United States: What happened in 2019 and significant events in 2020

U.S. Law: Year in Review 2019 and Year to Come 2020 summarizes some of the major developments in the U.S. last year, and a selection of key changes that we anticipate over the coming year.

There have been a wide range of changes to legislation and regulation across the U.S. including important developments in the areas of banking, competition and antitrust, capital markets, corporate, dispute resolution, financial regulation and Fintech.

Explore our overview of key developments below.

Key updates to


pieces of legislation in 2019 and 2020

2019 was a busy year which saw a considerable number of legal and regulatory changes impacting our clients’ businesses in the U.S. Our review summarizes a selection of these developments and what we expect in 2020.
Tom Shropshire, Global U.S. Practice Head
Tom Shropshire

Significant legal and regulatory events in 2019

Explore the tabs below to review the key developments you need to be aware of from 2019

Capital Markets & Corporate

SEC continues to ease regulatory burden for registered transactions: In 2019, the SEC continued its efforts to make the U.S. public markets more attractive by making small changes to the registration and public reporting process. Read more... One key change was extending to all issuers the ability to conduct pre-IPO communications with certain institutional investors (so-called “testing the waters”). Read more… The SEC also proposed amendments designed to reduce duplication and update its statistical disclosure rules for bank holding companies, which are currently contained in Guide 3. Read more…

Rule 10b-5 liability extends beyond “maker”: In March 2019, the U.S. Supreme Court held in Lorenzo v. SEC that a person who is not a "maker" of a misstatement can nevertheless be found to have violated Rule 10b–5 under the Securities Exchange Act of 1934. Read more… The next month, in applying Lorenzo, a New York district court held that allegations that an underwriter facilitated a securities offering with knowledge that the company had engaged in fraud in order to meet listing requirements was sufficient to state a claim under Rule 10b-5. Read more…

Expanding SEC enforcement jurisdiction: In affirming a grant of injunctive relief, the U.S. Tenth Circuit Court of Appeals issued a decision in SEC v. Scoville and Traffic Monsoon that makes it easier for the SEC to bring enforcement actions in connection with securities law violations that take place outside the United States. Read more…

SEC calls for companies to manage LIBOR transition: Joining regulators worldwide in moving away from the London Interbank Offered Rate (“LIBOR”), the SEC staff issued a statement in July 2019 urging companies to manage proactively their transition away from LIBOR. The statement also provides disclosure guidance in specific areas. Read more…

Direct listings gain momentum: This year, direct listings – a listing without a primary offering or a bookbuild – got significant market attention, following Spotify’s 2018 and Slack’s 2019 listings. In order to facilitate such listings, both Nasdaq and the NYSE proposed changes to their rules.
Unsponsored ADRs could be subject to 10b-5 claims: In June 2019, the Supreme Court denied the petition for certiorari in Toshiba Corp. v. Automotive Industries Pension Trust Fund, a Ninth Circuit decision holding that sales of unsponsored ADRs traded in the U.S. over-the-counter market could constitute "domestic transactions" – leaving open the possibility that an issuer that took no action to cause unsponsored ADRs to be sold in the U.S. could be subject to Rule 10b-5 claims. Read more…
Hedging policy disclosure rules: Many listed U.S. companies had to begin complying with employee hedging policy disclosure requirements in proxy and information statements with respect to the election of directors during fiscal years beginning on or after July 1, 2019. Read more…
SEC guidance eases contingent convertible offerings: In a step that will benefit non-U.S. financial institutions that are reporting companies in the United States, the SEC staff issued no-action letter guidance in March 2019 to permit the offer and sale of contingent convertible regulatory capital securities to U.S. institutional investors pursuant to Rule 144A under the Securities Act of 1933. Read more…
Delaware invalidates securities claims forum selection provisions: In December 2018, the Delaware Court of Chancery invalidated forum selection provisions in certificates of incorporation that would require any claim under the Securities Act of 1933 to be brought in federal court. Read more…


Uncertainty continues as to U.S. approach to digital assets: A key theme this year was the “lack of clarity” regarding U.S. regulatory guidance in the area of digital assets. Although the SEC Staff released a “Statement on “Framework for ‘Investment Contract’ Analysis of Digital Assets” in April 2019 announcing the publication of an analytical token framework, and issued its first digital asset sale-focused no-action letter, some – including certain US federal legislators and market participants – remained dissatisfied.  Indeed, some have criticized the SEC as unfairly “regulating through enforcement” and providing insufficient and, at times, inconsistent guidance concerning important threshold questions, including: when is the sale of a digital asset the sale of a security, and, perhaps just as importantly, when and how does a digital asset initially sold as a security, as a legal matter, “morph” into a non-security? Some of 2019’s key events include:

