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Financial Services & Public Policy Alert June 2009 K&L Gates is a global law firm with lawyers in 33 offices located in North America, Europe, Asia and the Middle East, and represents numerous GLOBAL 500, FORTUNE 100, and FTSE 100 corporations, in addition to growth and middle market companies, entrepreneurs, capital market participants and public sector entities. For more information, visit www.klgates.com. The Obama Plan for Financial Services Regulatory Reform: A New Foundation or An Ambitious Renovation? The Obama Administration unveiled the much-anticipated proposal for reforming how the financial services industry is regulated on June 17, 2009. When enacted, these reforms, which are billed as “a new foundation for financial regulation and supervision,” will have significant consequences for the financial services industry. However, rather than the comprehensive restructuring of the current patchwork regulatory framework that has been recommended by commentators in recent months, the proposal aims to fill regulatory gaps by granting new powers to existing regulators and creating new regulators. These reforms will have impact across the full spectrum of capital markets issues. Therefore, many K&L Gates partners working together in an interdisciplinary Capital Markets Reform Group have provided their insights for this alert. Overview of the Obama Administration Proposal In summary, the proposal would: • Grant the Board of Governors of the Federal Reserve System (“Federal Reserve”) the power to supervise all large financial institutions that pose systemic risk, even those that do not own banks. These large, interconnected firms (Tier 1 financial holding companies or “Tier 1 FHCs”) as well as their parents and subsidiaries would be subject to heightened capital, liquidity, and risk management standards. The Federal Reserve would also gain the power to supervise systemically important payment, clearing, and settlement systems. • Create a new Financial Services Oversight Council (“Council”) having the power to gather information from any financial firm in order to identify emerging systemic risks. In addition, the proposal would provide the Department of Treasury (“Treasury”) with resolution authority over non-bank financial institutions that pose systemic risk. • Consolidate the Office of the Comptroller of the Currency (“OCC”) and the Office of Thrift Supervision (“OTS”) into a single regulator, the National Bank Supervisor (“NBS”), eliminate the federal thrift charter, and remove obstacles to interstate branching by national and state banks. • Create a new Consumer Financial Protection Agency (“CFPA”) to regulate all financial products and services and the institutions that provide them. It would be an independent agency with rulemaking, supervisory, examination, and enforcement authority under fair lending and consumer financial protection laws. The CFPA would require that disclosure forms are clear and that consumers were offered simple and fair financial products. Financial Services & Public Policy Alert • Require advisers to hedge funds and private pools of capital to register with the Securities and Exchange Commission (“SEC”) and impose recordkeeping, disclosure, and reporting requirements on the funds they advise. • Keep the Commodity Futures Trading Commission (“CFTC”) and SEC as separate entities, but harmonize the regulation of futures and securities by creating uniform principles of regulation, and subject all over-the-counter (“OTC”) derivatives to comprehensive regulation. • Address the breakdown of the securitization markets by requiring loan originators to retain a five percent interest in the risk of securitized credit exposures, imposing reporting requirements on issuers of asset-backed securities, and reducing regulator reliance on credit rating agencies. • Establish an Office of National Insurance (“ONI”) within the Treasury to gather information and coordinate policy in the insurance sector. • Encourage the SEC to reform the money market fund industry, in consultation with the President’s Working Group on Financial Markets. Context of Proposal The proposed reforms would have a significant impact on the financial services industry. The Administration’s proposal, however, is more moderate than many expected, particularly in the context of recent financial services reform literature which has trended towards recommending increasingly more extensive regulatory restructuring. Preliminary reports, such as the U.S. Chamber of Commerce Commission on the Regulation of U.S. Capital Markets in the 21st Century Report and the Bloomberg/Schumer Sustaining New York’s and the US’ Global Financial Services Leadership Report, had recommended some level of modernization to address the overlaps and gaps in the current financial markets regulatory system. Released in March 2008, the Department of Treasury Blueprint for a Modernized Financial Regulatory Structure, among other things, significantly called for the merger of the CFTC and the SEC, which the Administration did not propose. On January 15, 2009, the Group of Thirty issued a report entitled Financial Reform: A Framework for Financial Stability. The report, primarily authored by former Federal Reserve Chairman Paul Volcker, one of President Obama’s economic advisors and Chairman of the President’s Economic Recovery Advisory Board, recommended a massive, globally coordinated restructuring of the legislative and regulatory system that governs the financial services industry (see K&L Gates Alert Group of Thirty Issues Roadmap for Financial