Rule for Broker-Dealers Engaging in Retail Foreign Exchange Transactions
Comments are due 60 days after the interim rule's publication in the Federal Register.
- GAO Issues Report Stating Bank Regulators Will Need More Information from Banks to be Able to Enforce Volcker Rule in Effective Manner
- DOL Extends Effective Dates for New Service Provider and Participant-Level Retirement Plan Fee Disclosure Requirements
The effective date for the interim final regulation under Section 408(b)(2) of ERISA that would require enhanced disclosure from certain pension plan service providers to plan fiduciaries was extended to April 1, 2012. The deadline for certain retirement plans with participant-directed investments to disclose specified plan fee, expense and other information to participants as required under the DOL's participant-level fee disclosure regulations was extended to the later of (i) 60 days following the date the new Section 408(b)(2) requirements become effective, or (ii) 60 days after the first day of the first plan year of the plan beginning after November 1, 2011.
- CFTC Adopts Anti-Fraud Rules
The rules become effective August 15, 2011.
- CFTC Issues Order Postponing Effectiveness of Various Elements of New Dodd-Frank Regulatory Framework for Swaps
The postponements extend until December 31, 2011 or the effectiveness of final related rulemaking, whichever is earlier.
- CFTC Staff Grants No-Action Relief Designed to Ease Dodd-Frank Transition
The no-action relief expires upon the earlier of the effective date of rulemaking that completes the definition of relevant terms in accordance with the Dodd-Frank Act or December 31, 2011.
- SEC Grants Accelerated Approval for Continuation of FINRA Pilot Regarding Margin Requirements for Credit Default Swaps
As extended, the pilot program will expire on January 17, 2012. Comments on the proposed changes to FINRA Rule 4240 are due by August 10, 2011.
- SEC Grants Accelerated Approval for Rule Temporarily Limiting the Application of FINRA Rules with respect to Security-Based Swaps
- OCC Issues Final Rule Implementing Dodd-Frank Preemption Provisions
The final rule became effective on July 21, 2011.
- D.C. Circuit Court of Appeals Vacates Proxy Access Rules
- FRB Issues SR Letter Related to Savings and Loan Holding Company Deregistration
- FSOC Releases Final Rule on Designating Financial Market Utilities as Systemically Important
- CFTC, SEC and FRB Submit Report on Risk Management Supervision of Designated Clearing Entities
- GAO Issues Report on FRB's Emergency Lending During Recent Economic Crisis
- OCC Issues Interim Final Rule Republishing and Renumbering OTS Regulations That It Will Enforce
The interim final rule became effective on July 21, 2011; comments are due by October 11, 2011.
- SEC Adopts Reporting Regime for Large Traders
Rule 13h-1 under the Securities Exchange Act of 1934 becomes effective October 3, 2011. Large traders must comply with the Rule's identification requirements beginning December 2, 2011. Broker-dealers must begin complying with the Rule's requirements to maintain records, report transaction data when requested, and monitor large trader activity beginning April 30, 2012.
- FINRA Proposes to Consolidate and Amend NASD and NYSE Communications Rules and Interpretations
Comments are due by August 24, 2011.
- GAO Issues Report on Mutual Fund Advertising
- Financial Stability Oversight Council Issues its First Annual Report; Finds that U.S. Financial Stability Improved, but U.S. Still Faces Challenges to Recovery
- SEC Adopts New Short Form Criteria That Eliminate Credit Ratings
The revised criteria and related rule and form changes are effective September 2, 2011 except for the rescission of Form F-9 and amendments to remove references to Form F-9 in other rules and forms, which will be effective December 31, 2012.
- SEC Re-Proposes Requirements Related to Shelf Registration of Asset-Backed Securities
Comments are due by October 4, 2011.
- SEC Staff Issues Report on Sales of Structured Securities Products to Retail Investors
- CFTC Adopts Rules Implementing New Framework for Approving New Products and Rule Changes Submitted by Registered Entities
The rules are effective September 26, 2011.
