Media RSS Feedhttps://www.cooley.com/corporate-content/rss-feeds/media-rss-feedAll Media & Insights RSS Feeden60{B11032D0-3D9E-4D47-9980-ED20FEF28CBF}https://www.cooley.com/news/coverage/2024/2024-03-18-chambers-europe-recognizes-cooley-lawyers-and-practicesChambers Europe Recognizes Cooley Lawyers and Practices<p><strong>Brussels and London &ndash; March 18, 2024 &ndash;</strong> Chambers Europe 2024 has recognized Cooley with four practice rankings and 10 individual lawyer rankings in their respective fields. The results include a new Europewide recognition in life sciences in the European Union, as well as two new individual rankings.</p> <p>The following are Cooley&rsquo;s <a rel="noopener noreferrer" href="https://chambers.com/law-firm/cooley-llp-europe-7:3562" target="_blank">Chambers Europe rankings for 2024</a>:</p> <p><strong>Leading practices</strong></p> <ul> <li>Corporate/M&amp;A: Mid-Market</li> <li>Life Sciences: EU</li> <li>Tax</li> <li>Technology, Media and Telecommunications (TMT)</li> </ul> <p>Cooley lawyers from Brussels and London were noted for their work representing life sciences and technology clients in EU regulatory law, competition law, data protection and information technology, capital markets, corporate/M&amp;A, and tax.</p>Mon, 18 Mar 2024 20:01:27 Z{DE88ED94-A6B8-482C-BE60-9B0F8FBFD9E7}https://www.cooley.com/news/coverage/2024/2024-03-18-cooley-noted-as-top-5-firm-for-securities-litigationCooley Noted as Top 5 Firm for Securities Litigation<p>Cooley was named among the top five law firms representing defendants in securities litigation cases, according to Lex Machina&rsquo;s Securities Litigation Report, which analyzes securities litigation trends in federal courts. The firm was noted as fifth overall based upon the number of defendants represented between 2021 and 2023, during which time it represented 67 defendants across 12 district courts.</p> <p>The report noted that the volume of securities litigation peaked in 2021, when nearly 2,650 cases were filed, and that major financial institutions were the most active defendants. Lex Machina also reported that approximately 84% of cases resulted in a settlement or resolution on procedural grounds.</p> <p><a rel="noopener noreferrer" href="https://pages.lexmachina.com/2024-Securities-Report_LP.html" target="_blank" class="arrow-link">Read the full report (registration required)</a></p> <p><a rel="noopener noreferrer" href="https://www.law360.com/securities/articles/1810781/latham-passes-skadden-as-busiest-securities-defense-firm" target="_blank" class="arrow-link">Read Law360&rsquo;s article covering the report (subscription required)</a></p> <p><a rel="noopener noreferrer" href="https://www.law.com/newyorklawjournal/2024/03/07/securities-litigation-cases-continued-to-decline-nationally-in-2023-report-finds/" target="_blank" class="arrow-link">Read New York Law Journal&rsquo;s article covering the report (subscription required)</a></p> <p>Lex Machina&rsquo;s Securities Litigation Report examines emerging trends in general securities cases, shareholder derivative suits, class action securities cases, cryptocurrency cases, special purpose acquisition company cases and securities appellate cases.</p>Mon, 18 Mar 2024 19:38:29 Z{FBB21ACC-6DAD-47D1-BBF5-F99B59DB6581}https://www.cooley.com/news/insight/2024/2024-03-18-comparing-the-sec-climate-rules-to-california-eu-and-issb-disclosure-frameworksComparing the SEC Climate Rules to California, EU and ISSB Disclosure Frameworks<p>The Securities and Exchange Commission (SEC) adopted its long-awaited climate disclosure rules on March 6, 2024. (For more information, see our <a href="https://www.cooley.com/news/insight/2024/2024-03-07-sec-adopts-climate-reporting-requirements" target="_self">recent Cooley client alert</a>, <a href="https://www.cooley.com/events/2024/2024-03-12-sec-climate-disclosure-rules-overview-of-the-newly-adopted-requirements-and-next-steps" target="_self">webinar</a> and <a href="https://www.cooley.com/services/practice/esg-and-sustainability-advisory/esg-resource-page/us-climate-rules" target="_self">resource page</a>.) The final rules require US domestic companies and foreign private issuers (FPIs) to disclose qualitative and quantitative climate-related information in their registration statements and periodic reports in general alignment with internationally accepted disclosure frameworks, including the Task Force on Climate-Related Financial Disclosures (TCFD) and the Greenhouse Gas (GHG) Protocol.