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May 22, 2012
EU Adopts List of "General Function" Health Claims on Foods
On 16 May 2012, the European Commission adopted its long-anticipated Commission Regulation listing permitted “general function” health claims (the “Permitted List”), as well as their conditions of use, under Article 13.1 of Regulation 1924/2006 on nutrition and health claims made on foods (the “Health Claims Regulation”).
As a result of the adoption of the list, food manufacturers will only be allowed to use health claims featuring on the Permitted List from the beginning of December 2012. Other health claims will be prohibited, subject to certain exceptions.
Accordingly, food business operators should bring their labeling and promotional practices in line with the Permitted List, with a view to achieving compliance by early December 2012 at the latest.
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- Food, Drug and Medical Device Regulatory
- Food, Drug and Medical Device Compliance and Enforcement
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May 21, 2012
California’s Proposed Pregnancy and Disability Regulations Would Impose New and Potentially Controversial Requirements on California Employers
California’s Fair Employment and Housing Commission (“FEHC”) has proposed new regulations governing pregnancy discrimination under the Fair Employment Housing Act (the “FEHA”) that could go into effect this year. The new regulations include provisions which if adopted, will impose new requirements on California employers, some of them controversial.
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- Labor, Employment and Immigration
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May 17, 2012
Eleventh Circuit Reverses TOUSA District Court And Upholds Fraudulent Conveyance Claims
On May 15, 2012, the United States Court of Appeals for the Eleventh Circuit issued an important opinion in the ongoing fraudulent conveyance litigation brought by the unsecured creditors’ committee in the bankruptcy of homebuilder TOUSA, Inc. (“TOUSA”). The fraudulent conveyance action involved a series of transactions pursuant to which TOUSA (i) obtained first lien and second lien loans from a syndicate of lenders (the “New Lenders”), secured by upstream secured guaranties from its subsidiaries (the “Conveying Subsidiaries”), and (ii) used the proceeds of the loans from the New Lenders (the “New Loan Proceeds”) to repay indebtedness owed to TOUSA’s existing lenders (the “Transeastern Lenders”) and to settle related litigation with those lenders. In a much criticized 2009 decision, the bankruptcy court not only avoided the guaranties and liens provided by the Conveying Subsidiaries to the New Lenders but also ordered that the Transeastern Lenders repay to the TOUSA estate over $400 million received in settlement of their litigation with TOUSA. On appeal in 2011, the District Court quashed the Bankruptcy Court’s ruling as it related to the liability of the Transeastern Lenders and held that the Transeastern Lenders were not liable to repay to TOUSA’s estate the amounts they received from the New Loan Proceeds. The Eleventh Circuit has now reversed the District Court decision.
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May 17, 2012
New Sanctions Target Parties Threatening the 2011 Power-Sharing Agreement in Yemen
On May 16, 2012, President Obama issued a new Executive Order authorizing the U.S. Treasury Secretary to sanction parties who undermine Yemen’s internal security or obstruct a November 2011 power-sharing agreement brokered by the Gulf Cooperation Council between the Government of Yemen and opposition leaders. The property of parties sanctioned under the Executive Order would be blocked and U.S. persons would be prohibited from engaging in any transactions with designated parties. No parties have been designated yet under the Executive Order, which reflects growing U.S. concern regarding Yemen’s internal stability.
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May 17, 2012
Sidley Austin LLP Global Pricing Newsletter - Volume One 2012
Sidley Austin LLP’s Global Life Sciences Team is pleased to provide you with this Global Pricing Newsletter, the first in a periodic series updating clients and friends of the firm on pricing issues around the world that may have an impact on pharmaceutical and biologic manufacturers’ legal and business strategies. This Newsletter follows Sidley’s webinar last fall in which we discussed how reference pricing, comparative effectiveness research, transparency, and mandatory pricing negotiation have an impact on pricing around the world.
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May 15, 2012
Important ERISA 408(b)(2) Disclosure Deadline Approaching for Managers of Plan Assets (Including Hard-Wired Plan Assets Feeder Funds)
As you may know, regulations issued under Section 408(b)(2) of ERISA require that “covered service providers” provide certain fee disclosures to ERISA plans. Covered service providers include (a) managers of plan assets funds, (b) managers of hard-wired plan assets feeder funds, and (c) managers of separate accounts for ERISA plans. The deadline for providing these disclosures is July 1, 2012.
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- Investment Funds, Advisers and Derivatives
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May 14, 2012
NDRC Takes Serial Measures to Reduce Drug Prices
It has long been a policy objective of the Chinese Government to reduce drug prices in China while ensuring drug quality. The National Development and Reform Commission of China (NDRC) recently took a series of measures to implement this objective.
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- Food, Drug and Medical Device Compliance and Enforcement
- Food, Drug and Medical Device Regulatory
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May 11, 2012
CFTC and SEC Finalize Key Dodd-Frank "Entity Definitions"
The Commodity Futures Trading Commission (“CFTC”) and Securities and Exchange Commission recently finalized the definitions of “swap-dealer,” “security-based swap dealer,” “major swap participant,” “major security based swap participant” and “eligble contract participant,” and the CFTC adopted final regulations treating commodity options similarly to swaps.” These so called “entity definitions” and the commodity option provisioins are key elements of implementation of the OTC derivatives reforms mandated by the Dodd Frank Act.
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- Investment Funds, Advisers and Derivatives
- Securities and Futures Regulatory
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May 11, 2012
MOH Publishes New Draft of Drug GSP Regulation
On April 25, the Ministry of Health of China (MOH) published a new draft of the Drug GSP for public comment.
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- Compliance Counseling - FDA
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May 10, 2012
EU launches a Public Consultation on the Modernization of its Trade Defense Instruments
Trade defense instruments (anti-dumping, anti-subsidy and safeguards) are one of the few tools companies have to address unfair trading practices. Importers, users and consumers are also impacted by how such instruments are applied.
The European Commission (Commission) has now launched a public consultation on ways to modernize and improve EU trade defense instruments. Stakeholders have until 3 July 2012 to contribute to the debate. The Commission will likely incorporate the results of this consultation into a proposal to be issued later this year.
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- Antidumping, Countervailing Duties and Trade Remedies
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May 10, 2012
Qui Tam Lawsuits under the False Claims Act: A Growing Concern for International Trade Compliance Officers
Increasingly, compliance lapses involving international trade rules are serving as the basis for qui tam lawsuits under the False Claims Act. Such suits may be initiated by any private party, including employees and competitors. Compliance officers should take steps to protect companies against this growing area of potential liability for international trade activities.
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- Antidumping, Countervailing Duties and Trade Remedies
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May 8, 2012
New Executive Order Targets Foreign Entities Evading U.S. Sanctions on Iran and Syria
On May 1, 2012, President Obama issued a new Executive Order authorizing the Treasury Department to sanction foreign persons engaged in activities intended to evade U.S. sanctions on Iran and Syria. The measure comes in the wake of brewing Congressional debate over strengthening sanctions on the regimes in Tehran and Damascus, as well as growing concern that foreign actors are assisting these regimes in ways that undermine U.S. policy.
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May 7, 2012
Federal Agencies Propose To Regulate Hydraulic Fracturing
On May 4, 2012, two federal agencies issued proposals regulating oil and gas development using hydraulic fracturing. First, the Bureau of Land Management released proposed rules that would expand regulation of hydraulic fracturing on federal and tribal lands. Second, U.S. EPA issued proposed guidance that would interpret the term “diesel fuels” and define how the federal Underground Injection Control program would apply to hydraulic fracturing.
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May 4, 2012
“Targeted Easing” of U.S. Sanctions Against Burma Will Require Careful Monitoring by U.S. Businesses
U.S. businesses seeking to read the tea leaves on prospects for doing business in Burma (Myanmar) in the wake of Burma’s April 1 parliamentary elections and other reforms may be encouraged by the swift changes made by the European Union and Canada. Could the United States Government be encouraged to follow suit? Given the number of overlapping sanctions currently in place, indications are that a slower and more cautious transition process is likely to unfold in the United States.
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May 4, 2012
CMS Surprises Industry with an Announcement to Delay Sunshine Act Data Collection
Yesterday, the Centers for Medicare and Medicaid Services (“CMS” or the “Agency”) posted on its official blog that it will not require applicable manufacturers and applicable group purchasing organizations to collect data pursuant to the federal Physician Payment Sunshine Act (the “Sunshine Act”) prior to January 1, 2013. The Sunshine Act requires manufacturers of covered drugs, devices, biological or medical supplies to annually report certain information about payments and transfers of value made to covered physicians and teaching hospitals. Prior to this announcement, data collection was due to begin sometime this year.
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April 27, 2012
May Edition of Notable Cases and Events in E-Discovery
This month’s Edition of Notable Cases and Events in E-Discovery includes a Third Circuit ruling overturning a district court decision and severely limiting the scope of e-discovery expenses recoverable as taxable costs and a New York state appellate decision adopting the rule in Zubulake that the producing party initially should bear the costs of document production.
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- Complex Commercial Litigation
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April 26, 2012
U.S. Customs to Disclose Identifying Information on Imported Goods to Enforce Certain IP Rights
On April 24, 2012, U.S. Customs and Border Protection (“CBP”) issued an interim rule authorizing officials to share identifying information with intellectual property holders during the import clearance process. The new rule amends the Customs and Border Protection Regulations, 19 C.F.R. part 133, which provides for border protection for trademarks, trade names and copyrights. The measure implements Section 818(g) of the National Defense Authorization Act for Fiscal Year 2012 , which permits CBP to share identifying information with rights holders as part of a broader effort to interdict counterfeit imports.
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April 24, 2012
Federal Reserve Clarification of Volcker Rule Conformance Period
On April 19, 2012, the Board of Governors of the Federal Reserve System (the “Board”) announced that banking entities subject to Section 13 of the Bank Holding Company Act of 1956, the so-called “Volcker Rule,” would have the full two-year period provided by statute to come into conformance with the Volcker Rule’s restrictions on proprietary trading and investment in and sponsorship of covered funds. The announcement was part of a joint statement released by the Board, the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Commodity Futures Trading Commission and the Securities and Exchange Commission.