  • Throughout the year, the SEC continued to bring enforcement actions against digital asset issuers and other market participants for violating the US federal securities laws. Read more...  In addition, with the issuance of no-action letters to TurnKey Jet and Pocketful of Quarters, the SEC began to create a very limited path for initial sales of certain digital assets to proceed as sales of non-securities. Notably, those no-action letters were controversial, as such proposed token sales bore very little resemblance to traditional 2017-style ICOs. Indeed, some believe that TurnKey Jet’s offering should not have required an SEC no-action letter. 
  • Meanwhile, on the legislative side, two ambitious bipartisan companion bills were introduced in Congress, with the express  aims of supporting the US blockchain industry and providing clarity for when the sale of a digital asset is not a security: the Token Taxonomy Act of 2019 (H.R. 2144) and the Digital Taxonomy Act (H.R. 2154).  Certain provisions contained within the bills generated some controversy and led to ongoing discussions, and we understand that the bills will be revised and reintroduced.

Banking & Financial Regulation

U.S. regulators amend Volcker Rule: In October 2019, the Board of Governors of the Federal Reserve System (the “Fed”) and four other regulators adopted amendments to the “Volcker Rule,” offering significant relief with respect to a number of the Volcker Rule’s current requirements, particularly with respect to the restrictions applicable to non-U.S. banks’ trading operations outside of the United States, although it does impose some additional burdens on non-U.S. banks that are less likely to impact U.S. banks. The amendments come into effect on January 1, 2020. Read more…

QFC stay rules become effective: The U.S. qualified financial contract ("QFC") stay rules require U.S. global systemically important banks ("GSIBs"), their subsidiaries, or the U.S. subsidiaries of non-U.S. GSIBs to include contractual restrictions on the exercise of certain default rights in certain of their QFCs to mitigate the risk of destabilizing closeouts of such QFCs. The rules require, in some cases beginning on January 1, 2019, the addition of certain restrictions to underwriting and similar agreements in capital markets transactions that involve GSIBs and certain of their affiliates.

Market looks to replace LIBOR: In April 2019, the Alternative Reference Rates Committee ("ARRC"), a group convened by the Federal Reserve Board and the Federal Reserve Bank of New York, published a white paper to help explain how market participants can use a compounded average of the Secured Overnight Financing Rate ("SOFR") in lieu of USD LIBOR for syndicated loans. The ARRC also published its recommended contractual fallback language for new originations of USD-denominated syndicated loans that reference LIBOR, specifying certain trigger events upon which the reference rate would transition from LIBOR to a benchmark replacement adjusted by a spread adjustment. The ARRC seeks to publish forward-looking term rates based on SOFR but there is no guarantee that such rates will be available before the discontinuation of LIBOR which may occur as early as the end of 2021.

Business Crime & Sanctions

OFAC issues “root causes” sanctions guidance: In May 2019, the U.S. Department of the Treasury’s Office of Foreign Assets Control ("OFAC") published guidance on the “root causes” of recent sanctions violations and the five essential components of a U.S. sanctions compliance program – management commitment, risk assessment, internal controls, testing and auditing, and training. Read more…

U.S. sanctions enforcement penalties reach new half year record: According to analysis we have undertaken of data available on the OFAC website, total U.S. sanctions enforcement penalties for the first six months of 2019 have reached US$1.28bn, exceeding the previous full year peak reported by OFAC of US$1.21bn for 2014. Read more…

FCPA’s extraterritorial reach remains uncertain: In June 2019, a US Court of Appeals for the Seventh Circuit denied a motion to dismiss federal bribery charges by a Ukrainian businessman and a Hungarian businessman. In doing so, the court explicitly declined to follow the Second Circuit’s decision in U.S. v. Lawrence Hoskins, which rejected the U.S. government’s attempt to use conspiracy and accomplice liability to reach conduct by a non-U.S. person that occurred outside the United States. Read more… Meanwhile, in the Hoskins case, the U.S. proceeded with an agency theory, which resulted in Hoskins’ conviction on FCPA and money laundering charges.

