Financial Services Weekly News - December 2015 #3

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Regulatory Developments

SEC Proposes New Derivatives Rules for Registered Investment Companies and Business Development Companies

On Dec. 11, the SEC proposed new Rule 18f-4 under the Investment Company Act, introducing a new regulatory regime for the use by registered investment funds and business development companies (Registered Funds) of derivatives transactions, “financial commitment transactions,” and other senior securities transactions, as these terms are uniquely defined in Rule 18f-4 (described collectively as transactions in Senior Securities). The rules are designed to bring uniformity and bright-line tests to Registered Funds engaging in these transactions, cap the leverage Registered Funds obtain through use of Senior Securities, and introduce procedural safeguards. If adopted, the proposed rule would require Registered Funds to comply with Senior Security regulation falling into five categories: (1) portfolio limitations, (2) asset segregation requirements, (3) derivatives risk management programs, (4) new recordkeeping requirements, and (5) amendments to proposed forms N-PORT and N-CEN. The portfolio limitations, in general, require Registered Funds to meet one of two tests: either an “exposure-based” test limiting a Registered Fund’s exposure to Senior Securities transactions (measured by the securities’ notional value) to 150% of the Registered Fund’s net assets; or a “risk-based” test allowing notional value exposure of up to 300% of net assets, provided that the Registered Fund’s calculated VaR (value at risk) is less when including the fund’s derivatives than it is when excluding them. The asset segregation requirements require Registered Funds holding derivatives to segregate assets for a mark-to-market coverage amount and an additional risk-based coverage amount reasonably determined by the board (though subject to certain SEC requirements), and also require segregation of 100% of the notional value of financial commitment transactions. Further, a Registered Fund that either has notional derivatives exposure exceeding 50% of net assets or uses “complex derivatives” must establish a formalized derivatives risk management program which, among other requirements, must be approved by the board and be administered by a designated derivatives risk manager. The comment period for proposed Rule 18f-4 closes 90 days after publication in the Federal Register.

FinCEN Extends FBAR Filing Date for Individuals with Signature Authority Over Foreign Financial Accounts

On Dec. 8, FinCEN issued FinCEN Notice 2015-1 announcing a further extension of the filing date for certain Report of Foreign Bank and Financial Accounts (FBAR) filings by individuals with signature authority over, but no financial interest in, one or more foreign financial accounts. The filing date, which had been June 30, 2016, has been extended to April 15, 2017. FinCEN explained that the extension was being provided “in light of ongoing consideration of questions regarding the filing requirement and its application to” those individuals.

SEC Issues Compliance and Disclosure Interpretations on Application of FAST Act to Emerging Growth Companies

On Dec. 10 the SEC issued two new C&DIs concerning the application of Section 71003 of the Fixing America’s Surface Transportation (FAST) Act (discussed in the Editor’s Note in last week’s Roundup) permitting EGCs to omit certain financial information in filings.

FINRA Provides Notice to Members of Obligations When Providing Stock Quote Information to Customers

On Dec. 9 FINRA announced that it had issued Regulatory Notice 15-52, reminding firms and registered representatives of their obligations under Rule 603(c) of Regulation NMS (Vendor Display Rule) when providing quotation information to customers. FINRA noted that the SEC staff recently made clear its view that if a registered representative provides a quotation to a customer that can be used to assess the current market or the quality of trade execution, reliance on non-consolidated market information as the source of that quotation would not be consistent with the Vendor Display Rule. In light of the SEC staff’s statements, FINRA advised firms to review whether they are in compliance with the requirement in the Vendor Display Rule that broker-dealers provide a consolidated display of market data when they are providing quotation information to customers.

SEC Approves FINRA’s Proposed Rule Change to Apply Markup Rule to Government Securities

The SEC has approved FINRA’s proposed rule change (discussed in the Oct. 7 Roundup) to amend FINRA Rule 0150 to apply 2121 (Fair Prices and Commissions) and its Supplementary Material .01 (Mark-Up Policy) and .02 (Additional Mark-Up Policy for Transactions in Debt Securities, Except Municipal Securities) to exempted securities that are government securities.

NFA Announces New Forex Reporting Requirements for FDMs

On Dec. 9 the National Futures Association (NFA) issued Notice I-15-29 announcing that, in conjunction with the changes to forex dealer member (FDM) capital requirements that take effect on January 4, 2016 (announced in Notice I-15-21), NFA is requiring FDMs to report additional information in the daily Forex Financial Report (FFR), which will assist NFA in its ongoing monitoring of FDMs. In addition, the Notice describes new line items NFA is adding to the supplementary information section of the monthly 1-FR-FCM (or FOCUS II) filing, which are intended to assist firms in properly calculating their net capital requirements under the new requirements.

