Financial Services Quarterly Report
October 01, 2015
A review of recent developments in the international financial services industry, including:
- China’s Policy Response to Market Turbulence: What It Means for Fund Managers
- Recent Developments in U.S. Excessive Fee Litigation
- Developments in the Luxembourg Financial Sector
- The Summer Budget: Changes to the UK Tax Treatment of Carried Interest
- Developing and Maintaining a Modern U.S. Compliance Program
- Letter from Amsterdam: Dechert and European Private Equity CFOs and COOs Share Key Regulatory Concerns
- International Sanctions: Resources for Meeting Compliance Challenges
- Living with the Volcker Rule
- AIFMD Resources: Cutting Through the Noise
China’s Policy Response to Market Turbulence: What It Means for Fund Managers
News of the volatile Chinese stock market has dominated international headlines over the past couple of months, and the spotlight has been on the Chinese authorities’ reaction to these developments. Their wide-reaching policy response has implications for fund managers both inside and outside of China. Until the recent market turbulence, China’s stock markets had been inclined towards increased liberalization, but since the market correction began, Chinese authorities have taken assertive measures to curb market volatility.
Recent Developments in U.S. Excessive Fee Litigation
The U.S. mutual fund industry is poised to see significant developments in the ongoing wave of Section 36(b) “excessive fee” litigation. Days apart in August, the Seventh Circuit affirmed the grant of summary judgment in Jones v. Harris Associates, L.P., while a New Jersey federal court denied defendants’ motion for summary judgment in the first of the “manager of managers” cases to reach that stage. Together with the recent uptick in the number of cases being brought to challenge fees charged by mutual fund advisers, this area of law merits careful attention.
Developments in the Luxembourg Financial Sector
The Luxembourg government has brought to Parliament a bill of law transposing UCITS V into Luxembourg’s UCI Law and AIFM Law. Further, the Luxembourg CSSF published a new version of its AIFMD Frequently Asked Questions, among other matters clarifying the definitions of “marketing” and “reverse solicitation” from a Luxembourg perspective. In another development, the Luxembourg “FATCA Law” recently came into effect, with an impact on covered institutions pursuant to the provisions of the law itself as well as the relevant guidance.
The Summer Budget: Changes to the UK Tax Treatment of Carried Interest
The Chancellor of the Exchequer’s recent Summer Budget and the related legislation introduced a series of unexpected tax changes along with the promise of further changes to come. This article describes some of the most important points in the Budget which affect the private equity and investment management industry. One of the most significant proposed changes would subject to UK taxation carried interest payments to non-UK domiciled executives working in the UK.
Developing and Maintaining a Modern U.S. Compliance Program
An investment adviser or fund that relies on the minimalist guidance issued by the SEC over a decade ago – when the SEC adopted the requirement to develop a “risk-based” compliance program designed to comply with the federal securities laws – would likely find its compliance program now viewed by the SEC as insufficient. The Staffs of three different SEC divisions express their evolving views on compliance in a variety of ways that are outside of the tradition rule-making process.
Letter from Amsterdam: Dechert and European Private Equity CFOs and COOs Share Key Regulatory Concerns
Dechert was again pleased to support the SuperReturn CFO/COO Forum, held in Amsterdam in September. Nearly 200 GPs, LPs and key individuals from the private equity and venture capital industry came together for three days of discussion and debate. Topics discussed included, among others: the AIFMD, national private placement regimes, reverse solicitation, ESMA recommendations, onshore and offshore relative merits, the U.S. regulatory focus on fees and expenses, and the OECD BEPS (Base Erosion and Profit Shifting) initiative.
International Sanctions: Resources for Meeting Compliance Challenges
International sanctions – such as economic sanctions, asset-freezing measures and trade embargoes – are a major compliance challenge for companies worldwide. Dechert has established a web page providing resources regarding the commercial complexities, legal intricacies and regulatory demands surrounding sanctions.
Living with the Volcker Rule
Dechert has established a web page to help clients respond to issues raised by the Volcker Rule adopted by five U.S. agencies, as well as the opportunities the rule may provide.
AIFMD Resources: Cutting Through the Noise
Dechert has established a web page that provides tools for navigating the EU Alternative Investment Fund Managers Directive, including reference guides, legal updates and video briefings. The AIFMD affects a wide range of asset managers, whether they are based within or outside the EU.
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