Today, the Wall Street Journal released data from their analysis of large U.S.-based multinational companies showing that global companies, aided by overseas revenue, are faring better than purely domestic companies during the economic recovery.

“Nearly 60% of the revenue growth between 2009 and 2011 at the companies in the Journal’s analysis came from outside the U.S.,” according to the April 27, 2012, WSJ article by Scott Thurm.

The data also revealed that 35 of these large U.S. companies “added jobs much faster than other U.S. employers in the past two years, but nearly three-fourths of those jobs were overseas.”

As the global managing partner of a U.S.-based law firm with offices in the U.S., Latin America, Asia, Europe, and the Middle East, nearly every day I see, first hand, the growing opportunities for U.S.-based companies in emerging markets. However, that doesn’t excuse the U.S. from keeping the home fire burning, especially where jobs are concerned.

The sad truth, in my opinion, is that the USA continues to miss the forest for the trees. Over-regulation and aspirational, morality-based legislation continues to drag the USA into the gutter while emerging markets without regulatory restrictions continue to bowl strikes. Capital flight, jobs, and private money will continue to seek opportunities in a global marketplace where the rewards will continue to outweigh the costs and risks of doing business at home.

It is one thing to preach about business virtues and morality while you’re on top, it is quite another when you’re fighting for your financial existence and your known markets continue to drive down and eat away at your net profits.

Jobs, investments, and smart money will continue to seek opportunities in emerging markets where the promise of wider profit margins are within reach.

Altruistic, sermon-like preaching is fine on holy days, whichever day that means for you, but capital markets are too ruthless to care about their place in the after life.

Diaz Reus & Targ has opened law offices in Iraq, further expanding our presence in the Middle East and reinforcing our long term commitment to the region.

FIRST Major International U.S. Law Firm to Enter Post-war Iraq

As the first major international U.S. law firm to enter post-war Iraq, our new offices provide us with a significant presence in this increasingly important emerging market. This is the natural and logical next step for our firm, which already has a  presence in the Dubai International Financial Centre. These new offices will enable the firm to further provide full service support to its clients and their business needs in the Middle East region.

Our Miami-based firm has established a strategic alliance with Newton & Partners, LLC, an emerging markets law firm that will serve as Diaz Reus’s affiliate in Iraq. Halim Gebeili, senior partner of this growing Mideast firm which has just started operations in Libya and Cairo, will be of counsel to Diaz Reus and will advise foreign companies regarding their investment strategy and associated corporate and regulatory aspects while operating in the greater Iraq and the Kurdistan area.

As a key player in Iraq’s legal market, Diaz Reus will focus on project finance, direct investment, mergers and acquisitions, corporate and business transactions, regulatory compliance and international arbitration. The Middle East is becoming increasingly important to our worldwide client base, which ranges from North and South America to greater Asia, China, India, and Europe. It’s clear that emerging markets will be driving global economic growth for the next decade, and Diaz Reus is well positioned with its in-depth local understanding, coupled with market-leading  international expertise, to assist in accessing these markets.

Contact Global Managing Partner, Michael Diaz, Jr .

About Diaz Reus

Diaz Reus represents dealmakers around the world with a focus on emerging markets. With experienced lawyers in the U. S., Latin America, Asia, Europe, and the Middle East, the firm is uniquely suited to handle a wide range of complex commercial, business, and financial transactions across international borders. Diaz Reus lawyers have experience in government relations, trade, compliance, customs, tax, and immigration matters, as well as internal and government investigations, litigation, and arbitration. Diaz Reus operates offices in Miami and Orlando, Florida; Caracas, Venezuela; Shanghai, China; Dubai, U.A.E.; Iraq; Frankfurt, Germany; Bogota, Colombia; Panama, Republic of Panama; Mexico City, Mexico; Buenos Aires, Argentina; Santiago, Chile; and an affiliate office in Sao Paulo, Brazil. For more information, visit www.diazreus.com.

New U.S. Regulations | Wide-Ranging Implications for Banks Operating in Latin America and the Caribbean

The U.S. Internal Revenue Service and the Treasury Department recently released much-anticipated proposed regulations for implementing the Foreign Account Tax Compliance Act (FATCA). Wide-ranging implications for banks operating in Latin America and the Caribbean are expected.