DOJ announces False Claim Act cooperation credit guidelines: The DOJ issued guidance in May 2019 on awarding cooperation credit to corporate defendants in False Claim Act ("FCA") matters. Similar to the DOJ Criminal Division’s Corporate Enforcement Policy, the FCA Guidelines provide that defendants may earn partial or maximum credit by (i) voluntarily disclosing misconduct unknown to the government; (ii) cooperating in an ongoing investigation; or (iii) undertaking remedial measures in response to a violation. Read more…

M&A & Competition

DOJ issues guidance for antitrust corporate compliance: The DOJ announced in July 2019 that it will give consideration in criminal charging decisions and penalty recommendations to whether a company has an effective corporate antitrust compliance program, and in certain circumstances will consider entering into deferred prosecution agreements in criminal antitrust investigations. The DOJ’s Antitrust Division also issued detailed guidance on its expectations for an effective antitrust corporate compliance program. Read more…

Court circuit split remains regarding tender offer liability standard: In April 2019, the Supreme Court dismissed a writ of certiorari in Emulex Corp. v. Varjabedian as "improvidently granted," letting stand a controversial Ninth Circuit decision holding that Section 14(e) of the Securities Exchange act of 1934 only requires private plaintiffs to prove negligence, not scienter, in connection with tender offers. The decision leaves a circuit split between the Ninth Circuit and five other federal appellate courts. Read more…

Significant legal and regulatory events in 2020

Explore the tabs below to review the key developments you need to be aware of in 2020

Capital Markets & Corporate

SEC aiming to finish Dodd-Frank rulemaking: In its latest Regulatory Flexibility agenda, the SEC has listed its current short-term and long-term rulemaking projects. Although the SEC is not bound by the agenda, which is published twice a year pursuant to the Regulatory Flexibility Act, SEC Chair Jay Clayton has said that he intends to publish shorter agendas that are more realistic. Among the items that the SEC may address in 2020 are a number of rules that were mandated by the Dodd-Frank Act of 2010:

  • Revised resource extraction payments disclosure
  • Final compensation clawback rules
  • Final pay-versus-performance rules
  • Proposed amendments to the disclosure rules on corporate board diversity
  • Revised conflict minerals rule

SEC may propose offering exemption changes: The SEC will likely act sooner rather than later to issue proposed amendments to many of the exemptions from registration under the U.S. Securities Act of 1933, following the extensive Request for Comment it issued in June 2019. The SEC Chair has made clear that he wants to increase the number of investors eligible to participate in private offerings, and we expect that we will see amendments to the accredited investor definition. Read more…

Supreme Court to rule on whether disgorgement is equitable relief in SEC actions: The U.S. Supreme Court is expected to issue a decision in 2020 in Liu v. SEC, answering whether the SEC may seek and obtain disgorgement from a court as “equitable relief” for a securities law violation, following Kokesh v. SEC, in which the court held that such disgorgement is a penalty. Read more…

SEC likely to ease disclosure rules governing acquisition financials and guarantor financials: In May 2019, the SEC proposed amendments that would ease the burden on public companies with respect to financial statement disclosure of recent acquisition and disposition activity. If adopted in 2020, these amendments would also likely have knock-on effects for Rule 144A offerings. Read more… The SEC is also expected to finalize changes proposed in 2018 that would ease financial disclosure requirements for guarantors and issuers of guaranteed securities. Read more…

SEC may make changes to proxy process: The SEC is expected to adopt changes that would impose additional procedural requirements on proxy advisory firms, which could provide an advantage for incumbent management. Read more… The SEC may also increase the ownership requirements that a shareholder must satisfy in order to be eligible to include a proposal in the company’s proxy statement. Read more…

SEC may address quarterly reporting: In December 2018, the SEC issued a Request for Comment on the nature, timing, format and frequency of periodic reporting (in particular, whether quarterly reporting should continue), as well as the relationship between the periodic reports that public U.S. domestic companies must provide and the earnings releases that they must furnish on Form 8-K. As the comment period ended in March 2019, the SEC may issue a proposal to amend the rules in 2020. Read more…

More direct listings expected: Many issuers are preparing or considering direct listings, which are likely to continue gaining viability as an alternative to a traditional IPO.


Clearer “paths forward” for compliant digital asset sales: We expect to see a continuing evolution of regulators’ (including the SEC’s) determinations of approved “paths forward” for compliant digital asset sales, both those digital assets expressly sold as securities and those that are deemed not to be sales of securities. Among other things, we anticipate an uptick in the number of Regulation A offerings for digital assets, particularly given the recent Blockstack Regulation A offering. In addition, we anticipate that so-called “stablecoins” will continue to rise in popularity, as some market participants argue that a “stable” (or in any event, less volatile) price may cause there to be no “reasonable expectation of profit” (i.e., one of the requirements under the Howey test for there to be an investment contract). Nonetheless, we also expect that regulators and legislators will remain cautious about stablecoins, both because there is no single type of stablecoin, and because of concerns about certain stablecoins supplementing, disrupting or replacing central bank fiat currencies.

