Financial Services Quarterly Report
A review of recent developments in the international financial services industry, including:
- DIFC Funds: 2016 and Beyond
- Managing the Compliance Aspects of Private Equity Investments
- The Shenzhen-Hong Kong Stock Connect
- The Evolving DOL Fiduciary Rule: Impact on Mutual Fund Distribution and Broker-Dealers Generally
- Foreign Institutional Investors are Granted Unprecedented Access to China’s Interbank Bond Market
- SEC Continues to Target Employer Agreements Restricting Whistleblower Rights
- Brexit Update and Resource CenterDechert's World Compass
DIFC Funds: 2016 and Beyond
The Dubai International Financial Centre (DIFC) is a financial free-zone located in Dubai with its own established set of laws and regulations as well as a financial regulator and court system. The DIFC is arguably the best-known financial hub for the Middle East, with an active financial services industry comprising local, regional and global managers. This article provides an introduction to the DIFC funds regime, the licensing regime for fund managers and investment advisers, and considerations for structuring investments in the countries of the GCC.
Managing the Compliance Aspects of Private Equity Investments
International business transactions can be subject to intense scrutiny due to the broad scope of the U.S. Foreign Corrupt Practices Act, the UK Bribery Act and similar anti-corruption measures around the world. The risks for PE investors that can result from corrupt activities of a target company may be significant, especially if the target operates in a high-risk jurisdiction or business sector. These risks can include loss of the investment’s value, or liability for previously unknown wrongful acts committed by the target, its local shareholders or others acting on their behalf.
The Shenzhen-Hong Kong Stock Connect
The official announcement of the launch of the long-awaited Shenzhen-Hong Kong Stock Connect was jointly made by the Securities and Futures Commission of Hong Kong and the China Securities Regulatory Commission in August 2016. Originally expected to go “live” more than a year ago, it is now anticipated that the Shenzhen-Hong Kong Stock Connect will be operational by the end of 2016. This cross-boundary investment channel will provide mutual stock market access between the Shenzhen Stock Exchange and the Stock Exchange of Hong Kong Limited.
The Evolving DOL Fiduciary Rule: Impact on Mutual Fund Distribution and Broker-Dealers Generally
The U.S. Department of Labor issued the final version of its “fiduciary investment advice” regulation following a lengthy proposal and re-proposal process. The final rule is expected to have a significant impact on the market for retirement investment advice. In expanding the universe of those considered to be “fiduciaries” under ERISA through the provision of investment advice, the final rule potentially results in significant operational changes for those newly classified as fiduciaries.
Foreign Institutional Investors are Granted Unprecedented Access to China’s Interbank Bond Market
A new program providing fund managers with access to China’s principal bond market officially opened for business in May 2016, simplifying the process of fixed-income investing in China. Previously, managers needed to obtain licenses and quotas to invest in bonds, a process that could take months. Despite the enhancements of the CIBM program, it has some unusual features of which managers should be aware.
SEC Continues to Target Employer Agreements Restricting Whistleblower Rights
The U.S. Securities and Exchange Commission recently announced the settlement of two cease-and-desist proceedings against employers alleged to have unlawfully restricted employees’ rights to engage in protected whistleblowing activity. According to the SEC, the two companies violated SEC Rule 21F-17 by utilizing severance agreements that required employees to waive their rights to receive incentive awards for providing information to the SEC.
Brexit Update and Resource Center
Following the Leave vote, companies operating or having commercial interests in the UK are grappling with the many legal and regulatory uncertainties that Brexit may bring. Challenges loom for highly regulated industry sectors such as financial services. Dechert has established a dedicated hotline with access to a team of expert partners and senior lawyers to respond to any urgent questions you may have. You can call 24 hours-a-day on: +44 20 7184 7575.
Dechert's World Compass
World Compass is a web-based subscription service that offers investment firms 24/7 access to concise global marketing and distribution guidance in approximately 100 jurisdictions worldwide, updated regularly to ensure accuracy, and covering funds, managed accounts and beneficial ownership reporting.