FEDERAL COURT RULES THAT SEC HAS CAUSE OF ACTION AGAINST CEOS
AND CFOS WHO PROVIDE FALSE RULE 13A-14 CERTIFICATION
A U.S. Court of Appeals recently ruled that the SEC has a cause
of action against CEOs and CFOs who provide a false certification
under Exchange Act Rule 13a-14, which requires an issuer's CEO
and CFO to sign a certification stating that the financial
statements included in the report filed under Exchange Act Section
13(a) fairly present in all material respects the issuer's
financial condition, results of operations and cash flow for the
covered period. The lower court had concluded that Rule 13a-14
creates a cause of action against CEOs and CFOs who do not sign or
file a certification, but not against CEOs and CFOs who make a
false certification. The U.S. Court of Appeals disagreed,
determining that simply signing a certification was insufficient
for compliance with the rule. The court also concluded that the
disgorgement remedy provided under Sarbanes-Oxley Act Section 304
applies even if an accounting restatement was caused by conduct in
which the officers were not personally involved. In reaching this
conclusion, the appeals court agreed with the SEC that Section 304
is concerned with an issuer's misconduct, not the individual
CEO or CFO misconduct. For more information on SEC v.
Jensen, click here.
UNITED KINGDOM CASE CLARIFIES THAT SALE OF SOFTWARE LICENSES
MAY BE SUBJECT TO AGENCY REGULATIONS
A United Kingdom court recently clarified that the sale of
software licenses through agents may constitute the sale of goods
and therefore may be subject to The Commercial Agents (Council
Directive) Regulations 1993. Such regulations govern the
relationship between a commercial agent and a principal with
respect to sales or purchases of goods and impose (among other
things) extensive good faith obligations and minimum notice periods
for terminating an agency contract that continues beyond its fixed
term. Based on the ruling in Software Incubator Ltd. v.
Computer Associates UK Ltd, parties who engage agents to sell
software licenses to U.K. customers should review their existing
agency contracts and determine if any of them are subject to the
regulations. For more information,
see Withers' client advisory here.
CFTC SIGNS MEMORANDUM OF UNDERSTANDING WITH MEXICAN
The U.S. Commodity Futures Trading Commission (CFTC) recently
signed a Memorandum of Understanding (MOU) with Comisión
Nacional Bancaria y de Valores and Banco de México, covering
cooperation in the oversight of regulated entities that operate on
a cross-border basis in the United States and Mexico. Although the
MOU does not impose any legally binding obligations, the parties
expressed their willingness to cooperate with each other in
fulfilling their regulatory mandates with respect to general
supervisory issues (including regulatory and oversight
developments) and other issues relevant to the operations,
activities and regulation of covered entities. The MOU provides for
notifications triggered by pending regulatory changes that may
significantly impact operations, activities or reputations of
covered entities; request-based information sharing among the
parties; and periodic meetings by the parties for the purpose of
updating each other about regulatory oversight programs. For more
information, click here.
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An assignment of rights under a contract is normally restricted to the benefit of the contract. Where a party wishes to transfer both the benefit and burden of the contract this generally needs to be done by way of a novation.
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