SEC Adopts Amendments to Auditor Independence Rule to Address the “Loan Provision”

Dechert LLP

The U.S. Securities and Exchange Commission on June 18, 2019 adopted amendments to Rule 2‑01(c)(1)(ii)(A) under Regulation S-X – the so-called “Loan Provision” (Final Rule).1 The Final Rule will become effective on October 3, 2019. Generally, the Loan Provision, as currently in force, provides that an audit firm will not be considered independent from an audit client under Regulation S-X if the audit firm (or certain of its personnel) has a lending relationship with a person that owns, beneficially or of record, more than 10% of the equity securities of the audit client.2 While the Loan Provision applies broadly to many different types of entities, compliance has posed particular challenges in the case of registered investment companies and other “funds”3 due to the manner in which their securities are sold and held through financial intermediaries.

As background, the SEC originally proposed amendments to the Loan Provision on May 2, 2018 (Proposal)4 and has adopted the amendments largely as proposed. Consistent with the Proposal, the Final Rule significantly narrows the universe of lending relationships that implicate the Loan Provision and reduces the compliance burden for audit firms and their audit clients. The Final Rule also addresses significant concerns over audit firms’ ability to comply with the Loan Provision with respect to registered investment companies and other funds. These concerns were initially publicized in 2016 and temporarily addressed in a no-action letter issued that year by the SEC’s Division of Investment Management (No-Action Letter).5

The Final Rule introduces four amendments to the Loan Provision. Specifically, the amendments:

  • Focus exclusively on beneficial ownership of an audit client’s equity securities;
  • Replace the 10% equity ownership threshold with a more qualitative “significant influence” test;
  • Establish a “known through reasonable inquiry” standard for purposes of an audit firm’s responsibility to identify an audit client’s beneficial owners of shares; and
  • Reduce the scope of entities deemed to be affiliates of an audit client that is a registered investment company or other pooled investment vehicle.6

A marked comparison reflecting the changes to the Loan Provision is presented in the Appendix.

The Final Rule

In the Adopting Release, the SEC acknowledged that, in the case of registered investment companies, other pooled investment vehicles, and registered investment advisers, application of the existing Loan Provision: was out of step with its original purpose of identifying relationships likely to compromise an audit firm’s independence; presented “significant practical challenges,” both for audit firms and the audit committees of their audit clients; could serve to “distract auditors’ and audit committees’ attention from matters that might be more likely to bear on the auditor’s objectivity and impartiality"; and may generate “significant costs” for entities, which are ultimately borne by shareholders.

Citing the original proposing and adopting releases for the Loan Provision, the Adopting Release explains that the rule was designed to prohibit lending relationships that “reasonably could be viewed as creating a self-interest that competes with the auditor’s obligation to serve only investors’ interests,” and that such concerns extended only to those shareholders of an audit client that have “'a special and influential role' with the audit client.” The Adopting Release cautions that violations of the auditor independence rules that “no reasonable investor” would view as compromising an audit firm’s independence could ultimately lead to the desensitization of market participants to more serious violations. According to the Adopting Release, the Loan Provision’s original purpose is therefore better served by limiting violations to cases where an auditor’s independence is actually impaired “in fact or in appearance.” The Final Rule’s four amendments are thus intended to more closely align the Loan Provision with its original aims and reduce the focus on fact patterns that do not impair an audit firm’s objectivity and impartiality.

Beneficial Ownership

The existing Loan Provision posed particular challenges for registered investment companies, in part because it applied both to “record” and “beneficial” owners of an audit client’s equity securities. The SEC recognized in the Adopting Release that shares of registered investment companies are commonly held by financial intermediaries in omnibus accounts on behalf of their clients, with the financial intermediaries serving as “record” owners of the shares. As a result of those arrangements, many intermediaries were implicated by the Loan Provision despite serving a merely custodial function with respect to fund shares. In the Adopting Release, the SEC acknowledged that those intermediaries might be unable (or lack economic incentive) to exercise voting control over shares or to otherwise be in a position to influence their issuer. The Final Rule limits the Loan Provision’s scope to beneficial ownership of an audit client’s equity securities (and those of the audit client’s non-fund affiliates) and does not extend to mere record holders of those securities. The SEC expressed the view that focusing solely on beneficial ownership will more effectively capture those relationships that implicate the Loan Provision’s objectives.

