Protecting & Growing Your Business

Governor Andrew Cuomo announced that effective Wednesday, May 19, 2021, New York State will adopt the Centers for Disease Control and Prevention’s (CDC’s) Interim Public Health Recommendations for Fully Vaccinated People for most businesses and public settings.

Annual spending worldwide on cloud services is expected to increase by 23% in 2021, according to a recent article in The Wall Street Journal, which cites a forecast by IT research and consulting firm Gartner Inc. Since the beginning of the COVID-19 pandemic, businesses have shifted to cloud-based services to support remote work, but businesses are also using the shift in attitudes toward cloud services to move more complex IT needs to the cloud. The article reasons that the push to use cloud services may also be due to the hybrid workplace model that many businesses are adopting, where workers can work both in the office and from home. This model requires that remote workers have access to critical software and infrastructure.

The US Department of Labor (DOL) recently announced guidance for plan sponsors, plan fiduciaries, recordkeepers and plan participants on cybersecurity best practices. The guidance focuses on three areas: (1) tips for hiring a service provider; (2) cybersecurity program best practices; and (3) online security tips. In this post, we will focus on the DOL’s tips for plan sponsors and plan fiduciaries in selecting a service provider.

New York Gov. Andrew Cuomo, New Jersey Gov. Phil Murphy, and Connecticut Gov. Ned Lamont jointly announced on May 3 a significant easing of the remaining capacity restrictions on business operations related to the COVID-19 pandemic.

The State of New York has enacted a new law that should ease the transition away from US dollar LIBOR for legacy financial contracts that are governed by New York law but do not contain modern benchmark fallback provisions. A similar federal law is in the works, which if passed would apply nationwide.

The UK Prudential Regulation Authority (PRA) published a policy statement (PS7/21) and a supervisory statement (SS2/21) on clarifying and modernizing regulatory expectations of outsourcing and third-party risk management on March 29. The expectations in PS7/21 and SS2/21 are relevant to banks, PRA-designated investment firms, insurers, and branches of overseas banks and insurers and apply not just to “outsourcing” but also non-outsourcing material or high-risk service arrangements. The expectations apply at a legal entity level rather than at a group level (save for expectations on intragroup arrangements).

Expectations for positive turns in many spheres of life, both commercial and social, have sprung at the arrival of COVID-19 vaccination. One of the popular questions is whether vaccination could change the current preference for working remotely (even as we see gradual easing of the remote work requirement in Russia) or whether it would be required as a condition to work in office. In this LawFlash we address whether an employer can require employees to vaccinate, whether the employee can seek to discontinue remote work following vaccination, and related matters.

Senator Chris Van Hollen (D-MD) introduced a Congressional Review Act (CRA) resolution of disapproval on March 26 that would invalidate the Office of the Comptroller of the Currency’s (OCC’s) true lender final rule.

With special purpose acquisition companies increasingly being used in initial public offerings and the commercial insurance market continuing to harden, captive insurance could be a solution for offering directors and officers protection against increased shareholder scrutiny and resulting derivative lawsuits.

Following the enactment of the Economic Aid to Hard-Hit Small Businesses, Nonprofits, and Venues Act in December 2020, the Biden administration announced several changes to the Paycheck Protection Program on February 22, 2021 aimed at providing greater access to funds for underserved businesses and communities. This LawFlash discusses these recent changes, highlighting key provisions and guidance for businesses seeking to participate in the program before it officially expires on March 31, 2021 (pending any additional legislation from Congress).

Mexico’s Federal Consumer Protection Agency (Procuraduría Federal del Consumidor (PROFECO)) on February 26 announced its new voluntary Ecommerce Ethics Code (Código de Ética en Materia de Comercio Electrónico), which may be adopted by entities doing online business in Mexico. Although the adoption of the Ecommerce Ethics Code is voluntary, it signals the authority’s baseline expectation for market participants, and sets forth the parameters and guidelines for suppliers of goods and services that operate through digital platforms or virtual salesrooms.

The European Commission adopted a roadmap for the European Union's digital economy until 2030 on February 10, 2021.