Goodwin Procter News

Client Alert: FAST Act Brings Additional Benefits for Emerging Growth Companies and New Resale Exemption

Goodwin Procter’s Capital Markets and Technology Companies practices have issued a client alert on the recently enacted FAST Act which includes several securities law provisions that will facilitate resales of privately placed securities and streamline capital-raising for emerging growth companies (EGCs). Among the securities law provisions contained in the FAST Act are a new exemption for resales of securities, a reduced waiting period for EGC roadshows for an initial public offering (IPO), a grace period for EGCs that lose EGC status before completion of their IPO, and reduced financial statement disclosure requirements for pre-effective registration statement filings for EGC IPOs.

DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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JD Supra Privacy Policy

Updated: May 25, 2018:

JD Supra is a legal publishing service that connects experts and their content with broader audiences of professionals, journalists and associations.

This Privacy Policy describes how JD Supra, LLC ("JD Supra" or "we," "us," or "our") collects, uses and shares personal data collected from visitors to our website (located at www.jdsupra.com) (our "Website") who view only publicly-available content as well as subscribers to our services (such as our email digests or author tools)(our "Services"). By using our Website and registering for one of our Services, you are agreeing to the terms of this Privacy Policy.

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Collection of Information

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Your interactions with our Website and Services: As is true of most websites, we gather certain information automatically. This information includes IP addresses, browser type, Internet service provider (ISP), referring/exit pages, operating system, date/time stamp and clickstream data. We use this information to analyze trends, to administer the Website and our Services, to improve the content and performance of our Website and Services, and to track users' movements around the site. We may also link this automatically-collected data to personal information, for example, to inform authors about who has read their articles. Some of this data is collected through information sent by your web browser. We also use cookies and other tracking technologies to collect this information. To learn more about cookies and other tracking technologies that JD Supra may use on our Website and Services please see our "Cookies Guide" page.

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We use the information and data we collect principally in order to provide our Website and Services. More specifically, we may use your personal information to:

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How is your information shared?

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How We Protect Your Information

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Our Website and Services are not directed at children under the age of 16 and we do not knowingly collect personal information from children under the age of 16 through our Website and/or Services. If you have reason to believe that a child under the age of 16 has provided personal information to us, please contact us, and we will endeavor to delete that information from our databases.

Links to Other Websites

Our Website and Services may contain links to other websites. The operators of such other websites may collect information about you, including through cookies or other technologies. If you are using our Website or Services and click a link to another site, you will leave our Website and this Policy will not apply to your use of and activity on those other sites. We encourage you to read the legal notices posted on those sites, including their privacy policies. We are not responsible for the data collection and use practices of such other sites. This Policy applies solely to the information collected in connection with your use of our Website and Services and does not apply to any practices conducted offline or in connection with any other websites.

Information for EU and Swiss Residents

JD Supra's principal place of business is in the United States. By subscribing to our website, you expressly consent to your information being processed in the United States.

  • Our Legal Basis for Processing: Generally, we rely on our legitimate interests in order to process your personal information. For example, we rely on this legal ground if we use your personal information to manage your Registration Data and administer our relationship with you; to deliver our Website and Services; understand and improve our Website and Services; report reader analytics to our authors; to personalize your experience on our Website and Services; and where necessary to protect or defend our or another's rights or property, or to detect, prevent, or otherwise address fraud, security, safety or privacy issues. Please see Article 6(1)(f) of the E.U. General Data Protection Regulation ("GDPR") In addition, there may be other situations where other grounds for processing may exist, such as where processing is a result of legal requirements (GDPR Article 6(1)(c)) or for reasons of public interest (GDPR Article 6(1)(e)). Please see the "Your Rights" section of this Privacy Policy immediately below for more information about how you may request that we limit or refrain from processing your personal information.
  • Your Rights
    • Right of Access/Portability: You can ask to review details about the information we hold about you and how that information has been used and disclosed. Note that we may request to verify your identification before fulfilling your request. You can also request that your personal information is provided to you in a commonly used electronic format so that you can share it with other organizations.
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    • Right to Restrict Our Processing or Erasure of Information: You also have the right in certain circumstances to ask us to restrict processing of your personal information or to erase your personal information. Where you have consented to our use of your personal information, you can withdraw your consent at any time.

You can make a request to exercise any of these rights by emailing us at privacy@jdsupra.com or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

You can also manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard.

We will make all practical efforts to respect your wishes. There may be times, however, where we are not able to fulfill your request, for example, if applicable law prohibits our compliance. Please note that JD Supra does not use "automatic decision making" or "profiling" as those terms are defined in the GDPR.

