In addition to the human tragedy, COVID-19 challenges the financial sector’s operating and business models and engages a wide range of law and regulation. As organizations strive to maintain business continuity and protect their workforce, they will face competing legal and regulatory pressures, particularly those operating on a cross-border basis, with regulated sector entities facing the further challenge of specific regulatory expectations.

Heavily-stress tested business continuity and resilience programs will enable management to evaluate and plan to mitigate identified risks and, in particular, to take steps to ensure their financial market operations continue to function. In this respect, the experience of the bird flu, 2014, swine flu, 2009, and SARS, 2002 to 2003, pandemics over the last 20 years will relevant as will the experience of business continuity issues during the global financial crisis.

The current pandemic, however, raises uniquely far-reaching issues in terms of breadth of markets and business practices that may be impacted and the potential extent of economic disruption. This high-level checklist provides an overview of key legal and regulatory issues that may require attention in the short-, mid- and long-term.

COVID-19 Checklist


The post Global: COVID-19 Checklist for Financial Institutions appeared first on Global Compliance News.


In brief

The US legal system is not virtual. As the Supreme Court has stated, the right to in-person confrontation has “a lineage that traces back to the beginnings of Western legal culture.” Reminders of the importance of physical presence in the courtroom are everywhere: the Constitution guarantees the right to trial by jury, the Supreme Court has held that there is a qualified First Amendment right to attend court proceedings, and out-of-court statements are generally inadmissible. These are only a few examples. But what happens when these important rights collide with equally important public health considerations? Are virtual solutions legally permissible/technically possible/strategically desirable? Will today’s temporary work-arounds become tomorrow’s best practices? Is remote litigation the wave of the future? What risks and opportunities does it present?


In this webinar, four Baker McKenzie partners, who collectively have dozens of years of civil and criminal trial experience, discuss these and related issues. Specific topics will include:

    • Court operations during COVID-19
    • The CARES Act provisions on remote proceedings
    • Trials, pleas and sentencings during the crisis
    • Constitutional issues in civil and criminal cases
    • Privilege and confidentiality considerations
    • Virtual discovery, remote depositions, and witness proffers
    • Strategic considerations in remote proceedings
    • The effective use of technology in virtual litigation
    • The implications of COVID-19 for cross-border disputes and discovery

Click here to view a recording of the webinar, using password 7f?&9T8?

Click here to access the deck.

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For the past few years, Silicon Valley has anticipated a period where plentiful venture capital funding dries up and startups with not-yet-profitable businesses must make it on their own.

For many start-ups, this will mean having to sell at a discount or to accept money at significant discounts to the valuations of their prior financing rounds, or suffer the ultimate ignominy of shutting down the company. The expected coronavirus-induced recession may well be the start of that period.

This article, first published on Bloomberg Law, is the first of a two-part series for buyer and investors on how to structure transactions for distressed start-ups. It will cover mergers and acquisitions transactions; the second part of this series will cover investments.


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This webinar recording covers government orders, creating a timeline, workplace safety and prevention strategies, testing and health screening, labor agreements, workforce communication, managing employee concerns, and litigation mitigation.

What US Employers Should Be Thinking About Right Now

Please see below the webinar materials as well as additional resources.

MCLE Credit

To receive MCLE credit, click on the state where you wish to obtain credit. A certificate of attendance is provided for those outside of the jurisdictions where we are not approved for MCLE credit. Once you complete the form(s), submit your form(s) to MCLE Support. This will immediately begin to process your request.

These are challenging times for all, but we are committed to helping our clients as they work through the impacts of COVID-19.

The post US: The Reopening Playbook – What US Employers Should be Thinking About Right Now (Webinar Recording) appeared first on Global Compliance News.


In brief

The North America Tax Practice Group presented Managing Supply Chain Disruption, the third webinar in the series The Importance of Tax in the Response to COVID-19 on 24 April 2020.


Global supply chains across many industries have suffered significant supply chain interruption.  There are many business, legal, tax, treasury and other implications resulting from those disruptions.  This webinar analyzes the impact of supply chain issues and address alternatives for efficiently addressing those changes and minimizing potentially adverse impacts.  Additionally, future changes to supply chains may be in order for longer-term optimization, and the session makes suggestions for making these changes efficient and beneficial.

If you have any questions, please contact any of the speakers listed.

