These are some of the compliance-related stories that caught my attention.
Two Anti-Corruption Items of Note
Matt Kelly
Radical Compliance
Good news for anti-corruption enthusiasts looking for something to read — we have two fresh pieces of literature this week that you can study and shoehorn into your compliance programs. First, Transparency International just released its 2019 Corruption Perceptions Index, which is one of the go-to benchmarks to help compliance officers perform a corruption risk assessment. The short version: lots of countries are backsliding into more corruption. Second, Britain’s Serious Fraud Office has quietly released its in-house guidance for how investigators should assess corporate compliance programs, akin to the U.S. Justice Department’s own guidance on how to evaluate compliance programs. The SFO material is much shorter and probably less informative, but still, it’s now available to the public.
http://www.radicalcompliance.com/2020/01/23/two-anti-corruption-items-note/
New Year Brings New Responsibilities for Some Asset Managers Who Are Exempt from Registration with the CFTC
Ropes & Gray
With the New Year comes new responsibilities for certain asset managers who are exempt from registration with the U.S. Commodity Futures Trading Commission (“CFTC”) as commodity pool operators (“CPOs”) or commodity trading advisors (“CTAs”). Following recent amendments to CFTC rules applicable to asset managers (discussed further here), family offices, operators of business development companies (“BDCs”) and certain operators of registered investment companies (“RICs”) should reevaluate their CPO registration exemptions and, with respect to family offices, CTA registration exemptions. Asset managers affected by the rule amendments may be required to take additional action. In addition, as in years past, certain CPO and CTA registration exemptions, including those claimed under CFTC Rule 4.5, 4.13(a)(3) and 4.14(a)(8), must be renewed by March 2, 2020.
https://www.ropesgray.com/en/newsroom/alerts/2020/01/New-Year-Brings-New-Responsibilities-for-Some-Asset-Managers-who-are-Exempt-from-Registration?
So Maybe The SEC Does Need Whistleblowers’ Help?
Jon Shazar
DealBreaker
Ah, right, those whistleblowers the SEC has made as clear as possible it neither needs nor wants nor intends to compensate. Surely, then, Jay Clayton’s boys can’t have missed too much, right?
https://dealbreaker.com/2020/01/tca-hedge-fund-shuts
Preventing Phishing Attacks
Michele R. O’Brien
The Compliance & Ethics Blog
Your organization’s staff should always be considered the first line of defense against cyber threats. Unfortunately, they can also be the biggest risk factor when it comes to phishing. It takes just one employee to take the bait and that’s enough for attackers to steal intellectual data.
https://complianceandethics.org/preventing-phishing-attacks/
Fried Frank Discusses Delaware Chancery’s Latest Decision on Material Adverse Change Clauses
By Gail Weinstein, Warren S. de Wied, David L. Shaw, Steven Epstein and Andrew J. Colosimo
The CLS Blue Sky Blog
Channel Medsystems, Inc. v. Boston Scientific Corporation (Dec. 18, 2019) is the Delaware Court of Chancery’s first decision issued since the Delaware Supreme Court’s 2018 Akorn decision to evaluate whether an acquiror had a right, under a merger agreement, to terminate a pending acquisition on the grounds that there was a “Material Adverse Effect” or “Material Adverse Change” in the target company. (We use “MAE” and “MAC” interchangeably in this memorandum.) Akorn was the first case in which the Court of Chancery, post-trial, found the existence of an MAE and the first post-trial Delaware decision to find that an acquiror had the right to terminate a merger agreement based on an MAE. In Channel, by contrast, Chancellor Bouchard ruled, after trial, that there was not an MAE and that the acquiror was required to close the merger.
https://clsbluesky.law.columbia.edu/2020/01/21/fried-frank-discusses-delaware-chancerys-latest-decision-on-material-adverse-change-clauses/
SEC/Telegram Litigation Commentary & Compendium (A Must Read for FinTech Players)
John Reed Stark
[T]he SEC Telegram matter is more than just the typical SEC emergency enforcement action. The SEC Telegram docket does not just provide a rapid-fire presentation of just about every issue facing cryptocurrency market participants today. The matter also offers a rare and vivid glimpse into the dramatic disparity between on the one hand, how the SEC enforcement division views digital token offerings (they should all be registered!) and on the other hand, how the so-called fintech bar views digital token offerings (they are not always securities!).
https://www.linkedin.com/pulse/sectelegram-litigation-commentary-compendium-must-read-stark
