2019 Insights: Regulatory

Skadden's 2019 Insights

Foreign Investment Control Reforms in Europe
The geopolitical environment continues to drive reform of foreign investment rules worldwide. The European Union as well as France, Germany, Russia and the U.K. are clarifying and tightening such rules in specific sectors in the interest of national security, with potentially significant implications for regulatory engagement and transaction management.

Trump Policy Actions Could Reshape Health Care and Life Sciences Landscape
With major bipartisan health care legislation unlikely in the newly elected Congress, those in the health care industry should closely follow the Trump administration’s executive actions, which may be the most accurate reflection of the future regulatory landscape.

Enhanced US Export Controls and Aggressive Enforcement Likely to Impact China
In the latter part of 2018, the U.S. government initiated efforts that in 2019 could severely constrain Chinese growth and ultimately be more effective than tariffs in leveraging changes to Chinese behavior.

Responding to the Call for Equal Pay
Heightened awareness to pay equity issues have led to expanded equal pay state laws in the U.S. and gender pay gap reporting laws in Europe. Companies should review and address pay disparities, and be prepared for class actions and renewed court focus on the issue.

Political Law: What to Consider When Providing Investment Fund Services to US State and Local Government Entities
Broker-dealers and registered investment advisers that seek to or provide services to U.S. state and local government entities must continue to develop and refine compliance programs to address laws regulating government investments, political contributions, gifts, lobbying and solicitation of business, conflicts of interest, and procurement.

California Privacy Law: What Companies Should Do to Prepare in 2019
The California Consumer Privacy Act is the broadest and most comprehensive privacy law enacted in the U.S. to date. While it does not go into effect until January 1, 2020, companies would be well-served by taking steps toward compliance in 2019, all the while monitoring ongoing rulemaking.

European Data Protection and Cybersecurity in 2019
Data protection laws in Europe evolved substantially in 2018, with the implementation of the GDPR and the Directive on Security of Network and Information Systems becoming national law at the member state level.  In 2019, the focus will transition from theory to practice, as implementation gives way to enforcement.

US Tax Reform and Cross-Border M&A: Considering the Impact, One Year In
Several new features of the U.S. international tax system introduced as part of the Tax Cuts and Jobs Act were meant to act as “carrots and sticks” to encourage U.S.-parented multinational companies to remain headquartered in and locate business activity in the United States. Their success remains to be determined, especially as potential global changes in corporate taxation could affect companies' decisions on how to structure cross-border M&A. 

Financial Regulation

Regulatory Relief May Generate Increased M&A Activity Among Banks
For a number of years following the financial crisis, the regulatory environment represented a significant challenge and source of uncertainty for bank M&A activity. The Crapo bill and other recent actions by banking regulators will meaningfully ease regulatory burdens on superregional, regional and larger community banking organizations, and make M&A opportunities more attractive. 

As Interest in Blockchain Technology Grows, So Do Attempts at Guidance and Regulation
The number of blockchain-enabled projects continues to rise as regulators work to apply existing laws and regulations to autonomous, decentralized platforms. Some clarity on issues such as whether a digital token is a security and whether ICOs are money transmitters is expected in 2019.

Despite Leadership Changes, No Pivot in Priorities Expected for Consumer Financial Services Enforcement
Leadership changes at both the CFPB and DOJ may impact agency priorities in 2019; however, the trend of fewer enforcement actions seems likely to continue. Financial institutions will be best served by maintaining strong compliance management programs and watching for developments at these agencies.

Significant Regulatory, Jurisdictional and Enforcement Challenges Ahead for CFTC
Over the coming year, the CFTC will further consider significant proposed amendments to swaps trading rules, and will need to address the EU's plans to adopt legislation that could subject U.S.-based clearinghouses to substantial EU oversight as well as the consequences of a series of court decisions that has called some of the CFTC's anti-manipulation and anti-fraud efforts into question.

Key Developments in US Sanctions
U.S. sanctions expanded considerably in 2018. Among other actions, OFAC for the first time incorporated substantial compliance commitments into a settlement agreement and included digital currency addresses as identifying information when it announced certain cyber sanctions-related designations. We expect that the Trump administration will continue to favor sanctions as a tool of U.S. foreign policy and that enforcement activity will increase in the year ahead.

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