View the recorded webinar.

Download the materials.

The post United States: Managing supply chain disruption – Recorded webinar appeared first on Global Compliance News.


While businesses have struggled most immediately with loss of revenue and threats to supply chains stemming from the COVID-19 pandemic, financial and other uncertainties create complex disclosure issues for companies across all industries. The directive by the US Securities and Exchange Commission (SEC) that companies provide investors with assessments and plans for addressing material risks to their businesses and operations created by the coronavirus “to the fullest extent possible” positions companies for heightened scrutiny by regulators and shareholders alike. Stock market volatility, share price declines, and the rise in “event-driven” securities litigation have companies and their officers and directors bracing for regulatory investigations, as well as private shareholder lawsuits.

Claims and government investigations of COVID-related issues and required public disclosures implicate directors and officers liability and possible insurance coverage under directors and officers (D&O) liability policies. Indeed, lawsuits have already been filed alleging that companies and their directors and officers violated SEC Rule 10b-5 by disseminating or approving disclosures relating to COVID-19 that they knew or should have known were false or misleading. And the SEC’s Co-Directors of Enforcement have already warned about some issues they anticipate in future investigations. Below, we outline some of the issues that may prompt COVID-related government investigations and private litigation, and we highlight the D&O insurance coverage considerations that companies should be focusing on now.

COVID-Related Claims & Government Investigations

We foresee a number of possible COVID-related claims and government investigations, including:

  • Investigations by the SEC and State Attorneys-General into inadequate disclosure of a company’s financial situation, including alleged misstatements and omissions of material negative information and risks related to COVID-19 stresses and impacts, concealment or improper valuation of impaired assets, insider trading or fair disclosure (Reg FD) issues, and inadequate due diligence;
  • Whistleblower claims relating to federal and state funds received from government programs;
  • Investigations by the SEC and the US Department of Justice (DOJ) regarding potential violations of the Foreign Corrupt Practices Act (FCPA) associated with the increased bribery risks prompted by travel restrictions, mandatory quarantine and the challenging economic landscape; and
  • Inquiries by the SEC, state securities regulators, and self-regulatory organizations that regulate financial services firms (including the Financial Industry Regulatory Authority (FINRA)) regarding alleged unsafe or unsound business practices, such as failures related to supervision, books and records retention and perhaps, most notably, Business Continuity Plans, and investigations related to customer-facing issues that challenge suitability or the discharge of other standard of care obligations imposed on these regulated entities and licensed individuals in connection with, for example, the sale of complex, structured or illiquid products, particularly to retail investors.

D&O Coverage Considerations

Much of the commentary concerning insurance coverage for COVID-19 issues has focused on business interruption coverage. However, as US companies publicly disclose the material risks to their businesses and plans for addressing those issues, the public filings may trigger enforcement investigations and shareholder lawsuits. The significant defense costs and other expenses associated with these actions could implicate D&O coverage, depending upon the specific language of the policy and circumstances under which a claim is made. With respect to government investigations, in particular, any coverage assessment requires a close textual analysis of the language of the insurance policy and application of key contractual terms to the intricacies of the complex and often opaque governmental investigative process.

A company’s D&O policies provide coverage for directors and officers named in securities lawsuits. Almost without exception, companies, themselves, also have coverage for securities lawsuits – although, in many policies, there is coverage for a company for a securities lawsuit only if the securities lawsuit is also lodged against a director or officer. Shareholder allegations that directors and officers failed to properly manage the impact of COVID-19 issues on their companies, or that the company failed to disclose potential or actual COVID-19 concerns, would in most cases be covered under standard D&O policy language, absent applicable exclusions.

Some of the most common business insurance coverages, such as commercial general liability (CGL) insurance, commercial automobile insurance and property insurance are highly standardized – primarily because an insurance industry organization develops most of the forms that comprise those coverages. However, there is no insurance industry organization or other group that develops the majority of the forms that comprise D&O insurance. Over the years, marketplace competition and other factors have led to standardization of a good deal of D&O policy wording, but, as with cyber insurance, media insurance, and some other types of insurance, there still is a fair amount of somewhat idiosyncratic or even sui generis language.