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- Financial Institutions Regulatory
- Investment Funds, Advisers and Derivatives
- Securities and Futures Regulatory
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April 24, 2012
New York City Lobbying Bureau Issues Advisory Opinions Clarifying Registration Obligations For Hedge Funds and Investment Managers
In December 2011, the New York City Lobbying Bureau issued two advisory opinions clarifying the application of exceptions to the obligation to register as a lobbyist for marketing to the New York City pension funds and other activities by many types of investment managers, including hedge funds. The opinions were placed on the Lobbying Bureau’s website with no announcement, and the industry press has not commented on them. When taken together, the two opinions provide considerable guidance regarding marketing activities that do not require registration. In addition, the opinions make clear which contract administration activities also do not require registration. This Sidley Update will outline the policy clarifications and identify unanswered questions.
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- Investment Funds, Advisers and Derivatives
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April 23, 2012
EU OTC Derivatives Regulation Under EMIR – An Analysis of the Final Agreed Text
The European Market Infrastructure Regulation ("EMIR") was adopted by the European Parliament on 29 March 2012. The technical standards that will provide the detailed rules that give effect to EMIR are to be published by the European Securities and Markets Authority ("ESMA") by no later than 30 September 2012. Nevertheless, the provisions of EMIR, which is expected to become effective during 2013, provide the framework for affected firms to prepare, if they have not already done so, for the new regulatory regime that will shape the over-the-counter ("OTC") derivative markets (comprising derivative contracts which are not traded nor executed on a "regulated market"). In this update we highlight the anticipated impact of EMIR on participants in such markets.
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- Securities and Futures Regulatory
- Investment Funds, Advisers and Derivatives
- Financial Institutions Regulatory
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April 23, 2012
Proposed Regulations Defining “Predominantly Engaged in Financial Activities” for the Dodd-Frank Act
On April 2, 2012, the Board of Governors of the Federal Reserve System (the “Board”) issued a supplemental notice of proposed rulemaking and a request for comment that would amend the Board’s Regulation Y to establish the criteria for determining whether a company is “predominantly engaged in financial activities” for purposes of Title I of the Dodd-Frank Wall Street Reform and Consumer Protection of 2010 (the “Dodd-Frank Act”). The Board had previously published a notice of proposed rulemaking on February 11, 2011, which, inter alia, sought to define when a company is “predominantly engaged in financial activities.” Based upon comments received primarily raising questions as to whether the conduct of certain financial activities that did not comply with the conditions applicable to bank holding companies should still be considered to be financial activities for purposes of the Dodd-Frank Act, the Board issued the present supplement to the February release. Comments are due by May 25, 2012.
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- Securities and Futures Regulatory
- Investment Funds, Advisers and Derivatives
- Financial Institutions Regulatory
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April 23, 2012
U.S. and EU OTC Derivatives Regulation – a Comparison of the Regimes
On 29 March 2012 the European Parliament adopted the European Markets Infrastructure Regulation (EMIR). The Regulation, which is expected to become effective during 2013, provides a new regulatory framework for the trading of standardized OTC derivative contracts. Attached is an update on EMIR which provides an analysis of the anticipated impact of EMIR on market participants.
EMIR is one of several initiatives taking place in the European Union and in multiple jurisdictions globally reforming OTC derivatives trading. For market participants with global trading operations and therefore potentially subject to regulation in multiple jurisdictions, it is possible that difficult compliance and choice of law questions will arise as the new global regulatory landscape for OTC derivatives evolves. The second update attached provides a high level comparison of the new rules for OTC derivatives regulation in the United States (US) and the European Union (EU).
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- Investment Funds, Advisers and Derivatives
- Securities and Futures Regulatory
- Financial Institutions Regulatory
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April 13, 2012
California Supreme Court Issues Ruling in Brinker Clarifying Employers’ Duty to Provide Meal and Rest Breaks to Hourly Employees
In one of the most anticipated wage and hour law decisions in years, the California Supreme Court unanimously ruled on April 12, 2012 that employers must relieve hourly employees of all duties during meal periods, but they are not required to “police” their employees to ensure no work is done. The Court also ruled that employees who work no more than 10 hours in a shift are entitled to one meal period, even if timing of the meal period causes the employee to work more than five hours between the meal and the end of the shift. Further, the Court clarified rules on rest periods and provided guidance to trial courts regarding their duty to make legal or factual determinations at the class certification stage.
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- Labor, Employment and Immigration
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April 13, 2012
FSOC Issues Final Rule on Oversight of Nonbank Financial Companies
On April 3, 2012, the Financial Stability Oversight Council (the “FSOC”) approved a final rule and accompanying guidance to establish criteria by which the FSOC will determine which nonbank financial companies, if in a state of material financial distress or due to their attributes (e.g. their nature, scope, or size), could “pose a threat to the financial stability of the United States,” and thus should be subject to oversight and regulation by the Board of Governors of the Federal Reserve System. This Client Update summarizes those procedures and criteria the FSOC will use in making those determinations, which it will begin this year.
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- Financial Institutions Counseling
- Financial Institutions Regulatory
- Investment Funds, Advisers and Derivatives
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April 12, 2012
California Supreme Court: Employers Must Relieve Employees of all Duties for Meal and Rest Breaks but are Not Required to “Police” Employees to Ensure No Work is Done
In a decision that affects employers throughout the state, the California Supreme Court in Brinker Restaurant Group v. Superior Court (Cal. Sup. Ct. Case No. S166350) ruled today that employers must relieve hourly employees of all duties during meal periods, but they are not required to ensure that the employee actually takes the break and that no work is done. In addition, an employer’s knowledge that employees are choosing to work through meal periods is, by itself, insufficient to subject the employer to premium pay.
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- Labor, Employment and Immigration
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April 12, 2012
Class Certification Denied in Senior Annuity Suit
In a first-of-its-kind win for defendants in “senior annuity” class actions, a federal court in Chicago denied class certification in a case against Bankers Life and Casualty Company. Rowe v. Bankers Life¬¬ and Casualty Company, No. 09-cv-491, slip op. (N.D. Ill. Mar. 29, 2012). This is the first denial of class certification in the myriad of senior citizen annuity class actions. The opinion is also noteworthy for its employment of the more modern class certification standard that requires plaintiffs to establish by a preponderance of the evidence all applicable elements of Rule 23. Sidley Austin LLP represents Bankers Life in the proceeding.
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- Insurance/Financial Services Class Actions
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April 9, 2012
Stem Cell Warning Letter Reflects FDA Focus on Medical Procedures
On March 13, 2012, the compliance office within the Center for Biologics Evaluation and Research (CBER) at FDA sent a Warning Letter to IntelliCell Biosciences, Inc., alleging that the firm’s IntelliCell™ process, based on acquiring adipose-derived stem cells and resulting in stromal vascular fraction, is a biological drug regulated under the Federal Food, Drug, and Cosmetic Act. The letter reflects FDA’s interest in expanding its regulatory authority over products under the Federal Food, Drug, and Cosmetic Act (FDCA) to encompass health care services, including clinical laboratory testing and regenerative medicine procedures involving autologous use of stem cells and other human cellular and tissue-based material.
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- Food, Drug and Medical Device Regulatory
- Food, Drug and Medical Device Compliance and Enforcement
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April 6, 2012
Department of State Announces Retrogression of Priority Dates
This Immigration Alert contains updates on the following:
- Retrogression of India and China EB-2 numbers
- Save the Date: Sidley Immigration Basics Program, June 29, 2012
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- Labor, Employment and Immigration
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April 5, 2012
Supreme Court Rules Mental or Emotional Distress Are Not “Actual Damages” Under the Privacy Act
The Supreme Court ruled on March 28, 2012, in Federal Aviation Administration v. Cooper, that “mental and emotional distress” are not “actual damages” cognizable under the Privacy Act. While it is unclear what import the case will have on claims predicated on common law privacy torts or on statutes where the question of sovereign immunity is not implicated, Cooper and the Court’s 2004 opinion in Doe v. Chao together demonstrate that the Supreme Court does not view the provision of minimum statutory damages – $1,000 per violation in the case of the Privacy Act – as sufficient in itself to obviate the need to allege concrete injury. Under the Privacy Act, the Court has now clearly held that such concrete injury must entail pecuniary or economic loss. Cooper thus does not provide any jurisprudential or philosophical support to expand the range of what types of injury are actionable in privacy litigation.
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- Privacy, Data Security and Information Law
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April 4, 2012
Anti-Corruption Quarterly Newsletter
Sidley Austin LLP is pleased to distribute its fifth issue of the “Anti-Corruption Quarterly” newsletter. This quarterly publication provides updates on the latest developments in the evolving area of global anti-bribery/FCPA regulation, analysis of current enforcement trends and new laws/regulations, as well as practical tips on improving anti-corruption compliance measures.
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- Complex Commercial Litigation
- Securities and Futures Regulatory
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April 4, 2012
April Edition of Notable Cases and Events in E-Discovery
In the April Edition of the Notable Cases and Events in E-Discovery includes reports on the first judicial opinion approving the use of computer-assisted review to search for relevant Electronically Stored Information (ESI) in appropriate cases and on a federal court administrative group report offering a general framework for managing discovery of ESI in criminal cases.
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- Complex Commercial Litigation
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April 4, 2012
President Obama Clears Way for Sanctions on Foreign Financial Institutions that Finance Petroleum Purchases from Iran
On March 30, 2012, President Obama determined that there is a sufficient supply of petroleum products in world markets to allow countries to significantly reduce their petroleum imports from Iran. The finding clears the way for new sanctions under section 1245 of the National Defense Authorization Act of 2012 (NDAA) on foreign financial institutions that conduct or facilitate financial transactions related to purchases of petroleum products from Iran. The President’s decision follows sanctions waivers for Japan and ten European countries.
