In his recent article for the Journal of Bankruptcy Law, SRZ of counsel Michael Cook dissects a recenty bankruptcy court decision and discusses the value that investment bankers can bring to reorganization cases.

According to Michael, “[c]ourts routinely rely upon ‘ethical walls,’ said the court, when ‘large investment banking firms have affiliates or divisions that engage in debt trading, stock trading, or other activities that arguably might give rise to potential issues if a person engaged in those activities were permitted to communicate with the investment bankers.’ Because the U.S. Trustee (‘UST’) had ‘endorsed the use of ethical walls . . . in a countless number of [other cases],’ the court saw ‘no reason why such arrangements would not be sufficient to protect against any risks that one might posit with respect to [W’s] association with’ his family foundations.”

In a recent article for Hedge Fund Law Report by Robin L. Barton, Schulte Roth & Zabel partner Ben Kozinn discussed issues with the SEC’s recent proposal regarding outsourcing by investment advisers, which would impose a comprehensive due diligence, monitoring and recordkeeping framework on the advisers.

According to Ben, in comparison to the SEC’s other proposed rulemakings released in the past year, the proposal “is, by far, the most extreme we’ve seen in terms of – just to use a catch phrase – a solution in search of a problem…[t]here’s nothing in the Proposal or what the SEC has said thus far that provides substantial evidence to justify this new set of requirements or show there’s some shortcoming in how managers are working with service providers.”

He continued, “[u]sually, when the SEC issues a rule proposal or something along these lines, it will say, ‘[w]e’ve identified some substantial issues in the industry, so therefore, we’re proposing these rules.’ That is not the case here.”

Read the article here.