Coverage for Government Investigations

In our experience, most D&O policies now provide coverage for expenses incurred in response to government investigations, including subpoenas and requests for documents. In most D&O policies providing this coverage, the coverage is triggered only if an individual insured receives a formal request from the government or is the target of the investigation, regardless of whether the company, itself, is also named. This coverage sometimes is subject to a “sublimit” that is well below general per-claim limit of the D&O policy.

Insurance policies are contracts and, generally speaking, are interpreted pursuant to the rules that govern the interpretation of contracts. Not surprisingly, with rare exceptions, unambiguous insurance policy language will be enforced as written. Coverage for expenses incurred in response to government investigations typically turns, then, on what the policy says in that regard, and if what it says is unambiguous in the context of the matters at issue. This subject was recently addressed in Jalbert v. Zurich Services Corporation, 953 F.3d 14 (1st Cir. 2020). In Jalbert, the First Circuit ruled that a Formal Order of Investigation issued by the SEC during a prior D&O policy period constituted a “Claim” first made during that earlier policy period, allowing two excess insurers under the later policy period to deny coverage for subsequent related actions. There was no dispute that the investigation initiated by the Formal Order was a “formal investigation,” and therefore a “Claim,” defined in both policies as “a formal regulatory proceeding (civil, criminal or administrative) against, or formal investigation of an Insured, including when such Insured is identified in a written Wells or other notice from the SEC or a similar state of foreign government authority that describes or alleged violations of securities or other laws by such Insured … for a Wrongful Act… .”

With respect to notice to the insurer, the policies contained a provision that “[a] Claim shall be deemed first made” with respect to a formal investigation on the date when “an Insured [has been] identified by name in an order of investigation, subpoena, Wells Notice or target letter … as someone against whom a civil, criminal, administrative or regulatory proceeding may be brought….” Jalbert turned on whether the “Claim” against the company was “deemed made” by the SEC’s Formal Order where the Order arguably was not conclusive proof that enforcement proceedings against the company were a “reasonable possibility.”

Noting the ordinary meaning of the policies’ language, the First Circuit drew a distinction between an investigative subpoena or other investigative request that merely seeks information from an individual or entity and a Formal Order of Investigation issued by the SEC ordering the investigation into conduct that, if verified, would constitute violations of federal laws. Agreeing with the District Court, the First Circuit concluded that the issuance of a Formal Order supported the inference that commencement of proceedings against the company was entirely possible and, therefore, satisfied the “Deemed-Made” clause.

The nature of the regulatory inquiry – and whether it constitutes a “Claim” under a particular policy, and against whom – is not always as clear. Particularly for regulated entities, this can be complicated, since investigations may commence with one or more regulatory requests, which may include a vague, broadly-titled investigation name that does not include your firm or identify any individual. Until such time as a subpoena is issued, for example, to obtain materials from a third party or testimony, the SEC Staff may choose not seek a Formal Order of investigation. Thus, if all that a company receives is a regulatory request, the issue of whether an insured should notify the insurance company is one that should be carefully analyzed, particularly since some insurance policies will cover regulatory investigations even absent the issuance of a Formal Order.

Key Takeaways

Businesses confronted with COVID-19-related lawsuits and government inquiries should carefully evaluate their D&O insurance policies when assessing available coverage. The timing of notice to insurers is critical (an issue that we will address in greater detail in a subsequent alert), and can impact coverage for related claims that arise from the same underlying facts. In most cases, companies should immediately give notice of the lawsuit or regulatory inquiry under any insurance policies that could potentially provide coverage.

Further, if COVID-19 related events put the company at risk of particular claims, including claims by shareholders in connection with a stock drop, companies should consider providing notice of circumstances under relevant policies – particularly where policies are scheduled for renewal. This is not only because subsequent policies may include less favorable terms, including COVID-19 and/or infectious disease-related exclusions, but also because the insured’s awareness of circumstances that could later give rise to an actual “Claim” could result in a finding, for a number of reasons, that there is no coverage for that “Claim” under subsequent policies.

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Numerous states have provided tax relief in response to the COVID-19 outbreak, often in the form of tax filing and payment deadline extensions. At this time, 40 states and Washington, D.C., have provided a corporate income tax filing and/or payment deadline extension. Some of these states have conformed to the July 15 federal corporate income tax extension date, while others have extended to an earlier or later date. Some states have also extended income tax deadlines for partnerships and other business entities and many states have extended individual income tax deadlines.

