Weekly RoundUp November 02, 2016

Financial Services Weekly News

Editor's Note

Voting Matters. Next week, we head to the polls to elect a new president of the United States and other government representatives. Voting is important because it allows registered citizens to cast their vote for leaders that they believe will make better choices for our nation. Voting matters in the context of selecting corporate leaders, too. This past week, the Securities and Exchange Commission (the SEC) voted to propose amendments to the proxy rules that would require parties in contested director elections to use universal proxy cards. The proposed rules would require the company and the dissident to provide shareholders with a universal proxy card that includes the names of both company and dissident nominees. Some view the rule proposal as a means to level the playing field for shareholders to have the freedom of choice to vote for their preferred candidates, which may be a combination of company and dissident nominees. This and other matters, including a client alert providing an update on the SEC’s response to proxy access no-action letter requests, are covered below.

Editor's Note
Editor's Note
Editor's Note

Regulatory Developments

Client Alert: SEC Proposes Rules on Universal Proxy and Voting Options

The SEC has proposed amendments to its proxy rules that would require the use of universal proxy cards in contested director elections, and would change the rules governing disclosure of shareholder voting options and standards in both uncontested and contested director elections. For more information, view the client alert issued by Goodwin’s Public Companies Practice.

OCC Announces Office of Innovation and Responsible Innovation Framework

On October 26, the Office of the Comptroller of the Currency (OCC) advanced its initiative to address the growing number of nonbank financial technology companies (Fintechs) providing financial products and services by announcing a series of recommendations and decisions for implementing a responsible innovation framework. Chief among these recommendations and decisions is the OCC’s decision to establish an Office of Innovation (Office), which will be headed by a Chief Innovation Officer with permanent staff initially located in New York, San Francisco and Washington. The OCC will also expand its outreach programs and “office hours” in other technology hubs, such as Austin, Boulder, Raleigh-Durham and Seattle. The Office will serve as a central point of contact; establish an outreach and technical assistance program for banks and nonbanks, including Fintechs; conduct awareness and training activities within the OCC to ensure a well-informed staff evaluates and supervises new products and services; encourage coordination and facilitation to improve decision-making related to innovation-related requests through clear response expectations, time frames, and workflows; establish an innovation research function to ensure the OCC learns about and understands the evolving financial technology landscape and its impact on the banking system; and promote interagency collaboration among domestic and international regulators for purposes of information-sharing and consistency among regulatory regimes. The OCC expects the Office to commence operations the first quarter of 2017.

Enforcement & Litigation

Client Alert: Antitrust Authorities to Prosecute Criminally Anticompetitive Hiring and Compensation Agreements

The United States federal antitrust authorities announced last week that companies who have in place formal or informal hiring or compensation agreements with competitors may now face criminal prosecution. This is a notable departure from the agencies’ previous enforcement efforts in these areas which were prosecuted civilly, and means that those involved in establishing or facilitating such agreements now face the prospect of incarceration, in addition to the already substantial fines and penalties imposed today. Human resource executives or others involved in hiring or compensation decisions who may have such agreements in place with their competitors should immediately consider ceasing participation in these agreements. For more information, view the client alert issued by Goodwin’s Antitrust & Competition Practice.

Client Alert: Update on SEC Proxy Access No-Action Letters

Recent SEC responses to no-action requests involving shareholder proposals seeking initial adoption of a proxy access bylaw confirm that the SEC staff is continuing to evaluate company requests to exclude these proposals from the company’s proxy statement on the basis of “substantial implementation” under Rule 14a-8, consistent with the staff’s position during late 2015 and 2016. Companies are likely to continue to be able to exclude these proposals if they have adopted, or propose to adopt, a proxy access bylaw that includes ownership threshold and holding period standards that are at least as favorable as those included in the proxy access shareholder proposal. On the other hand, SEC no-action responses published in July, September and October 2016 indicate that companies are unlikely to receive no-action relief from the SEC staff for exclusion of shareholder-proposed amendments to an existing proxy access bylaw on the basis of substantial implementation, although this result may depend on the specific provision of the company’s proxy access bylaw and the specific shareholder-proposed amendment. For more information, view the client alert issued by Goodwin’s Public Companies Practice.

