United States: SEC Adopts Expanded Proxy Voting Reporting by Registered Funds and New Reporting of Executive Compensation Votes by Form 13F Filers

Nov 07 2022

By: Lynn A. Schweinfurth, Kathy Kresch Ingber, and Crystal Liu

On November 2, by a vote of 3 to 2, the Securities and Exchange Commission adopted, largely as proposed, amendments to Form N-PX under the Investment Company Act of 1940 and new Rule 14Ad-1 under the Securities Exchange Act of 1934 (Amendments). The Amendments expand the proxy voting information that registered investment companies (Funds) report on Form N-PX, and require, for the first time, Form 13F filers (Managers) to report annually on Form N-PX how they voted proxies concerning certain shareholder advisory votes on executive compensation (“say-on-pay” votes).

Australian Regulatory Update – 7 November 2022

Nov 07 2022

By Jim Bulling and Anabelle Weinberg

1. ASIC Annual Forum

The ASIC Annual Forum was held on 3 – 4 November 2022 with a number of significant announcements being made.

Firstly, ASIC has for the first time announced their enforcement priorities for 2023. ASIC now intends to do this on an annual basis.

Australian Regulatory Update – 2 November 2022

Nov 02 2022

By Jim Bulling and Anabelle Weinberg

1. ASIC takes its first ‘greenwashing’ action

ASIC has taken its first ‘greenwashing’ action against Tlou Energy Limited (Tlou). Tlou has paid a total of $53,280 to comply with four infringement notices issued by ASIC over concerns about alleged false or misleading sustainability-related statements. Tlou have not admitted guilt.

United States: As the WORM Turns: SEC Provides Alternative Recordkeeping Requirements for Brokers

Oct 12 2022

By: Eden L. Rohrer, Chloe Vargas, and Raymond F. Jensen

On October 12, 2022, the SEC voted to adopt new electronic recordkeeping requirements for broker-dealers in an effort to modernize recordkeeping requirements and to allow broker-dealers to use new technologies to satisfy their obligations. The new recordkeeping requirements will amend the Securities Exchange Act of 1934 (“Exchange Act”) Rule 17a-4 (“Rule 17a-4”) for broker-dealers and Exchange Act Rule 18a-6 (“Rule 18a-6”) for Security-Based Swap Dealers, and Major Security-Based Swap Participants.

Significant to broker-dealers is that they will no longer be required to preserve electronic records in a non-rewritable, non-erasable or read once, write many (“WORM”) format. The new rule is technology neutral, allowing broker-dealers to adopt new technologies. The amended rule will eliminate references to outdated technology such as “micrographic media,” “microfilm or microfiche,” and “optical disk technology (including CD-ROM),” in their heyday when the rule was adopted in 1997.

United States: SEC vs. Wahi: An Insider Trading Action with Surprising Impacts on the Investment Management Industry

Aug 02 2022

By: Richard F. Kerr and Keri E. Riemer

The SEC has made a new crypto move – and its impact is broad.

As described in our FinTech Law Watch blog published on 29 July 2022, the SEC recently declared that 9 crypto assets were “securities” in a complaint relating to insider trading violations (Wahi Complaint).

Australia: DDO Implementation and Enforcement

Aug 01 2022

By Daniel Knight and Simon Kiburg

ASIC have announced the first enforcement action it has taken in relation to the Design and Distribution Obligations (DDO), which were introduced late last year. The enforcement action shows that, as described by ASIC deputy chair Karen Chester, “ASIC’s focus has now shifted to compliance. Industry has had sufficient time to bed down its implementation of the DDO regime.“

Australia: Crypto Downturn and Its Regulation

Jul 11 2022

By Daniel Knight and Kithmin Ranamukhaarachchi

In the wake of the drawn out cryptocurrency market downturn, increased regulation of the sector seems inevitable. With nearly one million Australians transacting in cryptocurrencies last year, there have been widespread calls to enact additional protections for retail investors.

United States: Grayscale Appeals to DC Circuit on SEC Denial of Bitcoin ETP

Jul 05 2022

By: Stacy L. Fuller, Clifford C. Histed, Cheryl L. Isaac, Richard F. Kerr, Keri E. Riemer, and Peter J. Shea

On Thursday, Grayscale Investments, LLC (Grayscale) filed suit against the Securities Exchange Commission (SEC) in the D.C. Circuit asking the court to reconsider the agency’s rejection of listing a spot Bitcoin ETP on the New York Stock Exchange (NYSE). In its appeal, Grayscale argued that the SEC’s ruling regarding its spot Bitcoin ETP was “arbitrary and capricious,” because it disregarded facts about the ETP and erroneously determined that listing the ETP would be in contravention of NYSE’s duties under the Securities Exchange Act of 1934.

Australia: BNPL: Credit or not?

Jul 04 2022

By Daniel Knight and Alex Morrison

The Minister for Financial Services, Stephen Jones, has said that the Government intends to regulate Buy Now Pay Later Products (BNPL Products) and stop the “argument about whether [they’re] credit or not”.

United States: 10 Impactful Provisions of the Lummis-Gillibrand Bill

Jun 09 2022

By: Andrew M. Hinkes, Eden L. Rohrer, and Judie Rinearson

The “Lummis-Gillibrand Responsible Financial Innovation Act” lays out a bold agenda for legal reform related to digital assets. Although a detailed summary of Bill is still forthcoming, here’s an abbreviated summary of 10 impactful provisions. For a more fulsome summary, see our full posting on the K&L Gates FinTech Law Blog.

Applies generally to incorporated and licensed entities, but unincorporated DAOs, users of digital assets, and DeFi protocols would not be affected.
Excludes a gain or loss of $200 or less in transactions for “goods or services” from gross income for federal income tax purposes.
Requires regulated entities to make certain transaction-specific disclosures to consumers.
Introduces the “ancillary asset” concept that splits the digital asset from any promises made in an investment contract, and delegates jurisdiction over ancillary assets to the CFTC.
Authorizes spot crypto asset exchanges to register with the CFTC.
Corrects the provision of the 2021 Infrastructure Investment and Jobs Act (HR 3684) that expanded the tax law definition of Broker to include any “person who… is responsible for … effectuating transfer of digital assets on behalf of another person.”
Clarifies that staking proceeds are not a part of gross income until the taxpayer “exercises dominion” over them.
Permits depository institutions to issue payment stablecoins subject to specific reserve and redemption requirements.
Prohibits banks from using reputation risk in its examination ratings and requires appropriate reasons for requesting the termination of a customer account.
Directs state regulators to adopt uniform money transmitter license requirements for digital asset transactions.

This Bill would radically change the way that regulated entities interact with digital assets in the U.S.. While the Bill is unlikely to pass this year, it is the product of significant bipartisan effort, and will likely lead to significant regulation of digital assets in the coming years.

Stay tuned for more in-depth coverage of the securities law and commodities law implications of amendments suggested in the Lummis-Gillibrand Bill.

Category:FinTech & Digital Currencies

1. ASIC Annual Forum