- SEC Staff Provides Additional Relief from Advisers Act Custody Rule Requirements Affecting Use of Auditors to Broker-Dealers
- OCC Adopts Final Retail Forex Rule; FRB Issues Proposed Retail Forex Rule
Comments on the FRB Proposed Rule are due by October 11, 2011.
Goodwin Procter LLP is one of the nation's leading law firms, with a team of 700 attorneys and offices in Boston, Los Angeles, New York, San Diego, San Francisco and Washington, D.C. The firm combines in-depth legal knowledge with practical business experience to deliver innovative solutions to complex legal problems. We provide litigation, corporate law and real estate services to clients ranging from start-up companies to Fortune 500 multinationals, with a focus on matters involving private equity, technology companies, real estate capital markets, financial services, intellectual property and products liability.
This article, which may be considered advertising under the ethical rules of certain jurisdictions, is provided with the understanding that it does not constitute the rendering of legal advice or other professional advice by Goodwin Procter LLP or its attorneys. © 2011 Goodwin Procter LLP. All rights reserved.
publications.
Patco Construction Company Inc., a commercial customer of the bank, brought suit alleging that the bank was responsible when third-party cybercriminals allegedly breached Patco's computer system, stealing passwords and challenge question answers allegedly through the use of keylogging malware, and executed a series of fraudulent withdrawals from Patco's checking account. Patco filed suit against People's United in 2009, alleging negligence, breach of contract, breach of fiduciary duty, unjust enrichment and conversion.
In May 2011, Magistrate Judge John Rich recommended that the court grant People's United's motion for summary judgment on all six counts and deny Patco's cross-motion for summary judgment. In a detailed 70-page opinion, Magistrate Judge Rich found that People's United had "demonstrated that the security procedures that it had in place as of May 2009 were commercially reasonable" under Article 4A of the UCC and that the rest of Patco's claims were preempted. On August 3, 2011, Judge Brock Hornby upheld the Magistrate's recommendation.
"This was one of the first cases of its kind in the United States to deal with online hacking of bank accounts," said Goodwin partner Brenda Sharton, who led the litigation team representing People's United. "People's United Bank's online banking security system is state of the art and among the best in use. Through this decision, the court recognized the commercial reasonableness of that system under the law." You can contact Brenda at 617.570.1214 to discuss this case.
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Federal Banking Agencies Issue Guidance Concerning S&P's Downgrade of U.S. Debt The FRB, FDIC, OCC and NCUA (the "Federal Banking Agencies") jointly issued regulatory guidance in connection with Standard & Poor's announcement that it had lowered the long-term credit rating on debt issued by the U.S. government and federal agencies from AAA to AA+. The Federal Banking Agencies stated that for risk-based capital purposes, the risk weights "for Treasury securities and other securities issued or guaranteed by the U.S. government, government agencies and government-sponsored entities will not change." The Federal Banking Agencies also noted that the treatment of the foregoing securities under federal banking regulations, e.g., Regulation W, will also be unaffected. |
ISSUES DURING THE MOST RECENT QUARTER
- SEC Proposes Changes to Advisers Act Rule Permitting Performance Fees
- SEC Seeks Public Comment on Short Sale Disclosure
- FDIC Board of Directors Approves Notice of Proposed Rulemaking on Retail Foreign Exchange Transactions That is Similar to NPR on the Same Topic Previously Issued by OCC
- FINRA Fines Broker-Dealer for Late Delivery of Mutual Fund Prospectuses to Customers
- SEC Chairman Testifies that Private Adviser Registration under Dodd-Frank Expected to Occur in Q1 2012
- SEC Requests Public Comment on the Feasibility of Assigned Credit Ratings for Structured Finance Products
Comments are due by September 13, 2011.
