In a speech last week before the Global Exchange and Brokerage Conference, CFTC Chairman Massad outlined a potential new area of focus for the CFTC – regulation of futures traders that use algorithmic and other automatic trading strategies. Chairman Massad’s announcement follows the SEC’s recent proposal to revise SEC Rule 15b9-1, which would require high-frequency trading firms that fall into the SEC’s broad definition of “broker-dealer” to register with FINRA.
Last week the U.S. Supreme Court declined to review the U.S. Court of Appeals for the Federal Circuit’s September 2014 ruling holding the president of Trek Leather Inc. personally responsible for penalties related to violations of U.S. Customs and Border Protection (CBP) laws.
The high court declined to grant Trek President Harish Shadadpuri’s petition for a writ of certiorari on the en banc (i.e., the full court instead of the typical three-judge panel) decision which unanimously backed CBP’s decision to hold Shadadpuri personally and individually liable for penalties stemming from the presentation of false documentation related to imports of men’s suits in 2004.
Shadadpuri argued in his petition that the en banc panel misread a U.S. customs law because the decision effectively nullified the portion of the statute that creates liability for those who aid and abet customs fraud. This misreading dramatically expands the list of individuals U.S. Customs and Border Protection may pursue for penalties. Continue Reading
The U.S. Department of Agriculture’s country of origin labeling (COOL) regulations, in effect since 2009, require that the labels of various meats (such as beef, lamb, pork, chicken, and goat) identify the country where the animal was born, raised, and slaughtered.
Alleging the regulations discriminatory, Canada filed a complaint against the United States regarding this regulation at the World Trade Organization (WTO), which Mexico later joined. In 2011, a WTO dispute resolution panel ruled against the United States; on appeal the following year, the result was upheld.
The U.S. proposed an amendment to the regulations in May of 2013 to comply with the WTO decision. Canada and Mexico challenged the new rule at the WTO, and again the panel ruled against the U.S. in July of last year. Just last month, the WTO upheld that ruling on appeal.
Canada has threatened to assess retaliatory tariffs on various food products (such as beef, pork, corn, apples, chocolate, and pasta), and is considering to initiate the retaliatory tariff process at the WTO. Mexico is expected to follow suit.
In response, House Agriculture Chairman K. Michael Conaway (R-Texas), introduced House Resolution (H.R.) 293, which would amend the Agricultural Marketing Act of 1946 by repealing the country of origin labeling requirements with respect to beef, pork, and chicken, and for other purposes. The bill reported out of the House Agriculture Committee on May 18 with a 38 – 6 vote.
It is unknown when the bill will be taken up by the full House, or how it will be handled in the Senate. Recent comments on the subject by Senator Chuck Grassley (R-Iowa), a proponent of COOL, suggest the Senate will not be in a rush to repeal the rule. In a May 19 conference call with agriculture media, Grassley said Congress should take its time and consider alternatives.
On May 8, 2015, U.S. District Judge Amy Berman Jackson granted a motion to suppress the use of potentially incriminating emails recovered from a laptop computer seized at Los Angeles International Airport in 2012 from a South Korean businessman, Mr. Jae Shik Kim. By granting this motion, the court prevented the U.S. Department of Homeland Security (DHS) from using the email as evidence in a case in which the government alleged that Mr. Kim conspired to send aircraft parts from the United States to China, and from there to Iran. Continue Reading
Last month, Treasury’s Financial Crimes Enforcement Network (FinCEN) levied its first fine against a virtual currency exchanger, Ripple Labs Inc. and its wholly-owned subsidiary, XRP II, LLC (formerly known as XRP Fund II, LLC). After BitCoin, Ripple is the second-largest cyber currency by market capitalization as of 2015.
The $700,000 civil money penalty was assessed because Ripple Labs willfully violated several requirements of the Bank Secrecy Act (BSA) by acting as a money services business (MSB) and selling its virtual currency, known as XRP, without registering with FinCEN, and by failing to implement and maintain an adequate anti-money laundering (AML) program designed to protect its products from use by money launderers or terrorist financiers.
FinCEN had previously issued guidance that it considered virtual currency providers to be subject to the same U.S. AML rules as MSBs. This action represents FinCEN’s first enforcement measure demonstrating that it is holding virtual currency money exchangers to the same standards as conventional ones.