The Adopting Release also clarifies that, for purposes of the Loan Provision, the term “beneficial owner” does not include financial intermediaries that are record holders with “limited authority” to exercise voting control or make investment decisions on behalf of underlying shareholders.7 This change is expected to drastically reduce the number of broker-dealers, custodians, and other financial intermediaries that are implicated by the Loan Provision solely as a result of their holding shares on behalf of their clients.

Significant Influence Test

The Final Rule replaces the Loan Provision’s existing quantitative, bright-line equity ownership test (10% Test) with a qualitative “significant influence test.” The existing 10% Test would prohibit a lending relationship between an auditor and any entity that held more than 10% (beneficially and/or of record) of an audit client’s shares. Thus, routine fluctuations in investment activity by an intermediary’s clients could cause the intermediary to exceed the 10% Test, despite the absence of meaningful changes in the intermediary’s relationship with an audit client. Further, the 10% Test has imposed significant operational burdens on audit firms and funds due to ongoing monitoring of ownership levels. In the Adopting Release, the SEC characterized the Loan Provision’s existing 10% beneficial or record ownership test as potentially being both under- and over-inclusive for purposes of identifying shareholders that have a “special and influential role” with an audit client. In its place, the Final Rule adopts a facts-and-circumstances-based test to determine whether a shareholder has the ability to exercise “significant influence” over an issuer.

The Adopting Release states that the Final Rule’s “significant influence” test is intended to correspond with the Financial Accounting Standards Board’s Accounting Standards Codification Topic 323 (ASC 323),8 which is currently referenced in other sections of the SEC’s auditor independence rules and, accordingly, will be familiar to audit firms. Under ASC 323, share ownership is only one of a number of factors that may indicate “significant influence.” Further, the Adopting Release states that, consistent with ASC 323, a shareholder’s ownership of less than 20% of an issuer’s voting securities would give rise to a rebuttable presumption that the shareholder does not have the ability to exercise significant influence over that issuer.9

In the fund context, the Adopting Release indicates that indicia of influence would include influence over a fund’s investment policies or its day-to-day portfolio management processes. The SEC identified decisions relating to the selection and valuation of investments, as well as the distribution of income and capital gains, as examples of day-to-day portfolio management processes. In cases where an investment adviser has significant discretion over a fund’s portfolio management process under the terms of an advisory agreement, the Adopting Release indicates that a shareholder that does not possess the ability to influence the investment adviser generally would not be deemed to have significant influence over the fund.10 The Adopting Release states that an audit firm could analyze significant influence by considering factors such as: a fund’s governance structure and governing documents; the manner in which fund shares are sold and held through financial intermediaries; and relevant contractual arrangements.11

Known Through Reasonable Inquiry Standard

The SEC notes that auditor independence is a "shared responsibility" between the audit firm and the audit client. The Adopting Release observes that monitoring for compliance with the Loan Provision’s existing quantitative, bright-line equity ownership test has posed significant challenges for auditors and their audit clients, including the need to share and access records or other information concerning share ownership. In addition to adopting the more qualitative significant influence test, the Final Rule addresses these operational challenges by establishing a “known through reasonable inquiry” standard to be applied when identifying the beneficial owners of an audit client’s shares. The Adopting Release acknowledges that, due to the manner in which shares of investment companies are distributed and held, shareholders’ identities may not be readily known to issuers or their audit firms; further, in some instances, banks or broker-dealers holding those shares on behalf of customers may be prohibited from disclosing beneficial owners’ identities. In addition, the SEC observed that if, following reasonable inquiry and in coordination with an audit client, an audit firm is not aware that an entity with which it has a lending relationship beneficially owns shares of the audit client, it is unlikely that such a relationship would impact the audit firm’s objectivity and impartiality.