According the U.S. IRS website,

“…the FATCA is an important development in U.S. efforts to improve tax compliance involving foreign financial assets and offshore accounts. Under FATCA, U.S. taxpayers with specified foreign financial assets that exceed certain thresholds must report those assets to the IRS.  In addition, FATCA will require foreign financial institutions to report directly to the IRS information about financial accounts held by U.S. taxpayers, or held by foreign entities in which U.S. taxpayers hold a substantial ownership interest.”

InterAmerican Dialogue’s Latin Finance Advisor-Financial Services interviewed Diaz Reus & Targ attorney, Sumeet Chugani, in their February 16-19, 2012 edition:

IADLFA asks:

• What do the proposed new regulations mean for banks in the region?
• Are there any surprises in the new regulations?
• Are concerns over sovereignty and privacy going to be sorted out in time for the scheduled implementation of FATCA next year?

Sumeet Chugani explains:

“Given its extremely broad scope, the proposed new FATCA regulations will apply to all non-U.S. businesses with U.S.-based investments, including banks and foreign financial institutions (FFIs) that serve only a very nominal amount of U.S. clientele. Expanding upon ‘FATCA 2011,’ the proposed regulations now require amplified due diligence— pegged to the value and risk profile of each FFI account. FATCA will also require FFIs to ‘withhold’ on ‘pass-thru payments’ from FFI account holders or other financial institutions that fail to comply with FATCA. In practice, this would require all FFIs to effectively act as a tentacle of the IRS, scrutinizing each transaction that flows through their accounts. Banks in Latin America and the Caribbean must then make a tough choice of whether to comply with the proposed rules, or risk noncompliance under their protectionist local laws, which may prohibit such dissemination of an account holder’s private information. This could cause banks in the region to stop doing business with U.S. citizens or dual-status taxpayers who, if holding any form of U.S. residency status, will be treated as U.S. account holders for FATCA purposes. The proposed rules also require financial institutions to implement an enhanced due diligence policy, including a step-by-step process for obtaining U.S. account holder identification and personal information. This new level of diligence will require banks and FFIs that continue to do business with U.S. clients to overhaul their current anti money-laundering and know-your-customer procedures to include the new, enhanced information. With the deadline of less than one year looming close, Latin American and Caribbean banks will need to rapidly undertake operational modifications, which may include austerity measures that reduce certain business prospects, for the sake of correctly applying FATCA. This may require terminating certain FFIs’ ‘tax haven’ status, and the removal of certain attractive privacy features.”

Email Sumeet Chugani

Excerpted from InterAmerican Dialogue’s Latin Finance Advisor-Financial Services, February 16-19, 2012 Edition.

In New York, NY, the U.S. Court of Appeals affirmed the dismissal of a case against Venezuelan government officials and businessmen accused of violating U.S. RICO statutes. The appellate court determined that the allegations in the complaint, which alleged conduct occurring almost entirely in Venezuela, did not trigger U.S. jurisdiction. The case, Eligio Cedeño v. Castillo, 10-3861-cv (2d Cir. Jan. 24, 2012), was important because it tested the outer limits of a federal court’s jurisdiction to hear a RICO case based on conduct occurring almost entirely outside of the U.S.

Diaz Reus & Targ partner, Carlos F. Gonzalez, who heads up the firm’s appellate practice, presented oral argument to the U.S. Court of Appeals for the Second Circuit in December. The case, had been filed by plaintiff Eligio Cedeño, a Venezuelan banker who is now in exile in Miami. Cedeño’s complaint alleged a conspiracy between several high-ranking Venezuelan government officials and businessmen who used a combination of official pressure and threats to extort the plaintiff’s interest in two Venezuelan banks.  However, the Plaintiffs never even got to first base with this case—either before the District Court or the Court of Appeals.

In an August 24, 2010, opinion, the U.S. District Court held that Cedeño’s complaint alleged an extraterritorial violation of RICO and therefore the U.S. statute did not apply. In the Appellate ruling, the appellate panel held that the business enterprise in question was Venezuelan and the facts were “insufficient to support extraterritorial application of the RICO statute.”

The court added,

“We have considered all of Cedeño’s remaining arguments and find them to be without merit.”

This case had enormous importance because it was one of the first to address the possible extension to RICO of very recent U.S. Supreme Court precedent admonishing the lower courts about extending the reach of U.S. laws extraterritorially in the absence of a clear mandate from Congress to do so.

The Diaz Reus legal team for Defendant-Appellee Ruben Rogelio Idler Osuna included Carlos F. Gonzalez and Michael Diaz, Jr., Gary E. Davidson, and Margaret T. Perez, on the brief.

