United States

Cutting and pasting misstatements can get you nailed for securities fraud

By Kathleen Scott (US) on April 4, 2019 Posted in Enforcement, General, Regulation and compliance, Securities, United States

In a decision with implications for private securities fraud suits, the United States Supreme Court recently held that an investment banker that copied and pasted misstatements from his boss into emails to prospective investors committed securities fraud, despite not being the actual “maker” of the statement, because the statement was attributed to another person. In … Continue Reading

In anticipation of Brexit, US regulators address status of certain swaps under the Swaps Margin Rule

By Kathleen Scott (US) and Lillian A. Cardona (US) on April 1, 2019 Posted in Banking, Commodities & Derivatives, General, Regulation and compliance, United States

With the next 10 days being crucial in the Brexit process, following the UK House of Commons rejecting the draft withdrawal agreement for a third time and the European Council calling an emergency summit for April 10, 2019, the Commodity Futures Trading Commission (“CFTC”) and the US banking, farm credit and housing agencies have issued … Continue Reading

U.S. Reporting Companies Must Disclose Brexit Risks

By Gerard Pecht (US), Seth Kruglak (US) and Simon Lovegrove (UK) on April 1, 2019 Posted in General, Regulation and compliance, Securities, United States

Brexit—whether it happens or not, and in what form it might (or might not) take—will shock the global marketplace. Yet despite the known unknowns in these tumultuous times, there is one certainty for public reporting companies in the United States: Brexit risks must be disclosed. On March 15, 2019, William Hinman, Director of the SEC’s … Continue Reading

Paying (or not) fees on registered US patents and trademarks in Venezuela in cryptocurrency

By Susan Ross (US) and Kathleen Scott (US) on March 29, 2019 Posted in Enforcement, Fintech, General, Regulation and compliance, United States

Last month, the Venezuelan Ministry of National Commerce issued a notice requiring patent and trademark fees to be paid in the cryptocurrency issued by the Venezuelan government — the Petro, which supposedly is backed by Venezuela’s oil and mineral reserves. As noted in previous posts, the United States has been increasing its economic sanctions on … Continue Reading

Changing securities laws and regulations for the digital token age

By Kathleen Scott (US) on March 21, 2019 Posted in Fintech, General, Regulation and compliance, United States

While federal courts last year recognized that virtual currencies based on blockchain platforms could qualify as securities and/or commodities, there has been some concern that these regulatory structures may not fit all digital tokens under all circumstances. In a recent New York Law Journal column, Robert Schwinger, a partner in the New York office of … Continue Reading

Brexit: Doing business in the EU – Updated

By Simon Lovegrove (UK) on March 18, 2019 Posted in Brexit, Brexit, France, General, Germany, Italy, The Netherlands, United Kingdom, United States

Recent updates Belgium: 10 April 2019 We have produced a colour coded heat map and table identifying the temporary emergency measures being implemented in EEA jurisdictions, and how financial services provides can benefit from these measures. We recommend that this resource be read in conjunction with this article. You will find our heat map and table … Continue Reading

Implementation of international standards can have collateral consequences

By Kathleen Scott (US) on March 15, 2019 Posted in Banking, Capital adequacy, General, Regulation and compliance, United States

Non-financial commercial companies often secure their derivatives transactions with financial institutions in a manner other than posting cash margin, such as by granting liens on a commercial end-user’s assets. A proposed regulation from the US federal banking regulators to revise risk-based capital rules regarding derivatives in order to implement an international standard may have the … Continue Reading

Brexit: what’s next ?

By Jonathan Herbst (UK), Imogen Garner (UK) and Joe Bamford (UK) on March 15, 2019 Posted in Brexit, Brexit, France, Germany, Italy, The Netherlands, United Kingdom, United States

Following a series of crucial votes in the House of Commons this week, the financial services team in London hosted a webinar this morning exploring the impact of these on financial service firms. Listen to the webinar here… Continue Reading

New virtual currency bills introduced in the U.S. Congress

By Deanne Barrow (US) and Lillian A. Cardona (US) on February 28, 2019 Posted in Fintech, General, Regulation and compliance, United States

