The White House announced yesterday that Makan Delrahim will be nominated to head up the United States Justice Department’s Antitrust Division. Delrahim, a long-time D.C. attorney with decades of policy and lobbying experience, is expected to be confirmed, given his Hill connections and support from the antitrust community. He is currently a member of President Trump’s transition team and most recently worked to guide Supreme Court nominee Neil Gorsuch through the Senate confirmation process. Delrahim has been described as a conservative pragmatist who listens to all sides as he attempts to develop consensus, an approach he is expected to take in his new proposed role. We anticipate that his nomination marks a return to the Bush-era level of merger challenges (meaning that the Antitrust Division will still be active), but that the Antitrust Division is more likely to clear deals that create verifiable efficiencies and is more willing to remedy issues through divestiture than Delrahim’s predecessors in the Obama administration.
On March 27, 2017, President Trump took the much-anticipated action of rescinding President Obama’s Fair Pay and Safe Workplaces Executive Order 13673 and its underlying regulations (the “Blacklisting Rules,” as it became known in the business community). As we previously discussed, the Blacklisting Rules required federal contractors and subcontractors to disclose violations of federal and state labor laws for the government to assess before awarding federal contracts. The Blacklisting Rules also prohibited certain contractors from using pre-dispute arbitration agreements covering Title VII and tort claims for sexual harassment/assault and mandated new pay notification requirements. In October 2016, a federal district court in Texas granted a preliminary injunction blocking the implementation of the labor law disclosure requirements and arbitration restrictions, but left in place the pay notification obligations.
On March 22, 2017, the Securities and Exchange Commission (SEC) adopted an amendment to Rule 15c6-1(a) under the Securities Exchange Act of 1934 (“Exchange Act”) to shorten the standard settlement cycle for most broker-dealer transactions from three business days after the trade date (T+3) to two business days after the trade date (T+2). Specifically, Paragraph (a) of Rule 15c6-1, as amended, will prohibit broker-dealers from effecting or entering into a contract for the purchase or sale of a security (other than certain exempted securities) that provides for payment of funds and delivery of securities later than the second business day after the date of the contract, unless otherwise expressly agreed to by the parties at the time of the transaction. According to the Adopting Release, broker-dealers must begin complying with the amended rule no later than September 5, 2017.
On March 1, 2017, the Securities and Exchange Commission (SEC) published for comment a proposed rule requiring the use of the Inline eXtensible Business Reporting Language (XBRL) format for the submission of operating company financial information and mutual fund risk/return summaries. With Inline XBRL, filers or filing agents would still need to tag the required disclosures using the applicable taxonomy. However, the tagging of information would be performed within the HTML document instead of a separate XBRL exhibit. Because the XBRL data would be displayed within the HTML filing in a browser, the preparer would have full control over the presentation of filer disclosures. As a result, Inline XBRL allows the use of a single document that is human-readable and also enables the automated extraction and analysis of embedded XBRL data by the user’s XBRL extraction software.
After a record-breaking 2016 for Chinese companies’ investments in the film industry, changes to Chinese foreign investment policy have created uncertainty for the future of Hollywood’s relationship with the Middle Kingdom. Late last year, the Chinese government began reviewing “irrational” investment activities in a number of sectors, including the entertainment industry. As a result of this review, China began scrutinizing large investments in foreign companies that are outside the investor’s core business. Additionally, China’s concerns regarding the outflow of cash overseas led to increased capital controls. The State Administrator of Foreign Exchange issued a directive requiring the regulator’s approval before companies can transfer more than $5 million, in dollars or renminbi, out of China.
On March 1, 2017, the Securities and Exchange Commission (SEC) published for comment proposed amendments to Rule 15c2-12 under the Securities Exchange Act of 1934 (Exchange Act) that would expand the list of events triggering a notice by issuers of municipal securities to the Municipal Securities Rulemaking Board (MSRB) through its Electronic Municipal Market Access (EMMA) system, which is the official source for municipal securities disclosures and related market data.
On March 1, 2017, the Securities and Exchange Commission (SEC) provided notice that the International Financial Reporting Standards (IFRS) taxonomy has been published on the SEC’s website as provided for by the EDGAR Filer Manual. Foreign private issuers (FPIs) that prepare their financial statements in accordance with IFRS and are subject to Rule 405 may immediately begin submitting their financial statements in interactive data format using the eXtensible Business Reporting Language (XBRL). Indeed, existing Rule 405 would require FPIs to submit financial data in XBRL upon publication of the IFRS taxonomy (which would be as early as May 1, 2017, for an FPI with a fiscal year ending December 31, 2016, filing a Form 20-F). However, the SEC is giving FPIs time to comply with the requirement by allowing them to wait and submit financial data in XBRL with their first annual report on Form 20-F or 40-F for a fiscal period ending on or after December 15, 2017.
The Trump presidency is halfway through its first 100 days. The legislative and executive branches are under a unified Republican government for only the second time since the Eisenhower administration, and the GOP is seeking to use this rare opportunity to advance its policy agenda. The Republicans’ early priorities, including the Congressional Review Act (CRA) resolutions and Cabinet nominations, are simple majority votes. Debate continues to swirl within the GOP over the Obamacare repeal and replace reconciliation bill, with some Republicans in Congress viewing the recently released legislation as insufficiently conservative, while others worry that it is too far to the right. Similar conflicts are likely to emerge in the coming months in the debate over tax reform, in which Republicans continue to struggle to unify behind an approach to lowering rates.