Contributed by Robert Q. Lee, Sumeet H. Chugani, and Xingjian Zhao,
Diaz Reus & Targ, LLP

Bank Holding Company Act and Change in Bank Control Act are two laws that affect investment in bank holding companies.

The credit crisis that gripped U.S. and global financial markets, and the ensuing economic meltdown, have created fresh investment opportunities for private equity and hedge funds. Two main factors have historically discouraged private equity investment in banking institutions. First, significant investments in banking institutions can invite some unwelcome regulatory burdens that private equity and hedge funds are specially structured to avoid. Second, the high costs of investing in bank holding companies often do not justify the risks and expected returns. However, recently announced changes in regulatory policy and significant declines in banks’ stock prices have created a more attractive environment for private equity and hedge funds to invest in banking institutions. Investments in failed banks will continue to be limited by strict Federal Deposit Insurance Corporation (FDIC) guidelines, which have been relaxed somewhat to attract more private equity investments in at-risk banking institutions.

The Federal Reserve Encourages Private Equity Investment in Bank Holding Companies

On June 29, 2011, the First NBC Bank Holding Company raised approximately $27 million through a private placement of 523,863 shares of common stock and 1,680,219 shares of Series C preferred stock at a price of $12.25 per share.1 The shares were purchased by Castle Creek Capital Partners IV, L.P., managed by its general partner Castle Creek Capital IV, LLC, which is a private equity fund headquartered in Rancho Santa Fe, California.2

The BHCA’s 25 percent ownership threshold, however, remains a bright-line test for control of a bank and the existence of bank holding company status.

Banking institutions and bank holding companies such as First NBC have been forced to actively seek capital from all available sources to replenish liquidity lost during the most recent financial crisis. Cue in private investment funds like Castle Creek Capital IV, LLC. With the stock value of many financial firms at bargain basement prices, opportunities now exist for private investment funds to capture low-cost equity stakes in publicly labeled “well-built” financial institutions. However, private equity funds investing in bank holding companies must take heed of the regulatory hurdles created by the Bank Holding Company Act (BHCA).3 These investors must also pay attention to provisions of the Change in Bank Control Act (CIBCA),4 as well as specific regulations of the Board of Governors of the Federal Reserve System (FRB).

The BHCA imposes significant regulation and oversight by FRB upon companies that control banks. Companies that control banks are considered bank holding companies and are subject to minimum capitalization requirements, limitations on non-banking
activities, restrictions on transactions with affiliate entities, and other regulatory burdens. For regulatory purposes, a company “controls” an entity if it

• (a) directly or indirectly owns or holds the power to vote 25 percent or more of any class of the entity’s
  voting stock;
• (b) has the ability to appoint a majority of the entity’s directors; or
• (c) has the ability to exercise a “controlling influence” over the entity’s management or internal policies.5 Under the BHCA, FRB has significant discretion in determining what constitutes a “controlling influence” over a banking institution.

In a nutshell, private equity funds may not “control” the banks in which they invest, unless they are bank holding companies, or are willing to become bank holding companies and be regulated by the BHCA. Should a private equity fund “control” or “exercise
a controlling influence” over a bank or bank holding company, it is regulated by FRB on an ongoing basis as a bank holding company. Such regulation requires the private equity firm to limit its activities to those “related” to banking, and refrain from engaging in “non-banking” activities that undermine a bank’s capitalization and financial soundness.

To attract greater private equity investment in banks, FRB has relaxed many of its discretionary policy guidelines that determine what ownership thresholds, board representation levels, and conduct of a bank’s management constitute a “controlling interest” as defined by the BHCA.6 These recently revised FRB policies generally encourage minority investment by hedge funds and private equity firms. Under these guidelines, a minority shareholder may own up to 33 percent of a bank’s or bank holding
company’s total equity before FRB presumes the presence of a “controlling interest,” so long as the investor does not own or control the power to vote on more than 15 percent of any class of voting securities.7 The BHCA’s 25 percent ownership threshold, however, remains a bright-line test for control of a bank and the existence of bank holding company status.

