Financial Services Weekly News Roundup - January 2015 #4

Goodwin
Contact

The CFTC Exercises Expanded Jurisdiction Over Retail Transactions in Physical Commodities. Title VII of the Dodd-Frank Act of 2010 amended the Commodity Exchange Act (CEA) to add new authority over certain leveraged, margined or financed retail commodity transactions. New section 2(c)(2)(D) applies to any agreement, contract or transaction in any commodity that is entered into with, or offered to, a non-eligible contract participant or non-eligible commercial entity on a leveraged or margined basis, or financed by the offeror, the counterparty or a person acting in concert with either of them. An agreement, contract or transaction of this type is treated as if it were a contract of sale of a commodity for future delivery, and thus subject to provisions of the CEA. The CEA provides exceptions for certain transactions from section 2(c)(2)(d), including an exception for a contract of sale that results in “actual delivery” within 28 days. On January 26, the CFTC announced that it had accepted an offer of settlement in Matter of Gold Coast Bullion, Inc. and Anthony Lauria, an administrative case against a self-described precious metals broker and its president and sole officer. The CFTC found that telemarketers for Gold Coast Bullion (GCB) told customers that they could buy precious metals with a payment of 25% of the purchase price, with the remaining 75% of the purchase price being covered by a loan to the customer on which the customer paid interest. GCB did not purchase or sell any physical metals, but instead contracted with another company, AmeriFirst Management LLC, to execute the customer’s order. AmeriFirst, itself the subject of a suit in federal court by the CFTC, also did not purchase or sell any physical metals in connection with the GCB customer transactions, but instead managed its own exposure using derivatives in margin trading accounts with several entities, and made book entries which tracked the value of the customer’s account. On these facts the CFTC was able to find that the GCB transactions were transactions with non-eligible contract participants entered into on a leveraged basis, and that they did not result in actual delivery of the precious metals within 28 days. Having found that the transactions were covered by the provisions of the CEA, the CFTC order found that GCB had committed fraud in connection with the transactions and had failed to registered as a futures commission merchant (FCM), and that Lauria was responsible as a controlling person of GCB for its violations. While it appears that the activities of GCB were fraudulent in intent, the CFTC’s order is a reminder that merchants who deal in precious metals and other commodities for actual delivery should be careful not to get pulled into the requirements of the CEA because they offer financing to retail customers.

Because of the snowstorm in the Northeast, we are publishing on Thursday this week.

Regulatory Developments

SEC Announces Roundtable on Proxy Voting

The SEC announced that it will host a February 19, 2015 roundtable on potential improvements to the proxy voting process focused on universal proxy ballots and retail participation in the proxy process. The roundtable’s first panel will focus on the state of contested director elections and whether changes should be made to the federal proxy rules to facilitate the use of universal proxy ballots by management and proxy contestants, and will also address the state law, logistical, and disclosure issues presented by a possible universal proxy ballot process. The roundtable’s other panel will focus on strategies for increasing retail shareholder participation in the proxy process. This panel will discuss how technology – by providing better access to information or easier means of voting – might affect retail participation. The second panel will also discuss whether the format of disclosure could be improved to increase shareholder engagement and how the mechanics of voting could be improved to affect retail shareholder participation. The roundtable will be open to the public and webcast live on the SEC’s website.

Client Alert: Important Changes to the U.S. Sanctions Against Cuba

Goodwin Procter’s National Security & Foreign Trade Regulation practice issued a Client Alert on the Obama administration’s recently announced changes to U.S. sanctions against Cuba, allowing expanded travel, trade, and exchange in targeted areas. Financial services-related changes detailed in the Alert include relaxation of limits on remittances, credit and debit card use and operations of U.S. banks and credit unions.