On Friday, May 22nd, the Chairman and Ranking Member of the Senate Finance Committee were joined by two other Committee Members in issuing an open letter inviting stakeholders to comment on how Medicare could improve treatment of beneficiaries with chronic conditions. Chairman Orrin Hatch (R-UT), Ranking Member Ron Wyden (D-OR), Johnny Isakson (R-GA), and Mark Warner (D-VA), co-chairs of a recently created working group on chronic care, outlined the urgent need. The letter says that treatment of chronic illnesses, such as heart disease, diabetes, and cancer, account for almost 93% of Medicare spending. The Senators further warned that the problem appears to be getting worse, citing a CDC study showing that the number of adults aged 45 to 64 living with multiple chronic conditions is increasing. Aging Baby Boomers will only further strain Medicare program spending, they predict.
In response, the Senators ask for input from public and private stakeholders. They are “seeking recommendations and thoughtful policies from health care stakeholders based on real world experience and data-driven evidence that will improve care for this vulnerable population.” Solutions should provide high quality care at greater value and lower cost without adding to the deficit. Continue Reading
The chair of Temple University’s physics department has been indicted for allegedly providing U.S. technology to China. Dr. Xioaxing Xi, a U.S. citizen and native of China, is an expert in the field of magnesium diboride thin film superconducting technology. According to the indictment, Xi was involved in a scheme over many years to funnel thin film superconducting technology to third parties in China.
On May 16, Hao Zhang, a Chinese university professor, was arrested upon entering the U.S. as one of six defendants charged with participating in a conspiracy to steal trade secrets and commit economic espionage against the United States. Their alleged goal was to set up a factory in the People’s Republic of China (PRC) that would develop and manufacture a series of high technology products that would have both civilian and military applications.
The 32-count indictment alleges that, with the financial support of the PRC and the PRC’s Tianjin University, in eastern China, the six conspirators established a shell corporation in the Cayman Islands, Novana, and a plant that could produce products from the information stolen from the US entities. The conspirators had filed for patents in both the US and PRC.
The two American companies at the center of their scheme were Avago Technologies (Avago), a California-based company, and Skyworks Solutions, Inc., based in Massachuetts. Avago is a leading designer, developer and supplier of a range of analog, digital and mixed signal products used in, e.g., cellular phones and tablets. The intellectual property allegedly stolen from Avago involved its patented Film Bulk Acoustic Resonators, known as FBAR.
Earlier this week, the U.S. Department of Education (DOE) published a Notice of Proposed Rulemaking in the Federal Register to amend the cash management regulations of the Student Assistance General Provisions regulations issued under the Higher Education Act of 1965, as amended (HEA).
The department was prompted to issue the proposed rule after receiving a number of reports from government and consumer groups documenting a troubling pattern of practices being employed by some financial account providers, including:
- Providers prioritizing disbursements to their own affiliated accounts over aid recipients’ preexisting bank accounts.
- Providers and schools strongly implying to students that signing up for the college card account was required to receive Federal student aid.
- Private student information unrelated to the financial aid process being given to providers before aid recipients consented to opening accounts.
- Access to the funds on the college card was not always convenient.
- Aid recipients being charged onerous, confusing, or unavoidable fees in order to access their student aid funds or to otherwise use the account.
The burden of the new regulations on post-secondary institutions largely depends on their current relationships with banks and debit card providers. For example, many large, public flagship institutions have revenue arrangements with banks and debit card providers. If an institution has such an arrangement, they will need to revise their contracts to comply with these regulations when they are made final.
The governor of Utah announced last week that the state is working to join Wyoming, North Dakota, and Colorado in challenging the U.S. Department of the Interior’s (DOI) rule to regulate hydraulic fracturing on federal and tribal lands.
The case Utah is trying to join was filed by Wyoming in March and claims the new fracking rules exceed DOI’s jurisdiction under the Federal Land Policy and Management Act, the Mineral Leasing Act, as well as the Safe Water Drinking Act. Two industry groups sued to block the regulations immediately following their release, but Wyoming is the first state to sue.
The suit revolves around the new rule’s well casing and wastewater storage requirements, as well as the requirement for drillers to disclose what chemicals they are using in their fracking operations.