- CFTC Extends Comment Period for Proposed Margin Regulations
- CFTC Reopens and Extends Dodd-Frank Act Rulemaking Comment Periods
- Reporting of Securities Holdings on Treasury Form SLT to Commence with Reports as of September 30 instead of June 30
- SEC Settles Administrative Proceedings Based on Omissions in Adviser's Responses to RFPs
- OCC Issues Interpretive Letter Concluding that a National Bank May Dispose of DPC Real Estate by Transferring the Property to the Bank's Community Development Corporation Subsidiary
- CFTC Codifies Exemptive Relief for Commodity ETFs
- SEC Approves FINRA Proposal to Amend New Rule 5131 to Simplify the Spinning Prohibition and Delay Implementation of Two Provisions
Implementation of FINRA Rule 5131's spinning prohibition and its prohibition on the acceptance of market orders for the purchase of IPO shares in the secondary market prior to the commencement of trading for the IPO shares was delayed until September 26, 2011.
- SEC Proposes Additional Regulations for Credit Rating Agencies and for Third-Party Due Diligence Providers, Issuers and Underwriters of Asset-Backed Securities
- Recent Bank Regulatory Developments Affecting Preemption
- SEC Adopts Final Rules Implementing Dodd-Frank Whistleblower Provisions
The final rules are effective August 12, 2011.
- FINRA Announces Extension of Implementation Date of New Know Your Customer and Suitability Rules and Provides Answers to Frequently Asked Questions
The implementation date of new FINRA Rules 2090 (Know Your Customer) and 2111 (Suitability) was extended to July 9, 2012.
- SEC Proposes New Condition for Rule 506 Safe Harbor That Would Disqualify Offerings Involving Felons and Other "Bad Actors"
- OCC Issues Notice of Proposed Rulemaking to Prepare for Integration of OTS on July 21, 2011
- Bank Regulators Propose Margin and Capital Requirements for Registered Swap Dealers, Major Swap Participants, Security-Based Swap Dealers, and Major Security-Based Swap Participants
- FinCEN Notice 2011-1 (Revised) Extending Filing Date Related to Exceptions for Certain Individuals with Signature or Other Authority over a Foreign Financial Account
The date for filing FBARs by certain individuals with signature or other authority only over certain foreign financial accounts was extended to June 30, 2012.
- FINRA Issues Complaint Charging Sole Distributor of REIT with Soliciting Investors without Fully Investigating Suitability and Related FINRA Advertising Rule Violations
- Basel Committee Modifies Credit Valuation Adjustment Capital Charge
- Barney Frank Urges SEC to Consider Fiduciary Standard Appropriate for Broker-Dealers and Not Merely Based on Investment Adviser Model
- Agencies Extend Risk Retention Rulemaking Comment Period
- DOL Proposes Extension of Effective Dates for New Service Provider and Participant-Level Retirement Plan Fee Disclosure Requirements
- FDIC Board of Directors Creates Advisory Committee on Systemic Resolutions
- FDIC Issues Letter Encouraging FDIC-Supervised Banks Who Have Class of Equity Securities Registered with FDIC to Use FDIC Electronic System to Provide Securities Exchange Act and FDIC Securities Filings to the FDIC
- Federal District Court Grants Motion to Dismiss Shareholder Suit Alleging Excessive Advisory and Distribution Fees, Citing Failure to Plead Facts Supporting the Gartenberg Factors
- Narrowly Divided U.S. Supreme Court Issues Decision in Securities Fraud Suit Against Mutual Fund Adviser
- SEC to Consider Final Action on Advisers Act Rulemaking under Dodd-Frank at June 22 Open Meeting
- Federal Banking Agencies Propose Guidance on Stress Testing for Large Banking Firms
- Federal Banking Agencies Issue Guidance on Advanced Measurement Approaches for Operational Risk
- SEC Staff Issues No-Action Letter Providing Relief to Investment Adviser and Mutual Funds Seeking to Invest in Certain Foreign Funds in Excess of the Limits of Section 12(d)(1)(A) of the Investment Company Act of 1940
- SEC Readopts Existing Section 13 and 16 Beneficial Ownership Rules to Clarify Their Continuing Application to Security-Based Swaps in Light of New SEC Rulemaking Powers under Dodd-Frank
- FRB Issues Proposed Rule that Would Require the Largest Bank Holding Companies to Submit Annual Capital Plans for FRB Review
- FINRA Encourages Firms to Assist Investment Advisers Seeking to Identify Participant-Directed Government Plan Investors in their Mutual Funds for Pay-to-Play Compliance
- CFTC Votes to Postpone Effectiveness of Various Elements of New Dodd-Frank Regulatory Framework for Swaps; SEC to Take Related Action for Security-Based Swaps
The CFTC's postponements extend until December 31, 2011 or the effectiveness of final related rulemaking, whichever is earlier.