Federal Reserve Issues Strategies for Improving the U.S. Payment System

On January 26, 2015, the Federal Reserve Board issued its long-anticipated plan for working with payments systems stakeholders to enhance the speed, security, efficiency and cross-border capabilities of the U.S. payment system. "Strategies for Improving the U.S. Payment System" outlines plans to establish task forces focused on implementation and fraud reduction and improve the system through work on standards, directories and business-to-business payment improvements. The paper also describes the Federal’s Reserve’s plans to enhance Fed-provided services for same-day automated clearing house (ACH), risk management and settlement. The Federal Reserve hosted a webcast on January 29 to discuss the report and the Federal Reserve’s plans for collaboration with stakeholders. Teleseminars will also be held on February 4 and 10 to present an overview of the strategies and answer questions.

Enforcement & Litigation

SEC Grants Relief From 2-Year Compensation Timeout Under Advisers Act Pay-to-Play Rule Triggered When Firm Principal Contributed to Texas Governor’s Presidential Campaign

Crestview Advisors, L.L.C., an SEC-registered adviser, was granted exemptive relief pursuant to Rule 206(4)-5 under the Investment Advisers Act, often referred to as the “Pay-to-Play Rule,” from the Rule’s two-year prohibition on receiving compensation with respect to the investments made by a Texas state pension plan in a private equity fund managed by the adviser. The prohibition was triggered when Jeffrey A. Marcus, a senior investment professional of the adviser, made a $2,500 campaign contribution in 2011 to the Presidential campaign of the Governor of Texas. By virtue of his office, the Texas Governor had the power to appoint all the members of the board of trustees that oversees investment decisions for the pension plan in question. The adviser maintained compliance procedures more restrictive than the limitations in the Pay-to-Play Rule, including a pre-clearance process for contributions to any national political candidate, party or action committee. The adviser attributed the violation of its compliance procedures by Mr. Marcus to a mistaken belief on his part that all contributions to federal campaigns were permissible and exempt from the adviser’s pre clearance requirements. Immediately upon learning of the contribution, the adviser’s chief compliance officer instructed Mr. Marcus to request the return of the campaign contribution, and the contribution was subsequently returned by the Governor’s campaign office. The adviser’s amended and restated application for exemptive relief on which the SEC granted the proposed relief is available here. Crestview Advisors, L.L.C., SEC Release No. IA-3997 (Jan. 15, 2015).

Investment Adviser Settles With SEC Over Compliance Program and Form ADV Shortcomings

The SEC settled administrative proceedings against du Pasquier & Co., Inc., a formerly registered investment adviser, based on SEC findings that the adviser failed to maintain adequate compliance policies and procedures and did not meet various Form ADV disclosure requirements with respect to the SEC and its clients. Among other findings, the SEC determined that the adviser (1) relied on an off-the-shelf compliance manual template without tailoring it to the firm’s business; (2) did not fully implement the compliance procedures it did adopt, e.g., the firm did not conduct adequate best execution reviews and did not adequately review marketing materials; (3) failed to conduct annual reviews of its compliance program; and (4) failed to conduct adequate reviews of its personnel’s securities transactions. A number of the violations noted in the settlement involved conduct identified by the SEC examination staff in 2004 and 2007. The SEC found that the adviser addressed some of the deficiencies identified in those examinations, but failed to prevent the violations identified in the settlement. In determining to accept the Offer, the Commission considered the adviser’s remedial efforts and cooperation with the SEC staff, including steps taken by the adviser before it became aware of the staff’s investigation. The adviser agreed to pay a $50,000 civil money penalty. In the Matter of du Pasquier & Co., Inc., SEC Release No. IA-4004 (Jan. 21, 1015).