Moreover, a minority shareholder can now enter into business relationships or transactions with a bank or bank holding company on a case-by-case basis, based on the size of the proposed relationship or transaction, whether the relationship is on market terms, whether it is non-exclusive, and whether it may be terminated without penalty.8 Private equity minority shareholders may also communicate and consult with the board of the banking institution to influence the corporate policies of the bank or bank holding company in the same manner as any other shareholder.9 Such shareholders may also have at least one seat on the bank’s board of directors.10 Additionally, a minority shareholder may hold two seats on the bank’s board of directors if three conditions are met: (1) its board representation is proportionate to its ownership interest, (2) it holds fewer than 25 percent of voting seats on the board, and (3) another shareholder (that is a bank holding company) controls the bank.11 Finally, a private equity minority shareholder can now enter into a shareholders’ agreement that contains covenants prohibiting the issuance of senior securities or borrowings, consultations rights, and information rights.12 More extensive covenants, such as limitations on hiring practices, raising additional capital, or engaging in new business, may still be deemed to be indicative of a “controlling interest” under the BHCA.

“Control” Analysis Entails Review of Multiple Factors

Questions surrounding “control” of a bank or bank holding company for BHCA purposes remain multifaceted. The organizational regime, ownership structure, management practices, and identity of principal investors in the private equity fund all play an integral part in FRB’s determination of the threshold of “control.” Furthermore, FRB may include the amount of the bank holding company’s securities that will be purchased by the private equity fund in its “control” analysis.

Although a company may usually acquire up to 24.9 percent of a bank holding company’s stock before triggering bank holding company status under the BHCA, FRB often takes into consideration other indicia of control. For example, FRB may review the number of directors that will stem from a proposed transaction and the private equity fund’s inclusion in board activities. A private equity fund may not have its members act as participating officers or board committee chairs of a bank or bank holding company. Moreover, FRB will assess the amount of influence the private equity fund will have on the management or policies of the institution. The FRB’s most recent policies will likely benefit private equity firms and hedge funds desiring to acquire stakes in banks or bank holding companies. Additionally, the new policy will help inject some much-needed capital into the banking sector.

With respect to a public company, presumption of control under the CIBCA is triggered by director indirect ownership of 10
percent or more of the institution’s outstanding common stock.

In addition to the BHCA’s requirements, the CIBCA13 should also be considered. With respect to a public company, presumption of control under the CIBCA is triggered by direct or indirect ownership of 10 percent or more of the institution’s outstanding
common stock.14 If a transaction becomes subject to the CIBCA, the private equity investor must submit a notice to FRB and the bank’s primary federal regulator (if different than FRB) that includes not only extensive information about the private equity entity, but also detailed biographical and financial information from the individuals who control the private equity investor. Some private equity companies are unwilling to file a CIBCA notice because of its intrusive nature, and because, after approval, they
will become an “institution-affiliated party”15 under Section 3(u) of the Federal Deposit Insurance Act, and therefore will be subject to the same set of potential regulatory liabilities as bank directors and officers. Other private equity investors are willing to file a CIBCA notice because, unlike the BHCA, the CIBCA does not impose any limitations on the investor’s other activities or require the investor to serve as a source of liquidity to the bank. Often, a CIBCA-triggering transaction is also necessary for the investors to inject a sufficient dollar amount in the target financial institution.

Conclusion

The recent financial crisis has created fresh and lucrative investment opportunities for private equity and hedge funds. However, these funds must approach investments in these banking institutions, or their holding companies, with the “control” thresholds in mind. The restrictions on the exercise of “control” reinforce the importance of the specific private equity or hedge fund being comfortable with the holding company or banking institution at the beginning of the parties’ relationship. At the inception of the relationship, the fund will have the greatest ability to influence the manner in which the holding company or banking institution operates. Being privy to the risks, regulatory standards, and complexities involved with each investment in a bank holding
company will permit the private equity or hedge fund to reap the rewards of its investment.

Robert Q. Lee is a partner in the transactional practice group of Diaz Reus & Targ, LLP, where he concentrates his practice on corporate and banking, securities, secured transactions, commercial real estate, and international business law (particularly in Asia).

Sumeet H. Chugani is an associate with the firm, where he focuses his practice on cross-border transactions, international dispute resolution, and regulatory compliance and support.

Xingjian Zhao is an associate attorney with the firm’s Shanghai office, where he focuses his practice on complex commercial litigation, appellate litigation, regulatory compliance, cross-border transactions, and Chinese law.