Virginia has become the second state in the United States to pass a comprehensive data privacy law after the Virginia Consumer Data Protection Act (CDPA) passed both houses of Virginia’s state legislature in February with overwhelming bipartisan support and was promptly signed into law by Virginia Governor Ralph Northam. The CDPA has a number of key similarities to the California Consumer Privacy Act (CCPA), the California Privacy Rights Act (CPRA), which comes into effect in 2023, and the European Union’s General Data Protection Regulation (GDPR), and it follows a similar framework with proposed data privacy bills pending in other statehouses.

Cybersecurity has earned its place at the top of organizations’ risk concerns during the COVID-19 pandemic. Remote working, an array of communication solutions and hardware being used by organizations, and the accelerated leveraging of cloud-based outsourcing solutions have increased the chain of potential vulnerabilities to cyberattacks.

The German Act on the Further Development of the Restructuring and Insolvency Law (Sanierungs- und Insolvenzrechtsfortentwicklungsgesetz – SanInsFoG) took effect on January 1, 2021, transforming the European Restructuring Directive of June 20, 2019 ((EU) 2019/1023) and introducing a self-administrated restructuring option outside the standard insolvency proceeding.

Virginia employers should take note of how the new COVID-19 permanent standard differs from last summer’s temporary standard and ensure that training and policies are updated accordingly.

Recent proposed changes to the Singapore Electronic Transactions Act would allow for the digitalization of cross-border trade documents and other important legal documents.

Coinciding with the end of the UK-EU Brexit transition period, the United Kingdom has dramatically reduced the scope of DAC 6 reporting obligations in the United Kingdom.

The US Securities and Exchange Commission has approved New York Stock Exchange rule changes that will grant the exchange discretion to allow companies to raise money by selling common shares in registered direct offerings, increasing the number of alternatives to traditional initial public offerings.

The coronavirus (COVID-19) pandemic constituted a “natural disaster” under a contract’s force majeure provision, Judge Denise Cote of the US District Court for the Southern District of New York recently ruled in JN Contemporary Art LLC v. Phillips Auctioneers LLC, No. 20-cv-4370, 2020 WL 7405262 (SDNY Dec. 16, 2020). This decision appears to be one of the first by a federal judge concerning such contractual language. Other courts may look to Judge Cote’s lengthy analysis of the meaning of the phrase “natural disaster” in this context when interpreting similar contractual language.

The Brexit “transition period” will come to an end on 31 December 2020, and from 1 January 2021, the United Kingdom will cease to follow EU rules. This brings significant changes to design law in the United Kingdom and European Union, relevant to all owners of Registered

Morgan Lewis partner Sheryl Orr spoke with Law360 about the coronavirus (COVID-19) pandemic’s impact on the deal-making process. In terms of how videoconferencing is helping get mergers and acquisitions done, Sheryl said, "It's much more similar to being in the room."

The Internal Revenue Service recently released Revenue Ruling 2020-27 and Revenue Procedure 2020-51, which provide guidance on the deductibility of certain expenses paid or incurred in a taxpayer’s business using loan proceeds from a “covered loan” provided under the CARES Act’s Paycheck Protection Program.

As the number of coronavirus (COVID-19) cases continue to rise throughout the country and the impact of the pandemic on employers continues unabated, many employers and employees are exploring not only how to work remotely, but whether and where to work remotely. Remote work continues to be required or strongly encouraged in some areas, and remote work may also appeal to employers as they respond to employee concerns about in-person work and consider potential cost savings. However, businesses that either ask or permit employees to work remotely on a long-term basis should be cognizant of the numerous potential legal implications, as well as business concerns that these arrangements can create.

The Small Business Administration recently announced new questionnaires for purposes of gathering information from borrowers related to the economic necessity certification under the Paycheck Protection Program.

With only weeks until the US presidential administration changes hands, companies and consumers alike are anticipating what a Biden presidency will mean for consumer financial protection and for the Consumer Financial Protection Bureau (CFPB), the agency charged with overseeing it. Partner Robin Nunn and of counsel Eamonn Moran outline some of the changes that may lie ahead.

The shock, turmoil, uncertainty, and lack of visibility that followed the immediate onset of the coronavirus (COVID-19) pandemic in March 2020 were significant factors accounting for why shareholder activism was relatively subdued during the 2020 proxy season. However, given that activist investors have now had more than eight months to acquire their “sea legs” and recalibrate their playbook for the evolving “new normal,” it is likely that, even as the COVID-19 pandemic shows no signs of abating, activist investors will be less reluctant to wage an activism campaign in whatever “new normal” we find ourselves in during the 2021 proxy season.

