General Business Education Securities

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Carrots, Corruption & Compliance

In part one of a two-part interview, Frank Brown, Value Chain and Anti-Corruption Program Team Leader at the Center for International Private Enterprise (CIPE), addresses a CIPE paper “Anti-Corruption Compliance, A Guide for...more

SEC Brings First Action under Dodd-Frank Municipal Advisor Antifraud Rules

Two California-based municipal advisory firms and their executives have agreed to settle SEC charges that they used deceptive practices when soliciting the business of five California school districts.more

Tough Exams for Investments in the Education Sector

The growth of private spending on education presents an opportunity for private equity. While public spending on education in the OECD as a proportion of gross domestic product decreased slightly between 2003 and 2012, the number of students attending private secondary institutions in the OECD rose from 11.07% to 15.99% during the same period. more

FCPA Compliance and Ethics Report-Episode 215-Bill Waite on the Compliance Horizon Report

In this episode I visit with Bill Waite, CEO of the Risk Advisory Group on their recent Compliance Horizon Reportmore

FINRA Proposes New TRACE Data Set

The Financial Industry Regulatory Authority (FINRA) announced last week that it is seeking comment on a proposal to create a new academic Trade Reporting and Compliance Engine (TRACE) data set. While academic researchers already use historic TRACE data, the data currently available to researchers does not include identifying information about dealer identities.more

Keeping Marblegate in Perspective: Implications for Debt Restructurings, Indenture Amendments and New Bond Issues

Involuntary debt restructurings that have the effect of impairing a bondholder’s right to receive payment may violate the Trust Indenture Act. This was recently held in the Marblegate/Education Management Corp. bondholder litigation. A first read of the case suggests potentially problematic implications. A deeper analysis shows a less troubling decision. The case is also relevant for the 144A for life market that is technically not subject to the statute. - Involuntary debt restructurings may violate the Trust Indenture Act if they have the effect of impairing a bondholder’s right to receive payment, even though they leave that right formally intact. That was recently held by the court in the Marblegate/Education Management Corp. bondholder litigation. The SDNY’s recent opinion on the merits (Marblegate II) confirmed its earlier holding on a request for a preliminary injunction to block the restructuring (Marblegate I). Please see full Memo below for more information. more

SEC Commissioner Wonders Whether Harvard Violated Securities Laws

SEC Commissioner Daniel M. Gallagher and Joseph A. Grundfest, Stanford Law School, Rock Center for Corporate Governance, have just published a paper titled “Did Harvard Violate Federal Securities Law? The Campaign Against Classified Boards of Directors.”more

SEC Announces First Settled Proceeding Against Municipal Issuer under MCDC Initiative

The SEC announced July 8 its first settled administrative proceeding against a municipal issuer under its Municipal Continuing Disclosure Cooperation (“MCDC”) Initiative. In its Order, the SEC charged Kings Canyon Joint Unified School District with violating ’33 Act § 17(a)(2)...more

SEC’s First Action Under the Municipalities Continuing Disclosure Cooperation Initiative

The SEC settled its first action under the Municipalities Continuing Disclosure Cooperation Initiative, launched on March 10, 2014. Under the Initiative the Enforcement Division agreed to recommend settlement on favorable, standardized terms for issuers and underwriters who self-report or were already under investigation for violations involving continuing disclosure obligations. The initiative is due to expire on September 10, 2014.more

Common Issues Related to the Sale of Gifted Stock

One of the more challenging aspects of managing a development office at a college or university is managing the sale of a gift of company stock. While there is no set criteria for determining when to accept such a gift, or for managing a gift of company stock once received, we have seen a number of issues recurring. This article provides a brief overview of the common issues colleges and universities face in dealing with the complexities of gifted company stock. more

In a First, SEC Charges Indiana School District and Municipal Bond Underwriter with Fraud

The Securities and Exchange Commission (SEC) on July 29, 2013 charged a school district in Indiana and its municipal bond underwriter with falsely stating to bond investors that the school district had been properly providing annual financial information and notices required as part of its prior bond offerings in compliance with its previous continue disclosure agreements.more

West Clark Community Schools Cease and Desist Order— SEC Enforcement of Rule 15c2-12