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- Financial Institutions Regulatory
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April 3, 2012
FTC Releases Final Report on Consumer Privacy: Calls for Enhanced Practices and Further Congressional Action
On March 26, 2012, the Federal Trade Commission (“FTC” or “Commission”) released its long-awaited report on consumer privacy, “Protecting Consumer Privacy in an Era of Rapid Change: Recommendations for Businesses and Policymakers” (the “Report”). The key concepts advanced in the new FTC report include: privacy by design, meaningful consumer choice, and industry transparency. The Commission suggests that the framework provided by the Report should serve as a baseline model for business-consumer privacy expectations, will help establish best industry practices, and could assist Congress in developing privacy legislation.
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- Privacy, Data Security and Information Law
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March 30, 2012
Congress Liberalizes Securities Offering Regulation
On March 27, 2012, Congress approved the JOBS (for “Jumpstart Our Business Startups”) Act. President Obama is expected to sign the measure quickly. Once in force, the JOBS Act will significantly liberalize communication practices allowed under the Securities Act in both registered and exempt offerings. Reduced disclosure requirements and certain other benefits under both the Securities Act and the Exchange Act will be available for certain smaller companies. The new law substantially increases the number of record holders a private company may have before it is required to register its equity securities under the Exchange Act.
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- Securities and Futures Regulatory
- Investment Funds, Advisers and Derivatives
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March 30, 2012
United States Suspends Argentina's Preferential Trade Status for Failure to Pay ICSID Arbitral Awards
On March 26, 2012, the United States took the unprecedented step of using trade measures to support the efforts of U.S. investors to recover under arbitral awards rendered against Argentina. President Obama issued a proclamation suspending Argentina’s designation as a beneficiary developing country under the U.S. Generalized System of Preferences (GSP) because Argentina “has not acted in good faith in enforcing arbitral awards in favor of United States citizens” or U.S.-owned companies. The suspension will affect goods entered or withdrawn from a bonded customs warehouse on or after May 28, 2012, including imports into the United States of wine and olive oil from Argentina.
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- International Arbitration (Commercial and Treaty)
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March 28, 2012
Arbitration Terms in Chinese Licenses
The firm recently advised a US-based client that has no Asian operations in connection with a proposed intellectual property license agreement to a company located in the People’s Republic of China (the “PRC”). One issue that received a great deal of attention was the selection of an appropriate dispute resolution mechanism, and to what extent that mechanism should—or could—include the right to seek interim relief, such as a temporary restraining order or preliminary injunction, to prevent misuse of the licensed intellectual property.
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- International Arbitration (Commercial and Treaty)
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March 28, 2012
U.S. Congress Enacts JOBS Act, Increasing 499 Investor Limit for Private Funds to 1,999 and Eliminating Prohibition Against General Solicitation in Connection with Certain Private Offerings
On March 27, 2012, Congress approved the so-called JOBS Act and President Obama is expected to sign it in the coming days. Once in effect, the JOBS Act will, among other things, (1) eliminate the prohibition against general solicitation and general advertising in connection with private offerings to accredited investors conducted in reliance on Rule 506 of Regulation D under the Securities Act of 1933, (2) apply elimination of the prohibition against general solicitation to other federal securities laws, and (3) raise the investor threshold for registration under the Securities Exchange Act of 1934 from 500 to 2,000 “holders of record” for most issuers.
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- Investment Funds, Advisers and Derivatives
- Private Equity and Venture Capital Funds
- Private Real Estate Funds
- Exchanges and Clearing Organizations
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March 27, 2012
EPA Releases Proposed Electric Generating Unit New Source Performance Standards for Carbon Dioxide Emissions
On March 27, 2012, the U.S. Environmental Protection Agency released a proposed rule regulating carbon dioxide (CO2) emissions from electric generating units (EGUs) greater than 25 megawatts under the Clean Air Act’s New Source Performance Standards. All new EGUs would have to meet a standard of 1,000 pounds of CO2 per megawatt hour. This is equivalent to the output of most natural gas combined cycle turbines without any CO2 controls. Any new coal-fired power plants would have to use carbon capture and storage to sequester approximately 50% of CO2 emissions over a 30-year average. EPA stated that the 30-year average would provide coal-fired EGUs with flexibility required for a new technology that will likely have interruptions during start-up and a long shakedown period. Existing EGUs would be exempt from the rule, as would proposed EGUs that have already acquired a complete preconstruction permit and would commence construction within 12 months of the publication of the proposed rulemaking in the Federal Register. Nor does EPA propose that the rule cover modifications to or reconstructions of existing sources.
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March 26, 2012
Analysis of Final EU Short Selling and CDS Regulation
On 24 March 2012 the final text of the new EU Regulation on Short Selling and Certain Aspects of Credit Default Swaps was published in the Official Journal of the European Union. The Regulation sets out notification requirements and restrictions relating to short positions in shares and sovereign debt and, separately, a prohibition on uncovered sovereign credit default swaps. This Update provides a description, and considers the implications, of the main provisions of the Regulation.
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- Financial Institutions Regulatory
- Investment Funds, Advisers and Derivatives
- Securities and Futures Regulatory
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March 26, 2012
Pfeil v. State Street Bank and Trust Company: Sixth Circuit Holds that the "Moench" Presumption of Prudence Does Not Apply at the Pleading Stage
On February 22, 2012, the United States Court of Appeals for the Sixth Circuit addressed the applicability of the “Moench presumption” with respect to ERISA claims for breach of fiduciary duty arising from allegedly imprudent investments in employer stock within an ESOP. The Sixth Circuit ruled that the presumption that a fiduciary’s decision to permit an investment in employer stock pursuant to the terms of the plan is prudent does not apply at the pleading stage, and a plaintiff can rebut the presumption by showing that “a prudent fiduciary acting under similar circumstances would have made a different investment decision.” Pfeil v. State Street Bank and Trust Co., 2012 WL 555481 at *4 (6th Cir. 2012) (citation omitted). The Sixth Circuit also held that (1) plaintiffs adequately pled the element of causation, (2) ERISA § 404(c) is an affirmative defense that could not be asserted in response to a motion to dismiss, and (3) State Street did not establish that plaintiffs’ claims were collaterally estopped by the Second Circuit’s decision in Young v. General Motors Investment Management Corp., 325 F. App’x 31 (2d Cir. 2009).
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- Labor, Employment and Immigration
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March 26, 2012
Proposed New EU Transparency Directive on Pricing and Reimbursement of Medicinal Products
On 1 March 2012, the European Commission published its long-awaited proposal to update Directive 89/105/EEC (the “Transparency Directive”), the key piece of legislation that limits the powers of EU Member States to set prices and reimbursement conditions of medicinal products. The Transparency Directive requires pricing and reimbursement (“P&R”) authorities to apply objective and non-discriminatory criteria, to respect strict time limits and to permit judicial review of P&R decisions. An update was needed to deal with the increasing complexity of European P&R systems, the introduction of demand-side measures (incentives to prescribing physicians) to influence drug prescriptions, and an unsatisfactory degree of Member State compliance.
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- Food, Drug and Medical Device Regulatory
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March 23, 2012
New German Notification and Publication Requirements for Net Short Positions from 26 March 2012
Germany adopted new notification and publication requirements for net short positions effective as of 26 March 2012. Clients may, via the internet, register with BaFin’s electronic notification platform and with the electronic Federal Gazette's publication platform in order to submit relevant notifications and publications.
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- Investment Funds, Advisers and Derivatives
- Securities and Futures Regulatory
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March 22, 2012
EB-2 Retrogression, H-1B Cap and Other Developments
This Immigration Update contains updates on the following:
- Save the Date: Sidley Immigration Basics Program, June 27, 2012
- Likely retrogression of India and China EB-2 numbers
- Start of H-1B filing period for FY2013
- Changes in L-1B regulations and related policy issues
- Expansion of E-Verify Self Check
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- Labor, Employment and Immigration
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March 22, 2012
Export Controls and Compliance Programs: Lessons learned from the ECJ
In setting up, rolling out and applying a compliance program for export controls and economic sanctions, companies often struggle with the level of scrutiny they should apply to their transactions. This is especially true in cases where it is unclear whether the involvement of a party to a transaction could raise concerns.
On 13 March 2012, the European Court of Justice (ECJ) issued two judgments that provide some guidance as to the level of scrutiny needed in such situations.
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March 21, 2012
Supreme Court Holds that Method of Correlating Blood Level of Metabolites to Drug Dosage Adjustment Is Not Patentable Subject Matter
On March 20, 2012, the Supreme Court issued its much-awaited decision in Mayo Collaborative Services v. Prometheus Laboratories, Inc., the latest in a recent string of Supreme Court and Federal Circuit decisions concerning patentable subject matter under Section 101 of the Patent Act. In a unanimous decision authored by Justice Breyer, the Court held unpatentable Prometheus’ method of adjusting the dosage of thiopurine agents based on the level of that drug’s metabolites appearing in a patient’s blood.
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- Patent and Intellectual Property Rights Appeals
- Intellectual Property Litigation
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March 20, 2012
Recent IRS Guidance on Electronic K-1s
The IRS has provided detailed requirements for providing electronic K-1s to partners.
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- Investment Funds, Advisers and Derivatives
- Private Equity and Venture Capital Funds
- Private Equity and Joint Ventures
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March 20, 2012
UK Government Announces Significant Changes to Competition Regime
On 15 March 2012, the UK Government announced the changes it has decided to implement to overhaul the UK’s competition regime. The reforms, which are important and far-reaching, include: creating a single, new competition enforcement agency (the Competition and Markets Authority); making it easier to secure criminal convictions of individuals alleged to have participated in cartel activity; lowering the threshold for imposing “interim measures” where allegations of anti-competitive practices are being investigated; and, in the area of merger control, standardising the first phase review period at 40 working days, pushing back first phase remedies discussions until after the Competition and Markets Authority has decided to initiate a second phase investigation, and increasing the fees parties must pay.