1 Castle Creek Capital, Press Release, First NBC Bank Holding Company
Completes $27.0 Million Private Placement of Common Stock and Preferred
Stock (July 7, 2011).
2 Id.
3 12 U.S.C. § 1841, et seq.
4 12 U.S.C. § 1817(j).
5 12 U.S.C. § 1841(a)(2).
6 See FRB, Policy Statement on Equity Investments in Banks and Bank Holding
Companies (Sept. 22, 2008).
7 Id. at 10.
8 Id. at 12-13.
9 Id. at 11-12.
10 Id. at 6.
11 Id. at 7.
12 Id. at 13-14.
13 See supra at note 4.
14 E.g., 12 C.F.R. § 225.41(c)(2).
15 12 U.S.C. § 1813(u).

By Michael Diaz, Jr. – Managing Partner
Andre Linhares – Attorney

First publication on The Brazilian-American Chamber of Commerce of Florida

The U.S. is taking its relationship with Brazil for granted, and that may hurt South Florida’s economy.

Consider the facts. In 2009, China became Brazil’s primary trading partner, surpassing the U.S. for the first time ever. The following year, China and Brazil signed several trade agreements boosting trade and energy co-operation.

By 2010, China took top honors as Brazil’s largest foreign investor. The growing importance of China to Brazil will change the traditional north-south flow of Brazilian trade and investment.

For example, Brazilian aircraft maker Embraer recently signed deals for Chinese airlines to buy 35 E190 planes that could be worth up to $1.4 billion dollars. China plans to invest $300 million in technology and research centers in São Paulo and Goias while Marfrig, a Brazilian meat cold storage plant manufacturer, will be investing $250 million in technology and research centers in China.

Taiwan based Foxconn Technology Group may spend $12 billion to build a factory in Brazil to produce the iPhone, iPad and other Apple electronic components in what would be the company’s largest investment overseas. Brazilians will no longer need to buy these electronic devices in South Florida because prices will be much cheaper in Brazil.

South Florida should take note, and take action.

South Florida has long been Brazil’s primary gateway to the U.S. marketplace. During the first 11 months of 2010, Florida’s merchandise trade with Brazil topped $14.4 billion, a 27 percent increase over 2009. Brazilian tourists spend more money in Florida than in any other state. Thirty-five percent of real-estate buyers in downtown Miami are Brazilians.

As Saulo Ferraz de Campos, president of the Brazilian/American Chamber of Commerce in Florida, said recently: “Brazil is to South Florida what China is to the world.” But, like any good relationship, the ties between South Florida and Brazil must be nurtured. Even if the U.S. is playing it cool, South Florida must continue to develop and strengthen its ties with the Brazilian marketplace.

Competition is fierce. Chinese, Japanese, and European manufacturers are investing in new technologies to compete with U.S. products. As Chinese goods flood Brazil, there is a natural fear that fewer Brazilians will visit South Florida to shop. And that trend may accelerate if the dollar rises in value.

Maintaining strong trade, business, and investment relationships with Brazil must become a high priority for South Florida. Brazil’s rich natural resources and worldwide demand for its commodities will make it one of the Western Hemisphere’s fastest-growing economies in 2011 and beyond. With this growth comes opportunity.

Brazil must hire more outside professionals to support its economic growth. The 2014 World Cup, and the 2016 Olympics will generate a need for architects, engineers, and various professionals. South Florida is uniquely poised to fill these needs. The region’s stable of qualified professionals should set their sights on Brazil and capitalize on that country’s proven growth potential.

President Obama certainly realizes the importance of Brazil. On a recent trip, Mr. Obama signed several bilateral agreements. While this was an important step forward in the relationship between the two countries, more progress must be made. Brazil is urging the U.S. to relax trade barriers affecting top commodities like ethanol, oranges, and steel. In addition, Brazil needs U.S. support in its bid to become a permanent member of the U.N. Security Council.

Despite these diplomatic challenges, the ties that bind the U.S. and Brazil are strong. Proximity breeds familiarity, and South Florida is well-positioned to capitalize on the many opportunities offered by Brazil’s exploding market. But, we cannot be idle. Our competitors are smart, efficient, and quick on the draw. Even if our national government is focused on other priorities, South Florida’s business and political leaders must look out for this region’s future.

Let’s not neglect our friends. Our future may well be in their hands.

Viva Las Vegas!

Las Vegas – September 19-21, 2011: The Association of Certified Anti-Money Laundering Specialists (ACAMS) ACAMS 10th Annual conference is packed with practical information including newly revamped and highly interactive sessions led by experts from leading global organizations. [See highlights below]

Diaz Reus is pleased to be the Diamond Sponsor for this first-class, annual event and I hope you’ll join us there. Attendees not only benefit from the educational sessions but also receive ample opportunity to network with colleagues and other professionals at the forefront of the Anti-Money Laundering community.