- IRS Extends Filing Date for Prior Year FBARs for Individuals with Signature Authority; FinCEN Extends FBAR Filing Date for Officers or Employees of Registered Investment Advisers
The deadline for filing FBARs with respect to 2009 or earlier calendar years for a person having signature authority over, but no financial interest in, a foreign financial account in 2009 or earlier calendar years was extended until November 1, 2011. For an officer or employee of a registered investment adviser with signature or other authority over, but no financial interest in, a foreign financial account of a person that is not a registered investment company, the deadline for filing an FBAR for calendar year 2010 and FBARs for calendar year 2009 or earlier calendar years for which the filing deadline was properly deferred under Notice 2009-62 or Notice 2010-23 was extended to June 30, 2012.
- Banking Agencies Adopt Final Rule Establishing Risk-Based Capital Floor for Large Financial Institutions
The final rule became effective July 28, 2011.
- NASAA Revises Proposed State Adviser Registration Exemptions
- Massachusetts Issues Consent Order Alleging Selective Dissemination of Unpublished Short Term Trading Ideas to Favored Customers by the Research Department of a Major Broker-Dealer
- FRB Adopts Final Rule and Interim Final Rule Concerning Capital Requirements for Small Bank Holding Companies Organized as S-Corps or in Mutual Form
- CFTC Issues Proposed Order Postponing Effectiveness of Various Elements of New Dodd-Frank Regulatory Framework for Swaps; SEC Issues Exemptive Relief Regarding Compliance with Dodd-Frank Security-Based Swap Provisions
- New ERISA Litigation Update Available
- SEC Adopts Dodd-Frank Related Rules Affecting Investment Advisers
In general, obligations under the new Advisers Act rules take effect as of March 30, 2012. For additional detail, particularly regarding other transition-related dates, see the June 30, 2011 Goodwin Procter Alert.
- SEC Adopts Amendments to Form ADV and Changes to "Pay-to-Play" Regulations in Connection with Dodd-Frank Act Implementation
An adviser filing an amendment to Form ADV after January 1, 2012 must use revised Form ADV. All advisers registered on January 1, 2012, regardless of their fiscal year end, must file an amendment on revised Form ADV by March 30, 2012. An investment adviser filing an initial application for registration after the IARD is re-programmed to accommodate filing of the revised Form ADV (perhaps as early as November 2011 according to the adopting release) must use the revised form.
- Two Federal District Courts Dismiss Derivative Suits Based on Alleged Unlawfulness of Asset-Based Rule 12b-1 Payments by Mutual Fund Distributor to Selling Broker-Dealers
- Court of Appeals Rules for FDIC in Unpublished Opinion Concerning Losses to FDIC Insurance Fund as a Result of Negligent Audit of First National Bank of Keystone
- FINRA Proposes Adoption of Supervision Rules Consolidating Rules from NASD and NYSE Rulebooks and Other Guidance
Comments are due by August 26, 2011.
