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Constitutionality of the SEC’s Growing Administrative Forum

The Securities and Exchange Commission (“SEC”) is increasingly favoring the administrative process over the court system for prosecuting securities cases, likely as a result of expanded powers included in the 2010 Dodd-Frank Wall Street Reform and Consumer Protection Act. For example, in the administrative forum, the SEC now has the authority to prosecute all individuals – even those not associated with regulated entities – and can impose more fines than it could before. Russell Ryan, a partner at King & Spalding in Washington, pointed out that the SEC obtained a record $3.4 billion in monetary sanctions in 2013 and continues to bring multi-million dollar actions. Notably, the SEC recently added two administrative law judges to its staff, increasing the number of judges from three to five. Furthermore, in June, Enforcement Director Andrew Ceresney announced that the SEC will bring more insider trading actions through administrative proceedings.

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S.E.C. Tightens Regulations on Asset-Backed Securities

The Securities and Exchange Commission (“S.E.C.”) adopted new rules on August 27 that increase disclosure requirements for issuers of asset-backed securities and establish new safeguards against conflicts-of-interest in the credit rating process. The rules implement reforms mandated by the Dodd-Frank Act, which Congress passed in 2010 to address the systemic issues at the root of the financial crisis. Read the rest of this entry »

Family Dollar Rejects Takeover Bid by Dollar General

On August 21, 2014, Family Dollar Stores, Inc. announced that its Board of Directors unanimously rejected Dollar General Corporation’s takeover bid, citing antitrust issues. This news comes in light of the fact that Dollar General outbid rival Dollar Tree, raising the possibility that Family Dollar would abandon its existing deal with Dollar Tree. However, Family Dollar rejected Dollar General’s proposed $9.7 billion acquisition offer and reaffirmed its support for the $8.5 billion deal with Dollar Tree, which it already agreed to. Read the rest of this entry »

Update: Argentina’s Debt Crisis Continues as Debt Swap Legislation is Proposed

After a rocky summer, Argentina is trying to push itself through its recent debt default by proposing new legislation that could potentially pull the country out of its current financial crisis. Last week, in a speech addressed to the nation, President Cristina Fernández announced a plan for legislation that would allow bondholders to swap “their debt issued under foreign law for bonds of the same value governed by local law.”

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Privacy & Cybersecurity Update – July 2014

In this edition of our Privacy & Cybersecurity Update, we analyze several significant developments occurring in July 2014, including a recent address by U.S. Treasury Secretary Jack Lew calling for tougher congressional action and greater private sector transparency regarding cybersecurity, the enactment of new U.S. laws requiring certain defense and intelligence contractors to report data breaches, and clarification from the FTC on verifiable parental consent methods for website operators and mobile app developers.

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Court Further Defines Limitations of Applying Revlon Duties in Stock-for-Stock Mergers

This article discusses the recent New York decision in Badowski v. Corrao that further defined the limitations of applying Revlonduties in stock-for-stock mergers.

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Update: Sprint and T-Mobile Call It Quits

After months of merger talks and a $32 billion deal rumored to be announced late this summer, Sprint has officially disclosed that it is no longer pursuing a purchase of T-Mobile. Now that a merger is off the table, T-Mobile’s CEO, John Legere, has swung a few punches at its rival. In a recent tweet, Legere wrote: “Join T-Mobile now and jump off the Sprint bus before it crashes.” According to The New York Times, “the tweets reflect not only the reignited competition between the country’s third- and fourth-biggest wireless service providers, but also a peculiar reversal of fortune for each company.” T-Mobile’s new pricing plans have attracted customers, while Sprint—a company that has historically been bigger than T-Mobile—has steadily lost customers.

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Banco Espírito Santo Bailout

After financial turmoil, the Portuguese bank, Banco Espírito Santo (“BES”), will be shut down and bailed out by a plan approved by the European Commission. Part of the bank will remain and continue to operate as Novo Banco; this bank will include healthy assets and senior debts. The troubled portion of BES will continue to house “shareholders and subordinated debtors who will be written down against the bad assets formed mainly of exposure to the rest of the Espírito Santo and to the bank’s Angolan unit.”

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Argentina’s Debt Crisis

Last week, Argentina defaulted on its debt for the third time in three decades, setting the country up for a debate on how to move forward. This default is Argentina’s second default in 13 years, and its spiral is causing concern not only in Latin America, but also in the U.S. and Europe. The Argentine stock market has taken a slight hit, which may have global repercussions.

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FDIC Issues Guidance on Requests by Banks That Are S-Corporations for Dividend Exceptions to Capital Conservation Buffer

The FDIC issued guidance (the “Guidance”; FIL-40-2014) to banks and savings associations that have elected S-corporation tax treatment (collectively, “S-corporation Banks” and each an “S-corporation Bank”) concerning the factors that the FDIC will consider when it receives a request from an S-corporation Bank to pay dividends to its shareholders “to cover taxes on their pass-through share of the [S-corporation Bank’s] earnings, where these dividends would otherwise not be permitted under the capital conservation buffer contained in the new Basel III capital rules.”  The capital conservation buffer, when it takes effect, will limit the amount of dividends a bank can pay when its capital ratios fall below the threshold levels of the buffer.  The capital conservation buffer will be phased-in over the years 2016 through 2018 and will become fully effective in 2019.  There are currently approximately 2,000 U.S. community banks, which are structured for tax purposes as Subchapter S corporations.

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