Two new bills were introduced in the U.S. House of Representatives at the end of January aimed at recommending possible legislative changes to regulate and promote virtual currencies, also known as cryptocurrencies. The first bill, H.R. 922, Virtual Currency Consumer Protection Act of 2019 aims to promote fair and transparent virtual currency markets by examining … Continue Reading

SEC takes aim at digital tokens and smart contracts

By Kathleen Scott (US) on February 27, 2019 Posted in Enforcement, Fintech, General, Regulation and compliance, Securities, United States

On the heels of the first-ever judicial holding this past summer that a cryptocurrency could qualify as a “security” under federal securities laws, the Securities and Exchange Commission (SEC) has brought a wave of new enforcement actions targeting blockchain-based digital token ventures under a variety of provisions in the securities laws. In a recent New … Continue Reading

Latest issue of Global Asset Management Quarterly now available

By Kathleen Scott (US) on February 27, 2019 Posted in Asset management, Banking, Brokers and Intermediaries, General, Regulation and compliance, United States

Issue 11 of our Global Asset Management Quarterly is now available. You can also register to automatically receive each issue as it is released. This publication highlights key developments that will be of interest to, and affect, our asset management clients, including market trends and developments in tax and buy-side regulation globally. Articles on US … Continue Reading

Joint statement by UK and US authorities on continuity of derivatives trading and clearing post-Brexit

By Hannah Meakin (UK) on February 25, 2019 Posted in Brexit, Clearing and settlement, Clearing and settlement, United Kingdom, United States

On 25 February 2019, the UK and US authorities issued a joint statement on continuity of derivatives trading and clearing post Brexit. The joint statement covers the following issues: Continued supervisory cooperation. The Bank of England (BoE) and the Commodity Futures Trading Commission (CFTC) are in the process of updating, in connection with the UK’s … Continue Reading

1LoD Summit – Best practice for risk and control functions within the first line of defence

By John Davison (UK), Christian Blackwell and Kevin Harnisch (US) on February 20, 2019 Posted in Regulation and compliance, United States

Norton Rose Fulbright is pleased to be sponsoring the 1LoD Summit in New York on 2 April 2019. The 1LoD Summit is the largest US event dedicated to front office risk and control functions, covering topics such as supervision, control assurance, conduct risk, surveillance, rogue trading and much more. The Summit is designed for those working in … Continue Reading

US regulators propose changes to Volcker Rule to conform to 2018 legislation

By Kathleen Scott (US) and Jackie Kim (US) on February 20, 2019 Posted in Asset management, Banking, Dodd-Frank, General, Regulation and compliance, United States

On February 8, 2019, the Office of the Comptroller of the Currency, the Board of Governors of the Federal Reserve System, the Federal Deposit Insurance Corporation, the Securities and Exchange Commission, and the Commodity Futures Trading Commission (collectively, the “Agencies”) published for public comment a Notice of Proposed Rulemaking (the “NPRM”) to amend the Volcker … Continue Reading

CSBS releases action items to improve regulation of nonbank financial services companies

By Justin Long (US) and Richard Potomac (US) on February 19, 2019 Posted in Banking, General, Regulation and compliance, United States

On February 14, 2019, the Conference of State Bank Supervisors (“CSBS”) announced several actions that it would be taking to modernize and harmonize state licensing, regulation, and supervision of non-depository financial institutions, including mortgage lenders, money services businesses, and consumer finance companies.… Continue Reading

US strengthens economic sanctions on Venezuela

By Kathleen Scott (US) on February 16, 2019 Posted in Enforcement, General, Regulation and compliance, United States

On January 28, 2019, the US Department of the Treasury’s Office of Foreign Assets Control (“OFAC”) added Petróleos de Venezuela, S.A., Venezuela’s state-owned oil company and a primary source of the country’s income and foreign currency, to its list of Specially Designated Nationals and Blocked Persons (the “SDN List”). Norton Rose Fulbright has prepared a … Continue Reading

Commissioner Peirce warns the SEC not to cast Howey’s net too wide

By Andrew Lom (US) and Rachael Browndorf (US) on February 15, 2019 Posted in Fintech, General, Regulation and compliance, Securities, United States