</p> <div style="border: 3px solid #5046ff; padding: 30px;"> <p><strong>Note on ongoing SEC climate rules litigation:</strong> On March 15, the US Court of Appeals for the Fifth Circuit granted a motion subjecting the SEC climate rules to an administrative stay pending review of the rules by the court. In addition to litigation in the Fifth Circuit, cases are pending in the Sixth, Eighth and Eleventh Circuits seeking to block the new rules, as well as challenges from environmental groups in the Second and DC Circuits pushing for stronger rules. The Judicial Panel on Multidistrict Litigation will consolidate the challenges before a single court of appeals, which may then dissolve the Fifth Circuit&rsquo;s order.</p> <p>While this temporary stay may be of limited long-term effect, companies may need to prepare for compliance with the SEC rules in the shadow of ongoing litigation uncertainty, an expected outcome similar to the conflict minerals rules. The prospect of yearslong litigation likely is most unsettling for companies that do not already publish robust climate disclosures and would not plan to do so in the absence of the SEC rules, though many such companies may not necessarily have extensive disclosure obligations under the SEC&rsquo;s materiality-focused framework in any case. Litigation uncertainty may be less impactful on compliance planning for companies also subject to California or European Union rules, or that otherwise make extensive voluntary disclosures. </p> </div> <p>&nbsp;</p> <p>For many companies, however, the SEC climate rules will apply in addition to other mandatory sustainability reporting frameworks already in force or imminently applicable. While the SEC&rsquo;s climate rules touch on many of the same areas as the three 2023 California climate disclosure laws (<a href="https://www.cooley.com/news/insight/2023/2023-09-19-california-ghg-emissions-and-climate-risk-bills-near-finalization" target="_self">Senate Bills 253 and 261</a> and <a href="https://www.cooley.com/news/insight/2023/2023-10-16-new-california-law-establishes-significant-disclosure-requirements-related-to-climate-goals-claims-and-offsets-beginning-january-1-2024" target="_self">Assembly Bill 1305</a>) and the EU&rsquo;s <a href="https://www.cooley.com/news/insight/2023/2023-08-11-eu-adopts-long-awaited-mandatory-esg-reporting-standards" target="_self">Corporate Sustainability Reporting Directive</a> (CSRD), there are points of significant divergence. The reporting landscape is likely to become increasingly complex, with numerous jurisdictions, including Australia, Hong Kong, Singapore and the United Kingdom, planning to adopt, or having already adopted, legislation to integrate the climate-related disclosure framework developed by the International Sustainability Standard Board (ISSB) &ndash; <a rel="noopener noreferrer" href="https://www.ifrs.org/issued-standards/ifrs-sustainability-standards-navigator/ifrs-s1-general-requirements/" target="_blank">International Financial Reporting Standards (IFRS) S1</a> and <a rel="noopener noreferrer" href="https://www.ifrs.org/issued-standards/ifrs-sustainability-standards-navigator/ifrs-s2-climate-related-disclosures/#about" target="_blank">IFRS S2</a> &ndash; into their corporate reporting. As a successor to the TCFD, the ISSB also will be an influential framework for those companies wishing to continue to report sustainability information voluntarily, particularly as institutional investors, such as <a rel="noopener noreferrer" href="https://www.blackrock.com/corporate/literature/publication/blk-stewardship-priorities-final.pdf" target="_blank">BlackRock</a>, and other stakeholders integrate these frameworks into their policies and engagement priorities.</p> <p>In addition, on March 15, 2024, the EU&rsquo;s <a href="https://www.cooley.com/news/insight/2023/2023-12-15-eu-reaches-political-agreement-on-groundbreaking-new-rules-for-corporate-sustainability-due-diligence-impacting-us-companies" target="_self">Corporate Sustainability Due Diligence Directive</a> (CSDDD) was approved by the Council of the EU. Subject to final approval by the European Parliament, expected in April, the CSDDD will become law and will apply to certain companies as early as 2027. For in-scope US companies, the CSDDD will generate additional climate-related obligations, including a mandatory requirement to adopt and put into effect a climate transition plan that aims to ensure, through best efforts, that their business models and strategies are compatible with the limiting of global warming to 1.5 &deg;C. In addition to potentially impacting SEC climate target and transition plan disclosures, these CSDDD obligations may also impact how companies analyse climate risk and emissions materiality in future SEC disclosure.