Posts tagged as:

extraterritoriality

Banking and finance roundup

by Walter Olson on December 17, 2014

  • House Oversight Committee report finds evidence FDIC used Operation Choke Point to strangle access to banking for lawful but disliked businesses [St. Louis Post-Dispatch, Bloomberg, report, Kevin Funnell, HalfWheel (cigar shops), Pete Kasperowicz, The Blaze (guns), Joe Adler/American Banker (critical views)]
  • “Fallout for the S.E.C. and the Justice Dept. From the Insider Trading Ruling” [Peter Henning, NYT DealBook, on challenges to previous cases; earlier]
  • Congress finally trims Dodd-Frank, with a nose hair clipper. Imagine what Sen. Warren will say if it takes up a scalpel or axe [Michael Greve]
  • Did tax policy set out to make life tough for American expatriates, or does it just seem that way? [Neil Gandal, WSJ on FATCA, FBAR, etc.]
  • “Like other federal agencies, the SEC has long been good at publicizing its initial accusations of wrongdoing …not so good at letting the public know when those accusations turn out to be unfounded or an overreach” [Russell Ryan via Bainbridge, more on SEC press releases on enforcement actions]
  • A market with next to no entry: “If Primary Bank, Mr. Greiner’s proposed firm, wins approval, it would be only the second new bank the FDIC has cleared in the U.S. since 2010.” [WSJ]
  • “The only people who benefit from shareholder litigation over M&A deals are lawyers. Period. End of discussion.” [Stephen Bainbridge; related, Steve Bradford via Bainbridge ("Delaware' entire fairness standard morphs into a tax on deals for the benefit of plaintiff lawyers"), earlier here, etc.]

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After receiving a complaint of health-status discrimination from a Royal Caribbean Cruise Lines employee, followed by a response from the company saying that the employee was a foreign national working on a foreign-flagged ship and therefore not subject to EEOC authority, the agency launched a massive fishing expedition:

(1) List all employees who were discharged or whose contracts were not renewed [from August 25, 2009, through the present] due to a medical reason.
(2) For each employee listed in response to request number 1, include the employee’s name, citizenship, employment contract, position title, reason for and date of discharge, a copy of the separation notice and the last known contact information for each individual.
(3) For each employee listed in response to request number 1, include their employment application and related correspondence, any interview notes, the identity of the person who hired the employee, how the employee obtained the position (i.e., online, in person, recruiter), the location where the employee was interviewed, and the identity and location of the person who made the final hiring decision.
(4) List all the persons who applied for a position but were not hired within the relevant period due to a medical reason
(5) For each person listed in response to request number 4, include their citizenship, employment application and related correspondence, any interview notes, the identity of the person [who] hired the employee, how the employee learned of the position (i.e., online, in person, recruiter), the location where the employee was interviewed, and the identity and location of the person who made the final hiring decision.

The cruise line complied in (massive) part, but not fully, “providing records for employees and applicants who were United States citizens” but not others. The agency took the dispute to court and proceeded to lose at every stage, the Eleventh Circuit being the latest to find its information demands burdensome and irrelevant: “The relevance necessary to support a subpoena for the investigation of an individual charge is relevance to the contested issues that must be decided to resolve the charge, not relevance to issues that may be contested when and if future charges are brought by others.” [Hunton and Williams; Phelps Dunbar]

Meanwhile, the commission has issued its fiscal 2014 performance report; in explaining a drop in resolved complaints, its public statement cites the “lingering effects of sequestration and the government shutdown” but not the marked skepticism that judges repeatedly showed toward EEOC positions through the year.

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Politics roundup

by Walter Olson on December 3, 2014

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CanadaQueenStampRemember when Canada was regarded as the high-tax, big-government country, and we weren’t? How times have changed. Burger King is considering becoming Canadian through a tax inversion deal with donut chain Tim Horton’s, aware that north of the border “corporate tax rates are as much as 15 percentage points lower than in the United States,” in the words of Daniel Ikenson at Cato, who writes: “If the acquisition comes to fruition and ultimately involves a corporate ‘inversion,’ consider it not a problem, but a symptom of a problem. The real problem is that U.S. policymakers inadequately grasp BurgerStamp that we live in a globalized economy, where capital is mobile and products and services can be produced and delivered almost anywhere in the world, and where value is created by efficiently combining inputs and processes from multiple countries. Globalization means that public policies are on trial and that policymakers have to get off their duffs and compete with most every other country in the world to attract investment, which flows to the jurisdictions where it is most productive and, crucially, most welcome to be put to productive use.” And the fact is that the United States, once the domicile of choice for international business, has slipped badly down the ratings of how difficult it is to do business in various countries. Policymakers “should repair the incentives that drive capital away from the United States.” Full post here. More: Stephen Bainbridge.

