Category:Finance & Banking
Appreciating Taxes
After failing to arrive at a consensus on healthcare reform, the Republican party recently passed a blueprint which marked their shift in focus to something less contentious: the American tax code. If the Republicans are successful, compliance with tax regulation in the United States may soon change. An aspect of the code likely to be reformed is how asset appreciation is taxed.
Is Federal Securities (De)Regulation Obscuring State Blue Skies?
Under Rule 506 of Regulation D (“Reg D”), the U.S. Securities and Exchange Commission (“SEC”) exempts companies making private placements to accredited investors from all federal and state securities registration requirements. As a federal safe harbor, Rule 506 of Regulation D preempts all conflicting state securities regulations, but reserves the states’ rights to require issuers to make notice filings, and to investigate and prosecute securities fraud under state securities laws, commonly known as “Blue Sky Laws.” On its face, Rule 506 of Reg D creates a more efficient securities marketplace. However, the historical lack of consequences for non-compliance at the federal level, combined with inconsistent state notice requirements for using exemptions, further complicates an already over-regulated securities marketplace.
Fight over the CFPB’s Arbitration Rule Exposes Rift Between Federal Regulators
Since its inception in 2010, The Consumer Financial Protection Bureau (CFPB) has garnered its fair share of criticism and controversy. The regulator was created by the Dodd-Frank legislation to curb the practices and risks, which brought about the financial crisis of 2007-2008. The CFPB is often criticized by the banks and firms it regulates, but now a fellow federal regulator is casting doubt on the CFPB’s new rule concerning mandatory arbitration clauses found in contracts for commonly used banking products, such as checking accounts and credit cards. The rule is also opposed by Congress, which is working on measures to repeal the rule, and several financial industry and lobbying groups who are suing the CFPB.
Captive Insurance Compliance after Avrahami
Captive insurance companies, insurance companies owned by persons related to the insureds, have long served as an important risk management tool for businesses as varied as Sears and The New York Times. In recent years, there has been an explosion of “micro-captive” insurance companies, companies with premiums that do not exceed $1.2 million in a year. Until 2017, $1.2 million was the allowable maximum amount of premiums for an insurance company to elect favorable tax treatment under I.R.C. § 831(b), allowing the small insurance company to be taxed only on its investment income. The IRS believes that these “831(b)” micro-captives are often used as tax-shelters rather than for legitimate business purposes.
Implementation of Swap Trade Regulation Aimed at Reducing Investment Risk for American Financial Firms
In September 2017, United States economic markets implemented swap-regulating rules to reduce risk to U.S. investment firms. Signed into law in 2016, this regulation curbs the risk associated with swap derivatives in the United States. The Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Financial Conduct Authority, and the Federal Housing Finance Agency (the “Agencies”), constructed a joint rule requiring taxpayer-insured banks and financial institutions to collect greater collateral and provide greater transparency when involved in swap derivative agreements.
A Look at Regulation Systems Compliance and Integrity
The U.S. Securities and Exchange Commission (the “SEC”) adopted Regulation Systems Compliance and Integrity (“Reg SCI”) to strengthen the technology infrastructure of the U.S. securities markets by imposing new regulatory requirements on SCI entities. The term “SCI entity” includes self-regulatory organizations (“SROs”) such as stock and options exchanges, registered clearing agencies, the Financial Industry Regulatory Authority (“FINRA”), and the Municipal Securities Rulemaking Board (“MSRB”); certain alternative trading systems; disseminators of consolidated market data, such as the Consolidated Tape Association; and certain exempt clearing agencies. The regulatory requirements were designed to reduce the occurrence of systems issues, improve resiliency when systems problems do occur, and to enhance the SEC’s oversight and enforcement of securities market technology infrastructure.
Hurricanes Harvey and Irma Add Urgency to Congressional Flood Insurance Reform Effort
In 2016, Congress introduced a bill to reform the National Flood Insurance Program. Proponents of the bill saw it as necessary reform to a debt-ridden and ineffective program, while opponents saw it as an attack against a necessary safeguard for coastal Americans. The National Flood Insurance Program was set to expire at the end of September 2016, until Congress extended the program through December 8, 2017. As Americans rebuild from Hurricanes Harvey and Irma, Congress contemplates reform and seeks to keep the program funded past December.
Hurricane Harvey Aftermath Leaves Opportunity for Financial Fraud
On August 30, 2017, Trump signed Proclamation 9632 declaring September 2017 as National Preparedness Month, encouraging “all Americans… take action to be prepared for disaster or emergency by making and practicing their plans,” also citing that fewer than half of American families report having an emergency response plan. While it is important to have a disaster plan in place for your family to take care of their physical needs, it is also vital to be prepared for the possibility of scams and fraudulent activity in the wake of a natural disaster such as Hurricane Harvey.
Mr. Trump’s Swing at Financial Regulation
During his first 67 days in office, Mr. Trump signed 19 executive orders. One such action designed to roll back regulations from the 2010 Dodd-Frank Act (“Act”) received little to no media attention but may have long lasting ramifications in the financial industry.
New York Law Could Shake Up Compliance Departments
Gilbert Carrillo Executive Editor Loyola University Chicago School of Law, JD 2017 The state of New York is in the process of implementing a new rule requiring some financial U.S. and foreign institutions, with New York offices, to prove that their transaction monitoring and sanctions filtering programs for catching criminal activity do in fact …
Read more