  • Timeframe for retaining your personal information: We will retain your personal information in a form that identifies you only for as long as it serves the purpose(s) for which it was initially collected as stated in this Privacy Policy, or subsequently authorized. We may continue processing your personal information for longer periods, but only for the time and to the extent such processing reasonably serves the purposes of archiving in the public interest, journalism, literature and art, scientific or historical research and statistical analysis, and subject to the protection of this Privacy Policy. For example, if you are an author, your personal information may continue to be published in connection with your article indefinitely. When we have no ongoing legitimate business need to process your personal information, we will either delete or anonymize it, or, if this is not possible (for example, because your personal information has been stored in backup archives), then we will securely store your personal information and isolate it from any further processing until deletion is possible.
  • Onward Transfer to Third Parties: As noted in the "How We Share Your Data" Section above, JD Supra may share your information with third parties. When JD Supra discloses your personal information to third parties, we have ensured that such third parties have either certified under the EU-U.S. or Swiss Privacy Shield Framework and will process all personal data received from EU member states/Switzerland in reliance on the applicable Privacy Shield Framework or that they have been subjected to strict contractual provisions in their contract with us to guarantee an adequate level of data protection for your data.

California Privacy Rights

Pursuant to Section 1798.83 of the California Civil Code, our customers who are California residents have the right to request certain information regarding our disclosure of personal information to third parties for their direct marketing purposes.

You can make a request for this information by emailing us at privacy@jdsupra.com or by writing to us at:

Privacy Officer
JD Supra, LLC
10 Liberty Ship Way, Suite 300
Sausalito, California 94965

Some browsers have incorporated a Do Not Track (DNT) feature. These features, when turned on, send a signal that you prefer that the website you are visiting not collect and use data regarding your online searching and browsing activities. As there is not yet a common understanding on how to interpret the DNT signal, we currently do not respond to DNT signals on our site.

Access/Correct/Update/Delete Personal Information

For non-EU/Swiss residents, if you would like to know what personal information we have about you, you can send an e-mail to privacy@jdsupra.com. We will be in contact with you (by mail or otherwise) to verify your identity and provide you the information you request. We will respond within 30 days to your request for access to your personal information. In some cases, we may not be able to remove your personal information, in which case we will let you know if we are unable to do so and why. If you would like to correct or update your personal information, you can manage your profile and subscriptions through our Privacy Center under the "My Account" dashboard. If you would like to delete your account or remove your information from our Website and Services, send an e-mail to privacy@jdsupra.com.

Changes in Our Privacy Policy

We reserve the right to change this Privacy Policy at any time. Please refer to the date at the top of this page to determine when this Policy was last revised. Any changes to our Privacy Policy will become effective upon posting of the revised policy on the Website. By continuing to use our Website and Services following such changes, you will be deemed to have agreed to such changes.

Contacting JD Supra

If you have any questions about this Privacy Policy, the practices of this site, your dealings with our Website or Services, or if you would like to change any of the information you have provided to us, please contact us at: privacy@jdsupra.com.

JD Supra Cookie Guide

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How We Use Cookies and Other Tracking Technologies

We use cookies and other tracking technologies to:

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There are different types of cookies and other technologies used our Website, notably:

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JD Supra Cookies. We place our own cookies on your computer to track certain information about you while you are using our Website and Services. For example, we place a session cookie on your computer each time you visit our Website. We use these cookies to allow you to log-in to your subscriber account. In addition, through these cookies we are able to collect information about how you use the Website, including what browser you may be using, your IP address, and the URL address you came from upon visiting our Website and the URL you next visit (even if those URLs are not on our Website). We also utilize email web beacons to monitor whether our emails are being delivered and read. We also use these tools to help deliver reader analytics to our authors to give them insight into their readership and help them to improve their content, so that it is most useful for our users.

Analytics/Performance Cookies. JD Supra also uses the following analytic tools to help us analyze the performance of our Website and Services as well as how visitors use our Website and Services:

  • HubSpot - For more information about HubSpot cookies, please visit legal.hubspot.com/privacy-policy.
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Facebook, Twitter and other Social Network Cookies. Our content pages allow you to share content appearing on our Website and Services to your social media accounts through the "Like," "Tweet," or similar buttons displayed on such pages. To accomplish this Service, we embed code that such third party social networks provide and that we do not control. These buttons know that you are logged in to your social network account and therefore such social networks could also know that you are viewing the JD Supra Website.

Controlling and Deleting Cookies

If you would like to change how a browser uses cookies, including blocking or deleting cookies from the JD Supra Website and Services you can do so by changing the settings in your web browser. To control cookies, most browsers allow you to either accept or reject all cookies, only accept certain types of cookies, or prompt you every time a site wishes to save a cookie. It's also easy to delete cookies that are already saved on your device by a browser.

The processes for controlling and deleting cookies vary depending on which browser you use. To find out how to do so with a particular browser, you can use your browser's "Help" function or alternatively, you can visit http://www.aboutcookies.org which explains, step-by-step, how to control and delete cookies in most browsers.

Updates to This Policy

We may update this cookie policy and our Privacy Policy from time-to-time, particularly as technology changes. You can always check this page for the latest version. We may also notify you of changes to our privacy policy by email.

Contacting JD Supra

If you have any questions about how we use cookies and other tracking technologies, please contact us at: privacy@jdsupra.com.

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