This Update discusses the most significant changes to the current regime and outlines anticipated next steps in the reform process.
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March 16, 2012
U.S.-Korea Free Trade Agreement Enters into Force
The U.S.-Korea Free Trade Agreement (Agreement) entered into force on March 15, 2012. One of the Agreement’s principal benefits is reduced duties on originating goods traded between the United States and the Republic of Korea (Korea). Companies should not, however, assume that all goods made in the United States or Korea qualify as originating goods. The Agreement contains rules of origin—reproduced in General Note 33 of the Harmonized Tariff Schedule of the United States—that dictate when goods may be certified as originating. Moreover, goods must meet additional requirements beyond the rules of origin. For example, goods that enter the commerce of a third country do not qualify for preferential duty rates. Thus, U.S.-origin goods shipped to Korea from a distribution center in China would not qualify for preferential duty rates in Korea if the goods entered the commerce of China while at the distribution center. U.S. Customs and Border Protection has promulgated interim regulations implementing the Agreement’s customs provisions, and issued implementation instructions to the various ports of entry throughout the United States.
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March 14, 2012
Draft Guidance on DTC Ad Pre-Review Program
On March 13, FDA released a draft guidance on pre-dissemination review of direct-to-consumer (DTC) television ads for prescription drugs, implementing FDCA § 503B, added by Section 901(d)(2) of the FDA Amendments Act of 2007 (FDAAA), codified at 21 U.S.C. § 353b (“The Secretary may require the submission of any television advertisement for a drug (including any script, story board, rough, or a completed video production of the television advertisement) to the Secretary for review under this section not later than 45 days before dissemination of the television advertisement”).
FDA requests comments on the draft guidance by May 14, 2012.
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- Food, Drug and Medical Device Compliance and Enforcement
- Food, Drug and Medical Device Regulatory
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March 13, 2012
FinCEN Issues Proposal to Expand Beneficial Ownership Identification Requirements
On March 5, 2012, the Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”) published in the Federal Register an Advance Notice of Proposed Rulemaking pertaining to the development of a customer due diligence (“CDD”) regulation (“CDD Proposal”) that would be applicable to banks, brokers or dealers in securities, mutual funds and futures commission merchants which focuses on the collection of beneficial ownership information about accountholders. The CDD Proposal arises out of FinCEN’s concern that there is a lack of consistency in the way financial institutions implement what FinCEN terms “implicit” CDD obligations and in the way they collect beneficial ownership information. For many financial institutions, the CDD Proposal may significantly increase their overall anti-money laundering compliance burden.
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- Financial Institutions Regulatory
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2012
Birth Affidavit Requirements
Both U.S. Citizenship and Immigration Services (CIS) and the Department of State (DOS) require applicants to submit evidence of birth as part an application for lawful permanent residence.
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- Labor, Employment and Immigration
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March 8, 2012
Adoption of OECD’s authorized functionally separate entity approach into German tax law
It is expected that, with effect from January 1, 2013, Germany will adopt the OECD’s authorized functionally separate entity approach to the attribution of profits to permanent establishments which should have significant impacts on the attribution of profits and the allocation of assets and free capital.
Clients should be prepared to adjust their intra-group policies during the second half of 2012.
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March 7, 2012
U.S. Congress Retroactively Authorizes Anti-Subsidy Investigations Against Non-Market Economy Goods
The U.S. Congress this week overturned a decision issued less than three months ago by the U.S. Court of Appeals for the Federal Circuit, which had ruled that the U.S. Department of Commerce has no authority to apply countervailing duties (CVD) on products of non-market economies (NMEs), such as China and Vietnam. Under the legislation, which the President is expected to sign just as quickly as the Congress approved it, more than two dozen CVD orders and several pending investigations against products of NMEs will be allowed to stand. Despite the swift passage of this legislation, however, the issue is sure to continue to be litigated for years, in part because the law purports to retroactively authorize CVD measures against NMEs, back to November 2006.
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- Antidumping, Countervailing Duties and Trade Remedies
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March 6, 2012
March Edition of Notable Cases and Events in E-Discovery
This month’s Notable Cases and Events in E-Discovery include a New York State appellate ruling adopting the Zubulake standard on preservation and imposing an adverse inference spoliation sanction against defendant and a ruling in the Deepwater Horizon matter rejecting the blanket claim that all email communications produced by defendants qualified for the hearsay exception as business records under Fed. R. Evid. 803(6) and finding instead that each email required individual review.
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- Complex Commercial Litigation
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March 5, 2012
EU Strengthens Sanctions Against Syria
On 28 February 2012, the European Union published a set of new sanctions designed to further tighten and complement the restrictive measures already in place against Syria.
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March 5, 2012
UK Supreme Court Rules in Favour of Non-Segregated Clients in Lehman Client Money Case
The UK Supreme Court’s judgment in the ‘Lehman Client Money’ case was handed down on 29 February 2012. The judgment concerns the scope of protection afforded to client money upon the insolvency of firms offering investment services and is significant, in particular, for creditors of LBIE and for creditors of affiliate Lehman companies such as Lehman Brothers Inc. and Lehman Brothers Finance AG. The judgment also has implications for the administration of present and future insolvencies of firms offering investment services where client money is both received from and paid out of the firm’s house accounts.
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- Corporate Reorganization and Bankruptcy
- Investment Funds, Advisers and Derivatives
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March 2, 2012
2012 London Olympics: Potential Compliance Risks
With the opening ceremony of the 2012 London Olympics less than six months away, many companies are planning to use the Olympics as a promotional opportunity. In making plans for the upcoming Olympics, companies should be cognizant that offering and accepting corporate hospitality packages raise potential risks under anti-corruption regulations, including the United States Foreign Corrupt Practices Act (“FCPA”) and the United Kingdom Bribery Act 2010 (“UK Bribery Act”).
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- Complex Commercial Litigation
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February 29, 2012
White House Issues First Ever Administration-Level Data Privacy Framework
On February 23, 2012, the Obama Administration released an important policy initiative embodied in a white paper setting forth a comprehensive privacy framework—the first such framework ever introduced by any administration. The white paper, titled Consumer Data Privacy in a Networked World: A Framework for Protecting Privacy and Promoting Innovation in the Global Digital Economy (the “White Paper”), is the culmination of extensive policy development by the U.S. Commerce Department and the Federal Trade Commission. The White Paper also represents a significant U.S. response to the European Union’s proposed data protection regulation to replace the EU Data Protection Directive (95/46/EC). The White Paper has reasserted the U.S. position that the U.S. framework for data protection is substantively strong and worthy of “mutual recognition” by the EU, but it may also crystallize a clash between the EU conception of privacy as a fundamental human right and the U.S. conception of privacy as a value to be balanced against competing values (e.g., innovation, communication and economic growth). Perhaps the most important dimension of the White Paper is who, how and where it was issued: by announcing the White Paper in the White House with a statement by the President, it is intended to represent a presidential initiative; this could significantly elevate the stature of privacy and data protection issues in the overall hierarchy of federal policy.
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- Privacy, Data Security and Information Law
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February 27, 2012
FINRA Publishes Debt Research Rule Proposal
On February 17, 2012, FINRA published its debt research conflicts of interest proposal in Regulatory Notice 12-09. The attached client alert summarizes the proposed rule and includes certain of our observations regarding instances in which the proposed rule may impose requirements different or more onerous than its equity research rule counterpart. Comments to Regulatory Notice 12-09 must be submitted to FINRA no later than April 2, 2012.
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- Securities and Futures Regulatory
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February 27, 2012
THE 408(b)(2) FEE DISCLOSURE REGULATION – IT’S FINAL!
On February 2, 2012, the Department of Labor (“DOL”) issued the final regulation (the “Final Regulation”) under section 408(b)(2) of the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), which requires certain plan service providers to disclose to plan fiduciaries certain information relating to their compensation.
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February 24, 2012
CMS Seeks Comments on Proposed Rule Addressing Reporting and Returning of Overpayments
On February 16, 2012, the Centers for Medicare and Medicaid Services (“CMS” or the “Agency”) published a proposed rule (the “Proposed Rule”) relating to the reporting and returning of overpayments to the Medicare program by Medicare Part A and B providers as required by health care reform legislation. The proposal, if adopted, would create an exceptionally expansive obligation to return overpayments, while, at the same time, failing to define a number of key terms clearly. Issues ripe for comment include: (1) the definition of “overpayment”; (2) the knowledge standard for identification of an overpayment; (3) the knowledge standard for a third party to a kickback arrangement; and (4) costs and burdens associated with the proposed 10-year lookback and reopening periods. Comments on the Proposed Rule will be accepted until April 16, 2012. Below is a summary of select topics addressed in the Proposed Rule.
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February 23, 2012
New FDA Food Inspection Powers in Interim Final Rule and Draft Guidance
On February 22, 2012, the U.S. Food and Drug Administration (FDA) issued an interim final rule and draft guidance for the food industry on the maintenance of food records relating to recipients and sources of food pursuant to the FDA Food Safety and Modernization Act. This provides FDA with greater information to respond to, and contain, threats to public health when a food contamination event occurs and underscores the importance of implementing robust recordkeeping procedures.
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- Food, Drug and Medical Device Compliance and Enforcement
- Food, Drug and Medical Device Regulatory
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February 22, 2012
SEC Adopts Revised Qualified Client Standards for Performance Fees, Including Exclusion of Primary Residence From Net Worth Calculation
On February 15, 2012, the SEC adopted amendments to Rule 205-3 under the Investment Advisers Act of 1940, the rule that permits SEC-registered advisers to charge performance-based fees to “qualified clients.” The amendments (i) revise the net worth test in the definition of qualified client to exclude the value of a natural person’s primary residence; (ii) include “grandfathering” provisions that allow advisers to maintain certain existing performance fee arrangements; and (iii) codify the higher dollar amount thresholds for qualified client status (at least $1 million under management with the adviser immediately after entering into the advisory contract or a net worth of more than $2 million at the time of entering the advisory contract) that were previously set by order and took effect on September 19, 2011. The amendments will be effective 90 days after publication in the Federal Register, but advisers may rely on the grandfathering provisions in the meantime.