Goodwin News

Goodwin Launches Impact & Responsible Investing Practice

Goodwin recently announced the launch of the firm’s Impact & Responsible Investing (IRI) Practice. The formation of the IRI practice leverages Goodwin’s position as one of the only leading law firms with demonstrated expertise across asset classes. The practice launches as investors are striving to be more mindful of environmental, social and governance (ESG) issues without sacrificing investment returns.

Goodwin Achieves ISO 27001 Recertification

Goodwin recently achieved ISO (International Organization for Standardization) recertification for email, mobile device management, document management, remote access solutions and Litigation Support services. The firm had previously received certification in these areas during the summer of 2015. The ISO 27000 group of standards helps organizations keep information assets secure and provides requirements for establishing, implementing, maintaining and continually improving an information security management system. ISO 27001 certification is a dynamic process, requiring at least annual audits and periodic renewal of certification, which provides the ongoing benefit of continuous process improvement. An ISO 27001 certification is widely accepted proof of reliable, defensible, standards-based information security practices and establishes that relevant laws and regulations are being met. The risk-based decision-making inherent in an ISO 27001 certification means the system shares a common basis with many new legal requirements.

Women’s Alternative Investment Summit 2016 – Nov. 3 – 4

The Women’s Alternative Investment Summit, produced by Falk Marques Group LLC, is a high-level conference designed to enhance networking, fundraising and deal-making opportunities for women across the broad spectrum of alternative investing, including private equity, venture capital, real estate, hedge fund, and distressed investing. Content focuses on issues of intellectual business interest, industry-specific information and trends, and current topics that are critical to the alternative investment strategies of GPs and LPs. Goodwin is a sponsor. For more information, view the event website.

Marketplace Lending Forum: Taking on Current Challenges to Bank Partnerships and More – Nov. 16

Join Goodwin and LendIt for this Marketplace Lending webinar featuring Goodwin partner Mike Whalen. Marketplace lending originations are projected to quadruple in the next four years, but regulatory and business considerations show that challenges still exist. This forum, based on a culmination of a series of industry alerts published by Goodwin, will provide actionable ideas on how online lending platforms and banks can partner in this innovative age. If you are a small business or consumer lender, this forum will help you better understand how partnerships can be structured to stabilize your business model. Banks of all sizes, commercial, community and regional, will learn how technological advances can help improve user experience and what processes can be outsourced or acquired. Register for this webinar.

Key Issues Facing Boards of Directors of Financial Institutions and Corporations: Heightened Expectations & Risk around Compliance Programs – Nov. 17

Directors, C-Suites, and General Counsel are increasingly focusing on compliance – a critical aspect to every business operation. Mistakes can seriously heighten corporate and personal liability. Goodwin partner Richard Strassberg joins Jason Brown, Chief Deputy Attorney General of New York State, Susan Schroeder, Senior Vice President, Deputy Chief, Enforcement Department of FINRA, and Jonny Frank, partner at StoneTurn Group. They will provide an overview of key national and state regulatory issues in financial services and other industry compliance.

5th Annual Banking Symposium – Dec. 6

Goodwin is hosting the 5th Annual Banking Symposium, a forum for CEOs and senior management of financial institutions to discuss critical and emerging issues in the industry. This year's theme, Unwinding the Road Ahead, will cover the aftermath of the 2016 presidential election and the effects of the new political landscape on financial institutions, the regulatory and compliance issues that are keeping you and your peers up at night, and how banks and Fintech partnerships are driving revenue and enhancing the bottom line. For event information and a list of speakers, please visit www.bankingsymposium.com.

This week’s Roundup contributor: Alex Callen.