</p> <h3>Key differences between frameworks</h3> <p>Navigating these regimes can be arduous and companies will need to work to understand the differences to develop an effective cross-regulatory reporting strategy. Later in this alert, we&rsquo;ve provided a table with a detailed summary of the similarities and differences between these climate reporting frameworks. Key differences include:</p> <h5>GHG emissions</h5> <p>While the SEC has scaled back on requirements for companies to report on their GHG emissions, limiting disclosures to Scopes 1 or 2 where material, the California climate disclosure laws, the CSRD and the ISSB standards all require disclosure of Scope 3 GHG emissions as well as Scopes 1 and 2. While the California climate disclosure laws remain unique in that they require disclosure irrespective of materiality, companies in scope of the CSRD are likely to struggle to avoid disclosing GHG emissions, given the reporting regime&rsquo;s requirement for double materiality, its broader approach to decision usefulness, and its starting assumption that Scope 3 emissions are an important driver of a company&rsquo;s transition risk.</p> <h5>Governance, strategy, risk management and targets</h5> <p>Outside of emissions and climate risk, the SEC rules include numerous qualitative and quantitative disclosures related to governance, strategy, risk management, and expenditures that are absent in the California laws and are more akin to those required under the CSRD and ISSB frameworks. While California&rsquo;s SB 261 also covers material risk disclosure, the SEC rules require additional disclosures of climate-related governance, strategy, transition plans to mitigate or adapt to material climate-related risks, and climate-related financial statement metrics. These SEC qualitative disclosure requirements are consistently linked to material risks and material impacts, such that disclosure on these topics may be broader in certain circumstances under the CSRD and ISSB (or even the California rules with regards to target disclosure under AB 1305, which is not limited to targets expected to have a material impact on reporting companies). This is particularly likely for those in scope of the CSRD, given that certain governance and risk management disclosures are mandatory irrespective of materiality, as well as the CSRD&rsquo;s broader materiality standard. </p> <h5>Materiality</h5> <p>On paper, materiality standards under the CSRD and SEC and other climate frameworks remain a significant point of divergence. While disclosures under the ISSB, the SEC climate rules and SB 261 are guided by financial or investor materiality (those factors affecting a company&rsquo;s performance or investor decision-making), the CSRD requires companies to undertake a &ldquo;double materiality&rdquo; assessment. This means that companies subject to the CSRD must disclose information on the impacts of their business on the environment and society irrespective of the positive or negative effect of such impacts on companies&rsquo; financials. It remains to be seen, however, whether in practice double materiality will significantly impact disclosures, as stakeholder impacts, such as significant environmental or negative community externalities, can often result in financial risks. Unlike the SEC rule, the CSRD also requires companies to disclose how their quantitative and qualitative materiality thresholds have been set and applied. Once a topic, such as climate, is determined to be material, disclosure of particular information under such a topic is defined by decision usefulness, which includes usefulness to users such as civil society, non-governmental organizations, governments, analysts and academics, representing a much broader standard than SEC materiality. Disclosures under California&rsquo;s SB 253 and AB 1305, by contrast, are mandatory irrespective of materiality, though SB 253 reporting is expected to be clarified by future implementing regulations by the California Air Resources Board. </p> <h5>Looking beyond climate and the company</h5> <p>Beyond materiality, the EU&rsquo;s CSRD is an outlier both in terms of the number of sustainability topics covered beyond climate, and its broad value chain reporting mandates, as companies must report not only on their own activities but also on the sustainability-related impacts, risks, and opportunities in their upstream and downstream value chains. While only those disclosure requirements for EU entities and their groups have been published to date, the sustainability topics covered include water and marine resources, biodiversity, workers in the value chain, and the circular economy. (For more information, refer to our <a href="https://www.cooley.com/news/insight/2023/2023-08-11-eu-adopts-long-awaited-mandatory-esg-reporting-standards" target="_self">August 2023 client alert</a>.)