Additionally, 21 states and Washington, D.C. have extended certain sales and use tax deadlines. The particular sales and use tax relief varies significantly by state, and is often limited to qualifying businesses (based on the entity’s size, industry, in-state operations, or other criteria). Some states have also extended certain deadlines for other indirect taxes, including excise taxes.

Baker McKenzie is tracking states’ corporate income tax and sales and use tax deadline extensions. Our tracker is available here and is updated as of 14 April 2020.

The post United States: State and Local Tax Responses to COVID-19: Corporate Income Tax and Sales and Use Tax Deadline Extensions appeared first on Global Compliance News.


United States: Federal Reserve releases details of lending programs in response to COVID-19 pandemic, including Main Street lending program for mid-sized businesses


On 9 April 2020, the Federal Reserve announced that it would be providing up to USD 2.3 trillion in loans to support the US economy in response to the COVID-19 pandemic.

The Federal Reserve released details of the Main Street lending program for mid-sized businesses that it had previously announced, release details of Municipal Liquidity Facility for states, cities and counties and released updated information about several recently announced financing programs: the Primary Market Corporate Credit Facility (PMCCF), the Secondary Market Corporate Credit Facility (SMCCF) and the Term Asset-Backed Securities Loan Facility (TALF).

The Federal Reserve stated that these programs were still being finalized, and requested comments from interested parties. Comments are open until 16 April.


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Our Global PIPE Guide sets out a comparison of the key features and requirements applicable to PIPE deals in a number of jurisdictions around the globe.

In this guide, our transactional lawyers share their insight and knowledge on PIPE deals including the key advantages of using PIPEs, why and how they are used. We also cover the key considerations for investors, and highlight any potential legal or regulatory hurdles an investor or issuer might face. We hope you find this guide useful.


Topics covered:

  1. Is it possible to avoid pre-emption rights?
  2. Is there a limitation on issuance of shares at a discount (limit on % stake &/or % discount)?
  3. What measures are available for PIPE investors over and above the rights available to other shareholders?
  4. Does PIPE trigger a takeover?
  5. What is the free float requirement?
  6. Do you need a prospectus or other registration statement?
  7. Do you need the approval of the existing shareholders?
  8. Any specific limitations on due diligence (due to insider trading restrictions)?
  9. Any key PIPE terms that may be required by investors or issuers?
  10. Any other potential obstacles in implementing PIPEs, etc.

We will be happy to provide more details of the rules and practice in any jurisdiction.

NOTE: The content of this guide is current as of 1 May 2020; the high-level guidance in this document is not intended to be comprehensive legal advice. We will be keeping this resource up to date, and also adding more jurisdictions over time, so we encourage you to refer to the most recent report available on this page.

The post Global Private Investment in Public Equity (PIPE) Guide appeared first on Global Compliance News.


In brief

Up until now, the medical exception to the substantial presence test has been limited only to medical conditions arising while such individual was present in the United States. During this unprecedented time, with countries closing their borders, global travel limited and persons stranded in countries not their own, following the lead of the OECD and other countries, the IRS has expanded the medical condition exception to the substantial presence test to account for US days of presence related to COVID-19.


Here is a summary of this alert of the newly issued Revenue Procedure 2020-20 (the “Revenue Procedure”):

  • Foreign nationals who spend too much time in the US may become US resident taxpayers under the Substantial Presence Test
  • The Medical Condition Exception, generally, is an exception that excludes certain days of US presence related to a medical condition that arose while the foreign national was in the US
  • The Revenue Procedure expands the Medical Condition Exception for COVID-19 related US days of presence of foreign nationals
  • Under the expansion, a foreign national may exclude for purposes of the Substantial Presence Test up to 60 days of US presence during a consecutive period that begins on or after February 1, 2020 and on or before April 1, 2020 (the “COVID-19 Medical Condition Travel Exception”)
  • The COVID-19 Medical Condition Travel Exception is claimed by attaching an IRS Form 8843, Statement for Exempt Individuals and Individuals with a Medical Condition, to their IRS Form 1040NR if they are required to otherwise file an IRS Form 1040NR. If they are not required to file an IRS Form 1040NR, such foreign nationals are not required to present an IRS Form 8843 to the IRS but are urged to document and maintain records in case the need to present the eligibility to exclude such days arises.

You may access the full alert here.

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