On February 8, 2019, SEC Commissioner Hester Peirce delivered a speech at the symposium ”Protecting the Public While Fostering Innovation and Entrepreneurship: First Principles for Optimal Regulation.” Her remarks, entitled “Regulation: A View from Inside the Machine,” provide insight into how SEC regulators currently view certain technological innovations and how they interpret and apply the … Continue Reading

CFTC divisions issue their 2019 examination priorities

By Joseph Williams (US) and Lillian A. Cardona (US) on February 13, 2019 Posted in Commodities & Derivatives, General, Regulation and compliance, United States

For the first time, the US Commodity Futures Trading Commission’s (“CFTC”) Division of Market Oversight (“DMO”), Division of Swap Dealer and Intermediary Oversight, and Division of Clearing and Risk published Examination Priorities for the year. While the CFTC has historically published its Rules Enforcement Review of specific commodity exchanges with notes as to areas for … Continue Reading

Sanctions and Supply Chains: e.l.f. Cosmetics, Inc. pays nearly USD 1 million to settle North Korea sanctions violations

By David Harris (UK), Jeffrey Cottle and Edward Malcolm (UK) on February 8, 2019 Posted in Enforcement, United States

A US-based cosmetics company, e.l.f. Cosmetics, Inc. (ELF), has reached a USD 996,080 settlement with the US Office of Foreign Assets Control (OFAC) for importing 156 shipments of false eyelash kits containing materials sourced from North Korea in apparent violation of the North Korea Sanctions Regulations. The materials were supplied by two of ELF’s China-based … Continue Reading

Mandatory stay provisions in qualified financial contracts

By Kathleen Scott (US) on February 7, 2019 Posted in Banking, Commodities & Derivatives, Dodd-Frank, General, Regulation and compliance, United States

Companies are being, or have been, approached by US banks and/or their affiliates with which they have derivatives contracts or other qualified financial contracts (QFCs) and asked to amend those agreements to cover a situation where the bank or its affiliates might be put into a receivership situation. The reason why they are getting these … Continue Reading

Broker-dealers can continue to rely on investment advisers for customer KYC requirements

By Kathleen Scott (US) on February 5, 2019 Posted in Asset management, Brokers and Intermediaries, Enforcement, General, Money laundering, Regulation and compliance, United States

In a December 12, 2018, letter to a US trade association with members that include broker-dealers in securities (“broker-dealers”), the US Securities and Exchange Commission (“SEC”) extended its no-action relief to broker-dealers who wish to rely on investment advisers to perform the broker-dealer’s obligations under US federal anti-money laundering (“AML”) customer identification program and beneficial … Continue Reading

FINRA to examine member firms’ digital assets activities for compliance with securities laws

By Lillian A. Cardona (US) on January 24, 2019 Posted in Brokers and Intermediaries, Fintech, General, Regulation and compliance, United States

On January 22, 2019, the Financial Industry Regulatory Authority (“FINRA”) released its 2019 Risk Monitoring and Examination Priorities Letter (Regulatory Notice No. 18-20) in which it identifies topics FINRA will focus on in the coming year. FINRA indicates that this year the securities self-regulatory organization will review “firms’ activities through its membership and examination process … Continue Reading

US Federal and State legislators propose exempting certain digital tokens from securities laws

By Andrew Lom (US) and Rachael Browndorf (US) on January 10, 2019 Posted in Fintech, General, Regulation and compliance, Securities, United States

On January 4, 2019, two Colorado senators introduced the “Colorado Digital Token Act,” a bill seeking to exempt digital tokens and cryptocurrencies from certain Colorado state securities laws. In filing the Colorado Digital Token Act, the senators proposed that digital tokens with a “primarily consumptive purpose” that are not marketed to be used for “speculative … Continue Reading

Personal jurisdiction in the age of blockchain

By Kathleen Scott (US) on January 10, 2019 Posted in Fintech, General, United States

As commercial activity increasingly intertwines with applications of blockchain technology with participants around the world, courts have had to grapple with the personal jurisdiction implications of such arrangements. Will participants in these blockchain applications based outside the United States find themselves subject to U.S. jurisdiction when disputes arise, based on how they have conducted their … Continue Reading