</p> <h3>Practical implications for SEC-registered companies </h3> <p>As a result of the above-discussed differences, multiframework reporting will present important practical implications for SEC-registered companies, including:</p> <h5>Emissions reporting will be unavoidable for many companies</h5> <p>Scope 3 reporting will be required for companies subject to SB 253 and, in practice, is likely unavoidable under the CSRD, despite such disclosures being abandoned in the final SEC rule, and under SB 253, Scopes 1 and 2 reporting also will not be subject to materiality tests. As a result, the changes to the SEC emissions reporting requirements may be much less consequential, even if companies may still avoid the added burden of including such disclosures in SEC filings. In addition, even when emissions reporting is not subject to materiality tests, emissions reporting under the GHG Protocol, particularly Scope 3, is shaped by judgments as to the materiality of emission types.</p> <h5>Companies may adopt more rigor in California, CSRD or voluntary reporting</h5> <p>Given overlap with SEC regulations, companies may approach California, EU, ISSB or other voluntary climate reporting with greater disclosure controls, including legal and internal audit oversight. In addition to potentially influencing SEC reporting decisions, public disclosures in other reports on a topic covered by SEC rules may increase a company&rsquo;s exposure to SEC enforcement or inquiries, liability under the US federal securities laws, and general investor scrutiny.</p> <h5>Disclosures in California, CSRD or ISSB reports may impact SEC disclosure strategies</h5> <p>Companies that otherwise may have attempted to treat their emissions or climate targets as nonmaterial may be less likely to do so if already required to disclose such matters under other regulations, though many companies may be reluctant to take on the added liability and other risks of disclosure in SEC filings. CSRD disclosures also may impact how companies approach materiality for SEC purposes. Although climate reporting under the CSRD is subject to a materiality test, the CSRD requires certain detailed climate-related disclosures irrespective of materiality. It is mandatory to disclose a company&rsquo;s processes, including its use of scenario analysis, to identify and assess climate-related impacts, risks, and opportunities. </p> <p>In addition, under the CSRD if a company determines that it will not report on climate, it must nevertheless publish a detailed justification as to why the climate-related information is not material enough, from both a financial and impact perspective, to require reporting, including a forward-looking analysis of the conditions that could lead the undertaking to conclude that climate change is material in the future. The combination of the CSRD&rsquo;s mandatory climate disclosures and its double materiality standard is expected to result in widespread decisions to fully report on climate, including emissions. The extensive disclosures required under the CSRD, including on the materiality analysis, may make it more difficult for companies to justify determinations that climate risks or emissions are nonmaterial, or to avoid SEC comments.</p> <h5>SEC implications may drive voluntary reporting strategies</h5> <p>Companies that wish to minimize the inclusion of climate-related disclosures in SEC filings may now have an incentive to minimize voluntary actions that could attract SEC or investor scrutiny of materiality determinations, such as voluntary climate-related disclosures in voluntary sustainability reports under the ISSB or other frameworks, or the publicizing of climate-related targets and goals. It is yet to be seen, however, whether rating agencies, institutional investors, corporate customers or other stakeholders, who often drive voluntary reporting strategies, will drop requirements for companies to provide disclosures under voluntary sustainability standards, such as Carbon Disclosure Project (CDP).</p> <h5>SEC implications may influence CSRD reporting strategies</h5> <p>Most US businesses that are in scope of the CSRD will be filing reports first at their EU subsidiary level in 2026 and later at the level of the ultimate US parent company in 2029. Many such companies are nevertheless considering early consolidated reporting at the ultimate parent-level for practical reasons. The appeal of early parent-level reporting may be impacted by the publication of the SEC rules, to avoid publishing materiality, risk, emissions, or other parent-level disclosures that may influence SEC reporting or attract SEC scrutiny. Nonetheless, there will not always be significant differences parent and subsidiary-level climate reporting under the CSRD, particularly with respect to Scope 3 emissions, so companies will need to make circumstances-specific judgements.