KMK Law Corporate & Securities Blog

On April 18, 2024, the Financial Crimes Enforcement Network (“FinCEN”) issued additional FAQs relating to the Corporate Transparency Act (the “CTA”). More specifically, FinCEN provided helpful guidance pertaining to the reporting requirements of homeowners associations (“HOAs”) and reporting companies that have ownership interest held in trusts.

On April 5, 2024, a jury in Federal Court in California found that the SEC established that Defendant Matthew Panuwat was liable under a civil misappropriation theory of insider trading violations of Section 10(b) of the Securities Exchange Act of 1934 and SEC Rule 10b-5. Panuwat formerly worked at a biopharmaceutical firm, Medivation, and bought call options in the biopharmaceutical firm Incyte minutes after learning that Medivation was to be acquired at a significant premium. When the Medivation transaction was announced, Incyte’s stock price increased and Panuwat sold his Incyte investment at a significant profit.

The U.S. Securities and Exchange Commission announced on April 4, 2024 that it is voluntarily delaying the
implementation of its climate disclosure regulations while it fights an Eighth Circuit Court challenge seeking
to vacate the rules.

On March 15, 2024, the U.S. Court of Appeals for the Fifth Circuit issued a stay of the Securities and Exchange Commission’s new climate-disclosure rules, which were adopted March 6.

On March 1, 2024, a Federal District Court in Alabama held that the Corporate Transparency Act (the “CTA”) is unconstitutional.[1] The Court reasoned that the plaintiffs were entitled to summary judgment because the CTA “exceeds the Constitution’s limits on Congress’ power.” As the Court ruled Congress exceeded its enumerated powers, the Court found it unnecessary to render a decision on the plaintiffs’ other arguments, specifically, whether or not the CTA violates the First, Fourth, and Fifth Amendments.

On February 28, 2024, the SEC announced it will consider final rules for climate-related disclosures on March 6, 2024. A link to the announcement and agenda is here.

Hedge funds and private equity groups have long used the “limited partner exception” to minimize self-employment taxes, but on March 13, 2018, the IRS announced that it was going to increase its scrutiny on taxpayers utilizing that exception.[1] As part of that campaign, a number of cases are currently being litigated regarding the limited partner exception.[2] On November 28, 2023, the Tax Court issued its first ruling on one of the cases dealing with this exception, Soroban Capital Partners LP et al. v. Commissioner; 161 T.C. No. 12 (2023).

The Corporate Transparency Act ("CTA") reporting requirements take effect on January 1, 2024. The CTA requires many entities to disclose ownership information to the Financial Crimes Enforcement Network (“FinCEN”).

On November 22, 2023, the SEC issued an order postponing the effective date of rules that would require issuers to include detailed disclosures in periodic reports related to their share repurchases (the “Repurchase Rule”). For a summary of the Repurchase Rules, including Regulation S-K Items 408(d) and 703, see our Securities Snapshot: 3^rd Quarter 2023 – Share Repurchase Rule Reminders.

On June 5, 2023, the New York Stock Exchange (NYSE) filed Amendment No. 1 to its proposed listing standard related to the Securities and Exchange Commission’s (SEC) Rule 10D-1 (the “Clawback Rule”), extending the effective date to October 2, 2023. On June 6, 2023, The Nasdaq Stock Market LLC (Nasdaq) also filed Amendment No. 1 to its proposed clawback listing standard, delaying the effective date until October 2, 2023.