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  • In banking and FCPA cases, targets of DOJ prosecution are disproportionately firms domiciled abroad, and other countries do notice that [Jesse Eisinger, NYT "DealBook"]
  • “Los Angeles’ Confused Suit against Mortgage Lenders” [Mark Calabria, Cato] Providence also using disparate impact suits in hopes of making banks pay for its housing failures [Funnell]
  • Podcast discussion on Operation Chokepoint with Charles J. Cooper, Iain Murray, and Todd J. Zywicki [Federalist Society, earlier]
  • New round of suits against banks based on ATMs’ imperfect wheelchair accessibility [ABA Journal, earlier here]
  • Walgreen’s could save billions in taxes if it moved to Switzerland from U.S. Whose fault if anyone’s is that? [Tax Foundation]
  • “Left unmentioned: how fed regulation and trial lawyers deter banks from protecting themselves with overdraft fees.” [@tedfrank on NYT report about banks' use of databases to turn down business from persons with records of overdrawing accounts, a practice that now itself is being targeted for regulation]
  • Scheme to seize mortgages through eminent domain stalling as cities decline to come on board [Kevin Funnell]

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  • Payday lenders sue federal agencies over Operation Choke Point [Bloomberg News, Business Journals, earlier; more, Funnell]
  • Speaking of those lenders: “California Supreme Court to review ‘rent-a-tribe’ arrangement for payday lenders” [CL&P, more]
  • “If someone starts trying to blame the Global Financial Crisis on ‘de-regulation’, you can stop reading…” [Lorenzo via Arnold Kling]
  • Can we just admit that the feds’ real target in the Credit Suisse case was the bank’s customers? [ABA Journal]
  • Maryland does not approve of Bitcoin [my Free State Notes via Kevin Funnell]
  • Behind Halliburton v. Erica P. John Fund, SCOTUS’s big case on securities class actions, two lawprofs are jousting [Alison Frankel, Reuters, and there's a Cato connection; earlier]
  • For expats, FATCA raises “prospect of being discriminated against as an American for all things financial” [Peter Spiro/OJ; Sophia Yan, Money] More renounce U.S. citizenship [Yahoo] A Canada-based FATCA resource [Isaac Brock Society] Earlier here, etc.
  • Court will hear case of mariner charged with Sarbanes-Oxley records-destruction violation for discarding undersized fish [Jonathan Adler, Eugene Volokh, Daniel Fisher]
  • SCOTUS goes 9-0 for wider patent fee shifting in Octane Fitness v. ICON and Highmark v. Allcare Health Management System Inc. [Ars Technica, ABA Journal, earlier]
  • Constitutional principle that Washington must not give some states preference over others could face test in New Jersey NCAA/gambling case [Ilya Shapiro, Cato]
  • Supreme Court grants certiorari in Dart Cherokee Basin Operating Co. v. Owens, a class action procedure case on CAFA removal [Donald Falk, Mayer Brown Class Defense Blog]
  • “Supreme Court’s Daimler decision makes it a good year for general jurisdiction clarity” [Mark Moller, WLF, earlier] Decision calls into question “the jurisdictional basis for this country’s litigation hellholes” [Beck]
  • How liberals learned to love restrictive standing doctrine [Eugene Kontorovich, more]
  • “California Shouldn’t Be Able to Impose Regulations on Businesses Outside of California” [Ilya Shapiro on cert petition in Rocky Mountain Farmers Union v. Corey (fuel standards)]

FATCA is working!

by Walter Olson on February 20, 2014

The number of Americans who’ve turned in their passports and renounced citizenship has increased more than tenfold in five years, to 3,000 in calendar 2013. [USA Today] Earlier on the burdensome expatriate tax and regulation measure here, here, here, and generally here.

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At Treasury’s mercy

by Walter Olson on November 14, 2013

How “money laundering” regulations give the U.S. Treasury power to destroy foreign banks [Stewart Baker, Volokh] Meanwhile, if Canadians imagine that the Foreign Account Tax Compliance Act (FATCA) is something only Canadian-Americans need to worry about, they should think again [Maclean's]. Excerpt:

To say that FATCA is controversial is an understatement. The law is so complex and onerous to implement that some foreign banks have reportedly kicked out their U.S. clients in order to avoid dealing with it. Americans living abroad are queuing to give up their U.S. passports over it. The other problem with FATCA is that it asks foreign banks to do things that are often illegal in their home countries, such as passing on certain private information.

Earlier on “know your customer” here and on FATCA here.

Many previous posts in this space have addressed the Foreign Account Tax Compliance Act, which presumes to regulate overseas banks and financial institutions that do business with Americans, and which goes into effect next June. So it’s nice to see the Paper of Record running a reasonably informative introductory piece on its problems, even if at too late a date to get the thing stopped. “Global banks and investment firms have made their dislike of the law known, though they are reluctant to speak out individually” — and how common that last point is these days, given the retaliatory potential of the U.S. government’s vast regulatory and enforcement apparatus for a business that does dare to speak out. Still, a few critics are willing to show their heads above ground, including

Georges Ugeux, a dual Belgian-American citizen, a lecturer at Columbia Law School and the founder of Galileo Global Advisors, an international business consulting firm. He described the law as “bullying and selfish.” The United States, he said, “is acting outside its borders as if they were its home.”