Libra (or a competitor) likely to proceed outside the U.S.: 2020 is likely to be the year of the “payment token” or “social media coin.” Although Facebook CEO Mark Zuckerberg has said that Facebook would not move forward with the Libra project anywhere in the world until it gets approval from U.S. regulators, he also said it was inevitable something like Libra would be launched either by the independent Libra Association, which includes a number of U.S. companies as members, or by China, which has said that it was looking into a similar digital currency project. There could be a “race to the moon” if China issues a digital yuan, or a major non-U.S. company issues a popular stablecoin, and U.S. legislators realize that these types of digital assets are coming, irrespective of whether Libra itself succeeds or moves forward.

Enforcement actions may answer some securities law questions: Several SEC enforcement actions relating to initial coin (token) offerings are on course to be litigated in 2020. The results of litigation may help to resolve critical issues in the regulation of cryptocurrencies, including whether, and under what circumstances, U.S. federal securities laws apply to ICOs and related promotional activities by issuers and other market participants. While litigation often takes years to reach a final and non-appealable judgment, we believe it likely that at least some important threshold questions regarding digital asset sales will be answered. Read more... 

New data privacy laws: New York’s Stop Hacks and Improve Electronics Data Security Act (the "SHIELD Act") will become effective in March 2020, and it expands the scope of covered entities required to notify New York residents whose personal information has been implicated in a data breach and lowering the standard for determining when a notification is required. Because the SHIELD Act has such a broad reach, it is critical that persons and entities – wherever located – that collect, process or store private information of New York residents continually assess and review their incident response plans and data security programs to ensure compliance with the SHIELD Act’s rigorous requirements. Read more...

Banking & Financial Regulation

Fed expected to adopt changes to definition of “control under banking regulations: The Board of Governors of the Federal Reserve System is expected to adopt in 2020 substantial revisions to its regulations on the definition of “control” under the U.S. Bank Holding Company Act of 1956 (the "BHCA"). The amendments would codify a significant amount of existing Federal Reserve practice and make “targeted adjustments” generally intended to liberalize the current practice on BHCA control determinations. If adopted, the changes would represent a significant step toward enhancing the transparency of the Federal Reserve’s approach to analyzing control under the BHCA and could enhance the ability of U.S. banks, bank holding companies and non-U.S. banks with U.S. branches or agencies to raise capital and make investments in fintech companies, among other things. Read more…

Court expected to decide whether term loan is a security under state securities law: In the bankruptcy of Millennium Health, the trustee of the lender claim trust alleges that the arrangers that underwrote a US$1.75bn term loan to Millennium violated state “blue sky laws”, the state equivalent of the federal securities laws. The arrangers brought a motion to dismiss on a number of grounds, including that the loans in question are not “securities” under state or federal law and are therefore not subject to state Blue Sky laws. The district court is expected to rule on the motion in 2020. If the court denies the motion, the issue of whether or not the term loan is a security would be further litigated through discovery and possibly trial. If the court were to conclude that broadly syndicated loans are subject to the securities laws, the process of syndicating and trading loans would be far more time-consuming and cumbersome, making syndicated loans a less attractive asset class, pushing borrowers instead to issue secured bonds or look to direct loans for financing.

M&A & Competition

CFIUS amendments to take effect: Following the enactment of the Foreign Investment Risk Review Modernization Act of 2018 ("FIRRMA") and the issuance of interim regulations in October 2018 implementing small portions of FIRRMA, investors waited through most of 2019 for the publication of draft regulations that would implement the rest of FIRRMA’s provisions. Meanwhile, most attention in 2019 was on identifying transactions subject to new mandatory “pilot program” filings for investments in U.S. “critical technology” businesses. In September 2019, two sets of draft regulations implementing most of FIRRMA were made available for public comment. By February 2020, all of the implementing regulations should take effect and participants in U.S.-bound foreign investment should experience a new set of decisions as they assess whether and how to engage with CFIUS. Read more…

CFIUS is expected to issue final rules implementing the Foreign Investment Risk Review Modernization Act of 2018 soon, with the new, extremely detailed regulations to take effect no later than February 13, 2020. By watching this video, you’ll learn about five of the key changes:

  • definitions of covered investments in U.S. technology, infrastructure, and personal data
  • mandatory v voluntary CFIUS filings
  • special treatment for certain foreign investors
  • expanded jurisdiction over real estate transactions
  • new filing fees

Fintech in 2020: U.S. Predictions

Joshua Klayman, U.S. Head of Fintech & Head of Blockchain & Digital Assets

Focusing on the 2020 market, Joshua Klayman, our U.S. Head of Fintech, assesses the likelihood of Libra proceedings outside of the U.S. and discusses how the SEC’s position on ICOs may be tested. 

Click here to view the full Fintech Year in Review 2019 and Year to Come where teams from 16 countries summarized legal and commercial developments in the fintech space.

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