November 29, 2006

NASD and NYSE Consolidate Broker/Dealer Regulation

As been bandied about for some time, the NASD and NYSE announced yesterday the signing of a letter of intent to consolidate their broker-dealer regulatory operations into a new self-regulatory organization. The new SRO will be named later and is expected to begin operations in the second quarter of 2007, and will operate from Washington DC; New York; and 18 District and Dispute Resolution office locations around the country. Here is a statement from SEC Chair Cox.

NYSE Regulation’s CEO Richard Ketchum will serve as the non-executive Chairman of the organization’s Board of Governors during a three-year transition period and remain CEO of NYSE Regulation; NASD Chairman and CEO Mary Schapiro will serve as CEO of the new SRO. According to this article, it is estimated that a single regulator could save the brokerage industry at least $100 million a year.

The Latest Privacy Policy Developments

In this podcast, Andy Serwin of Foley & Lardner talks about the latest privacy policy developments, including:

– What are the latest developments regarding companies losing their private data?
– Any state or federal legislative reactions?
– How can drafting policies and procedures protect a company?
– What do you recommend should be in a policy to protect social security numbers and other private employee or customer data?
– What should be in a policy to provide notification to affected parties in the event of a breach?

Patentability of Tax Advice and Tax Strategies

Mike Holliday notes a developing issue involving the patentability of tax advice and tax strategies which may be of interest, as noted in this article by the AICPA on “Patenting Tax Strategies.” In August, the NYSBA Tax Section sent a letter to Congressional leaders on difficult policy and practical issues raised by the patenting of tax advice and tax strategies. In addition, a House Subcommittee held hearings on this issue in July.

The AICPA article and the NYSBA letter both refer to a pending case (Wealth Transfer Group LLC v. Rowe) filed in the US District Court in Conn. in January, claiming infringement of a patented tax strategy by a corporate executive-director. Apparently the alleged infringement was the defendant’s transfer of nonqualified stock options to fund a Grantor Retained Annuity Trust (GRAT). The letter points out that although tax strategies in many cases may be embodied in confidential documents – e.g., a tax return and/or legal advice – tax strategies for publicly offered securities are disclosed in SEC filings. In addition, in the pending infringement case, the alleged infringement of transferring nonqualified stock options to a GRAT was reported in Forms 4 filed with the SEC. It has been suggested that the plaintiff apparently found out about the transfer through the SEC filing.