FINRA Fines Broker-Dealer Over Disclosure of Customer Information in Response to Requests Related to Class Action Notices

FINRA entered into a settlement with member firm Scottrade, Inc. related to FINRA’s findings that in 2012 the firm violated Regulation S-P by disclosing the names and addresses of more than 300,000 customers in response to requests from a class action administrator and law firms regarding the delivery of class action notices to Scottrade’s customers. FINRA found that Scottrade’s disclosure did not fall within any exception to Regulation S-P’s prohibitions regarding the disclosure of nonpublic personal information about its customers, noting particularly that the requests did not fall within the exception allowing for disclosures to comply with a subpoena or respond to judicial process. FINRA also determined that Scottrade had inadequate supervisory policies and procedures related to the disclosure of confidential customer information by the department handling the class action notice requests. In addition to undertaking specific measures to address and correct the violations identified in the settlement, Scottrade agreed to pay a $200,000 fine.

Industry Developments

ICI and IDC Issue Report on Use of Proxy Advisory Firms by Registered Funds

The Investment Company Institute (ICI) and the Independent Directors Council (IDC) released their Report on Funds’ Use of Proxy Advisory Firms, which is designed to assist registered fund advisers and boards in responding to June 2014 guidance from the SEC staff about advisers’ proxy voting responsibilities relating to use of proxy advisory firms. The report addresses the following topics: (i) proxy advisory firm services generally, (ii) board oversight of proxy advisory firms, (iii) fund adviser due diligence and oversight of proxy advisory firms, which represents the bulk of the report, and (iv) miscellaneous considerations related to proxy advisory firm oversight. An appendix provides references to additional resources, including SEC releases and staff guidance, ICI and IDC publications (such as the ICI and IDC’s Oversight of Fund Proxy Voting paper, which discusses the board’s role in overseeing proxy voting more broadly), and other resources.

Lynne Barr Presenting on FDIC Overdraft Protection Guidance, February 5, 2015

On February 5, 2015, Banking and Consumer Financial Services chair Lynne Barr will be presenting a live CLE webinar program entitled “Trending Tips on FDIC Guidance on Overdraft Protection” in association with Lorman Education Services. Please view program details here, and note the special 50% discount codes offered on the cover which we are pleased to extend to clients and friends of the firm.

 

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.

© Goodwin | Attorney Advertising

Written by:

Goodwin
Contact
more
less

Goodwin on:

Readers' Choice 2017
Reporters on Deadline

"My best business intelligence, in one easy email…"

Your first step to building a free, personalized, morning email brief covering pertinent authors and topics on JD Supra:
*By using the service, you signify your acceptance of JD Supra's Privacy Policy.
Custom Email Digest
- hide

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.

Please note that if you subscribe to one of our Services, you can make choices about how we collect, use and share your information through our Privacy Center under the "My Account" dashboard (available if you are logged into your JD Supra account).

Collection of Information

Registration Information. When you register with JD Supra for our Website and Services, either as an author or as a subscriber, you will be asked to provide identifying information to create your JD Supra account ("Registration Data"), such as your:

  • Email
  • First Name
  • Last Name
  • Company Name
  • Company Industry
  • Title
  • Country

Other Information: We also collect other information you may voluntarily provide. This may include content you provide for publication. We may also receive your communications with others through our Website and Services (such as contacting an author through our Website) or communications directly with us (such as through email, feedback or other forms or social media). If you are a subscribed user, we will also collect your user preferences, such as the types of articles you would like to read.

Information from third parties (such as, from your employer or LinkedIn): We may also receive information about you from third party sources. For example, your employer may provide your information to us, such as in connection with an article submitted by your employer for publication. If you choose to use LinkedIn to subscribe to our Website and Services, we also collect information related to your LinkedIn account and profile.

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.

How do we use this information?

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:

  • Operate our Website and Services and publish content;
  • Distribute content to you in accordance with your preferences as well as to provide other notifications to you (for example, updates about our policies and terms);
  • Measure readership and usage of the Website and Services;
  • Communicate with you regarding your questions and requests;
  • Authenticate users and to provide for the safety and security of our Website and Services;
  • Conduct research and similar activities to improve our Website and Services; and
  • Comply with our legal and regulatory responsibilities and to enforce our rights.

How is your information shared?