- Bank Regulators Extend Comment Period on Proposed Rulemaking on Margin and Capital Requirements for Registered Swap Dealers, Major Swap Participants, Security-Based Swap Dealers and Major Security-Based Swap Participants
- Oversight Body of Basel Committee Issues Statement on Capital Surcharge for Largest Banks
- Massachusetts State Court Dismisses Two Separate Class Actions by Holders of Common Shares in Closed-End Funds Alleging Injury from Redemption of the Funds' Auction Rate Preferred Shares
- FFIEC Releases Supplemental Guidance on Internet Banking Authentication
- SEC Settles Administrative Proceedings Over Pricing of Securities Backed by Subprime Mortgages in Mutual Fund and Closed-End Fund Portfolios as FINRA and State Authorities Take Related Action
- SEC Proposes Amendments to Broker-Dealer Financial Reporting Rule
- Goodwin Procter Issues Client Alert on New SEC Rules Implementing Advisers Act Registration Exemptions
The Final FRB Rules become effective on October 1, 2011.
- Final Form SLT and Instructions Now Available
- Goodwin Procter Issues Consumer Financial Services Alert Concerning FRB's Adoption of Final Durbin Rules
- SEC Issues Additional Guidance, Interim Relief and Exemptions Relating to Security-Based Swaps
- SEC Approves Extension of Temporary Exemptions for Eligible Credit Default Swaps to Facilitate Operation of Central Counterparties to Clear and Settle Credit Default Swaps
The new expiration date is April 16, 2012.
- SEC Issues Temporary Exemption from Registration Requirements for Entities Providing Certain Clearing Services for Security-Based Swaps
- SEC Proposes Business Conduct Standards for Security-Based Swap Dealers and Major Security-Based Swap Participants
Comments are due by August 29, 2011.
- CFTC Posts Discussion Draft of Proposed No-Action Relief Designed to Ease Dodd-Frank Transition
- Federal Banking Agencies Issue Guidance on Counterparty Credit Risk Management
- FDIC Brings Suit Against Former CEO of IndyMac; Former Washington Mutual Senior Officers Seek Dismissal of FDIC Suit on Grounds That They Should Be Protected by Business Judgment Rule
- SEC Staff Provides No-Action Relief from Advisers Act Registration to a Wholly-Owned Subsidiary Advising Foreign Funds Whose Sole Investor Was Adviser's Parent
- SEC Staff Posts FAQ on Mid-Sized Advisers
- FinCEN Issues Guidance on Actions that U.S. Financial Institutions Should Take as a Result of Recent Unrest in Syria
- SEC Provides Limited Extension of Compliance Deadlines for New Risk Management Control Requirements Applicable to Broker-Dealers with Market Access
The new compliance date for (i) the requirements of Rule 15c3-5 under the Securities Exchange Act of 1934 as they apply with respect to fixed income securities and (ii) the requirements of Rule 15c3-5(c)(1)(i) as it applies with respect to all securities, is November 30, 2011.
- SEC Issues Order Increasing "Qualified Client" Income and Net Worth Thresholds for Performance-Based Advisory Fees
The order is effective as of September 19, 2011.
- FRB Issues Final Rule Repealing Regulation Q, Effective July 21, 2011
- California Provides Continuation of its Private Adviser Exemption from State Registration through January 17, 2012
- GAO Issues Report on Feasibility of Forming a Self-Regulatory Organization to Provide Primary Oversight of Private Fund Investment Advisers
- SEC Adopts Interim Final Rule for Broker-Dealers Engaging in Retail Foreign Exchange Transactions
Comments are due 60 days after the interim rule's publication in the Federal Register.