While the Adopting Release does not provide specific guidance as to what would constitute a “reasonable inquiry” in this context, it reiterates the observation in the Proposing Release that such a standard is “generally consistent with regulations implementing” the Investment Company Act of 1940, the Securities Act of 1933 and the Securities Exchange Act of 1934, and should, therefore, be familiar to issuers. The Adopting Release states that audit firms and their clients could conduct a reasonable inquiry analysis by examining “the audit client’s governance structure and governing documents, Commission filings about beneficial owners, or other information prepared by the audit client which may relate to the identification of a beneficial owner.”12

Exclusion of Funds from Affiliate Definition

The Final Rule no longer requires registered investment companies and other pooled investment vehicles within the same investment company complex to be deemed to be affiliates of one another for purposes of the Loan Provision. As noted above, under the existing Loan Provision, an audit firm’s “audit client” is defined to include affiliates of the audit client, which, for a registered investment company, include all entities within the investment company complex, regardless of whether the audit firm actually provides audit services to those other entities. As a result of this expansive definition, under both the existing Loan Provision and the No-Action Letter, auditors were forced to monitor the ownership of all registered investment companies and private funds advised or sponsored by an audit client’s investment adviser, as well as the ownership of the adviser itself and certain of its affiliates. The Adopting Release notes that fund shareholders generally are not able to exercise influence over the management of other funds in the same fund complex. Therefore, the Final Rule amends the definition of “audit client” as it applies to a “fund” to exclude any other fund that otherwise would be considered an affiliate of the audit client.13

Most notably, this change would eliminate the requirement that an audit firm expend resources assessing the owners of every fund within an investment company complex rather than focusing only on those funds for which it provides audit services. It eliminates situations in which an audit firm would fail to comply with the Loan Provision due to a lender’s ownership of shares of a fund for which the audit firm does not provide audit services.

In a change from the original Proposal, the definition of “fund” in the Final Rule is expanded to include not only an investment company or an issuer that would be an investment company but for the exceptions in Section 3(c) of the 1940 Act, but also a commodity pool as defined in Section 1a(10) of the Commodity Exchange Act, which is not an investment company and does not rely on an exclusion from investment company status in Section 3(c) of the 1940 Act. In addition, the SEC clarified in the Adopting Release that the definition of a “fund” for purposes of the Loan Provision also encompasses “foreign funds.”14

Other Potential Amendments

The Adopting Release states that SEC Chairman Jay Clayton has directed the SEC staff to consider recommendations for possible additional changes to the SEC’s auditor independence rules, including the Loan Provision, in light of comments that were submitted in response to the Proposing Release, some of which addressed unrelated provisions of the auditor independence rules. The Adopting Release notes that those comments related to, among other things, the definitions of the terms “covered person” and “affiliate of the audit client.”

Conclusion

The Final Rule provides relief for investment companies and audit firms that have continued to allocate significant resources to complying with the requirements of the No-Action Letter. In addition, the Final Rule should reduce or eliminate the disproportionate degree of attention that fund audit committees have been required to devote to considering technical violations of the Loan Provision that have no bearing on an auditor’s objectivity and impartiality.

Appendix – Changes to Loan Provision

(A) Loans/Debtor-Creditor Relationship.

(1) Any loan (including any margin loan) to or from an audit client, or an audit client’s officers, directors, or record or beneficial owners of more than ten percent(known through reasonable inquiry) of the audit client’s equity securities where such beneficial owner has significant influence over the audit client, except for the following loans obtained from a financial institution under its normal lending procedures, terms, and requirements:

(1i) Automobile loans and leases collateralized by the automobile;

(2ii) Loans fully collateralized by the cash surrender value of an insurance policy;

(3iii) Loans fully collateralized by cash deposits at the same financial institution; and

(4iv) A mortgage loan collateralized by the borrower’s primary residence provided the loan was not obtained while the covered person in the firm was a covered person.

(2) For purposes of paragraph (c)(1)(ii)(A) of this section:

(i) the term audit client for a fund under audit excludes any other fund that otherwise would be considered an affiliate of the audit client;

(ii) The term fund means: an investment company or an entity that would be an investment company but for the exclusions provided by Section 3(c) of the Investment Company Act of 1940 (15 U.S.C. 80a-3(c)); or a commodity pool as defined in Section 1a(10) of the U.S. Commodity Exchange Act, as amended [(7 U.S.C. 1-1a(10)], that is not an investment company or an entity that would be an investment company but for the exclusions provided by Section3(c) of the Investment Company Act of 1940 (15 U.S.C. 80a-3(c)).

Footnotes

1) Auditor Independence With Respect to Certain Loans or Debtor-Creditor Relationships, Release No. 33-10648(June 18, 2019) (Adopting Release).

