Compliance Bricks and Mortar for April 4

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These are some of the compliance-related stories that recently caught my attention.

Small Banks Look to Sell as Rules Bite by Michael Rappaport in the Wall Street Journal

In a period when low interest rates are squeezing small banks, the costs of adhering to new regulations are taking a toll. Executives from at least a half-dozen small banks that have agreed to be acquired in recent months said the increasing regulatory burden was a factor in their decisions.

Just How Binding Are SEC Statements In An Adopting Release? by Keith Paul Bishop in California Corporate and Securities Law

The really important question is what is the legal effect, if any, of preambles to rules?  One might argue that since a preamble is not subject to notice and comment, it is not legally binding under the Administrative Procedure Act (5 U.S.C. § 551 et seq.).  However, the Ninth Circuit Court of Appeals held earlier this week that an administrative law judge could consider the regulatory preamble.  Peabody Coal Co. v. Dir., Office of Workers’ Comp. Programs, 2014 U.S. App. LEXIS 5996 (9th Cir. Apr. 1, 2014).

Paul Ryan’s Plan for the SEC: Slash & Burn by Broc Romanek in

Not sure why Rep. Paul Ryan chose the SEC as an example of a federal agency with “duplication, hidden subsidies, and large bureaucracies” in his budget plan released yesterday, but he did. This is the 4th year in a row that Ryan has proposed a plan – but the first time he has focused on the SEC specifically. Remember that the SEC is not only deficit neutral and doesn’t count against the new-fangled Congressional budget caps, but is an independent agency that brings in more money to the US Treasury than it costs. Ryan’s proposal doesn’t specify exactly how much he would cut from the SEC (rather there are budget cuts for a group of agencies as a whole on pages 38-39).

Michael Lewis’s flawed new book by Felix Salmon

I’m halfway through the new Michael Lewis book – the one that has been turned into not only a breathless 60 Minutes segment but also a long excerpt in the New York Times Magazine. Like all Michael Lewis books, it’s written with great clarity and fluency: you’re not going to have any trouble turning the pages. And, like all Michael Lewis books, it’s at heart a narrative about a person — in this case, Brad Katsuyama, the founder of a small new stock exchange called IEX.

Dear Virginia: Do better by Jessica Tillipman in The FCPA Blog

Last summer, I wrote a series for the FCPA Blog about Virginia’s “Shamefully Inadequate Ethics Laws” (see here, here and here). I was not alone in criticizing what has been deemed one of the least effective ethics regimes in the country.