Certified Anti-Money Laundering Specialists | Hot Topics for 2011

• Developing Innovative Practices to Further Public and Private Sector Relationships
• Emerging Payment Channels and New Products: Emerging Money Laundering Risks?
• Ponzi Schemes and Corporate Fraud: Can Your Organization Survive These New Threats?

Ponzi Schemes and Corporate Fraud: Can Your Organization Survive These New Threats?

I will be joined by an esteemed panel of experts on Wednesday, September 21 at the 
Plenary Session beginning at 10:55 a.m. where we will be discussing:  Ponzi Schemes and Corporate Fraud: Can Your Organization Survive These New Threats?

The evolution of crime has resulted in individuals further refining their attempts at defrauding financial organizations and orchestrating multi-layered international Ponzi schemes. In order to maintain your advantage against such individuals, your compliance department must evolve accordingly. This session examines the latest developments in illegal activities and reviews key elements of cases such as the Madoff, Stanford and Martin Frankel scandals amongst others. Learn which mechanisms and internal controls your organization must have in place to spot the transactions associated with these schemes and avoid related monetary penalties and citizen lawsuits.

ACAMS 2011 Conference Highlights

Plenary Sessions
Leading international AML/CTF authorities have agreed to share critical intelligence and proven best practices to combat financial crime. You will receive the latest legislative updates and insight into regulatory expectations. Whether you are affiliated with a financial institution, a non-depository institution or a government agency, you cannot afford to miss these insightful presentations.

Seminars
Seminar sessions are strategically selected topics addressing your most pressing challenges. They provide vital regulatory updates presented by panels of globally-recognized AML/CTF experts. These highly informative presentations give you practical takeaways covering areas such as emerging financial crimes and creating meaningful public-private partnerships. Walk away with new insight to ensure your AML/CTF program exceeds regulatory expectations.

Workshops
This year’s workshop track is packed with practical information and interactive exercises in each and every session, all led by experts representing organizations around the world. Learn ready-to-use techniques for your investigations department, tools to integrate FCPA into your existing AML program and best practices for managing your FIU through these hands-on sessions.

Financial Institution Case Study Analysis [NEW TRACK]
For the first time in its history, the ACAMS Annual conference features a track solely dedicated to the detailed analysis of real-life case studies. Hear international thought leaders and government officials dissect recent incidents regarding alternative currency, trade finance and mortgage fraud–and share best practices and real-world techniques to apply to your own program.

Focus on Audit [NEW TRACK]
In response the increased use of independent audit findings in regulatory scrutiny, the following audit-focused sessions have been added to the program, providing you with the most effective tools and techniques for conducting AML audits, fortifying your current practices and efficiently testing your existing program.  Learn directly from experienced presenters how to overcome the critical challenges directly affecting the AML audit professional.

Financial Institution Discussion Group
Effective training and peer-to-peer information sharing are pivotal elements of any AML/CTF program.  Join these intimate bank-specific discussion groups to connect with your peers and get the latest intelligence on how to fortify your current AML/CTF program against financial crimes.

Government Focus Discussion Groups
As a government official, training and partnerships are key elements in preventing criminal activity. The goal of these discussion groups is to provide a platform for government and industry professionals to exchange ideas, share best practices and forge valuable new alliances with peers. Join skilled moderators as they lead compelling and ground-breaking discussions.

Regional Focus Discussion Groups
Join expert moderators as they assess the potential risks of—and innovative approaches to—conducting business in international jurisdictions. Get updated information on the latest criminal schemes affecting your international business and learn how extraterritorial and local laws can potentially change the way your department operates.

Non-Depository Institutions Discussion Groups
Targeted exclusively to securities, insurance and MSBs, these discussion groups provide a thorough update on the latest challenges affecting non-depository institutions. Participants will have the opportunity to interact with industry peers and expert moderators, expanding your knowledge and increasing your network of AML/CTF contacts.

AML Knowledge Networking [NEW TRACK]
These sessions are a unique combination of networking and active learning. Take advantage of hands-on trainings to expand your knowledge and forge new relationships; while tackling some of the most challenging issues affecting the AML professional.

