Funds Talk: October 2020

Topics covered in this issue include:

• OCIE Warns of Increased ‘Credential Stuffing’ Cyberattacks on Investment Advisers, Broker-Dealers
  The threat to financial institutions from this type of cyberattack is on the rise, according to the SEC’s compliance and inspection staff, with potentially negative financial, regulatory, legal and reputational consequences for those businesses and investors. There are steps that organizations can take to minimize their risks — and the risks to their clients — from these attacks. 
  
  

• Decoding Derivatives – Q3 2020
  This highlights notable Q3 events, strategies and developments in the credit and derivatives markets.
   

• Second Circuit Holds That So-Called Flip Clause Priority Provisions Are Protected by the Swap Safe Harbor under the Bankruptcy Code
  In a recent Lehman Brothers decision, the Second Circuit has provided clarity as to the enforceability of flip clauses in bankruptcy dealing with respective noteholder and debtor priorities in the context of structured notes. In reaching this decision, the Second Circuit effectively overruled a prior, decade-old decision issued by the Bankruptcy Court for the Southern District of New York that held (among other things) that the swap safe harbor provisions in the Bankruptcy Code did not protect noteholders under such clauses. The Second Circuit has instead ruled that this safe harbor does apply in those instances and has confirmed the breadth of the swap safe harbor. 
  
  

• European Court of Justice Invalidates EU-US Privacy Shield Framework
  A recent decision by the European Court of Justice struck down the EU-U.S. Privacy Shield program. The court overturned an earlier European Commission decision that the framework — administered by the U.S. Department of Commerce and enforced by the Federal Trade Commission — adequately protects European individuals’ personal data in compliance with the EU’s General Data Protection Regulation.