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- Investment Funds, Advisers and Derivatives
- Private Equity and Venture Capital Funds
- Private Real Estate Funds
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February 17, 2012
Ten Steps Global Life Sciences Companies Should Take in 2012
Members of Sidley Austin’s Global Life Sciences Industry Team recently reviewed litigation, regulatory, corporate, enforcement, and legislative trends in their respective fields. Our team recommends that legal departments in the life sciences industry manage risks and take advantage of business opportunities by taking the ten steps outlined in this update in 2012.
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- Food, Drug and Medical Device Compliance and Enforcement
- Food, Drug and Medical Device Regulatory
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February 17, 2012
The Einhorn/Greenlight Insider Dealing Case – EU/US Differences Highlighted
This client update examines the recent decision of the UK Financial Services Authority to fine David Einhorn and Greenlight Capital Inc. £7.2 million for insider dealing and highlights the important differences between the insider dealing laws of the United Kingdom and those of the United States.
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- Financial Institutions Regulatory
- Investment Funds, Advisers and Derivatives
- Securities and Futures Regulatory
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February 16, 2012
The UK Financial Conduct Authority: How Will the New Supervisory Regime Affect Investment Firms?
The new Financial Conduct Authority (FCA) will, along with the new Prudential Regulation Authority, be taking over the functions of the existing Financial Services Authority in 2013. This Update focuses on the new powers that have been proposed for the FCA, the plans for its supervisory approach and the ways in which firms can prepare for the transfer of powers that is set to take place.
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- Securities and Futures Regulatory
- Investment Funds, Advisers and Derivatives
- Financial Institutions Regulatory
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February 15, 2012
ABA Resolution Urges U.S. Courts to Respect Foreign Data Privacy Laws*
A recent resolution adopted by the American Bar Association (ABA) seeks to help reconcile U.S. civil discovery obligations with international privacy and ‘‘blocking’’ laws.
If this development, and the underlying substantive rationale, gains traction, it could potentially mitigate international litigation conflicts. Companies facing international discovery compliance dilemmas should assess whether the ABA’s action could provide useful arguments to advance in U.S. courts. However, it is worth noting that the ABA action does not directly address the fact that, to date, some EU data protection authorities have taken the position that a company’s bona fide obligations to comply with binding U.S. legal obligations, or to defend its legal rights in the United States, are not a legitimate basis to collect and process personal information in the European Union, or to transfer such information to the United States. By granting little or no respect to U.S. law, the European Union’s regulatory perspective is, along with lack of comity accorded to EU law by some U.S. courts, substantially responsible for the conflicts that have arisen between privacy and discovery. It would thus behoove justice officials from both jurisdictions to strive to develop a more satisfactory modus vivendi regarding mutual recognition and international comity.
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- Privacy, Data Security and Information Law
- EU and International Privacy
- Information Security and Data Breaches
- Complex Commercial Litigation
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February 15, 2012
New CFTC CPO/CTA Rules May Impact Family Offices
On February 9, 2012, the Commodity Futures Trading Commission (“CFTC”) issued final rules eliminating a number of exclusions and exemptions relied on by commodity pool operators (“CPOs”) and commodity trading advisers (“CTAs”) and increasing the reporting requirements for registered CTAs and CPOs. In making these changes, the CFTC declined to provide specific exemptions for family offices. Accordingly many family offices will be impacted by these rules.
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- Investment Funds, Advisers and Derivatives
- Trusts, Estates and Not-for-Profits
- Estate Planning and Wealth Transfer
- Family Offices and Private Trust Companies
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February 14, 2012
CFTC Adopts Final Rules Amending CPO/CTA Registration and Compliance Obligations
On February 9, 2012, the Commodity Futures Trading Commission (“CFTC”) issued final rules (the “Final Rules”) eliminating a number of exclusions and exemptions relied on by commodity pool operators (“CPOs”) and commodity trading advisors (“CTAs”) in connection with many privately offered funds and investment companies registered under the Investment Company Act of 1940 (“RICs”). The Final Rules (a) eliminate the exemption from CPO registration that is currently available under CFTC Rule 4.13(a)(4) for CPOs of certain privately offered funds, (b) reinstate prior trading criteria for RICs under CFTC Rule 4.5 (adding an alternative trading threshold and including CFTC-regulated swaps in the trading criteria), (c) require that under CFTC Rule 4.7 CPOs may no longer claim an exemption from the requirement of including certified financial statements in pool annual reports, (d) require the filing of annual reaffirmation notices to claim relief under CFTC Rules 4.5, 4.13 or 4.14, (e) require additional reporting on Forms CPO-PQR and CTA-PR and (f) amend the boilerplate risk disclosure statements required by CPOs and CTAs to include risks posed by the trading of swaps, among other changes.
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- Investment Funds, Advisers and Derivatives
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February 14, 2012
Four Critical Issues Affecting Public Commodity Pools and Derivative Transactions under Proposed Regulations Implementing the Volcker Rule
This Sidley update highlights significant issues affecting both public commodity pools and derivative transactions, as well as the CFTC's February 14, 2012 Volcker Rule proposal.
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- Investment Funds, Advisers and Derivatives
- Securities and Futures Regulatory
- Financial Institutions Regulatory
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February 10, 2012
CFTC Issues Final Rules Amending CPO and CTA Registration and Compliance Obligations
On February 9, 2012, the U.S. Commodity Futures Trading Commission (“CFTC”) released final rules that will have a significant impact on registered and exempt commodity pool operators (“CPOs”), including those CPOs that will soon find themselves within the CPO definition due to the expansion of the CFTC’s mandate to cover non-security-based swaps (i.e., “swaps”), once the CFTC and the Securities and Exchange Commission finalize the definition of “swap” in the coming months.
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- Private Equity and Venture Capital Funds
- Investment Funds, Advisers and Derivatives
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February 9, 2012
IRS Releases FATCA Proposed Regulations
The IRS has released proposed regulations under the Foreign Account Tax Compliance Act. The proposed regulations provide guidance regarding withholding and compliance requirements, phase in the implementation of reporting deadlines and extend the cutoff date for grandfathered obligations to December 31, 2012.
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- Private Equity and Venture Capital Funds
- Tax - Capital Markets Transactions and Derivative Products
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February 8, 2012
CFPB Issues Final “Remittance” Rule and Concurrent Proposed Rule
On January 20, 2012, the Consumer Financial Protection Bureau (the “CFPB”) released a final rule and accompanying staff commentary amending Regulation E to add provisions applicable to consumer-initiated remittances to foreign recipients (the “Final Rule”). The Final Rule was issued pursuant to Section 1073 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the “Dodd-Frank Act”), which amended the Electronic Fund Transfer Act (“EFTA”) to establish a disclosure and error resolution regime for consumers who use “remittance transfer providers” to send remittances to recipients located in foreign countries.
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- Financial Institutions Regulatory
- Financial Institutions Business Transactions
- Global Financial Services
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February 7, 2012
CMS Proposes Significant Changes to the Medicaid Drug Rebate Program
On February 2, 2012, the Centers for Medicare and Medicaid Services (“CMS”) published its much anticipated proposed rule governing the calculation of Average Manufacturer Price (“AMP”), the determination of Best Price, and key pharmacy reimbursement issues (“the Proposed Rule”). The Proposed Rule addresses a number of amendments to the Medicaid Drug Rebate Statute enacted by recent health care reform legislation. CMS’ proposals have the potential to increase manufacturers’ Medicaid rebate liability significantly both by increasing the size of rebates and by substantially expanding the drug utilization subject to Medicaid rebates. Comments on the Proposed Rule will be accepted until April 2, 2012.
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- Healthcare Public Policy and Governmental Affairs
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February 7, 2012
February Edition of Notable Cases and Events in E-Discovery
This month’s Notable Cases and Events in E-Discovery includes discussion of a Model Order for e-discovery in patent cases designed to reduce discovery costs for such cases and a North Carolina federal court decision allowing a forensic search of a non-party’s hard drive under specified conditions.
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- Complex Commercial Litigation
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February 6, 2012
President Obama Blocks All Property of the Government of Iran and Iranian Financial Institutions
President Obama issued an Executive Order blocking all property of the Government of Iran and Iranian financial institutions, including the Central Bank of Iran (popularly known as Bank Markazi), effective February 6, 2012. The Executive Order, which implements the National Defense Authorization Act for Fiscal Year 2012, comes in the midst of growing international concern regarding Iran’s nuclear program and its recent threats to block the Strait of Hormuz.
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January 31, 2012
2011 Year in Review
Last year, Sidley Austin LLP’s Insurance & Financial Services Group issued a client alert listing Ten Items to Watch in 2011. With that year concluded, we take this opportunity to review the items and report briefly on their development in 2011.
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- Insurance and Reinsurance Litigation
- Insurance/Reinsurance Disputes
- EU and International Privacy
- Privacy, Data Security and Information Law
- Asset-Backed Securitization
- Environmental Torts, Class Actions and Public Nuisance Litigation
- Insurance Company Investment Strategies
- Insurance/Financial Services Class Actions
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January 31, 2012
Opportunities to Comment on the Implementation of the EU Falsified Medicines Directive
The European Commission is currently taking the necessary steps to implement the provisions of the EU Falsified Medicines Directive (2011/62/EU – the “Directive”), published on 1 July 2011 and amending the EU Medicinal Products Directive (2001/83/EC).
The Directive establishes new measures to prevent falsified medicines from entering the legal supply chain and is likely to increase the costs for companies that have active substances manufactured in certain countries outside of the EU and North America.