IMPORTANT DATES:

If you’re planning to attend, here are some important dates to consider:

• May 31 $300 early bird expires
• June 30 $200 early bird expires
• July 26 Speed Networking registration opens
• July 30 $100 early bird expires
• Aug 1 Entries due for Awards
• Aug 15 Finalists for Awards announced
• Aug 17 Hotel group rate expires
• Sept 7 Materials available online
• Sept 13 Registration bar code distribution via email
• Sept 18 Pre-conference workshops
• Sept 18 CAMS Exam Prep Seminar
• Sept 19 Main conference starts
• Sept 20 Award ceremony
• Sept 20 10th Anniversary Gala Networking Reception

Stay tuned for more reporting in the days leading up to the conference. Las Vegas – September 19-21, 2011 – See you there!

Guest post by Joseph Gulino, DRRT Investigations, Governance & Compliance. Miami, Florida

First published by the ABA International Section of Law, January 2011, Volume 6, Issue 4.

MORRISON V. NATIONAL AUSTRALIA BANK: EFFECTS AND FUTURE PERSPECTIVES

With the decision in Morrison v. National Australia Bank (NAB), the U.S. Supreme Court drastically changed the landscape of investor protection, ruling that the securities laws of the United States do not apply to non-U.S. investors who purchased shares in foreign companies outside the United States. Therefore, these investors will need to seek other jurisdictions abroad as their only chance to recoup losses sustained as a direct result of violations of (U.S.) securities laws, while non-U.S. companies are trying to reassure themselves that the “terrifying” threat of class actions no longer exists.

The NAB decision is important and unprecedented, does not take into account previous decisions of courts of appeals and the test that was applied for over 40 years (the “conduct & effects test”), and will change the protection of global investors by reducing the number of securities class actions filed in the United States, the (so far) most effective – and maybe most abused – system for investor protection in the world. The decision has already resulted in dramatic changes to the investor protection system in the United States, and will continue to have such effect in the future, as courts expand and interpret the Supreme Court ruling. Hence, the basic test for the availability of the U.S. investor protection system is whether the stock in question is traded on a U.S. exchange. The repercussions, however, are numerous.

An interesting twist to this limitation of investor rights is the continued jurisdiction of the SEC over U.S. and non-U.S. companies to pursue enforcement and disgorgement actions in the United States beyond what private investors could do. This is a result of the Dodd-Frank Act of 2010, with a concurrent study on the effect of such “extensive” jurisdiction. The outcome of such study and of the intense lobbying efforts of U.S.-based investors might well be a reversal of NAB or a reinstatement of at least the “effects test” in favor of U.S. based investors, but leaves foreign investors (who provide significant capital investments in U.S. companies) without substantial protection in the United States.

Continue reading the complete article by clicking this link to open in PDF format.

Conclusion

In sum, there will be, in the meantime, a proliferation of litigation in the world where similar issues will be tried in different countries with varying results. There will be different levels of investor protection in different countries. European investors will request more protection, which will, perhaps, be a further motivation for class actions in Europe and for the protection of investors.

There are two recent examples: the EADS and Fortis (now Ageas) cases. Investor Foundations have been established in the Netherlands to bring claims against these two companies and will act on behalf of investors worldwide. These are cases following the example in Royal Dutch Shell, one of the first cases to use Dutch law to protect the interests of aggrieved investors.
Alternatives exist, and we must be vigilant in searching for them and in pursuing all possible means of loss recovery for injured shareholders. Cooperation among law firms with specialties in specific jurisdictions will also be necessary as well to provide the top level of investor protection to affected investors.

And so we wonder: what is happening to the proposals for an introduction of class actions in countries like France and Italy? Will international investors finally request EU-wide jurisdiction or class actions to decide the disputes of shareholders? Meanwhile, we must act, must make decisions and protect investments using the resources that we have now and above all, lawyers must have the capacity to advise on the proposals, opportunities, and drawbacks for all investors.

For my blog readers with business or personal concerns in Dubai International Financial Center (DIFC), I am pleased to report that my law firm is now positioned to offer you legal representation in the DIFC; having officially established our law offices at Office #31, Level 3, Gate Village Building 4.

We are particularly pleased that Arti Sangar, a seasoned attorney in international commercial dispute-resolution and arbitration matters, will be serving as our Partner in Charge of the Dubai office. In addition to her extensive experience in commercial disputes, she offers savvy counsel in transactional matters pertaining to private equity investments, corporate-restructuring, M&A, major real estate development projects, and employment issues. She is enrolled as legal practitioner in Australia, India, and Dubai International Financial Center. She holds law degrees from universities in Australia and India as well as Masters of Defense Studies, Panjab University, Chandigarh, India and is a Certified Anti-Money Laundering Specialist (CAMS). Learn more about Arti’s experience here…

Rounding out the DIFC practice is partner Carlos F. Gonzalez, fluent in Arabic, Spanish and English, and myself.

