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As financial markets across the world become more integrated, the potential for financial shocks to be transmitted both from one jurisdiction to another and from one financial sector to another increases. At the same time differences in national regulatory arrangements can be the source of important competitive distortions between financial institutions. Against this background national authorities have been seeking to coordinate the regulation of securities firms and of batiks undertaking securities business. This paper, which is published in two parts, aims to clarify some of the policy issues arising from recent convergence initiatives by examining the US capital adequacy rules for US investment firms and contrasting the US approach with European securities regulation as formulated in the Capital Adequacy Directive. The first part of this paper was published in the previous issue of Journal of Financial Regulation and Compliance.

Recent SEC actions, including its first settlement of an enforcement case, provide specific guidance and some surprising points of emphasis concerning the implementation of Regulation FD (Fair Disclosure). Although there is nothing inherently unlawful about one‐on‐one meetings with securities analysts or institutional investors, the SEC’s actions demonstrate the risks associated with one‐on‐one meetings, particularly with sell‐side analysts for public companies and potentially for the analysts themselves. Executives and analysts alike could benefit from consulting with counsel about the best ways to perform the valuable function of discussing a company’s business without violating Regulation FD. Several measures should be considered, including, among others, a review of prior filings, education about what types of information is normally considered material, and a predetermined view about areas that will be “out of bounds” to questions.

The purpose of the paper is to summarize and discuss selected investor‐protection and other related enhancements to federal securities regulation contained in the Dodd‐Frank Wall Street Reform and Consumer Protection Act.

The paper discusses the following investor protections and related enhancements: enhanced whistleblower incentives and protections; expanded SEC investor‐protection administrative functions including the establishment of an Office of the Investor Advocate, the appointment of an Ombudsman, and the establishment on a permanent basis of an Investor Advisory Committee; expanded enforcement authority against aiders and abettors of securities violations; evaluation of the existing standards of care employed by broker‐dealers and investment advisers; a narrowing of exemptions from registration under the Securities Act, including by directing the SEC to enact rules to disqualify “bad actors” from relying on Rule 506 of Regulation D and adjusting the definition of “accredited investor” for purposes of the SEC's rules under the Securities Act; an exemption for certain small companies from the auditor attestation requirements of Sarbanes‐Oxley; provisions to increase the oversight and accountability of credit rating agencies; and steps to bolster the regulatory oversight of the municipal securities market, including by creating a new class of regulated intermediaries – “municipal advisors”

The Dodd‐Frank Act leaves many critical issues to be fleshed out through further SEC rulemaking and in the implementation phase, including: procedures regarding whistleblower information submitted to the SEC; the actual role of the Office of the Investor Advocate; whether the SEC will adopt a broker‐dealer fiduciary‐duty standard of care; additional texture on rules disqualifying bad actors from relying on Rule 506 of Regulation D; adjustments to net worth requirements related to accredited investor status; rules on disclosure of credit ratings in registration statements; and qualification standards for municipal advisors.

Public companies and other persons affected by the Dodd‐Frank Act should: keep abreast of key developments in the rulemaking phase; possibly participate in the rulemaking process: develop realistic strategies to respond to the proposed rules; develop compliance action plans; and review whistleblower‐related compliance policies and procedures.

The paper provides expert guidance from experienced securities and financial services lawyers.

As financial markets across the world become more integrated, the potential for financial shocks to be transmitted both from one jurisdiction to another and from one financial sector to another increases. At the same time differences in national regulatory arrangements can be the source of important competitive distortions between financial institutions. Against this background national authorities have been seeking to coordinate the regulation of securities firms and of banks undertaking securities business. This paper, which is published in two parts, aims to clarify some of the policy issues arising from recent convergence initiatives by examining the US capital adequacy rules for US investment firms and contrasting the US approach with European securities regulation as formulated in the Capital Adequacy Directive. The second part of this paper will be published in the next issue of Journal of Financial Regulation & Compliance.

On December 17, 2003 the Securities and Exchange Commission (SEC) approved an overhaul of the New York Stock Exchange’s (NYSE’s) system of corporate governance. After questions arose concerning the NYSE’s ability to discharge its self‐regulatory functions following the resignation of former Chairman and CEO Richard Grasso, Interim Chairman John Reed proposed new governance architecture including a newly independent Board of Directors and a separate Board of Executives designed to represent the NYSE’s various constituencies. The new architecture reflects an effort to strike a balance between an independent board of directors and the desire for input from the industry, i.e., self‐regulation. This new structure should not be seen as the SEC’s determination of the future of self‐regulation, but simply as the most recent step in refining and improving the self‐regulatory process at the NYSE and other marketplaces as well.