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- Food, Drug and Medical Device Compliance and Enforcement
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January 31, 2012
The Landscape for Competition Damages Actions in London’s Olympic Year
The European Commission has for some time sought to encourage private claims against companies which have infringed European Union (“EU”) competition laws but activity in this area varies within the EU from jurisdiction to jurisdiction. This update looks back on some important developments from 2011 concerning competition damages actions in England & Wales. It also looks ahead to likely developments in 2012, including judgments of the English courts and the possibility of the European Commission proposing legislation on collective actions.
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January 30, 2012
CFTC Finalizes Significant Dodd-Frank Swap Regulations and Proposes Long-Awaited Regulations Implementing Volcker Rule
On January 11, 2012, the Commodity Futures Trading Commission (“CFTC”) held an open meeting and approved (i) three final rule releases, (ii) a delegation of authority and (iii) one proposed rule release, all relating to the implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act.
The three final rules relate to (a) the registration of swap dealers and major swap participants, (b) business conduct standards for swap dealers and major swap participants and (c) the protection of cleared swaps customer contracts and collateral. The CFTC also (d) delegated authority over registration of swap dealers and major swap participants to National Futures Association and (e) proposed a rule on prohibitions and restrictions on proprietary trading and certain interests in, and relationships with, hedge funds and private equity funds (i.e., the so-called “Volcker Rule”).
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- Investment Funds, Advisers and Derivatives
- Securities and Futures Regulatory
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January 30, 2012
FTC Announces HSR Premerger Notification and Clayton Act § 8 Thresholds
The Federal Trade Commission has announced the most recent annual adjustments to the Hart-Scott-Rodino Act premerger notification thresholds (effective February 27, 2012) and the thresholds that apply to interlocking directorates under Section 8 of the Clayton Act (effective January 27, 2012).
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- Investment Funds, Advisers and Derivatives
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January 27, 2012
Guidance on New W-2 Reporting Requirement for Health Coverage Cost
On January 3, 2012, the Internal Revenue Service issued additional guidance on the requirement that employers begin for 2012 reporting the cost of each employee’s group health plan coverage on Form W-2. Employers subject to the requirement will need to make a number of decisions in complying with the requirement and are strongly encouraged to implement mechanisms now to properly capture this year’s cost.
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January 27, 2012
HIRE Act’s Revocation of TEFRA Exception for Bearer Bonds Effective March 19, 2012
Effective for issuances occurring on or after March 19, 2012, the Hiring Incentives to Restore Employment Act (the “HIRE Act”), which was signed into law by President Obama on March 18, 2010, repeals the “foreign targeted obligation” (or “Eurobond”) exception established by the Tax Equity and Fiscal Responsibility Act of 1982 (“TEFRA”) to the adverse U.S. tax rules applicable to bearer debt instruments. As a result of the repeal, beginning on March 19, 2012, U.S. companies generally will be effectively precluded from issuing bearer debt securities. This client update provides an overview of the consequences to U.S. and non-U.S. issuers and to bondholders of the repeal of the Eurobond exception.
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- Tax - Capital Markets Transactions and Derivative Products
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January 27, 2012
New EU Data Protection Regulation Announced
A proposed EU Data Protection Regulation was announced by the European Commission in Brussels this week. As proposed, the Regulation will have a significant impact on almost every business in the EU and non-EU businesses that have EU customers. The proposed Regulation introduces fines of up to 2% of annual worldwide turnover. It will also require many businesses to appoint data protection officers and undertake detailed privacy impact assessments among many other obligations. The proposed Regulation also introduces new rights for individuals, including a right to have their personal data deleted and for the data to be transferred to a new service provider. Consumer organisations can also make complaints to supervisory authorities and bring class actions on behalf of individuals for non-compliance with the proposed Regulation.
For further information on this development and other EU data protection requirements please contact John Casanova or William Long in London.
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- Privacy, Data Security and Information Law
- Financial Institutions Regulatory
- Corporate Governance and Compliance
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January 2012
Private Clients, Trusts & Estates Group Newsletter
Private Clients, Trusts & Estates Group Newsletter - January 2012
The following articles are included in the Newsletter:
Charitable Lead Annuity Trusts (CLATs): Passing Down Wealth and Philanthropic Values; Tax Consequences of Civil Unions and Same-Sex Marriages; 2012 Transfer Tax Exclusions; Florida Powers of Attorney; Illinois Powers of Attorney; Gift Tax Rules
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- Trusts, Estates and Not-for-Profits
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January 26, 2012
EU Broadens Sanctions Against Iran and Syria
On 23 January 2012, the European Union (EU) adopted a set of new sanctions designed to complement and reinforce the restrictive measures already in place against Iran and Syria.
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January 26, 2012
SEC Issues Much Anticipated Investment Adviser “Umbrella” Registration Guidance
On January 18, 2012, the Division of Investment Management of the Securities and Exchange Commission issued a no-action letter updating guidance on “umbrella” registration and the circumstances in which affiliated investment advisers may rely on a single registration on Form ADV. This update describes the conditions on such reliance set forth in the letter and their implications for investment advisers and their affiliates.
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- Investment Funds, Advisers and Derivatives
- Private Equity and Venture Capital Funds
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January 20, 2012
Major New China Developments for Western Manufacturers
This Global Life Sciences: China Update will cover the following two topics:
- China Issues Five-year Plan for Pharmaceutical and Medical Device Industries
- SFDA GMP Work Plan Encourages M&A and Technology Transfer Transactions Involving Local Drug Manufacturers
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- Food, Drug and Medical Device Compliance and Enforcement
- Food, Drug and Medical Device Regulatory
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January 17, 2012
Hosanna-Tabor: The Supreme Court Recognizes The Ministerial Exception To Employment Discrimination Laws
The Supreme Court’s unanimous opinion in Hosanna-Tabor v. EEOC recently provided helpful guidance to religious institutions by holding that ministers may not use employment discrimination laws to challenge religious institutions’ employment actions. The opinion by Chief Justice Roberts marked the first time that the Supreme Court acknowledged this constitutional “ministerial exception” from anti-discrimination laws. Although the Supreme Court noted that the scope of the ministerial exception would develop over time, it identified a number of guideposts to aid the lower courts in determining who qualifies under the ministerial exception. Religious institutions should consider reviewing their employment practices to ensure maximum protection in light of this new guidance.
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- Labor, Employment and Immigration
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January 13, 2012
British Bankers' Association Releases Guidance on the UK Bribery Act 2010
On 20 December 2011, the British Bankers’ Association released its guidance document for the banking sector on compliance with the UK Bribery Act 2010. The guidance is aimed at assisting banks in establishing policies and procedures to combat bribery and corruption. This update summarises the key points in the guidance and highlights some areas which were not dealt with as fully as may have been hoped.
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January 12, 2012
Anti-Corruption Quarterly Newsletter
Sidley Austin LLP is pleased to distribute its fourth issue of the “Anti-Corruption Quarterly” newsletter. This quarterly publication provides updates on the latest developments in the evolving area of global anti-bribery/FCPA regulation, analysis of current enforcement trends and new laws/regulations, as well as practical tips on improving anti-corruption compliance measures.
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- Complex Commercial Litigation
- Securities and Futures Regulatory
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January 12, 2012
China Issues New Rules to Tackle Conflict of Interest of Healthcare Government Officials
On December 26, the Chinese Ministry of Health (MOH) issued the Rules on Prohibition of Conflict of Interest for Healthcare Officials. The Rules impose restrictions on healthcare government officials’ activities in connection with business operations of drug and device manufacturers. Companies operating in China should review carefully their interactions with and employment of healthcare government officials to ensure compliance and add this to FCPA and anti-bribery reviews.
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- Food, Drug and Medical Device Compliance and Enforcement
- Food, Drug and Medical Device Regulatory
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January 12, 2012
SEC Finalizes Net Worth Standard for Natural Person Accredited Investors
On December 21, 2011, the Securities and Exchange Commission adopted certain amendments to the “accredited investor” standards to implement Section 413(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act. This update describes these amendments and includes suggestions for compliance, which must occur before February 27, 2012.
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- Investment Funds, Advisers and Derivatives
- Securities and Futures Regulatory
- Private Equity and Venture Capital Funds
- Private Real Estate Funds
- Securities Regulatory Aspects of Transactional Work
- Securities Regulatory Compliance Counseling
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January 11, 2012
Chinese Government Publishes Vaccine Supply System Development Plan
On December 22, the State Council of China published the Vaccine Supply System Development Plan. The Plan covers the period from 2011 to 2015, taking into account the need before 2020.
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- Food, Drug and Medical Device Compliance and Enforcement
- Food, Drug and Medical Device Regulatory
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2012
2012 Insurance and Reinsurance Law Report
For more than fifteen years, the Sidley Reinsurance Law Report has been a useful tool for cedents, reinsurers, retrocessionaires, intermediaries, arbitrators, and others transacting business in the insurance and reinsurance industry. This year the title has been changed to the Insurance and Reinsurance Law Report in order to reflect the broad topics of interest to the industry covered in the Report.
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- Insurance/Reinsurance Disputes
- Insurance and Reinsurance Litigation
- Financial Services/Consumer Class Actions
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January 10, 2012
January Edition of Notable Cases and Events in E-Discovery
This month’s Notable Cases and Events in E-Discovery include discussion of a United States District Court for the Southern District of New York pilot program designed to improve judicial oversight of complex civil cases, including a number of e-discovery provisions, and a Kansas Supreme Court ruling that, in the absence of a duty to preserve, a party was not guilty of spoliation when it intentionally destroyed evidence it knew was relevant to an ongoing lawsuit to which it was not a party.
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- Complex Commercial Litigation
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January 10, 2012
New York Wage Act Requires Annual Notice Requirements
The New York Department of Labor recently imposed new wage rate notice requirements, with the passage of the New York Wage Theft Prevention Act. Pursuant to the new law, all private sector employers with employees in the state of New York must provide New York employees with wage rate notices that include specific compensation information. Employers must provide current employees with this information no later than February 1, 2012.