Together, our DIFC practice will focus on the following areas of law:

• project finance,
• trade,
• customs,
• financial,
• commercial and corporate transactions and governance,
• foreign government relations,
• tax planning,
• immigration,
• litigation, and arbitration.

Why Dubai International Financial Center?

Our decision to stay and grow in Dubai was simple: Having an office in DIFC will make it easy and convenient for clients to contact Diaz Reus about business, trade, government relations, and investment matters. We possess the ability to provide clients with seamless representation, from starting or growing their physical presence in Dubai and throughout the MENA region, to quickly and efficiently resolving business related disputes within the DIFC’s world-class facilities. As the leading business hub in the United Arab Emirates, DIFC supports economic development in the region by providing the needed legal and business services, as well as physical infrastructure. It is considered a global gateway for finance, capital and investment.

DIFC focuses on banking services (investment banking, corporate banking and private banking); capital markets (equity, debt instruments, derivatives and commodity trading); asset management and fund registration (fund registration, fund administration and fund management); reinsurance; Islamic finance and back office operations. One of the key subsidiaries of the center is NASDAQ Dubai (formerly Dubai International Financial Exchange (DIFX).

With the addition of our Dubai office we are now strategically placed in ten global offices. They include: Miami and Orlando, Florida; Shanghai, China; Mexico City, Mexico; Frankfurt, Germany; Caracas, Venezuela; Bogota, Colombia; and Buenos Aires, Argentina, as well as an affiliate office in Sao Paulo, Brazil.

So, when you’re in the neighborhood, stop by and say hello. We look forward to getting to know you and serving your legal needs where ever they may be throughout the world.

For more information, visit our law firm’s website at www.diazreus.com

Diaz Reus
Office Number: 31, Level 3, Gate Village Building 4
PO Box 113355, Dubai International Financial Centre
Dubai, United Arab Emirates
T  +971 (0) 4 4019809
F +305-375-8050

Ten years after Banco Latino, S.A.C.A. sued Milagros Cisneros, a member of the prominent Venezuelan family and her now defunct company, Explotaciones Mineras de Venezuela, C.A. (“Exmivenca”), to collect on a multi-million dollar loan, the case ended with a bang.  After three days of a jury trial, Cisneros’ attorneys, Thomas G. Schultz and Bryan T. West of Miami-based Tew Cardenas, LLP conceded liability.  After hearing testimony from the bank’s witnesses, Mr. Schultz announced to Miami-Dade County Circuit Court Judge Maxine Cohen Lando that Cisneros would agree to the entry of a $9,254,066.51 judgment against her.

The Complaint, filed in February 1999, alleged that Ms. Cisneros, as sole shareholder of Exmivenca, entered into an agreement for one year with the bank to establish a trade credit facility to finance purchases from U.S. suppliers for export to Venezuela. In order to further induce the bank to extend loans and advances of funds, Ms. Cisneros unconditionally and absolutely guaranteed payment of all obligations or liability of Exmivenca to the bank.

In October 1993, Exmivenca requested to renew the credit facility for another year subject to the availability of funds, and gave the bank a promissory note in the amount of $2.5 million.  Then Exmivenca obtained $ 1,188,739.33. in additional loans and advances from the bank under the credit facility from October to December of 1993.

Exmivenca defaulted on the loans by failing to pay the bank the outstanding principal and interest due under the promissory note upon maturity.

Gary E. Davidson, and Carlos F. Gonzalez and I represented Banco Latino S.A.C.A.  To say that we were very pleased with the result of the jury trial, especially because Ms. Cisneros agreed to pay the full amount claimed by the bank, would be entirely accurate.

This is a resounding victory for Venezuela’s banking authorities. Trial lawyers always want to hear a jury return a verdict in their favor, but the victory is even sweeter when your opponent surrenders before you have even finished your case.  Cisneros’ concession only confirmed the strength of our case.

Davidson offered this quote to the media, “although there is a great deal of resentment against banks in the current environment, we were confident that when presented with the evidence establishing that Cisneros guaranteed the loans made to her company, the jury would return a verdict in our favor.”  And, Gonzalez agreed, noting that, “In the end, it was Cisneros’ own lawyers who realized that the case could not be won by the Cisneros family.”