To explain the requirements of Regulation Systems Compliance and Integrity (“Regulation SCI”) and the new responsibilities of organizations defined as “SCI entities.”

Explains the purpose of Regulation SCI, the responsibilities of SCI entities, systems covered by the rules (“SCI systems”), and specific obligations of SCI entities, including the establishment and periodic review of policies and procedures, compliance with the Exchange Act, designation of “responsible SCI personnel,” appropriate corrective action in response to “SCI events,” notification of systems changes, annual “SCI reviews,” business continuity and disaster recovery testing, and recordkeeping and filing. Discusses future implications for SCI Entities and other market participants.

Regulation SCI launches a broad and extensive overlay of rules and guidance to address systems capacity and integrity issues that have increasingly affected the securities markets. The adoption of this regulation suggests that there will continue to be increased scrutiny by the SEC, FINRA and other regulators of the automated systems and related policies and procedures of all market participants.

SCI entities will need to devote considerable attention and resources not just to prevent incidents where possible, but also to establish systems for ensuring thorough compliance and well-documented and reasonable follow-up actions where necessary. All market professionals – including broker-dealers, investment advisers, pension funds and investment companies – should study the new regulation and consider adopting appropriate policies and procedures to address operating as well as cyber security issues with respect to their own critical operating technology.

Practical guidance from experienced financial services lawyers.

The United States Securities and Exchange Commission adopted Regulation S in 1990 to clarify that offshore offers and sales of securities need not comply with the onerous registration requirements of US securities laws. In the short time since Regulation S was adopted, a number of issuers have abused the regulation. Amendments designed to curb these abuses have been recently proposed. This paper addresses the impact of the amendments and identifies significant issues to consider when undertaking a Regulation S transaction.

This article examines compliance and disclosure interpretations issued by the staff of the Securities and Exchange Commission in May 2016 that provide guidance to SEC-reporting companies on how they can use financial measures not prepared in accordance with generally accepted accounting principles in a manner that complies with SEC rules governing the presentation of non-GAAP measures in SEC filings and other public communications.

This article provides an in-depth analysis of the new interpretive guidance in the context of the increasing use of non-GAAP financial measures by SEC-reporting companies and the SEC’s concern that some companies have been using non-GAAP measures inappropriately to present a materially different picture of their operating performance than investors can discern from financial measures prepared in accordance with GAAP.

Although the appropriate use of non-GAAP financial measures can enhance investor understanding of a company’s business and operating results, a relatively permissive SEC attitude towards the use of non-GAAP measures in recent years has emboldened some companies to increase their reliance on non-GAAP measures in a manner the SEC views as inconsistent with its rules. The SEC staff’s new guidance signals a renewed focus by the SEC on compliance with its requirements concerning the nature of permissible non-GAAP measures and the ways in which companies should present those measures.

This article provides expert guidance on a major new SEC disclosure requirement from experienced securities lawyers.

For the sponsor or manager of a non‐US investment fund, the mantle of US laws and regulations surrounding the offering of fund shares to US investors can be mystifying. In an effort to simplify and clarify the legal miasma, the US Congress and Securities and Exchange Commission (SEC) have in the past year taken action to facilitate the offering of interests to more sophisticated investors in both foreign and domestic private investment funds. This paper describes the recent legislation enacted by Congress, rules and interpretations issued by the SEC and its staff to implement and effectuate the legislation and strategies for privately offered investment companies to take advantage of the new, more liberal regulatory scheme.

The purpose of the paper is to explore the legal and institutional frameworks for optimal regulation of capital market beyond compliance-based regulation, to enable the market to deliver on its strategic role as the enabler of efficient allocation of resources and economic growth.

The paper relies on doctrinal approach to assess the existing regulatory approaches and prospects for the future.

The paper found that the regulatory authorities unduly concentrate on compliance-based and sanction-based regimes without sufficient emphasis on innovations and transformative solutions that foster diversification and efficiency in the market. The paper also found that the deployment of innovations and transformative solutions complemented with robust regulation is positively correlated with capital market growth.

The paper offers fresh insights on the optimal approaches to regulation of capital market that transcend compliance-based and sanction-based regimes to reliance on innovative tools that expand, diversify and effectuate the functionality and utility of capital market.