Law Firm Memo Survey: Q1 2016

May 18, 2016

ScaleQ1 2016 found firms in a pensive mood. Our latest law firm memo survey identified 37 memoranda chewing, mulling, and ruminating over various aspects of 2015’s corporate law landscape – from capital markets and M&A to proxy season, and FCPA enforcement.

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37 memoranda

Sixteen memos surveyed 2015’s dealmaking landscape. While most were overviews, including White & Case’s, Record Breaker: US M&A in 20151, and WilmerHale’s 2016 M&A Report2, a smaller number, such as Simpson Thacher’s report on social issues in M&A transactions3 and Gibson Dunn’s shareholder activism update4, focused on narrower topics.

  1. White & Case LLP, Record Breaker: US M&A in 2015 (Feb. 1, 2016)
  2. Wilmer Cutler Pickering Hale and Dorr LLP, 2016 M&A Report (Mar. 24, 2016)
  3. Simpson Thacher & Bartlett LLP, Social Issues in Selected Recent Mergers and Acquisitions Transactions (Mar. 2, 2016)
  4. Gibson, Dunn & Crutcher LLP, M&A Report: 2015 Year-End Activism Update (Feb. 2, 2016)

Nine memos analyzed the 2014-2015 proxy season, with most using their analysis to make predictions for 2015-2016.


International Sanctions

22 memoranda

On January 16th, 2016, inspectors from the International Atomic Energy Agency verified Iran’s compliance with the initial nuclear requirements of the Joint Comprehensive Plan of Action. U.S. and E.U. regulators recognized this milestone (known as Implementation Day), by easing sanctions against Iran.1 Shearman and Sterling cautioned that the “immediate impact … may be more limited than some of the news headlines may suggest.” 2 Simpson Thacher noted that, “U.S. persons largely remain prohibited from doing business in or with Iran,”3 under continuing sanctions that Paul Weiss described as “as complex as [those] which existed before Implementation Day, and enforcement … expected to be as active as ever.”4

  1. Iran Sanctions Resource Center, U.S. Department of the Treasury
  2. Shearman & Sterling LLP, Navigating Iran Sanctions After Implementation Day (Jan. 20, 2016)
  3. Simpson Thacher & Bartlett LLP, Is Iran Open for Business? Most “Secondary Sanctions” Lifted but the Situation Remains Largely Unchanged for U.S. Persons (Jan. 19, 2016)
  4. Paul, Weiss, Rifkind, Wharton & Garrison LLP, Understanding the Changes to the Iran Sanctions Regime: OFAC Issues Guidance, General Licenses on JCPOA Implementation Day (Jan. 20, 2016)

In early March, in response to a North Korean nuclear test, the U.S. government and the United Nations Security Council expanded sanctions against North Korea.1 White & Case reported that the new measures replace a “patchwork” of restrictions and “restore comprehensive sanctions against North Korea.”2 Weil Gotshal described the new sanctions as “ratcheted up,”3 and WilmerHale noted the “rigorous inspection regime.”4

  1. North Korea Resource Center, U.S. Department of the Treasury
  2. White & Case LLP, U.S. Significantly Expands Sanctions Targeting North Korea (Mar. 18, 2016)
  3. Weil, Gotshal & Manges LLP, Expansion of Sanctions Against North Korea (Mar. 1, 2016)
  4. Wilmer Cutler Pickering Hale and Dorr LLP, Enhanced North Korea Sanctions Adopted (Mar. 8, 2016)


CFTC Uncleared Swap Margin Rules

9 Memoranda

On January 6, 2016, the CFTC approved margin requirements for swap transactions not cleared through a registered derivatives clearing organization.1 White & Case noted “significant harmonization” between the CFTC rules and rules adopted in October by the so-called Prudential Regulators2, and DLA Piper observed that the CFTC had “deferred” regulating swaps already subject to the jurisdiction of the Prudential Regulators.3 Cleary Gottlieb remarked that differences between the CFTC rules and rules adopted in other countries were “sufficient to result in material competitive disparities.”4