Reforms). On May 26, 2009, the Committee on Capital Markets Regulation released The Global Financial Crisis: A Plan for Regulatory Reform. The Committee recommended creating a new agency, similar to the U.K.’s Financial Services Authority, to regulate all aspects of the financial system. The relatively moderate approach taken by the Administration provides important insights into the development of the proposal and the road ahead. The Administration’s proposal was developed with a significant amount of input from key Members of Congress, including House Financial Services Chairman Barney Frank (D-MA) and Senate Banking Committee Chairman Chris Dodd (D-CT), and other stakeholders. As such, the Administration’s proposal largely represents a consensus on the general form the financial services reforms should take. However, the Administration’s approach may pose strategic and political difficulties moving forward. In the legislative process, concessions are essential to negotiation. In recognition of this, legislative proposals often contain controversial but extraneous provisions which are “given up” in order to gain the support of key interest groups, eventually ending with the desired outcome. By making relatively moderate proposals, it is not clear how close the final enactment will be to the desired form. At present, the key targets include empowering the Federal Reserve as the systemic risk regulator and the proposed CFPA, recommendations which interest groups have criticized in the days since the proposal’s release. Regulation of Systemic Risk June 2009 2 Financial Services & Public Policy Alert The proposal recommends creating a Financial Services Oversight Council, a concept similar to the one proposed by the Federal Deposit Insurance Corporation (“FDIC”) Chairman Sheila Bair and SEC Chairman Mary Schapiro. The Council would consist of various Administration officials, to facilitate information sharing and coordination, identify emerging risks, advise the Federal Reserve on systemic risk, and resolve jurisdictional disputes between regulators. The proposal would provide the Federal Reserve with the authority to designate and supervise any systemically significant financial institutions as Tier 1 FHCs, without regard to whether such organizations control depository institutions. Although any proposed legislation would include parameters for the Federal Reserve to use when making such a designation, this proposal still represents unprecedented authority for a regulator to deem an organization subject to a new regulatory regime. The Tier 1 FHCs would be subject to an even greater level of scrutiny, including stringent capital and prudential requirements. Moreover, consolidated supervision of the Tier 1 FHCs would extend to their parents and subsidiaries, whether regulated or unregulated, U.S. or foreign domiciled. This could lead to a competitive imbalance, where market participants interpret the heightened supervision and oversight of these entities as making them safer than non-Tier 1 FHCs. Depository Institutions The proposal recommends reforming regulation and supervision of banks and thrifts by eliminating the OTS and consolidating supervision and regulation of national banks and federal thrifts under a new regulator, the NBS. Although the proposal is unclear on this point, it appears that the NBS would essentially be a reconstituted OCC. The proposal does not address the issue of which regulator would regulate state savings banks currently regulated by the OTS. The FDIC would remain the regulator of state non-member banks, while the Federal Reserve would be the regulator for state member banks. Thus, the proposal leaves in place the nation’s dual banking system, although it promises to blur the distinctions between the various charters to avoid regulator shopping. Similarly, the authority of the National Credit Union Administration to regulate credit unions would remain unchanged. Holding company supervision would also be consolidated into a single regulator, the Federal Reserve. Thus, the former distinctions between thrift holding companies and bank holding companies are proposed to be eliminated. The proposal would also eliminate all exceptions to the definition of “bank” for purposes of determining which companies are subject to bank holding company regulation, forcing all commercial firms that currently operate banks to cease doing so. This includes industrial loan companies, unitary thrift holding companies, and even retailers that operate credit card banks, many of which played little role in the financial crisis. Trust companies that have FDIC-insured deposits would also be considered banks for bank holding company purposes, but the proposal is silent on the status of trust companies that do not accept FDIC-insured deposits. In addition, all bank holding companies would be subject to capital and prudential requirements more stringent than those currently in place, and Tier 1 FHCs would be subject to an even greater level of scrutiny. The proposal also echoes prior proposals that call for granting the Treasury, FDIC, and Federal Reserve new resolution powers over systemically significant financial organizations. Consumer Financial Protection Agency The proposal recommends the creation of the CFPA, a new federal agency responsible for protecting consumers in the financial products and services markets. The concept of the CFPA was first proposed by Elizabeth Warren, the chair of the TARP Congressional Oversight Panel, and has gained momentum among policymakers in recent months (see K&L Gates Alert Fifty Ways to Need a Lawyer: Congress