</p> <h3>Disclosure framework comparison</h3> <p>Below is a high-level comparison of the SEC climate rules, the three California climate disclosure laws, the CSRD* and ISSB. </p> <img src="-/media/4aa11b9e8a4348669cf1c8da974612d8.ashx" alt="Comparing the SEC Climate Rules to California, EU and ISSB Disclosure Frameworks " /><img src="-/media/7df62b80def14f86b92c5bed05b785db.ashx" alt="Comparing the SEC Climate Rules to California, EU and ISSB Disclosure Frameworks " /><img src="-/media/d4973642b8b74abb9e192ea7d68a9189.ashx" alt="Comparing the SEC Climate Rules to California, EU and ISSB Disclosure Frameworks " /><img src="-/media/0fd06e1d20fa4c59a5bf5ef93b8900f9.ashx" alt="Comparing the SEC Climate Rules to California, EU and ISSB Disclosure Frameworks " /> <p>&nbsp;</p> <p>* The commentary on the CSRD is limited to the ESRS published to date, which apply predominantly to EU companies, their groups and those with securities admitted to trading on EU regulated markets. Further sector-specific standards that also will apply are expected. The reporting standards for ultimate non-EU parents required to report under the CSRD have not yet been published, but they are not expected to be as detailed as those described in this alert and are likely to be focused on sustainability impacts, rather than sustainability-related financial risks and opportunities. For more information, see Cooley&rsquo;s <a rel="noopener noreferrer" href="https://www.cooley.com/-/media/cooley/pdf/corporate-sustainability-reporting-directive-faq.pdf" target="_blank">FAQ on the CSRD</a>.</p> <h3>Which entities need to comply and from when?</h3> <img src="-/media/bdfde035e71044c89bfd1c1de2e02160.ashx" alt="Comparing the SEC Climate Rules to California, EU and ISSB Disclosure Frameworks " />&nbsp;&nbsp; <p>&nbsp;</p> <img src="-/media/c425d96cad9345d89c9a98f04f9b0a89.ashx" alt="Comparing the SEC Climate Rules to California, EU and ISSB Disclosure Frameworks " /> <h5>Notes</h5> <p>The tables estimate filing dates based on FYB January 1 and present compliance dates for SEC LAFs, as these are the filers most likely to be subject to the CSRD, SB 253 and SB 261.</p> <ol> <li>See <a href="https://www.cooley.com/news/insight/2024/2024-03-07-sec-adopts-climate-reporting-requirements#:~:text=Disclosure%20compliance%20dates" target="_self">the summary table at the end of our March 7 alert</a> for more information on disclosure dates.</li> <li>Entities that on an individual or, if a group, consolidated basis satisfy at least two of the following: (1) balance sheet total of more than 25 million euros; (2) net turnover of more than 50 million euros; (3) an average of more than 250 employees during the financial year.</li> <li>Entities that are not large and on an individual or, if a group, consolidated basis satisfy at least two of the following: (1) balance sheet total of more than 450,000 euros; (2) net turnover of more than 900,000 euros; (3) an average of more than 10 employees during the financial year.</li> <li>To allow for additional time to prepare emissions data, disclosure of GHG emissions data may be incorporated into a company&rsquo;s second quarter 10-Q or filed in a 10-K/A by the filing deadline for the second quarter 10-Q. For FPIs, GHG emissions data is due in a 20-F/A no later than 225 days after the fiscal year-end. In each case, to take advantage of this delay, the issuer must include a statement in its annual report on Form 10-K or 20-F, as applicable, to indicate its express intention to later amend its filing to make these GHG emissions disclosures.</li> </ol>Mon, 18 Mar 2024 07:00:00 Z{F171F4DD-83A9-4A4F-8FF2-0C9AD0343CC4}https://www.cooley.com/news/coverage/2024/2024-03-14-amolyt-pharma-agrees-to-be-acquired-by-astrazeneca-in-up-to-1-05-billion-crossborder-transactionAmolyt Pharma Agrees to Be Acquired by AstraZeneca in up to $1.05 Billion Cross-Border Transaction<p><strong>New York &ndash; March 14, 2024 &ndash;</strong> Cooley advised Amolyt Pharma, a global clinical-stage biopharmaceutical company based in Lyon, France, that specializes in developing therapeutic peptides for rare endocrine and related diseases, on <a rel="noopener noreferrer" href="https://www.globenewswire.com/news-release/2024/03/14/2845997/0/en/Amolyt-Pharma-Enters-into-Definitive-Agreement-to-be-Acquired-by-AstraZeneca.html" target="_blank">its definitive agreement to be acquired by AstraZeneca for up to $1.05 billion in cash</a>. Partners Jamie Leigh, Bill Roegge, Laura Berezin and Marc Recht led the Cooley team advising Amolyt.</p> <p>Under the terms of the agreement, AstraZeneca will acquire all of Amolyt&rsquo;s outstanding shares for a total consideration of up to $1.05 billion, on a cash and debt-free basis, consisting of $800 million upfront at deal closing, plus the right for Amolyt&rsquo;s shareholders to receive an additional contingent payment of $250 million, payable upon achievement of a specified regulatory milestone. Subject to the satisfaction of customary closing conditions in the acquisition agreement, including regulatory clearances, the transaction is expected to close by the end of Q3 2024.