Foley Hoag LLP

SUMMARY

The Massachusetts Securities Division (the “Division”) has adopted new regulations relating to the regulation of investment advisers. The new regulations will become effective on February 3, 2012, but will not be enforced by the Division until August 3, 2012, six months after the effective date.  [more...]

SUMMARY

Asset managers are reminded that The Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”) implemented a significant change in the approach taken under the Investment Advisers Act of 1940, as amended (the “Advisers Act”), regarding the registration with the Securities and Exchange Commission (the “SEC”) of advisers to unregistered funds. This change reflects two fundamental alterations of basic regulatory philosophy: a determination that advisers to such funds must register with the Securities and Exchange Commission (the “SEC”) unless covered by a specific exemption from registration; and a greater reliance on state regulators to oversee advisers generally. The deadline for managers required to register with the SEC is March 30, 2012. In order to make certain that a registration is effective by March 30, managers should file an application with the SEC by February 14, 2012.  [more...]

SUMMARY

Title IV of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Act”) set forth, among other regulatory changes, a revised net worth test for a natural person to qualify as an “accredited investor” for purposes of Regulation D under the Securities Act of 1933, as amended (the primary private placement exemption relied on by investment advisers managing private investment funds). The revised standard, which came into effect on July 21, 2010, requires such individual’s net worth or joint net worth with the spouse of that person, at the time of investment to be $1,000,000, excluding the value of the primary residence of such natural person.  [more...]

SUMMARY

Effective September 30, 2011, the new Treasury International Capital (TIC) Form SLT is required to be filed by certain custodians, investment managers and investors. The first filing deadline will be October 24, 2011 for any reporting entity, including an investment adviser that has $1 billion or more of reportable securities as of the last business day of the reporting month. You should note that only aggregate data derived from Form SLT will be published and only in a manner that will not reveal individual responses.

SUMMARY

On September 8, 2011, Representative Bachus (R-Ala.), Chairman of the House Financial Services Committee, introduced a discussion draft of the Investment Adviser Oversight Act of 2011 which proposes allowing a self-regulatory organization (“SRO”) to oversee investment advisers. If adopted, the legislation would amend the existing Investment Advisers Act of 1940 to provide for a national investment adviser association. If established, all Securities and Exchange Commission (the “SEC”) and state registered investment advisers would be required to register with the association. The draft legislation hasn’t yet been presented to the House Financial Services Committee.

SUMMARY

A decision by the Massachusetts Supreme Judicial Court (“SJC”) on September 22, 2011, lays to rest the Secretary of the Commonwealth’s finding that a hedge fund manager, Bulldog Investors General Partnership (“Bulldog”), and its principals, violated the Massachusetts Securities Act through its operation of an interactive website that provided investment information to all visitors. In this decision, the SJC rejected the hedge fund’s argument that the Secretary’s order violated the hedge fund’s First Amendment right to communicate information to consumers.

SUMMARY

Registered Investment Advisers who were registered as of December 31, 2010, and who have fiscal years ending December 31, 2010 through April 30, 2011 must deliver brochure supplements (Part 2B Form ADV) to existing clients by September 30, 2011. Advisers should already be delivering brochure supplements to new and prospective clients.

SUMMARY

At an open meeting of the Securities and Exchange Commission (the “SEC”) held earlier today, the SEC adopted final rules relating to the implementation of the changes to the registration requirements contained within the Dodd-Frank Wall Street Reform and Consumer Protection Act. The SEC also extended the deadline by which currently unregistered advisers will need to comply with the new registration requirements until March 30, 2012.

Additional information regarding the details of the new rules will follow.

SUMMARY

The I.R.S. has recently issued its annual cost-of-living adjustments applicable in 2011 to qualified retirement (pension, profit-sharing, § 401(k), money purchase and stock bonus) plans. Generally, there has been such a low rate of inflation in the nation’s economy that many of these cost-of-living adjustments will remain unchanged.

SUMMARY

As the end of 2010 approaches and we receive numerous inquiries concerning developing hiring plans, I thought you might be especially interested to note some particulars about the Hiring Incentives to Restore Employment Act (the “HIRE Act”) which was enacted earlier this year to stimulate prompt hiring of workers by businesses.

SUMMARY

The Federal Trade Commission (FTC) just published its preliminary Staff report setting out its proposed framework for protecting privacy in the digital economy. View the FTC’s press release here. The FTC is seeking comments on its proposed framework by January 31, 2011 and expects to issue a final report in 2011.