Proposes to Establish Financial Services Watchdog Agency and the upcoming K&L Gates Alert on the proposed CFPA). Characterizing the current regulatory regime as “fragmented,” the CFPA would have extensive regulatory, supervisory, and enforcement authority over all financial products and services providers, except for those investment products and services that the SEC or CFTC already regulates. The proposal calls for providing the CFPA with exclusive authority to promulgate and interpret June 2009 3 Financial Services & Public Policy Alert regulations under existing and future consumer financial services and fair lending statutes, suggesting that the authority of existing federal financial regulators would be scaled back to some extent. In addition, the new agency would have the authority to ban unfair and deceptive acts and practices. would provide to the Federal Reserve to assess whether the fund or fund complex is so large, highly leveraged, or interconnected as to pose a threat to financial stability. Such firms, deemed “Tier 1 FHCs,” would be subject to, among other things, higher capital, liquidity, and risk management standards. Under the proposal, the CFPA would do it all, from requiring mortgage companies to offer a straightforward “plain vanilla” mortgage product, to enforcing fair lending laws and the Community Reinvestment Act, to requiring a duty of “reasonableness” in communications and transparency in mortgage loan disclosures. In fact, there is hardly any area of financial regulation that the CFPA would not affect. Although the depth and breadth of the agency’s proposed authority and responsibilities makes it unlikely that all of the recommendations will actually become law, it is indicative of the clear appetite for a new consumer protection regime. If implemented, these initiatives could have a farreaching impact on the managers of private pools of capital. For example, these initiatives could require U.S. and non-U.S. domiciled advisers to certain non-U.S. domiciled private investment funds to register under the Advisers Act. Non-U.S. domiciled advisers to non-U.S. domiciled funds could be subject to these requirements, if such funds themselves rely on an exemption from registration under the Company Act. Also, if a U.S. or non-U.S. domiciled adviser (which shares personnel and obtains other services from non-U.S. regulated affiliates) registers under the Advisers Act, then the issue would be presented as to the extent to which the requirements of the Advisers Act would apply to the non-U.S. operations, clients or accounts managed or serviced by such non-U.S. regulated affiliates. Private Investment Fund Advisers The proposal recommends that advisers to hedge funds and other private pools of capital, including advisers to private equity funds and venture capital funds, whose assets under management exceed some unspecified “modest” threshold, be required to register with the SEC under the Investment Advisers Act of 1940 (“Advisers Act”). Although not specified in the proposal, “private pools of capital” are likely to be identified in draft implementing legislation as including investment funds that rely upon the exemptions from registration under the Investment Company Act of 1940 (“Company Act”) provided by Sections 3(c)(1) and 3(c)(7) thereunder. It is of interest that the proposal does not call for the outright elimination of the “private adviser exemption” under Section 203(b)(3) of the Advisers Act as some have suggested. Private investment funds managed by these SECregistered advisers would be subject to regulatory reporting requirements, recordkeeping requirements, and mandatory disclosure obligations to investors, creditors, and counterparties. The proposal would require the investment funds to report on a confidential basis the amount of assets under management, borrowings, off-balance sheet exposures, and other information that the SEC The proposal also emphasizes the need for international regulation of hedge funds and calls for the global implementation of the G-20 commitments for registration of hedge funds (or their managers) and enhanced disclosure requirements. Securitization Transparency and Credit Ratings The proposal strives to bring the securitization markets into a coherent regulatory framework in order to improve transparency and market discipline. These efforts include initiatives to improve and standardize disclosure practices by originators, underwriters, and credit rating agencies. New requirements would help ensure that investors and credit rating agencies have access to more information about the assets underlying a securitization transaction. In particular, issuers of asset-backed securities (“ABS”) would be required to disclose loan-level data, broken down by loan broker or originator. June 2009 4 Financial Services & Public Policy Alert In addition, the SEC would have clear authority to require robust, ongoing reporting by ABS issuers. Under current law, a registered offering of ABS triggers a reporting obligation, but the reporting obligation is normally suspended because of an exception in the law. Implementing the proposal may involve limiting or eliminating that exception. With respect to secondary market trading, the Trade Reporting and Compliance Engine (also known as “TRACE”), the standard electronic trade reporting database for corporate bonds, would include ABS. This would enhance price discovery, but it may impair liquidity and the willingness of financial intermediaries to make a market in certain ABS. The proposal also calls for strengthening the regulation of credit rating agencies. Credit