</p> <p>A Cooley team led by Laura Berezin and Marc Recht has advised Amolyt, one of the top private biotechnology companies in France, since 2021.</p>Thu, 14 Mar 2024 21:13:00 Z{226C0B9B-13B7-4457-AAC3-7C51B7956B60}https://www.cooley.com/news/coverage/2024/2024-03-14-cooley-wins-appeal-for-coolit-systemsCooley Wins Appeal for CoolIT Systems<p><strong>Palo Alto &ndash; March 14, 2024 &ndash;</strong> Cooley represented <a rel="noopener noreferrer" href="https://www.coolitsystems.com/" target="_blank">CoolIT Systems</a> &ndash; a leader in advanced liquid cooling technology for data centers, servers and desktops &ndash; in a successful appeal to protect one of its liquid cooling patents. In a decision issued March 7, 2024, a three-judge panel at the US Court of Appeals for the Federal Circuit reversed a Patent Trial and Appeal Board (PTAB) partial claim construction on the scope of a key claim term and issued a new construction that captured Cooley&rsquo;s arguments at the PTAB and on appeal for CoolIT.&nbsp;The Federal Circuit also vacated the PTAB&rsquo;s invalidity determination and remanded proceedings for further consideration under its new construction. Partner Reuben Chen argued for CoolIT at the Federal Circuit; the successful team also was led by partner Heidi Keefe and associate Dustin Knight.</p> <p>This appeal follows Cooley&rsquo;s 2022 <a href="https://www.cooley.com/news/coverage/2022/2022-10-31-coolit-corsair-secure-summary-judgment-of-non-infringement-in-patent-dispute">summary judgment victory</a> for CoolIT in district court.</p>Thu, 14 Mar 2024 17:35:28 Z{3C732878-C346-4F34-887D-BFE922BBC0C1}https://www.cooley.com/news/coverage/2024/2024-03-13-europe-one-step-away-from-adopting-ai-rules-after-lawmakers-voteEurope One Step Away From Adopting AI Rules After Lawmakers’ Vote<p>Patrick Van Eecke, Cooley partner and co-chair of the firm&rsquo;s global cyber/data/privacy practice, was quoted by Reuters about the European Union&rsquo;s Artificial Intelligence (AI) Act &ndash; and how it will be used as a blueprint for AI laws in other countries and regions.</p> <p><a rel="noopener noreferrer" href="https://www.reuters.com/technology/eu-lawmakers-endorse-political-deal-artificial-intelligence-rules-2024-03-13/" target="_blank" class="arrow-link">Read the article (subscription required)</a></p>Wed, 13 Mar 2024 21:03:01 Z{C76F907B-D41F-4C7C-8358-8B3B29937C45}https://www.cooley.com/news/coverage/2024/2024-03-13-zephyr-ai-announces-111-million-series-aZephyr AI Announces $111 Million Series A<p><strong>Palo Alto &ndash; March 13, 2024 &ndash;</strong> Cooley advised Zephyr AI, a healthcare technology company committed to developing fast and explainable artificial intelligence solutions to democratize precision medicine, on <a rel="noopener noreferrer" href="https://www.businesswire.com/news/home/20240312475536/en/Zephyr-AI-Raises-111-Million-in-Series-A-Financing" target="_blank">its $111 million Series A financing</a>. Partner Josh Seidenfeld led the Cooley team advising Zephyr AI.</p> <p>The financing includes participation from Revolution Growth, Eli Lilly, Jeff Skoll and EPIQ Capital, among others. The proceeds will enable Zephyr to further enhance its analytical speed, fortify its extensive collection of training and validation data sets, and support the expansion of its scientific and commercial teams to expedite the delivery of its rapidly growing pipeline of insights to the market.</p>Wed, 13 Mar 2024 15:54:00 Z{AC8D86CD-9121-43BD-9BFC-CC3DF51532AF}https://www.cooley.com/news/insight/2024/2024-03-13-eu-reaches-provisional-agreement-on-banning-products-made-with-forced-labourEU Reaches Provisional Agreement on Banning Products Made With Forced Labour<p>On 5 March 2024, <a rel="noopener noreferrer" href="https://www.europarl.europa.eu/news/en/press-room/20240301IPR18592/deal-on-eu-ban-on-products-made-with-forced-labour" target="_blank">European Union legislators reached provisional agreement</a> on new rules that, once formally adopted, will ban products made with forced labour from being placed or made available on the EU market or exported from the EU market. The EU&rsquo;s ban on products made with forced labour regulation (FLR) will apply to products which in whole or in part benefited from forced labour. The FLR supplements the existing EU rules combatting human trafficking. The FLR will now be subject to formal approval and is likely to apply across all EU member states from mid-2027.