  1. Margin Requirements for Uncleared Swaps for Swap Dealers and Major Swap Participants, 81 FR 636-01 (Jan. 6, 2016)
  2. White & Case LLP, Prudential Regulators and CFTC: Final Margin Rules for Uncleared Swaps (Mar. 7, 2016)
  3. DLA Piper LLP (US), Life on the margin: US margin rules finalized at last (Jan. 12, 2016)
  4. Cleary Gottlieb Steen & Hamilton LLP, Agencies Finalize Margin Rules for Non-Cleared Swaps and Security-Based Swaps (Jan. 28, 2016)



Foreign Corrupt Practices Act

12 Memoranda

The Foreign Corrupt Practices Act was the most popular enforcement topic in Q1 2016. Memos from Davis Polk1, Gibson Dunn2, and Shearman & Sterling3 recapped FCPA enforcement trends in 2015, while several others analyzed the SEC’s settlement of an enforcement action against SciClone Pharmaceuticals, Inc.4 On February 4, 2016, the SEC announced that SciClone had agreed to pay $12.8 million to settle charges it bribed Chinese government officials. Paul Weiss observed that the action demonstrated the SEC’s determination to sanction improper gifts “even in the absence of proof of an improper quid pro quo.”5 Ropes & Gray declared the settlement agreement “especially noteworthy” because it provides “important guidance on compliance practices.”6

  1. Davis Polk & Wardwell LLP, 2015 DOJ and SEC FCPA Resolution Tracker (Jan. 27, 2016)
  2. Gibson, Dunn & Crutcher LLP, Six Trends in 2015 FCPA Enforcement (Feb. 1, 2016)
  3. Shearman & Sterling LLP, Recent Trends and Patterns in the Enforcement of the Foreign Corrupt Practices Act (FCPA)/FCPA Digest (Jan. 4, 2016)
  4. In the Matter of Sciclone Pharm., Inc. Respondent, SEC Release No. 3739, (Feb. 4, 2016)
  5. Paul, Weiss, Rifkind, Wharton & Garrison LLP, SciClone Pharmaceuticals Settles FCPA Action Over China Business Practices (Feb. 16, 2016)
  6. Ropes & Gray LLP, SEC Charges U.S. Pharmaceutical Company for FCPA Violations Arising from Alleged Bribery in China (Feb. 16, 2016)


The End of “Disclosure-Only” Settlements in Delaware

12 memoranda

In a “disclosure-only” settlement, shareholders agree to withdraw a lawsuit challenging a corporate transaction in exchange for more robust proxy disclosure. Paul Hastings described such settlements as “the common way of resolving merger litigation.” But, as Weil Gotshal noted, recent years have seen decisions from the Delaware Court of Chancery “increasingly critical” of disclosure-only settlements. On January 22nd, in what Sullivan & Cromwell called “a decision continuing the trend,”3 the Court of Chancery rejected the proposed disclosure-only settlement of a shareholder suit seeking to block the merger of Trulia, Inc. and Zillow Group, Inc.4 Sullivan & Cromwell opined that the decision demonstrated that Delaware courts are “loath to approve disclosure-only settlements in the absence of compelling misstatements or omissions.”

While the goal of the decision is, in the words of Paul Hastings, “eliminating or paring down unmeritorious merger litigation,” it “remains to be seen” if the decision will have that effect, or if, as Sullivan & Cromwell suggested, such litigation will “simply move to a different jurisdiction.”

  1. Paul Hastings LLP, Delaware Court of Chancery Appears to Sound Death Knell for Disclosure-Only Settlements in Merger Litigation (Jan. 29, 2016)
  2. Weil, Gotshal & Manges LLP, End of an Era: The Music Stops for “Disclosure-Only” Settlement in Delaware (Feb. 19, 2016)
  3. Sullivan & Cromwell, In re Trulia, Inc. Stockholder Litigation (Jan. 26, 2016)
  4. In re Trulia, Inc. Stockholder Litigation, 129 A3d 884 (2016)