rating agencies would be required to have robust policies and procedures that manage and disclose conflicts of interest, differentiate between structured and other products, and otherwise promote the integrity of the ratings process. Regulators would also be required to reduce their reliance on credit ratings in regulations and supervisory practices. Such a change would impact net capital rules for brokerdealers, risk-based capital requirements for banks, eligibility requirements for securities that can be owned by money market mutual funds, and eligibility to register certain debt securities using a shelf registration statement. To the extent risk-based regulatory capital rules would continue to rely on credit ratings, those rules would account for the risk of structured credit products, including the concentrated systematic risk of senior tranches and re-securitizations and the risk of exposures held in highly leveraged off-balance sheet vehicles. These changes would be closely tied to the proposed increases in regulatory capital requirements on highly rated ABS. While significant new legislation will be required to implement some of the proposal’s securitization changes, most of the proposal depends on the continuation of existing regulatory and industry initiatives and, in some cases, changes to accounting rules. Realigning Risks The proposal lays some of the responsibility for the financial crisis on securitization because, by breaking the link between borrowers and lenders, it contributed to an erosion of lending standards that resulted in a market failure. The proposed solution is to require loan originators or sponsors to retain five percent of the credit risk of securitized exposures, which they would not be able to hedge. This requirement may effectively prevent non-bank mortgage bankers from providing housing credit, which currently benefits consumers by providing competition to banks. Such mortgage bankers generally do not have capitalization to permit retaining significant securitization risk on their balance sheets, and raising additional equity capital in the current markets would be difficult. With respect to banks, the proposal leaves it to the federal banking agencies to apply the retention requirement to securitization sponsors rather than loan originators. At a time when the industry and the Administration acknowledge the need to restart securitizations, this retention requirement may further slow recovery in the securitization market. Additional proposed regulations would align the compensation of market participants with the longterm performance of the loans underlying securitization transactions. Much work will need to be done to find fair and sensible ways to limit, or claw back, compensation based on poor performance of the loans. It may often be difficult to determine whether poor performance is attributable to a change in market conditions, changed borrower circumstances, or just poor underwriting. Given the range of participants in the process, from loan brokers to originators to securities firms, each with its own compensation conventions and structures and many subject to different regulatory regimes, developing consistent standards and approaches on this issue may prove difficult. Commodities, Futures, and Derivatives As expected, the CFTC would not be merged into the SEC, but the proposal does call for harmonizing how the two agencies regulate. Specifically, the CFTC and SEC would build a common foundation for market regulation by agreeing on principles that are significantly more precise than the current “core principles” that were enacted by the Commodity Futures Modernization Act of 2000 (see upcoming K&L Gates Alert Can We All Get Along? – June 2009 5 Financial Services & Public Policy Alert Administration Urges Futures and Securities Harmonization). The proposal offers few, if any, details of how CFTC and SEC regulation might reach a state of harmonic nirvana. The CFTC and SEC are to complete a report to Congress by September 30, 2009 identifying conflicts and recommending how to eliminate them. If they cannot agree, remaining disputes will be referred to the Council, which will have 6 months to report its recommendations to Congress. Conflicts yet to be sorted out include identifying which products each agency would regulate; determining how to treat derivatives related to debt or equity instruments or various economic indices, which are now deemed to be “excluded commodities”; regulating hedge fund advisers currently registered with the CFTC as commodity pool operators or commodity trading advisers; and imposing fiduciary duties on broker-dealers and futures commission merchants. The proposal also recommends that all OTC derivatives, including credit default swaps, would be subjected to comprehensive regulation. Standardized OTC derivatives would be transacted on regulated exchanges and transparent electronic trading systems, and cleared through regulated central counterparties. For customized OTC derivatives that could not be cleared and exchangetraded, regulatory requirements applicable to all dealers and other firms would provide the functional equivalent of clearing and minimize systemic risk. These regulations would include promptly reporting all transactions to a regulated trade repository and maintaining conservative capital, margin, and business conduct requirements. The capital requirements would be more conservative than existing bank capital regulatory requirements related to OTC derivatives. Market efficiency and transparency would be improved by creating a system to disseminate promptly prices and