- GAO Issues Report Stating Bank Regulators Will Need More Information from Banks to be Able to Enforce Volcker Rule in Effective Manner
- DOL Extends Effective Dates for New Service Provider and Participant-Level Retirement Plan Fee Disclosure Requirements
The effective date for the interim final regulation under Section 408(b)(2) of ERISA that would require enhanced disclosure from certain pension plan service providers to plan fiduciaries was extended to April 1, 2012. The deadline for certain retirement plans with participant-directed investments to disclose specified plan fee, expense and other information to participants as required under the DOL's participant-level fee disclosure regulations was extended to the later of (i) 60 days following the date the new Section 408(b)(2) requirements become effective, or (ii) 60 days after the first day of the first plan year of the plan beginning after November 1, 2011.
- CFTC Adopts Anti-Fraud Rules
The rules become effective August 15, 2011.
- CFTC Issues Order Postponing Effectiveness of Various Elements of New Dodd-Frank Regulatory Framework for Swaps
The postponements extend until December 31, 2011 or the effectiveness of final related rulemaking, whichever is earlier.
- CFTC Staff Grants No-Action Relief Designed to Ease Dodd-Frank Transition
The no-action relief expires upon the earlier of the effective date of rulemaking that completes the definition of relevant terms in accordance with the Dodd-Frank Act or December 31, 2011.
- SEC Grants Accelerated Approval for Continuation of FINRA Pilot Regarding Margin Requirements for Credit Default Swaps
As extended, the pilot program will expire on January 17, 2012. Comments on the proposed changes to FINRA Rule 4240 are due by August 10, 2011.
- SEC Grants Accelerated Approval for Rule Temporarily Limiting the Application of FINRA Rules with respect to Security-Based Swaps
- OCC Issues Final Rule Implementing Dodd-Frank Preemption Provisions
The final rule became effective on July 21, 2011.
- D.C. Circuit Court of Appeals Vacates Proxy Access Rules
- FRB Issues SR Letter Related to Savings and Loan Holding Company Deregistration
- FSOC Releases Final Rule on Designating Financial Market Utilities as Systemically Important
- CFTC, SEC and FRB Submit Report on Risk Management Supervision of Designated Clearing Entities
- GAO Issues Report on FRB's Emergency Lending During Recent Economic Crisis
- OCC Issues Interim Final Rule Republishing and Renumbering OTS Regulations That It Will Enforce
The interim final rule became effective on July 21, 2011; comments are due by October 11, 2011.
- SEC Adopts Reporting Regime for Large Traders
Rule 13h-1 under the Securities Exchange Act of 1934 becomes effective October 3, 2011. Large traders must comply with the Rule's identification requirements beginning December 2, 2011. Broker-dealers must begin complying with the Rule's requirements to maintain records, report transaction data when requested, and monitor large trader activity beginning April 30, 2012.
- FINRA Proposes to Consolidate and Amend NASD and NYSE Communications Rules and Interpretations
Comments are due by August 24, 2011.
- GAO Issues Report on Mutual Fund Advertising
- Financial Stability Oversight Council Issues its First Annual Report; Finds that U.S. Financial Stability Improved, but U.S. Still Faces Challenges to Recovery
- SEC Adopts New Short Form Criteria That Eliminate Credit Ratings
The revised criteria and related rule and form changes are effective September 2, 2011 except for the rescission of Form F-9 and amendments to remove references to Form F-9 in other rules and forms, which will be effective December 31, 2012.
- SEC Re-Proposes Requirements Related to Shelf Registration of Asset-Backed Securities
Comments are due by October 4, 2011.
- SEC Staff Issues Report on Sales of Structured Securities Products to Retail Investors
- CFTC Adopts Rules Implementing New Framework for Approving New Products and Rule Changes Submitted by Registered Entities
The rules are effective September 26, 2011.
- SEC Staff Provides Additional Relief from Advisers Act Custody Rule Requirements Affecting Use of Auditors to Broker-Dealers
- OCC Adopts Final Retail Forex Rule; FRB Issues Proposed Retail Forex Rule
Comments on the FRB Proposed Rule are due by October 11, 2011.
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