SUMMARY

In this Issue: 

• The Sarbanes-Oxley Act provides whistleblower protection to certain employees who report wrongdoing by a publicly-traded company.

• A federal district court in Massachusetts has held that Sarbanes-Oxley whistleblower protection covers not only employees of the publicly-traded company, but also employees of that companys contractors, subcontractors, and agents.

• The district court is the only one in the United States that has interpreted Sarbanes-Oxley whistleblower protection to be so broad.

• The First Circuit has accepted the case for interlocutory appeal, and will likely be the first appellate court to determine the proper coverage of Sarbanes-Oxley whistleblower protection.
  

SUMMARY

In accordance with the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), on August 26, 2010 New York Stock Exchange LLC (“NYSE”) filed a proposed rule change with the Securities and Exchange Commission (the “SEC”) to prohibit NYSE member organizations from voting uninstructed shares if the matter voted on relates to executive compensation. On September 9, 2010, the SEC published a notice to solicit comments on the proposed rule change. Because the Dodd-Frank Act does not provide for a transition phase, the SEC approved the proposed rule change on an accelerated basis. The rule change, as proposed, was effective immediately.

SUMMARY

In reviewing the recently enacted Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act), we found two very different sections worthy of brief note.

Small Issuers exempted from auditor certificates as to accounting controls.

SEC enforcement powers expanded against aiders and abettors and for foreign violators.  [more... ]

SUMMARY

On July 21, 2010, President Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act), arguably the most far-reaching package of financial regulatory reforms since the New Deal. The legislation restructures the regulatory framework for much of the U.S. financial system, and its effects will be most pronounced on the financial services industry.

However, the Dodd-Frank Act will affect all U.S. public companies by extending the federal regulation of matters relating to corporate governance and executive compensation. [more... ]

SUMMARY

Among the many elements of the massive Dodd-Frank Wall Street Reform and Consumer Protection Act are provisions applicable to public companies requiring defined “say-on-pay” votes. These are shareholder votes on

• executive compensation generally, and
• executive compensation relating to business combinations, known as “golden parachutes”.

In the United States, say-on-pay is advisory and not binding on a company’s board of directors. However, thus far in 2010, at least three companies have received negative say-on-pay votes from shareholders. Public companies would be wise to review their compensation programs with a view to how those programs will be perceived, particularly as explained in the Compensation Discussion and Analysis section of their proxy statements.   [more...]

SUMMARY

In this Issue:

SEC v. TAMBONE: The First Circuit Reverses Course on What It Means to “Make” a Statement Under the Securities Laws

• Sitting en banc, the First Circuit vacated a key portion of its prior panel decision and affirmed the district court’s dismissal of the SEC’s Section 10(b)/Rule 10b- 5 claim against two mutual fund underwriters.
• The court rejected the SEC’s argument that a person who uses a false statement drafted by others to sell securities is liable for “making” that statement under Rule 10b-5.
• While this ruling closes one door to primary violator liability, others doors may yet remain open depending on the specific allegations of each case, and the First Circuit declined to choose sides in the current circuit split regarding the scope of primary liability.
  

SUMMARY

In early February, the Securities and Exchange Commission published an interpretive release (Release Nos. 33-9106 and 34-61469) about public company disclosures related to climate change. The Commission has previously stated that it is not making new law, nor is it taking a position on any aspect of the debate concerning climate change. Instead, the release summarizes the current state of that debate, reminds companies of the existing regulatory scheme requiring disclosures concerning environmental and climate matters, and then — in what is clearly the most helpful part of this fairly short release — enumerates and describes the kinds of disclosures that the Commission believes would be, and should be, captured by the current regulatory system.

SUMMARY

The U.S. Securities and Exchange Commission (SEC) issued interpretive guidance yesterday which requires publicly traded companies to consider the impacts of climate change – both the physical damage it could cause, as well as the economic impacts of domestic and international greenhouse gas emissions-reduction rules – and disclose those risks to investors.

SUMMARY

Late yesterday afternoon, the U.S. House of Representatives passed legislation that would tax carried interest income (sometimes called “performance allocations” or “incentive allocations”) at ordinary-income rates beginning in 2010. The legislation (H.R. 4213, the “Tax Extenders Act of 2009”) also provides that carried interest income will be subject to self-employment taxes, regardless of certain exceptions previously available.

We will monitor the bill's progress in the Senate and Conference Committee and provide more detail as the bill moves closer to enactment.