  • Content and other public information (such as an author profile) is shared on our Website and Services, including via email digests and social media feeds, and is accessible to the general public.
  • If you choose to use our Website and Services to communicate directly with a company or individual, such communication may be shared accordingly.
  • Readership information is provided to publishing law firms and authors of content to give them insight into their readership and to help them to improve their content.
  • Our Website may offer you the opportunity to share information through our Website, such as through Facebook's "Like" or Twitter's "Tweet" button. We offer this functionality to help generate interest in our Website and content and to permit you to recommend content to your contacts. You should be aware that sharing through such functionality may result in information being collected by the applicable social media network and possibly being made publicly available (for example, through a search engine). Any such information collection would be subject to such third party social media network's privacy policy.
  • Your information may also be shared to parties who support our business, such as professional advisors as well as web-hosting providers, analytics providers and other information technology providers.
  • Any court, governmental authority, law enforcement agency or other third party where we believe disclosure is necessary to comply with a legal or regulatory obligation, or otherwise to protect our rights, the rights of any third party or individuals' personal safety, or to detect, prevent, or otherwise address fraud, security or safety issues.
  • To our affiliated entities and in connection with the sale, assignment or other transfer of our company or our business.

How We Protect Your Information

JD Supra takes reasonable and appropriate precautions to insure that user information is protected from loss, misuse and unauthorized access, disclosure, alteration and destruction. We restrict access to user information to those individuals who reasonably need access to perform their job functions, such as our third party email service, customer service personnel and technical staff. You should keep in mind that no Internet transmission is ever 100% secure or error-free. Where you use log-in credentials (usernames, passwords) on our Website, please remember that it is your responsibility to safeguard them. If you believe that your log-in credentials have been compromised, please contact us at privacy@jdsupra.com.

Children's Information

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.
    • Right to Correct Information: You may ask that we make corrections to any information we hold, if you believe such correction to be necessary.
    • 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

As with many websites, JD Supra's website (located at www.jdsupra.com) (our "Website") and our services (such as our email article digests)(our "Services") use a standard technology called a "cookie" and other similar technologies (such as, pixels and web beacons), which are small data files that are transferred to your computer when you use our Website and Services. These technologies automatically identify your browser whenever you interact with our Website and Services.

How We Use Cookies and Other Tracking Technologies

We use cookies and other tracking technologies to:

  1. Improve the user experience on our Website and Services;
  2. Store the authorization token that users receive when they login to the private areas of our Website. This token is specific to a user's login session and requires a valid username and password to obtain. It is required to access the user's profile information, subscriptions, and analytics;
  3. Track anonymous site usage; and
  4. Permit connectivity with social media networks to permit content sharing.

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

  • "Session cookies" - These cookies only last as long as your online session, and disappear from your computer or device when you close your browser (like Internet Explorer, Google Chrome or Safari).
  • "Persistent cookies" - These cookies stay on your computer or device after your browser has been closed and last for a time specified in the cookie. We use persistent cookies when we need to know who you are for more than one browsing session. For example, we use them to remember your preferences for the next time you visit.
  • "Web Beacons/Pixels" - Some of our web pages and emails may also contain small electronic images known as web beacons, clear GIFs or single-pixel GIFs. These images are placed on a web page or email and typically work in conjunction with cookies to collect data. We use these images to identify our users and user behavior, such as counting the number of users who have visited a web page or acted upon one of our email digests.

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.
  • New Relic - For more information on New Relic cookies, please visit www.newrelic.com/privacy.
  • Google Analytics - For more information on Google Analytics cookies, visit www.google.com/policies. To opt-out of being tracked by Google Analytics across all websites visit http://tools.google.com/dlpage/gaoptout. This will allow you to download and install a Google Analytics cookie-free web browser.

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.

- hide

This website uses cookies to improve user experience, track anonymous site usage, store authorization tokens and permit sharing on social media networks. By continuing to browse this website you accept the use of cookies. Click here to read more about how we use cookies.