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- Labor, Employment and Immigration
- Labor and Employment Class and Collective Actions
- Employment Discrimination Litigation
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January 9, 2012
AT&T Mobility v. Concepcion Notwithstanding, the National Labor Relations Board Finds That Class Action Waivers Are an Unfair Labor Practice
The National Labor Relations Board held, in the case of D.R. Horton and Michael Cuda, that it is an unfair labor practice for employers to require employees who are covered by the National Labor Relations Act to sign an arbitration agreement that waives their right to file joint or class claims. The NLRB’s decision is a blow to companies hoping to extend the Supreme Court’s decision in AT&T Mobility v. Concepcion to the employment context.
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- Labor, Employment and Immigration
- Labor and Employment Class and Collective Actions
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January 9, 2012
European Court rules on Access to Statements of Contents of European Commission Cartel Files in Civil Antitrust Damages Actions
In a December 2011 ruling , the General Court of the European Union held that the European Commission should disclose the statements of contents of its cartel case files to private plaintiffs in “follow-on” civil antitrust damages actions in Europe, upon motivated request. Although the ruling does not require the Commission to disclose the actual documents in its file, it facilitates discovery of at least some of those documents in domestic litigation. Indeed, plaintiffs will be able to use the statements of contents to identify and seek discovery of specific documents listed in the statements.
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January 8, 2012
SEC Guidance Relating to Sovereign Debt and Other Exposures in Europe
On January 6, 2012, the SEC’s Division of Corporation Finance issued important guidance to registrants (primarily financial institutions) relating to their disclosures concerning European sovereign debt. The guidance, which is effective immediately, applies to both US registrants and foreign private issuer registrants. Issuers should comply with the guidance in future SEC filings and, if considering an offering in the immediate future, should review their existing filings to determine if further disclosures are appropriate. The Division’s guidance is also of potential importance to issuers of 144A and other non-registered securities. Please contact a Sidley lawyer if you require further information.
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- Preferred and Capital Securities
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January 6, 2012
New York Becomes the Latest State to Adopt a Version of Section 711 of the Insurer Receivership Model Act
New York becomes the latest state to adopt a version of the Section 711 of the Insurer Receivership Model Act. Counterparties to derivative transactions with New York-domiciled insurers now will be provided additional protections if any such insurer becomes subject to an insolvency proceeding.
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January 5, 2012
FDA Issues Interim Final Rule Requiring Sole Drug Manufacturers to Report Temporary Production Halts
On December 19, 2011 the Food and Drug Administration (FDA) published in the Federal Register an interim final rule aimed at improving the Agency’s awareness of impending drug shortages. The rule comes in response to an Executive Order issued by President Obama in October directing FDA to “take steps that will help to prevent and reduce current and future disruptions in the supply of lifesaving medicines” and noting that timely advance notification of shortages to FDA and the public is an important element of mitigating such disruptions.
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- Compliance Counseling - FDA
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January 5, 2012
Recent Developments in the Export Controls and Sanctions Area
There have been a number of significant developments in the area of export controls and sanctions regimes, which should be of interest to companies with global operations.
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January 4, 2012
China Drug Supply Chain and GxP Update
This update includes information on the following topics:
- SFDA Publishes Further Proposed Revisions to Drug GSP for Comment
- China Completes Seven Overseas GMP Inspections in 2011
- China Heightens Crackdown on Counterfeit Drugs
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- Food, Drug and Medical Device Compliance and Enforcement
- Food, Drug and Medical Device Regulatory
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January 4, 2012
FDA Request for Comments on Timing For Implementation of Safety Labeling Changes
On December 20, 2011, the U.S. Food and Drug Administration (FDA) published a notice requesting public input on the deadlines for implementing drug safety labeling changes. FDA’s request refers specifically to the timeframes in which manufacturers should implement safety labeling changes and the circumstances in which it is appropriate for products with existing labeling to remain in distribution when a labeling change is made. Comments are due by February 21, 2012.
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- Food, Drug and Medical Device Compliance and Enforcement
- Food, Drug and Medical Device Regulatory
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January 3, 2012
China Further Revises Rules for Foreign Investment in Pharmaceutical Industry
On December 24, 2011, China’s National Development & Reform Commission (NDRC) published the amended Industry Catalogue for Foreign Investments (the Catalogue). Initially promulgated in the early 1990’s, the Catalogue classifies foreign investments in various industries into four categories (Encouraged, Restricted, Permitted and Prohibited) and has been the key regulation defining the regulatory landscape of foreign investments in China. While the amended Catalogue does not significantly alter the life sciences industries’ rules, a number of changes are worth noting.
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January 3, 2012
New California State Legislation Requires Prop 39 Audits to be Submitted By March 31 to Citizens’ Oversight Committee
SB 423 was recently enacted to require school districts, community college districts or the county office of education to submit its Prop 39 general obligation bond annual, independent financial and performance audit for the preceding fiscal year to its citizens’ oversight committee by March 31 of each year.
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January 3, 2012
Preview of New 2012 California Labor and Employment Laws
As we enter 2012, employers in California are faced with a number of significant new obligations imposed by recently passed legislation and NLRB decisions. Prudence dictates that employers review their human resources policies to ensure compliance with these laws and decisions.
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- Labor, Employment and Immigration
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December 28, 2011
Extension of Temporary Registration Rule for Municipal Advisors
The Securities and Exchange Commission is amending Rule 15Ba2-6T, which provides for the temporary registration of municipal advisors under Section 15B of the Securities Exchange Act of 1934 to extend the date on which the Rule will terminate from December 31, 2011 to September 30, 2012. As a result, the registration of any municipal advisor who is temporarily registered pursuant to the Rule as of December 31, 2011 will be automatically extended without the need for further affirmative action by the municipal advisor.
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- Investment Funds, Advisers and Derivatives
- Private Equity and Venture Capital Funds
- Private Real Estate Funds
- Securities and Futures Regulatory
- Securities Regulatory Aspects of Transactional Work
- Securities Regulatory Compliance Counseling
- Securities Regulatory Investigations and Examinations
- Securities/Commodities Industry Strategic Business Transactions
- Public Finance Derivatives
- Public Finance Securitization
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December 22, 2011
European Unitary Patent Protection
The legislative package for the creation of a European Unitary Patent and Patent Court is coming closer to approval and the first Unitary Patents could be granted as early as 2013. This package has the potential to dramatically reduce the costs associated with patent filing and litigation in Europe, but it is not without problems. This alert discusses current political problems, the legislation under consideration, criticisms of the package and the timetable for implementation.
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- Intellectual Property Litigation
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December 22, 2011
Falsified Medicines Directive – Public Consultation on “Safety Features”
The European Union’s Falsified Medicines Directive (2011/62/EU) aims to improve drug safety by introducing measures to prevent falsified medicines entering the legal supply chain. “Safety features” will be required to be placed on packaging to enable product verification. There is currently a consultation on the nature of these safety features. This alert discusses this aspect of the Directive, the consultation and the next steps in the process.
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December 22, 2011
Landmark WTO Government Procurement Agreement Opens New Markets for Contractors and Suppliers
On December 15, 2011, negotiators at the World Trade Organization (WTO) Ministerial Conference session in Geneva concluded a landmark trade agreement that will expand international competition in the government procurement sector. This new accord comes in the form of revisions to the WTO Government Procurement Agreement (GPA), which safeguards the access of foreign suppliers to government contracts in 42 countries worldwide.
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December 21, 2011
CMS Seeks Comments on its Long-Awaited Sunshine Act
The Centers for Medicare & Medicaid Services (“CMS”) recently published a proposed rule implementing the Physician Payment Sunshine Act (section 6002 of the Affordable Care Act). Comments on the Proposed Rule will be accepted until February 17, 2012. This Client Update highlights significant issues upon which CMS is actively soliciting comments.
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December 21, 2011
DDTC Proposes Long-Awaited Changes to Defense Trade Brokering Rules
On December 19, 2011, the U.S. State Department’s Directorate of Defense Trade Controls proposed long-awaited changes to the rules governing the brokering of defense articles and defense services under the International Traffic in Arms Regulations. The proposed changes entail far-reaching changes to the brokering requirements, as well as certain related requirements applicable to manufacturers and exporters of defense articles and defense services. Comments on the proposed changes are due by February 17, 2012.
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December 20, 2011
EU Issues New Export Authorizations for Dual-Use Goods
Under the EU export control framework, the export of dual-use goods and technologies (those that can be used for both civil and military purposes) is subject to prior authorization. Controlled items may not leave the EU customs territory without an export authorization. Currently, there are four types of export authorizations.
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December 20, 2011
U.S. Court of Appeals Invalidates Application of Anti-Subsidy Law to China and Other Non-Market Economy Countries
On December 19, 2011, the U.S. Court of Appeals for the Federal Circuit (CAFC) issued a landmark decision invalidating the application of U.S. anti-subsidy, or countervailing duty (CVD), law to non-market economy countries (NMEs), including China. Barring intervention by the U.S. Supreme Court or the U.S. Congress, this decision will halt or overturn scores of CVD proceedings involving China, profoundly impacting the administration of trade remedies in the United States. However, an immediate suspension of pending investigations and reviews or unwinding of existing orders is unlikely.
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- Antidumping, Countervailing Duties and Trade Remedies
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December 13, 2011
New California Website Disclosure Law On Human Trafficking And Slavery Applicable To Retailers And Manufacturers
SB 657, the “Transparency in Supply Chains Act of 2010” requires certain retailers and manufacturers to post on the homepage of their Internet Website a “conspicuous and easily understood link” to a disclosure detailing whether, and to what extent, they investigate or monitor slavery or human trafficking in their “direct” product supply chains. SB 657 mandates certain statements on this topic, detailed in this update.