With the US Food and Drug Administration’s first issuance of an Emergency Use Authorization for a COVID-19 vaccine, employers should consider the implications a new vaccine will have on their workplaces. Although much remains speculative, employers can look to the regulation of current vaccines as the basis for their preliminary planning. Those who begin to plan now will be better positioned to navigate the various risks and issues involved.

Morgan Lewis of counsel Eamonn Moran spoke with Bloomberg Law for an article about the US Consumer Financial Protection Bureau’s final debt collection rule. In the piece, Eamonn noted that the appellate courts and possibly the US Supreme Court may need to clarify what constitutes meaningful attorney involvement due to the lack of uniform standard.

The Internal Revenue Service (IRS) has issued Revenue Procedure 2020-44 (the Revenue Procedure) providing interim guidance for taxpayers moving away from Interbank Offered Rates (IBORs) to fallback provisions issued by the Alternative Reference Rates Committee (ARRC) or the International Swaps and Derivatives Association (ISDA). Here is why the guidance, though fairly constrained, is welcome news for several reasons.

Economic turmoil as a result of political instability and from the coronavirus (COVID-19) pandemic, together with unallocated capital and low interest rates, means that non-core, but potentially profitable, operations or underperforming distressed assets are increasingly available across Europe. Countries across the region have also adapted insolvency laws to facilitate transactions and support economic activity. This first edition of our Sovereign Wealth Funds Update discusses the prevailing conditions, with particular reference to the United Kingdom, France, and Germany, including key considerations for sovereign wealth funds seeking to engage in distressed M&A transactions.

Morgan Lewis partners Matthew Schernecke and Kristen Campana authored a Bloomberg Law article about the concessions lenders have made in exchange for additional credit support, capital contributed, and/or additional covenants amid the coronavirus (COVID-19) pandemic.

Section 1071 of the Dodd-Frank Act amended the Equal Credit Opportunity Act (ECOA) to require financial institutions to compile, maintain, and submit to the Consumer Financial Protection Bureau (CFPB or Bureau) certain data on applications for credit for women-owned, minority-owned, and small businesses.

Partners Daniel Tehrani and Robin Nunn and associate Bryan Woll authored a Law360 Expert Analysis about a new antifraud initiative of the US Department of Treasury’s Financial Crimes Enforcement Network (FinCEN).

Partner Christine Lombardo was quoted in the first of a two-part series by Hedge Fund Law Report, which looks at the new US Securities and Exchange Commission (SEC) Marketing Rule “through the eyes of private fund managers.” The article examines important changes that have been made to the amendments that were originally proposed.

Morgan Lewis partner Greg Parks spoke with Compliance Week for an article about Virginia’s Consumer Data Protection Act.

Partner Cosimo Zavaglia spoke with Law360 about the potential implications of a US Supreme Court case regarding state income taxes imposed on nonresident workers who are working from home amid the COVID-19 pandemic.

Morgan Lewis partners and co-heads of the firm’s privacy and cybersecurity practice Mark Krotoski and Reece Hirsch spoke with Law360 about the major privacy and cybersecurity developments that occurred in 2020. In the article, Reece discussed the California Consumer Privacy Act and Mark outlined the oral arguments in US Supreme Court cases that addressed robocalls.

Morgan Lewis partner Mark Krotoski spoke with Law360 about a cybersecurity and privacy case before the US Supreme Court that seeks to resolve a longstanding circuit split about the circumstances under which companies, organizations, and government agencies can enforce access restrictions on information and data under the Computer Fraud and Abuse Act.

The shock, turmoil, uncertainty, and lack of visibility that followed the immediate onset of the coronavirus (COVID-19) pandemic in March 2020 were significant factors accounting for why shareholder activism was relatively subdued during the 2020 proxy season.

Morgan Lewis partner Omar Shah was quoted in an article by Global Competition Review after the UK’s Competition and Markets Authority (CMA) on 6 November published draft updates to two of its merger guidance documents in preparation for the end of the Brexit Transition Period on 31 December 2020.

Morgan Lewis of counsel Eamonn Moran spoke with USA Today about the US Consumer Financial Protection Bureau’s final rule regarding overdue debt collections. In the article, he discussed the rule’s implications for consumers.