2) “Audit client” is defined to include affiliates of the audit client, which, for a registered investment company, includes all entities within the “investment company complex,” regardless of whether the audit firm actually provides audit services to those other entities.

The “investment company complex” of an audit client that is an investment company is defined in Rule 2‑01(f)(14) to include, among other things: (i) the company’s investment adviser; (ii) any affiliates of the investment adviser that are investment advisers or provide administrative, custodian, underwriting or transfer agent services to registered funds; and (iii) any other investment company or any company that would be an investment company but for Section 3(c) of the Investment Company Act of 1940, which is advised or sponsored by the audit client’s investment adviser.

3) As discussed further in this OnPoint, the Final Rule defines “fund” as it relates to the Loan Provision as: (i) an investment company or an entity that would be an investment company but for the exclusions provided by Section 3(c) of the 1940 Act; or (ii) a commodity pool as defined in Section 1a(10) of the Commodity Exchange Act, which is not an investment company or would be an investment company but for the exclusions provided by Section 3(c) of the 1940 Act.

4) Auditor Independence with respect to Certain Loans or Debtor-Creditor Relationships, Release No. 33‑10491 (May 2, 2018) (Proposing Release). For further information, please refer to Dechert OnPoint, SEC Proposes Amendments to Auditor Independence Rule to Address the “Loan Provision”.

5) Fidelity Management & Research Company, et al., SEC No-Action Letter (June 20, 2016). For further information, please refer to Dechert Newsflash, SEC Staff Issues No-Action Relief on Auditor Independence and the “Loan Provision” and Dechert Newsflash, SEC Staff Extends Effectiveness of No-Action Relief on Auditor Independence and the “Loan Provision”. The Adopting Release states that the No-Action Letter will be withdrawn on the effective date of the Final Rule.

6) Pooled investment vehicles include “private funds” that are excluded from the definition of investment company under Section 3(c)(1) or 3(c)(7) of the 1940 Act.

7) The Adopting Release notes that financial intermediaries that take certain steps to remove discretion over the voting or disposition of shares also generally will not be considered beneficial owners for purposes of the Loan Provision.

8) ASC 323 provides a non-exclusive list of factors that could give rise to significant influence over an issuer, including: representation on the board of directors; participation in policy-making processes; material intra-entity transactions; interchange of managerial personnel; technological dependency; and extent of ownership by an investor in relation to the concentration of other shareholdings.

9) Conversely, ASC 323 establishes a rebuttable presumption that a shareholder owning 20% or more of an issuer’s equity securities would have the ability to exercise significant influence over the issuer. As outlined in the Proposing Release, ASC 323 provides a list of factors to be considered in rebutting that presumption, including (among others): the existence of an agreement under which the shareholder surrenders significant rights; or the shareholder’s attempt and failure to obtain representation on the issuer’s board of directors.

10) The Adopting Release also notes that a shareholder’s ability to vote on a pro rata basis with other shareholders concerning the approval of a fund’s management agreement or its fundamental policies generally should not be viewed to signify significant influence over the fund. The Adopting Release adds, however, that in the private fund context, a side letter agreement permitting an investor to participate in portfolio management (including through participation on an advisory committee) would likely lead to a determination that the investor has significant influence over the private fund. The Adopting Release clarifies that an investor that participates on an advisory committee would likely be found to have significance influence over a private fund if such a committee “involves substantive oversight responsibility or decision-making capacity over operating and financial policies significant to the fund.”

11) The Adopting Release also states that with respect to exchange-traded funds (ETFs), the deposit or receipt of creation or redemption baskets by an authorized participant (AP), or by a market maker acting through an AP that is also a lender to the auditor of the ETF, would not by itself lead to a conclusion of significant influence over the ETF.

12) Similarly, the No-Action Letter suggested that a “reasonable inquiry” could consist of a review of “available ownership records.”

13) The SEC also clarified in the Adopting Release that this exclusion encompasses any other entities in which such a fund invests.

14) A “foreign fund” is defined in the Adopting Release as an investment company “that is organized outside the U.S. and that does not offer or sell its securities in the U.S. in connection with a public offering."

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.

© Dechert LLP | Attorney Advertising

Written by:

Dechert LLP
Contact
more
less

Dechert LLP on:

Readers' Choice 2017
Reporters on Deadline

Related Case Law

"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.