September 18, 2018

September 18, 2018

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September 17, 2018

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CFIUS Jurisdiction Expansion and FINRA Regulatory Notice on ATS Supervision Obligations

New Foreign Investment Law Expands CFIUS Jurisdiction

On August 13, President Trump signed into law the Foreign Investment Risk Review Modernization Act of 2018 (FIRRMA). The new law expands the jurisdiction and powers of the Committee on Foreign Investment in the United States (CFIUS) and will have material implications for investments made in US businesses by foreign investors. Certain provisions of the new law went into effect immediately. Others will become effective after implementing regulations are adopted.

The most significant provisions of FIRRMA:

  • expand the scope of CFIUS jurisdiction to cover a wider range of transactions, including certain transactions where the foreign investor will not “control” a US business;
  • establish that the parties file mandatory “declarations” describing certain transactions before closing;
  • extend the time period for CFIUS to review notifications;
  • provide some relief from CFIUS to foreign investors who make indirect, non-controlling investments in US businesses through US investment funds; and
  • impose a filing fee of up to $300,000 for notified transactions.

For foreign investors seeking to acquire US businesses or assets, CFIUS is now an increasingly important regulatory hurdle to consider in evaluating US investments and in setting a timeline for closing.

FINRA Publishes Regulatory Notice Regarding ATS Supervision Obligations

On August 13, the Financial Industry Regulatory Authority (FINRA) issued Regulatory Notice 18-25 to remind Alternative Trading Systems (ATS) to evaluate their supervisory systems to ensure compliance with their supervision obligations, including, without limitation, with respect to business continuity, recordkeeping, Regulation ATS, Regulation NMS, Regulation SHO and the SEC’s Market Access Rule, to the extent applicable. As a general matter, consistent with existing supervision obligations, FINRA expects that an ATS’s supervisory system be reasonably designed to identify “red flags,” including potentially manipulative or non-bona fide trading that occurs on or through its systems.

The regulatory notice is available here.

©2018 Katten Muchin Rosenman LLP

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About this Author

Janet M. Angstadt, Securities, Financial Services, Chicago, Lawyer, Katten Law FIrm
Partner

Janet M. Angstadt is the head of Katten's Chicago Financial Services practice. She focuses her practice on broker-dealer and exchange compliance issues and advises companies on matters regarding compliance with the regulations of the US Securities and Exchange Commission (SEC) and self-regulatory organizations (SROs).

Janet represents clients in a wide range of legal and regulatory matters, including mergers and acquisitions, SRO investigations, compliance issues related to registrations, sales practice, short sales, Regulation NMS, market-making and...

312.902.5494
Michael T. Foley, Katten, Lawyer, Finance, FINRA, Chicago
Special Counsel

Michael Foley represents broker-dealers, investment advisers and other financial services industry participants with respect to a broad spectrum of legal and regulatory matters arising under the federal securities laws.

Michael has nearly 20 years of experience in private practice and in-house at both a large, full-service broker-dealer and at an online discount broker-dealer, advising broker-dealers and other financial institutions regarding compliance with the federal securities and commodities laws, and with the regulations of the US Securities and Exchange Commission, the US Commodity Futures Trading Commission and financial industry self-regulatory organizations. 

312-902-5452
Associate

Dina Wegh concentrates her practice in financial services matters.

While in law school, Dina served as a managing director for A Jailhouse Lawyer's Manual and was on the staff of the Human Rights Law Review.

212.940.6704
James J. Calder, Antitrust Attorney, Katten Muchin law firm
Partner

James J. Calder devotes his practice to antitrust and competition law. He is co-head of the firm’s Antitrust and Competition practice.

James’ antitrust practice includes litigation, counseling and responding to government antitrust investigations. He handles matters involving price fixing, market allocation, group boycotts and other horizontal restraints; monopolization, intellectual property licensing and other intellectual property issues; industry-wide standard setting efforts; vertical restraints; distribution issues; and Robinson-Patman Act problems....

212-940-6460