Updates on Regulation, Trading, and Market Reforms for the Alternative Investment Community

AuthorDebbie Klis

SEC Charges Public Company for Misleading COVID-19 Disclosures

The SEC has brought its first enforcement action against a public company relating to disclosure of the financial effect of the pandemic. The Cheesecake Factory Incorporated, without admitting or denying the SEC’s findings, agreed to a cease-and-desist order and payment of a $125,000 civil penalty, settling charges of making misleading disclosures in two Form 8-Ks: In both reports, dated March 23...

Welcome News in Financial Circles: LIBOR Termination Extended Briefly

On November 30th, LIBOR administrator, ICE Benchmark Administration (“IBA”), announced plans to ease worries surrounding LIBOR cessation with a brief extension to June 30, 2023.  IBA’s intention is to cease publication  (i)  of 1-week and 2-month USD LIBOR at the end of 2021 and (ii) subject to compliance with applicable regulations, including as to representativeness, it does...

Let the Fundraising Begin:  SEC Harmonizes and Improves its Exempt Offering Framework

On November 2, 2020, the Securities and Exchange Commission (“SEC”) voted to amend and simplify its rules governing private-offering exemptions under the Securities Act of 1933 (the “Securities Act”) to promote capital formation (the “Amendments”).[1]  The SEC release included discussion of their intent to remain true to the key components of their mission, namely investor protection, capital...

LIBOR Transition Developments: Fallback Supplement and Protocol to be Released October 23, 2020

On October 9, 2020, the International Swaps and Derivatives Association (“ISDA”) announced that it will release the IBOR Fallbacks Supplement to the 2006 ISDA Definitions (“Supplement”) and the ISDA 2020 IBOR Fallbacks Protocol (“Protocol”) on October 23, 2020, which will take effect on January 25, 2021 (the “Effective Date”).  The 2006 ISDA Definitions will include new fallback provisions to...

September 30, 2020’s LIBOR Hardwired Transition Date Has Arrived

Today is the day that the New York Fed’s Alternative Reference Rates Committee (ARRC) recommended transition to a “hardwired” approach for LIBOR[i] successor provisions in U.S. dollar-denominated syndicated credit facilities takes effect.  Henceforth, to the extent not already utilized, all new syndicated business loans should include ARRC-recommended (or substantially similar) hardwired USD...

New ESG-Related Regulatory Obligations for Private Funds

The consideration of environmental, social and governance factors alongside financial factors in the investment decision-making process are increasingly popular ways for investors to evaluate companies and funds in which they may choose to invest.  According to the most recent report from US SIF Foundation, investors held $11.6 trillion in assets chosen according to ESG criteria at the beginning...

SEC Expands Pool of Eligible Private Offering Participants

The Securities and Exchange Commission’s (SEC) recent expansion of the definition of “accredited investor” in the final rule (Final Rule) issued on August 26, 2020, allows people with professional knowledge, experience or certifications to qualify as accredited investors, which is a highly welcome step that is creating quite a buzz!!  The Final Rule is particularly beneficial to private offerings...

Increase in Sophistication of Ransomware Attacks on SEC Registrants

On July 10, 2020, the SEC’s Office of Compliance Inspections and Examinations (“OCIE”) issued a cybersecurity risk alert in which it discussed the flood of bad actors orchestrating phishing campaigns designed to penetrate financial networks to access internal resources and deploy ransomware.  OCIE’s alert indicated that ransomware attacks on SEC registrants appeared to...

ARRC Releases Fallback Language for the LIBOR Transition

The Alternative Reference Rates Committee (ARRC) released updated fallback language for new originations of U.S. dollar-denominated syndicated business loans that reference LIBOR and new variable-rate private student loans on June 30, 2020.  The language is intended to address the disruption that could occur should the termination of LIBOR indeed occur at the end of 2021. With respect to...

Welcome News for Venture Capital, Opportunity Zone and other Private Equity Funds: Federal Agencies Ease Volcker Rule Restrictions

On June 25, 2020, the Securities and Exchange Commission, Comptroller of the Currency and the Commodity Futures Trading Commission, the Federal Reserve and Federal Deposit Insurance Corporation announced a final rule that will allow banks to invest in private funds including hedge funds, qualified opportunity zone funds (QOFs), and other private equity funds. Indeed, the release specifically...

Updates on Regulation, Trading, and Market Reforms for the Alternative Investment Community