Monday, November 20, 2017
10:30 a.m. – 2:00 p.m.

The Fairmont Royal York
100 Front Street West
Toronto, ON M5J 1E3
Canada

Please join us for one (or both) of our sessions.

During the first session, our speakers will provide an overview of debt capital market trends in 2017 and what to expect in the months ahead. We will discuss some of the regulatory developments that are, and will continue to, impact issuances by financial institutions, including the Canadian banks. In particular, we will discuss issuance trends for financial institutions in the United States, the prospects for regulatory burden relief and tax reform, and related matters. We will also discuss the bail-in regime in Canada and the proposed TLAC requirement. Lastly, we will discuss recent NVCC issuances in the United States by Canadian banks, as well as other funding activity, including covered bonds.

During the second session, our speakers will discuss the application of blockchain in financial services, payments and financial products with a focus on use cases. In particular, we will discuss the applicable regulatory and tax considerations in the United States and conclude with some tips to assist the audience in navigating these regimes.

Session 1: Debt Capital Markets, Regulatory Developments & Market Outlook
10:30 a.m. – 12:00 p.m.

  • Overview of the debt capital markets;
  • Issuance levels and trends;
  • What to expect in the months ahead;
  • U.S. regulatory developments;
  • Canadian regulatory developments;
  • NVCC issuances; and
  • Modifying issuance programs for the bail-in regime.

Speakers:

  • Tom Connell
    Managing Director, Standard & Poor’s
  • Bryan Farris
    Associate Director, UBS Investment Bank
  • Peter Hamilton
    Partner, Stikeman Elliott LLP
  • Ahmet Yetis
    Americas Head of Capital Solutions, UBS Investment Bank
  • Oliver Ireland
    Partner, Morrison & Foerster LLP
  • Anna Pinedo
    Partner, Morrison & Foerster LLP

Lunch: 12:00 p.m. – 12:30 p.m.

Session 2: Blocked? Navigating the U.S. Regulatory and Tax Regimes Applicable to Blockchain
12:30 p.m. – 2:00 p.m.

  • What is blockchain and how does it work?;
  • Which laws apply?;
  • Timing, finality, and enforceability;
  • System accountability and responsibility;
  • Use cases;
  • Digital tokens, token sales, and U.S. regulation;
  • IRS Notice 2014-21;
  • Case study: Department of Justice Coinbase summons; and
  • Interesting issues relating to taxation of financial instruments and crypto.

Speakers:

To register for this program, or for more information, please click here.

Today, to mark the opening of the Practising Law Institute’s 49th Annual Institute, SEC Chair Clayton gave a keynote address focused on governance and  transparency, which was a surprising direction since the program focuses heavily on capital formation.  In his remarks, Chair Clayton discussed the SEC’s rulemaking agenda.  He noted that the SEC’s near-term agenda will be more limited than in prior years.  In outlining key areas of attention, Chair Clayton discussed the proxy process and shareholder engagement.  He discussed the need to ensure that the voice of retail investors is heard.  This is unusual in that so many academic studies and popular press articles have discussed the extent to which there has been a significant decline in the percentage of public company stocks in pure retail hands.  To the extent that there is retail ownership it is disintermediated since ownership is indirect through ETFs or other managed investments.  In any event, Chair Clayton questioned whether the voting decisions made by funds are maximizing value for shareholders.  Chair Clayton also discussed enforcement initiatives and again focused on risks to retail investors–highlighting particular areas of concern such as fee disclosures, penny stock related fraud, and transaction processing issues (such as those that might facilitate microcap fraud).  Chair Clayton also touched briefly on ICOs offerings.  Here is a link to the full text of the remarks:
https://www.sec.gov/news/speech/speech-clayton-2017-11-08.

Tuesday, October 31, 2017
12:00 p.m. – 1:30 p.m. EDT
5:00 p.m. – 6:30 p.m. BST

Token sales, also known as “ICOs,” represent a new capital-raising method that is being explored by a variety of companies in the market. In the past few months, the U.S. Securities and Exchange Commission (SEC) has provided guidance concerning token sales. Although the SEC did not declare that all digital tokens constitute securities, it cautioned, among other things, that certain tokens may be securities and that existing securities frameworks apply to token sales, notwithstanding that digital tokens may be distributed via distributed ledger technology. In addition, the IRS has published guidance relating to tokens that are “convertible virtual currencies” and has indicated that such tokens generally are treated as property for U.S. federal income tax purposes. Token sales, and the legal and regulatory landscapes in the United States and around the world with respect to digital tokens, continue to evolve.