other trade information. Aggregate volume and open position data would be publicly available, and data on a particular party’s transactions and positions would be available to regulators on a confidential basis. Broker-Dealers The proposal includes establishing a fiduciary duty for broker-dealers offering investment advice and harmonizing the regulation of investment advisers and broker-dealers. Among other things, new legislation would “bring important consistency” to the regulation of broker-dealers and investment advisers by requiring broker-dealers who provide investment advice to investors to have the same fiduciary obligations as registered investment advisers. The proposal would also prohibit certain conflicts of interest and sales practices that are contrary to the interests of investors. While the proposal speaks of “retail” investors, it is unclear whether firms will be held to this higher fiduciary standard for their institutional clients. Similarly, it is unclear whether dealers that offer several securities for an investor to consider, particularly in the context of fixed income principal trading, will be subject to the traditional suitability standard or will owe a fiduciary duty. One possible effect of this broad expansion of responsibility is a higher cost to investors to account for the increased litigation exposure. The proposal also reopens the examination of the differences between the regulation of broker-dealers and investment advisers and the distinct relationship each has with its clients. The definition of “investment adviser” in the Advisers Act excludes “any broker or dealer whose performance of such services is solely incidental to the conduct of his business as a broker or dealer and who receives no special compensation.” As recently as 2005, the SEC issued rules that set forth criteria for determining when advice provided by a brokerdealer should not be deemed to be “solely incidental” to its brokerage services. Expect those regulations to be reconsidered as the proposal works its way into law. Insurance Markets The proposal’s treatment of the insurance industry is paradoxical. It laments the weaknesses of regulating insurance at the state level and indicates a strong preference for federal regulation of insurance, but it fails to call for an end to state regulation in whole or in part. Instead, it proposes to create the ONI within Treasury, which would have the power to gather information, identify weaknesses, and coordinate policy throughout the June 2009 6 Financial Services & Public Policy Alert insurance industry. The ONI would also have the power to negotiate international agreements and “speak with one voice” on behalf of the U.S. insurance industry. Despite the proposal’s lofty goal of developing a modern regulatory framework for insurance, the proposed ONI is charged only with understanding and monitoring the insurance industry. Its powers would be limited to encouraging states to increase capital standards and reduce regulatory inconsistencies. A main purpose of the ONI would be to recommend that the Federal Reserve regulate specific insurance companies as Tier 1 FHCs. The ONI also would be given authority in the international context to represent the U.S. in the International Association of Insurance Supervisors, enter into international agreements, and increase international cooperation on insurance regulation. In addition, insurance products that would be considered investment products, such as annuities that are not already regulated by the SEC or CFTC, would be subject to regulation by the proposed Consumer Financial Protection Agency. Money Market Funds The proposal shows an appetite for potentially major reforms to money market fund regulations in order to reduce “the susceptibility of money market mutual funds to runs,” as illustrated by the impact of the Reserve Primary Fund’s net asset value falling below $1.00 per share in September of 2008. The proposal encourages the SEC to move forward with plans to require substantial liquidity buffers, reduce the weighted average maturity of securities held, tighten credit concentration limits, improve risk analysis and management, and empower boards of directors to suspend redemptions in extraordinary circumstances. In addition, the President’s Working Group on Financial Markets would be required to prepare a report assessing whether more fundamental changes are necessary. The report, which would be due September 15, 2009, would consider eliminating the stable net asset value and requiring money market funds to access emergency liquidity facilities from private sources. Any new regulations would require approval by the SEC and would involve a waiting period during which the SEC may consider comments on the proposed regulations. In March, SEC Chairman Mary Schapiro stated that the SEC was considering similar reforms to strengthen fund credit quality, maturity, and liquidity standards in remarks before the Senate Banking Committee; one of the SEC’s proposals includes a floating net asset value. International Financial Markets Extending beyond the U.S. financial system, the proposal calls upon the U.S. to use its leadership to raise international regulatory standards and improve international cooperation. The coordination would involve improving the Basel II capital standards, supervising internationally active firms, aligning crisis management efforts, and strengthening financial regulation in all countries. With more consistent supervision, financial institutions would be less likely to move their activities to those jurisdictions that have weaker standards. The