Congress & Insider Trading: The STOCK Act's Loophole Swallows the Rule
I guess Congress is not satisfied that it's approval rating is down to single digits. As noted in this CNN article, the House Ethics Committee came up with a 14-page memo to interpret the STOCK Act differently than its Senate counterpart and found that spouses and children are exempt from the new law that had banned insider trading in Congress. The Office of Government Ethics, which oversees all federal executive branch employees, sided with the House.
So there you have it. A different standard for Congress compared to other federal employees. A group of ethics officials who have no understanding of beneficial ownership (guess they should have read our new "Beneficial Ownership Table Handbook"). And back to Square #1 in providing some integrity on the Hill. House Majority Leader Eric Cantor now claims that his office inadvertently created the loophole. Thanks to Martha Steinman, who's recently moved over to Hogan Lovells, for the heads up...
A Conflict Minerals Preview?
Here's information from Cooley's Cydney Posner: Someone at the WSJ apparently found a willing leaker with knowledge of the version of the conflict minerals rules currently being circulated among the SEC commissioners. The proposal is scheduled for a vote on August 22.
The WSJ characterized the draft as, contrary to some expectations (including my own), tougher than the original proposal: "Compared with the original proposal, a final draft circulated to SEC commissioners would outline a series of items for companies to review before they can assume their goods don't contain minerals from the area, people familiar with the document said. If adopted, the rule could create more costs for companies trying to determine whether they need to submit a 'conflict-minerals report' to the SEC....The draft tightens the standards for an independent audit that must be conducted on the report and would require top executives to sign off on the report, something companies believe could subject them to greater liability.
"Under the draft, the SEC would give companies a two-year transition period to determine if certain goods contain conflict minerals, one of several concessions sought by business groups. The details of the final rule could change ahead of next month's vote, but people familiar with the matter said they didn't expect major negotiations among the SEC's five commissioners."
As you may recall, the proposal has been subject to a lot of lobbying on both sides: nonprofits, corporations, legislators and even clergy. According to the article, the U.S. Chamber of Commerce is once again threatening to intercede: "in a July letter to the SEC, [the Chamber] warned the rule could be overturned by the courts if the agency doesn't fix certain flaws. The trade group's letter cast doubt on the SEC's roughly $71 million cost estimate for all U.S. public companies that need to comply with the rule and said the agency needs to include in its estimate the costs for corporate suppliers and vendors." Remember that that kind of argument was a winner for the Chamber in connection with proxy access.
Dodd-Frank Turns Two
Dodd-Frank celebrated it's second birthday over the weekend as noted in this Washington Post article. Meanwhile, the WaPo reports how the statute of limitations is approaching for cases relating to the financial crisis as we approach the five-year mark on that...
On Friday, the SEC delivered this report to Congress on decimalization as required by the JOBS Act.
Deal Cube Tournament: Elite Eight; 4th Match
This is the last match of the 4th round - the battle among the Elite Eight! Then on to the Final Four! As noted in these rules (and keep sending more pics for the next tourney), please vote for one of the following two cubes below:
- Broc Romanek