Sen. Rand Paul of Kentucky has introduced legislation to roll back part of the law, and there is a site called RepealFatca.com. [Lynnley Browning, NYT via TaxProf]

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Free speech roundup

by Walter Olson on September 9, 2013

  • “It’s Not Illegal to Sell Anti-NSA Shirts Bearing the NSA Logo”
    [Volokh]
  • Can an American national be sued in American courts for working to persuade a foreign government to pass an oppressive law? [BTB on Scott Lively Uganda case]
  • “Court Rejects Religious Discrimination Claim Based on Associated Press’s Rejection of Plaintiff’s Religiously Themed Article” [Volokh]
  • Workings of British hate speech law: police visit clergyman who emailed pair of unwelcome religious tracts [Spectator]
  • “HIV Denialist’s Trademark and Defamation Claims Against Critical Blogger” [Paul Alan Levy]
  • Revisiting the practice of suing publishers of drug information in pharmaceutical liability cases [Beck]
  • “Australia’s Press Regulators Look To Enforce Ideological Conformity” [Tuccille, Reason]

..a surge in U.S. citizenship renunciations by expatriates [Bloomberg] The United States is “the only nation in the Organization for Economic Cooperation and Development that taxes citizens wherever they reside,” a departure whose disincentive effects are magnified now that Congress is insisting on regulating foreign financial institutions that deal with Americans. Earlier on FATCA here. More: Dan Mitchell, Cato.

New SEC chairman Mary Jo White shows better sense about it than some newspaper editorialists that could be named [Louise Bennetts, Cato]

Gibson CEO Henry Juszkiewicz, WSJ, excerpted at PoliceMisconduct.net:

In America alone, there are over 4,000 federal criminal offenses. Under the Lacey Act, for instance, citizens and business owners also need to know – and predict how the U.S. federal government will interpret – the laws of nearly 200 other countries on the globe as well. Many business owners have inadvertently broken obscure and highly technical foreign laws, landing them in prison for things like importing lobster tails in plastic rather than cardboard packaging (the violation of that Honduran law earned one man an eight-year prison sentence). Cases like this make it clear that the justice system has strayed from its constitutional purpose like stopping the real bad guys from bringing harm.

Harvey Silverglate says that while Juszkiewicz is right as far as he goes, he’s seeing only part of the picture. Earlier on the Gibson raid and Lacey Act here, here, etc.

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In the case of Kiobel v. Royal Dutch Petroleum, scheduled for argument Tuesday, the Supreme Court will consider curbing the modern scope of the Alien Tort Statute, which asserts U.S. jurisdiction over various human rights controversies arising within the bounds of other countries. [Reuters, earlier] Considering that it amounts to the Law of the Hegemon, the Statute is oddly popular in some Left circles [Kenneth Anderson/Volokh] European governments (Germany, Great Britain, the Netherlands) have filed amicus briefs on the defense side [John Bellinger, Lawfare; more, WaPo]

More: The New York Times’s Room for Debate discussion includes a contribution by my Cato colleague Ilya Shapiro. And Point of Law is having a featured discussion on the case with David Weissbrodt of the University of Minnesota and Julian Ku of Hofstra.

Some expected that the big new SEC regulations on industrial users of tin, tungsten, tantalum and gold would mostly affect electronics and jewelry makers, but the actual net being cast is far wider. Manufacturers in general must investigate the supply chains of their products in order to comply with the disclosure requirements, no small matter at a firm like Kraft with 40,000 products and 100,000 suppliers. (Kraft found that the minerals may turn up in pouch packaging of juice products.) No wonder the SEC’s absurd initial estimates of a mere $70 million economy-wide compliance cost have given way to estimates a hundred times higher or more. In an echo of the infamous CPSIA statute, “the rule provides no de minimis exemption for trace amounts.” [Melissa Maleske, Inside Counsel, earlier here, here, and here] (& Bainbridge)

More: the Dodd-Frank conflict minerals provision and the Democratic Republic of the Congo [Marcia Narine, Conglomerate via Bainbridge]

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“Tulane Study Says SEC Estimate of Cost of Conflict Mineral Rules is 100x Too Low” — headline at Business Law Prof (via Prof. Bainbridge), describing a new calculation that the implementation of the complication Dodd-Frank provision will in fact cost American business upwards of $7 billion, not the $70 million the Securities and Exchange Commission optimistically foresaw. (Typo fixed now.) Earlier here, here (“devastating” effect on Congolese).

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“The House Judiciary Committee passed a bill yesterday that would make it a federal crime for U.S. residents to discuss or plan activities on foreign soil that, if carried out in the U.S., would violate the Controlled Substances Act (CSA) — even if the planned activities are legal in the countries where they’re carried out.” [Balko, Somin]

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