proposal sets a laudable goal, but does not provide clear answers as to how it could be reached. Achieving worldwide consensus to raise international regulatory standards and improve international cooperation would be an incredibly difficult task. Efforts to coordinate financial regulation internationally are limited by the fact that so few countries participate and those that do participate are not bound to implement specific recommendations. As illustrated by the European Union, even when nations implement common international standards, the result can vary so much from one country to another that it is hard to fathom that the final legislation was derived from the same standard. The Next Steps Chairman Barney Frank is expected to pursue financial services legislation in the near term. The House was initially expected to finish its consideration of the legislation by August, but that time frame has already begun to slow. The House Financial Services Committee will now be holding hearings, committee meetings, and markups on financial regulatory reform into September. The pace of the Senate action is also unclear, partially due to Chairman Dodd’s current focus on health care reform, which is also a priority for the June 2009 7 Financial Services & Public Policy Alert White House. (The House and Senate will likely vote on their respective health care reform bills before the August recess; a conference is expected to follow in late September or early October). Chairman Dodd had stated that he intends to move forward with financial services legislation, but has indicated that he expects lengthy deliberations. It has been suggested that the Senate may take up the legislation in late September, with the goal of having it to the President by early 2010. However, it is likely that the process could continue well into next year. of designated partners in each of the firm’s relevant practice areas across the full spectrum of capital markets issues. These practice areas include: broker-dealer and securities trading; commodities and futures; depository institutions; derivatives and securitization; hedge funds; insurance and annuities; investment banking; investment management; mortgage banking and consumer finance; and public policy. By coordinating across all of these disciplines, K&L Gates will be able to provide unequaled service and insights to firm clients as these new laws and implementing regulations are written. As mentioned above, K&L Gates has established an internal Capital Markets Reform Group that consists June 2009 8 Financial Services & Public Policy Alert For more information on K&L Gates’ Capital Markets Reform Group, please contact one of the professionals listed below. Insurance/Annuities Diane E. Ambler [email protected] +1.202.778.9886 Investment Banking Philip M. Cedar [email protected] +1.212.536.4820 Public Policy & Law Daniel F. C. Crowley [email protected] +1.202.778.9447 European Regulation Vanessa C. Edwards [email protected] +44.(0)20.7360.8293 Broker-Dealer/Securities Trading Edward G. Eisert [email protected] +1.212.536.3905 Mortgage Banking & Consumer Financial Products Steven M. Kaplan [email protected] +1.202.778.9204 Depository Institutions Sean P. Mahoney [email protected] +1.617.261.3202 Hedge Funds J. Matthew Mangan [email protected] +1.415.249.1046 European Financial Services Philip J. Morgan [email protected] +44.(0)20.7360.8123 Investment Management Mary C. Moynihan +1.202.778.9058 [email protected] Derivatives/Securitization Anthony R.G. Nolan [email protected] +1.212.536.4843 Money Market Funds Clair E. Pagnano [email protected] +1.617.261.3246 Commodities/Futures Lawrence B. Patent [email protected] +1.202.778.9219 Anchorage Austin Beijing Berlin Boston Charlotte Chicago Dallas Dubai Fort Worth Frankfurt Harrisburg Hong Kong London Los Angeles Miami Newark New York Orange County Palo Alto Paris Pittsburgh Portland Raleigh Research Triangle Park San Diego San Francisco Seattle Shanghai Singapore Spokane/Coeur d’Alene Taipei Washington, D.C. K&L Gates is a global law firm with lawyers in 33 offices located in North America, Europe, Asia and the Middle East, and represents numerous GLOBAL 500, FORTUNE 100, and FTSE 100 corporations, in addition to growth and middle market companies, entrepreneurs, capital market participants and public sector entities. For more information, visit www.klgates.com. K&L Gates comprises multiple affiliated partnerships: a limited liability partnership with the full name K&L Gates LLP qualified in Delaware and maintaining offices throughout the U.S., in Berlin and Frankfurt, Germany, in Beijing (K&L Gates LLP Beijing Representative Office), in Dubai, U.A.E., in Shanghai (K&L Gates LLP Shanghai Representative Office), and in Singapore (K&L Gates LLP Singapore Representative Office); a June 2009 Financial Services & Public Policy Alert limited liability partnership (also named K&L Gates LLP) incorporated in England and maintaining offices in London and Paris; a Taiwan general partnership (K&L Gates) maintaining an office in Taipei; and a Hong Kong general partnership (K&L Gates, Solicitors) maintaining an office in Hong Kong. K&L Gates maintains appropriate registrations in the jurisdictions in which its offices are located. A list of the partners in each entity is available for inspection at any K&L Gates office. This publication is for informational purposes and does not contain or convey legal advice. The information herein should not be used or relied upon in regard to any particular facts or circumstances without first consulting a lawyer. ©2009 K&L Gates LLP. All Rights Reserved. June 2009