This webinar will explore the current legal, regulatory and tax landscape relating to token offerings and will consider the following:

  • What are digital tokens and how are they typically used and sold?
  • What guidance has the SEC provided regarding token sales, and what is the significance of that guidance?
  • What guidance has the IRS provided regarding tokens, and what tax considerations are relevant to tokens and token sales?
  • What are some of the other legal matters that token issuers and their counsel should be aware of when contemplating launching token sales?

Speakers:

CLE credit is pending for California and New York.

For more information, or to register, please click here.

On September 11, 2017, SEC Chief Accountant Wesley Bricker gave a speech at the AICPA National Conference on Banks & Savings Institutions titled “Advancing High-Quality Financial Reporting in Our Financial and Capital Markets.”  Mr. Bricker dedicated a portion of the speech to discussing the importance of broker-dealer compliance, as well as regulatory and financial reporting requirements, relating to initial coin offerings (ICOs), also referred to as token sales.  Mr. Bricker noted that in July 2017, the SEC issued a report on its investigation of an offering of digital tokens by The DAO, an unincorporated virtual organization.  Mr. Bricker emphasized that, as stated in the SEC’s report, the federal securities laws apply to those who offer and sell securities in the United States, regardless of whether the issuing entity is a traditional company or a decentralized autonomous organization, whether those securities are purchased using U.S. dollars or virtual currencies, or whether they are distributed in certificated form or through distributed ledger technology.  Mr. Bricker stated that an entity involved in initial coin or token offering activities must consider the necessary accounting, disclosure and reporting guidance based on the nature of its involvement, including the preparation of financial statements.  Mr. Bricker noted that issuers involved in initial coin or token offerings should consider, for example, the application of SEC guidance in addressing the following questions:

  • What are the necessary financial statement filing requirements?
  • Are there liabilities requiring recognition or disclosure?
  • Are there previously recognized assets that require de-recognition?
  • Are there revenues or expenses requiring recognition or deferral?
  • Is there a transaction with owners, resulting in debt or equity classification and possibly compensation expense?
  • Are there implications for the provision for income taxes?

Mr. Bricker also noted that holders of coins or tokens should consider, for example, the application of SEC guidance in addressing the following questions:

  • Does specialized accounting guidance (such as for investment companies) apply to the holder’s financial statement presentation?
  • What are the characteristics of the coin or token in considering whether, how, and at what value the transaction should affect the holder’s financial statements?
  • What is the nature of the holder’s involvement in considering whether the issuer’s activities should be consolidated or accounted for under the equity method?

A copy of the speech is available at: https://www.sec.gov/news/speech/speech-bricker-2017-09-011.

Global fintech venture capital-backed financings are on course to hit record highs, according to a recent research briefing by CB Insights. For the first half of 2017, there have been 496 VC-backed financings that raised over $8.0 billion for fintech companies around the world. U.S. fintech issuers represented almost 40% of the total number of fintech financings in the first half of the year with 198 deals raising $3.1 billion.

Financings for blockchain and bitcoin companies globally in the first half of 2017 raised $343 million over 36 deals. Wealth tech company financings, which include robo-advisors and mobile investing platforms, raised $661 million across 33 financings. Financings for insurance tech companies accounted for over 15% of financings by number of deals, raising $826 million over 76 deals.

There are now 26 fintech unicorns, companies with a valuation of over $1 billion, which include 15 U.S.-based fintech companies. This follows an ongoing trend of privately held companies choosing to remain private longer. Late-stage investments have been ever more present with companies going through multiple rounds of financings due to increased access to capital. Both global and U.S. late-stage investments in fintech companies hit five-quarter highs, with a median deal size of $34 million and $38.5 million, respectively.

To see CB Insight’s full report, click here.

Thursday, May 25, 2017
10:00 a.m. – 11:30 a.m. EDT

The webinar will discuss the current state of fintech services in the US, including state licensing requirements, bank partnership arrangements, and the potential for special purpose bank charters at both the state and federal levels.

