Securities Regulation and Enforcement
The SEC’s ambitious regulatory agenda includes revised rules on ESG disclosures, executive stock sales and SPACs. Meanwhile, the SEC’s enforcement program will continue to focus on bringing cases involving cryptocurrency offerings, cybersecurity breaches and executive perks.
The SEC is seeking to finalize rules for a long-shelved proposal that would require public companies to implement policies requiring clawbacks of executive compensation.
Public companies should expect more shareholder campaigns for information about political donations and other political activity. The SEC has signaled it may require new disclosures as part of its policy to raise ESG standards.
Investigations, Enforcement and Mandates
The Biden DOJ’s recent policy pronouncements reflect a more proactive approach to corporate criminal investigations and a tougher stance with respect to corporate resolutions and remedies.
Federal enforcement in the life sciences sector recently has been driven by the pandemic. If FDA inspections pick up and more senior positions are filled, the industry could see the enhanced oversight many originally expected from the Biden administration.
Under Democratic control, congressional committees are likely to continue scrutinizing Wall Street and social media and other large technology companies in 2022.
Two federal vaccination mandates are enjoined pending appeals, but the Supreme Court allowed a third, covering health care workers, to go into effect. Meanwhile, New York City has imposed strict vaccination requirements on its businesses.
As senior positions are filled in key agencies, expect more enforcement of consumer financial services laws and regulations. Redlining, loan servicing and credit reporting are all likely targets for scrutiny.
Companies — from the top down — need to focus on defenses against cyberattacks and plans for recovery as enforcement actions and cyber-related laws gain momentum.
Central banks around the world are debating whether to create their own digital currencies. The European Central Bank has shown enthusiasm for the concept, and the Bank of England is open to it. Federal Reserve leaders appear skeptical.
Through procedural changes and new legal approaches, antitrust regulators are trying to expand their power to promote competition and achieve social policy goals, creating uncertainty in an enforcement regime that had been fairly predictable.
Competition regulators worried about overlooking “killer acquisitions” of small innovators by large, established firms are amending notification thresholds and exercising discretion to investigate deals that otherwise would not be reviewed.
CFIUS and International Trade
As more countries screen foreign direct investments for national security issues, parties need to perform thorough due diligence and be attuned to the concerns of authorities in multiple jurisdictions.
Security concerns, together with shortages of key goods and components, prompted new supply chain initiatives in 2021 that will affect U.S. trade in the year ahead.
The Biden administration has maintained and extended an array of China-related regulatory and enforcement measures to address national security concerns. Meanwhile, companies with Chinese operations need to comply with the country’s new data laws.
The Build Back Better Act would amend U.S. rules on tax-free spin-offs, making it more challenging to monetize value by reallocating debt to a spin-off company. But a distributing company may still be able to extract value with the right structuring.
With new uncertainties about transfer pricing, multinationals should consider “competent authority processes” to address double taxation and other disputes, and to win preapproval for future internal cross-border transactions.
Cryptocurrency transactions can fit poorly into traditional tax frameworks, forcing authorities and market participants to wrestle with thorny questions about how to apply tax rules – or write new ones.
Skadden is proud to present “GILTI Conscience,” a new podcast series in which tax partners Nate Carden and David Farhat invite other industry leaders and authorities to join them in discussing pressing transfer pricing issues, international tax reform efforts and tax administration trends.