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- Labor, Employment and Immigration
- Privacy, Data Security and Information Law
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December 13, 2011
New EU Data Protection Regulation to have Significant Impact on Life Sciences
A draft EU Regulation on Data Protection was released un-officially last week. The Regulation, which is unlikely to become law until 2014 at the earliest, will replace the existing EU data protection regime and will have significant implications for the life sciences industry including fines of up to 5% of the annual worldwide turnover.
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December 12, 2011
MF Global and MF Global UK: What Every End-User of Futures and OTC Derivatives Should Be Thinking
The collapse of MF Global has raised a number of concerns primarily in the context of futures but equally likely to apply to cleared OTC derivatives. Clearinghouse standards and the mechanisms for transferring (or ‘porting’) positions and collateral related to cleared swaps are not fully developed and are yet to be tested by a futures commission merchant or clearing member insolvency. In the U.S., the shortfall in customer assets has exposed flaws in the regulatory framework and gaps in the regime for prudential supervision. In the UK, the failure of MF Global UK has highlighted certain problems with porting of positions and collateral to new clearing members as well as the risks associated with principal-to-principal clearing models. This update summarizes these issues and proposes some ideas that could help to mitigate the potential risks.
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- Investment Funds, Advisers and Derivatives
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December 12, 2011
OFAC Lifts Sanctions Affecting South Sudan
On December 8, 2011, the Office of Foreign Assets Controls (OFAC) issued a final rule lifting sanctions on South Sudan’s petrochemical sectors and authorizing transshipments of goods, technology and services to South Sudan through Sudan. These changes come in the form of two new general licenses under the Sudanese Sanctions Regulations and are designed to open the door to trade and investment in South Sudan following that country’s political independence.
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December 8, 2011
CFPB Proposes Two-Page Credit Card Agreement
On December 7, 2011, the Consumer Financial Protection Bureau (“CFPB”) announced a new “Know Before You Owe” project. The stated goal of the project is to simplify credit card agreements, to create greater consumer understanding of the prices, risks, and terms of credit cards.
The centerpiece of the new project is a prototype two-page credit card agreement. The short agreement is intended to convey the key terms of a credit card to a consumer. The agreement does not contain all of the contractual details that are typically found in a cardholder agreement today, including some that are required by regulation, and instead refers to a list of standardized definitions that the CFPB has also released.
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- Financial Institutions Regulatory
- Financial Institutions Business Transactions
- Financial Institutions Counseling
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December 8 , 2011
December Edition of Notable Cases and Events in E-Discovery
This month’s Case Notes include discussion of a Ninth Circuit decision finding that the terms of the Electronic Communications Privacy Act prohibit disclosure of a foreign citizen’s emails to third parties in response to a civil subpoena and a Pennsylvania federal court ruling providing guidance on e-discovery costs recoverable by a prevailing party.
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- Complex Commercial Litigation
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December 8, 2011
SEC Changes Review Procedures for Offerings by Foreign Issuers
The SEC has just announced that its Division of Corporation Finance has changed its practices for examining draft versions of Securities Act registration statements for foreign issuers. For more than twenty years, the staff has accepted drafts of registration statements as correspondence, without any public filings or other submissions to EDGAR. The drafts were reviewed in substantially the same manner as publicly-filed documents. The staff would provide comment letters to the issuer and review amended drafts responding to the comments. Under this procedure, a foreign issuer could complete the entire examination process before any public filing under the Securities Act.
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December 7, 2011
Financial Crimes Enforcement Network FAQs
On November 2, 2011, the U.S. Treasury Department’s Financial Crimes Enforcement Network (“FinCEN”) released a set of Frequently Asked Questions (“FAQs”) to assist providers and sellers of prepaid access in understanding certain aspects of the final prepaid access rule that FinCEN issued on July 29, 2011 (“Prepaid Access Rule”). FinCEN makes clear that the FAQs are intended to provide interpretive guidance only, and do not supersede or replace any aspect of the Prepaid Access Rule. We discuss below certain aspects of the guidance that the FAQs provide with respect to the Prepaid Access Rule.
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- Financial Institutions Regulatory
- Retail Financial Services
- Financial Institutions Counseling
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December 6, 2011
Reporting U.S. Ownership of Foreign Securities on Treasury's TIC Form SHC
Certain U.S.-resident custodians and end-investors, including investment funds, that have holdings of foreign securities will be required to file a Report of U.S. Ownership of Foreign Securities, Including Selected Money Market Instruments (“Form SHC”) by March 2, 2012, to reflect their holdings as of December 31, 2011. Form SHC is a benchmark survey conducted every five years to collect data on U.S. ownership of foreign securities as part of the Treasury International Capital (“TIC”) reporting system. The reported information is used by the U.S. government in computing U.S. balance of payments accounts and international investment positions, and formulating international economic and financial policies. This update provides an overview of Form SHC reporting requirements for U.S.-resident entities that may need to prepare and file the report.
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- Financial Institutions Regulatory
- Investment Funds, Advisers and Derivatives
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December 6, 2011
SFDA Simplifies Clinical Trial Requirements for Certain Class II Devices
On November 24, 2011, the Chinese State Food and Drug Administration (SFDA) announced the Notice for Clinical Trial Waiver concerning Certain Class II Devices (Notice) with immediate effect. In the Notice, SFDA identified 21 types of Class II devices eligible for waiver of local registration trials, provided that the applicants for marketing authorizations can produce a comparative illustration of the device under application with the same type of device which has been approved by SFDA. Such comparative illustration must include information about the functional mechanism, product materials, structural composition, primary technical performance indicators, methods for sterilization (if applicable), expected uses, and whether intended for household uses.
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- Food, Drug and Medical Device Compliance and Enforcement
- Food, Drug and Medical Device Regulatory
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December 5, 2011
EU Strengthens Syrian Sanctions
On 1 December 2011, the European Union decided to exert additional pressure on the Syrian Government by imposing a new set of economic sanctions.
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December 5, 2011
SEC Announces Record Number of Enforcement Actions
With significant publicity, the U.S. Securities and Exchange Commission announced several weeks ago that it had filed the most enforcement actions in a single year in SEC history. For the fiscal year ending September 30, 2011, the SEC stated it filed a record 735 enforcement actions, with more than $2.8 billion in penalties and disgorgement ordered.
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- Accountants/Professional Service Firms Liability
- Securities and Futures Regulatory
- Financial Reporting and Disclosures
- Investment Advisers and Mutual Funds
- Private Securities Litigation
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December 1, 2011
Section 457A Amendment Deadline Approaching
Sections 409A and 457A of the Internal Revenue Code significantly revised the rules applicable to nonqualified deferred compensation arrangements and imposed substantial penalties for failures to comply with the new requirements. As described below, the deadline for adopting certain amendments to these arrangements to comply with Section 457A is December 31, 2011. If necessary amendments are not adopted or the requirements of Section 457A are otherwise not satisfied, the income deferred under these arrangements may be subject to a 20% additional tax and the recognition of such income may be accelerated.
Section 457A applies to deferred compensation arrangements between a service provider subject to U.S. income tax and a tax-indifferent service recipient, such as an offshore investment vehicle. The Section generally applies to compensation attributable to services performed after 2008. Deferred compensation attributable to services performed before 2009 (“Grandfathered Amounts”) generally must be paid by the later of (a) the last taxable year beginning before 2018 or (b) the first taxable year in which the Grandfathered Amounts are no longer subject to a substantial risk of forfeiture.
The time or form of payment of Grandfathered Amounts may be amended to comply with the Section 457A payment deadline without violating the other restrictions of Sections 409A and 457A, provided that the amendment is set forth in a written instrument and is effective on or before December 31, 2011. Thus, if you have any deferred compensation arrangements covering Grandfathered Amounts, any amendments to those arrangements needed to comply with Section 457A must be adopted by the end of this year.
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- Investment Funds, Advisers and Derivatives
- Private Equity and Venture Capital Funds
- Private Real Estate Funds
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November 30, 2011
U.S. Technologies and Trade Secrets at Risk in Cyberspace
In its report to Congress dated October 2011, “Foreign Spies Stealing U.S. Economic Secrets in Cyberspace,” the U.S. National Counterintelligence Executive (“NCIX”) provided harrowing details regarding the pervasive and growing threat of economic cyber-espionage being conducted against U.S. corporations. Foreign perpetrators—identified in the report as emanating primarily from China and Russia—are described as targeting American companies to obtain sensitive intellectual property, technology data and other business secrets.
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- Privacy, Data Security and Information Law
- Information Security and Data Breaches
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November 29, 2011
IOM Report Recommends FDA Prepare to Regulate Health IT
On November 10, 2011, the Institute of Medicine released a report, Health IT and Patient Safety: Building Safer Systems for Better Care, which evaluates the benefits and risks associated with health IT. According to the report, the current lack of federal oversight for health IT puts patients at risk. The report recommends the creation of a new agency to oversee health IT adverse event reporting and advises the U.S. Department of Health and Human Services (HHS) to lay the groundwork for future U.S. Food and Drug Administration (FDA) oversight in the event other recommendations prove inadequate to protect the public.
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- Food, Drug and Medical Device Compliance and Enforcement
- Food, Drug and Medical Device Regulatory
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November 29, 2011
USCIS Announces H-1B Cap Has Been Reached
This Immigration Update contains news regarding the following recent developments in business immigration and E-Verify:
- H-1B cap reached
- Movement of bills to create E-Verify mandate and to eliminate per-country green card limitations
- Employer ordered to pay H-1B wages for failure to pay return transportation
- Procedural USCIS developments, including new EAD card, electronic filing, and secure mail initiative
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November 28, 2011
China Issues Rules on Drug Pricing Investigation
On November 9, 2011, China’s National Development and Reform Commission (NDRC) released a regulation entitled Trial Measures for Investigation on Ex-Factory Prices of Drugs, which will enter into effect on December 1, 2011.
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