On July 29, 2013, the SEC entered a pair of Cease and Desist Orders against West Clark Community Schools (the “School District”) and Citi Securities, the underwriter of certain municipal bonds issued by the School District (the “Underwriter”). The School District is located in Indiana and has approximately 4,500 students and is governed by a five-member Board of School Trustees (the “School Board”). The Underwriter is a small regional underwriter which was principally involved in underwriting Indiana bond offerings. In 2005, the School District sold $52 million of municipal bonds to the Underwriter. As part of the offering, the School District executed a continuing disclosure agreement (a “CDA”) pursuant to SEC Rule 15c2-12 (the “Rule”) under which the School District agreed to provide certain financial information and operating data on an annual basis, as well as timely notice of certain specified events as required by the Rule. In December 2007, the School District sold $31 million of additional bonds to the Underwriter. In the Official Statement for the 2007 offering, the School District stated that it had never failed to comply in any material respect with any previous undertaking entered into pursuant to the Rule. In addition, the School District executed a standard Rule 10b-5 certificate stating that the 2007 Official Statement did not contain any untrue statement of a material fact. In fact, the School District had never made any of the continuing disclosure filings which it had agreed to make in the CDA. The SEC concluded in its Order relating to the School District that the School District had violated, among other things, Rule 10b-5 by making a false statement regarding its compliance with the CDA. The School District was required by the SEC to enter into certain undertakings under which it agreed to ensure that all required disclosures were made and to adopt written disclosure policies and procedures to ensure that filings would be made in the future. Please see full alert below for more information.more

Banking & Financial Services E-Note - March 28, 2013

In This Issue: - Global Banking Group Calls for Several Rates to Replace Libor - U.S. Applies Money-Laundering Rules to "Virtual Currencies" - SEC Says Big Banks Don't Have to Hold Shareholder Break-Up Votes - CFPB Proposes More Oversight of Nonbank Student Loan Companies - Industry Discourages Adding Down Payment Rule to CFPB Measure - IASB Accounting Rule Will Require Banks to Show Losses Earlier - Over 4 Years After TARP, Future of Bank Reforms Still Unclear - Index Shows Uptick in Small Business Loans From Big Banks - Earnings for Credit Unions Hit Record $8.5 Billion in 2012 - Pave Offers Students Alternative to Traditional Loans - Excerpt from Global Banking Group Calls for Several Rates to Replace Libor: The tarnished Libor interest rate benchmark should be replaced with a range ofreference rates based on actual market transactions by banks, a global group of centralbankers said. Please see full E-Note below for more information.more

Weglarz v. JP Morgan Chase Bank, N.A., and National Collegiate Trust

Complaint--Class ActionIllinois

National Collegiate Student Loan Trust is being sued on a class action basis for its improper, fraudulent use of the LIBOR index on its promissory note private student loans. This is just another defense of contract when being sued by these trusts when consumers default. I understand that borrowers are now defaulting en mass on these agreements.more

Cleaning Up Past Offerings to Investors

Many offerings to investors require that forms be filed with one or more securities agencies within 15 days of the first sale. Still, even if the forms were not filed on time, it’s often possible to file them even though they are late. Filing late – even when a long time has passed – is much better than not making the filings at all. more

The Academics Are Just Plain Wrong: The Trust Is Not a Contract

Since the 1960s, the trust has been under attack on two fronts in the American law school. First, the traditional Trusts course has been down-graded to elective status, a misguided curricular “reform” that Charles E. Rounds, Jr. discusses elsewhere. See this posting’s “Related Documents” section below. Second, certain influential law academics have taken to asserting that the trust is merely a contract. They are wrong: The trust relationship is sui generis; it belongs in its own pigeon hole. In Loring and Rounds: A Trustee’s Handbook § 8.22 (2012) [Wolters Kluwer]), Charles E. Rounds, Jr. explains why the law is too subtle and nuanced to accommodate such a simplistic notion. The main focus of the Handbook, which was first published in 1898, however, is not legal education but the rights, duties and obligations of trustees and their beneficiaries, both from the theoretical and practical perspectives. The 2012 edition, due out in December of 2011, will be a fully-integrated, flexible-covered bound volume of well over 1500 pages. [http://www.aspenpublishers.com/Product.asp?catalog_name=Aspen&product_id=1454813296&promoID=ER04&cookie%5Ftest=1]. It replaces the Handbook’s bulky ring binder platform, a recent innovation that contemplated yearly supplementation. The Handbook’s aforementioned § 8.22 is reprinted below in its entirety.more

It's Only a Matter of Degree--Companies Find Trouble in Publicizing the Educational Backgrounds of Officers

Many companies disclose the educational achievements of their directors, officers and key employees. These disclosures can be found on company websites, in company press releases and in filings made with the Securities and Exchange Commission and other regulators. Recently, several companies have had to confront embarrassing allegations that they had misstated the educational attainments of their key personnel. Please see full newsletter for more information.more

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