The presenters will also discuss the benefits and potential difficulties of these arrangements. Finally, the discussion will touch on fintech enhancements to existing bank services, including distributed ledger technology.

Topics Will Include:

  • An update on the state of fintech services;
  • Lending and payments models;
  • Bank partnerships;
  • State licenses;
  • Bank Charters;
  • True Lender; and
  • Madden.

Speakers:

CLE credit is pending for California and New York.

For more information, or to register, please click here.

The fast growing fintech industry continues to command the attention of investors across the globe.  A recent CB Insights report summarized the global financing trends for fintech companies in 2016.  There were 836 venture capital-backed financings, which raised $12.7 billion for fintech startups in 2016.  While this was a $2 billion drop from 2015 figures, it is a significant increase from 2012’s 451 deals, which raised $2.5 billion.  U.S. fintech issuers represented over half of the total number of fintech financings with 422 deals, raising $5.5 billion.

Within the fintech space, funding for blockchain and bitcoin companies accounted for 8% of total deals in 2016, raising $431 million. Companies in the payments tech field, which provide solutions to facilitate payment processing, raised $1.6 billion in 2016 across 150 financings.  Insurance tech companies also warrant mention with 109 deals, raising $1.6 billion in 2016.

As privately held companies opt to remain private longer and defer going public, there has been an emergence of “unicorns,” or companies that have a valuation of over $1 billion. CB Insights reports that there are now 190 unicorns with a cumulative valuation of $660 billion.  There are 22 fintech unicorns, including 11 U.S.-based fintech unicorns.  With increased access to capital, more privately held companies go through numerous rounds of financings, referred to as late-stage financings.  Fintech companies ended 2016 with a median late-stage deal size of $26.5 million, accounting for 29% of their total deal share.

On December 2, 2016, Comptroller of the Currency Thomas Curry confirmed that the agency will begin considering applications from FinTech companies to become special purpose national banks, saying that the OCC will charter “financial technology companies that offer bank products and services and meet our high standards and chartering requirements.” The OCC simultaneously released a white paper on issues addressing the conditions on extending national bank charters to FinTech companies.

Read our client alert.

On November 14, 2016, the SEC hosted a panel discussion entitled the “Impact of Recent Innovation in Capital Formation,” as part of its public forum on financial technology (Fintech) innovation held in Washington, D.C., and webcast over the SEC’s website.  Mr. Sebastian Gomez Abero, Head of the Office of Small Business Policy of the SEC’s Division of Corporation Finance, moderated the panel.

Panelists discussed the relationship between financial innovation and capital formation, the dynamic between Fintech and investor protection, and the risks, challenges and opportunities facing borrowers, lenders, intermediaries and regulators engaged in the online marketplace lending and crowdfunding spaces.  The panelists said that, overall, they see the recent growth in peer-to-peer online lending and crowdfunding technologies as positive developments, particularly in expanding the availability of and access to affordable credit and capital to traditionally underserved markets, including small business owners and entrepreneurs.  Another common theme identified by the panel is the need for greater clarity, standardization and consolidation in the regulatory structure.  A panelist commented that, at the moment, there were about 25 federal agencies involved in consumer finance and much more at the state level, with overlapping jurisdictions.  Oftentimes, borrowers who wish to tap into the online marketplace lending and crowdfunding spaces are confronted with the daunting task of navigating through a complex and overlapping regulatory landscape, with multiple regulators to deal with.  Notwithstanding these challenges, the panel expressed confidence that online marketplace lending and crowdfunding are poised to grow and develop in the coming years.  The SEC has also reported that in less than six months since the regulations became effective, more than 140 companies have started an offering using the new Regulation Crowdfunding.

Today the SEC announced the agenda and the panelists for its first ever fintech forum on November 14th.  As noted in the announcement, the session, which will begin at 9 a.m. ET, will be divided into four panels. Participants on the first panel will discuss the impact of recent innovation in investment advisory services. The second panel will discuss the impact of recent innovation on trading, settlements, and clearance activities. Participants on the third panel will discuss the impact of recent innovation in capital formation. The final panel will discuss investor protection in the fintech era.  The session is open to the public and also will be webcast.

Learn more here:   https://www.sec.gov/news/pressrelease/2016-234.html