Schulte Roth & Zabel partner Michael Didiuk recently discussed the Financial Crimes Enforcement Network rule implementing the Corporate Transparency Act with Law360 reporter Sarah Jarvis for her article titled, “Compliance Priorities In 2024 Include Climate And AI.” Michael explained that the rule created requirements for companies to report on their beneficial owners to crack down on the abuse of shell companies. 

“Each entity formed or registered to do business in the U.S. needs to evaluate its filing obligation under the Beneficial Ownership Information (“BOI”) Rule and whether it is eligible for one of the 23 exemptions available in the BOI Rule,” Michael said, adding that advisers should prepare detailed organizational structure charts and assess whether they should restructure to utilize available exemptions. He stated that there are potential civil and criminal penalties for noncompliance, and that the potential disclosure of BOI information of investors will motivate advisers and sponsors to reevaluate new fund structures. 

Read more here. 

Schulte Roth & Zabel partner Heather Wyckoff was recently featured in Rob Kozlowski’s Pensions & Investments article, titled “Top stories of 2023: Fed fights inflation, private markets face reckoning, ESG backlash and more.” Heather shared her perspective on the law signed by Florida Governor Ron DeSantis requiring the State Board of Administration to make investment decisions based “solely on pecuniary factors” and not include environmental, social and governance (“ESG”) considerations. 

She stated that the Florida law doesn’t define ESG but provides that money managers can’t risk the profitability of the investments they make, which is already universally practiced by managers that offer the kinds of commingled funds and separate accounts in which SBA invests. Heather added that the law is essentially redundant since managers typically are already managing money solely for that purpose. 

Read more here.  

In his latest article for The Bankruptcy Strategist titled, “Split Second Circuit Narrows Bankruptcy Code’s Settlement Payment Safe Harbor,” Schulte Roth & Zabel of counsel Michael L. Cook details the Second Circuit’s split decision in In re Nine West LBO Securities Litigation.

Two streams of payments to shareholders in a leveraged buyout (LBO), totaling $4 million (Certificate Transfers) and $1.101 billion (DTC Transfers), made through a paying agent bank, were “safe harbored under [Bankruptcy Code §546(e), but “Payroll Transfers,” totaling $78 million, made to the debtor’s “directors, officers and employee shareholders through its payroll program … [were] not so shielded,” from fraudulent transfer claims, held the Second Circuit in a split decision. In re Nine West LBO Securities Litigation, 2023 WL 8180356, *4 (2d Cir. Nov. 27, 2023) (2-1). The majority opinion turned on “the scope of the term ‘financial institution’ as defined in [Code] §101(22)(A)” when applied to the paying agent bank and its customer, the debtor here. Id. In the majority’s view, “the definition encompasses bank customers [i.e., the debtor] only in transactions with the bank acting as their agent ….” Id.