</p> <p>The potential impact of the FLR and the need for companies to achieve greater supply chain visibility is made clear by the recent impounding of thousands of vehicles at US customs over component parts linked to allegations of forced labour in violation of the US Forced Labor Prevention Act (House Resolution 6256). The EU&rsquo;s ban would take effect in a similar way, but it would be broader than the US requirements, as it is not limited to forced labour in specific geographic areas. </p> <h3>FLR&rsquo;s key elements</h3> <p>The full text of the provisional agreement has not been published and is expected to become publicly available in the next few weeks. In the meantime, based on what we know at this stage, we have listed below some highlights of the agreement.</p> <h5>Products subject to the FLR and the meaning of &lsquo;forced labour&rsquo;</h5> <p>The ban is expected to apply to products used in whole or in part at any stage of the supply chain (i.e., whether extracted, harvested, produced or manufactured using forced labour). It would not matter whether the occurrence of forced labour arose within the EU or outside, nor whether it was the final product or one of the product components that benefited from forced labour. Prior versions of the FLR defined &lsquo;forced labour&rsquo; by referencing the International Labour Organization Convention &ndash; &lsquo;all work or service which is exacted from any person under the menace of any penalty and for which the said person has not offered [themselves] voluntarily&rsquo;. </p> <h5>In-scope companies</h5> <p>The FLR will apply to small and medium-sized enterprises (SMEs), as well as large companies, placing products on the EU market, distributing products within the EU, or exporting products outside the EU.</p> <h5>Investigations and enforcement will follow a risk-based approach</h5> <p>The provisional agreement sets out clear criteria to be applied by enforcement authorities when assessing risks and violations:</p> <ul> <li>The scale and severity of suspected forced labour, including the likely presence of state-imposed forced labour.</li> <li>The quantity or volume of the noncompliant product made available on the EU market.</li> <li>The proportion of parts within the final products likely to have been made with forced labour.</li> <li>The proximity of the company to the suspect forced labour risks, as well as the company&rsquo;s leverage to address them.</li> </ul> <h5>Enforcement is likely to focus on high-risk areas and products</h5> <p>According to the text, the European Commission (EC), at the European Parliament&rsquo;s insistence, will develop a list of high-risk areas and products which enforcement authorities will need to <strong>consider</strong> when assessing the likelihood of noncompliance with the FLR. The EC, however, has the power to identify products or product groups for which importers and exporters will have to submit extra details to EU customs, such as information on the manufacturer and suppliers of these products.</p> <h5>Enforcement authorities</h5> <p>Investigatory and decision-making powers will be divided between the EC and the competent authorities of the relevant member state, depending on whether the risks of forced labour were identified outside of the EU or within a particular member state. The final decision of the lead investigatory authority will, however, apply in all member states. Investigations will be supported by a new &lsquo;Forced Labour Single Portal&rsquo;, which will include information on bans, a database of risk areas and sectors, publicly available evidence and a whistleblower portal. Third-country cooperation, in particular with countries with similar legislation, also should be expected, with cooperation and information-sharing agreements envisaged by the agreed text.</p> <h5>Risks of product seizures, disposal and fines</h5> <p>If investigations conclude that forced labour has been used, the enforcement authorities can ban or require the withdrawal and disposal of the relevant goods from the EU market and online marketplaces. Noncompliant goods also may be confiscated at customs. The goods would then have to be donated, recycled or destroyed. The provisional agreement clarifies that the requirement to dispose of the product only relates to the noncompliant component and not necessarily the product as a whole if it is possible to replace the individual noncompliant component. However, if companies eliminate forced labour from their supply chains, banned products can be admitted back on EU market. Companies that do not comply also can be fined.</p> <h5>Publication of guidelines</h5> <p>Guidelines are to be published for companies and enforcement authorities to support compliance efforts and set out best practices. These guidelines, which will include accompanying measures for micro-companies and SMEs, will be available through the &lsquo;Forced Labour Single Portal&rsquo; to be launched by the European Commission.</p> <p>The FLR will not place specific due diligence requirements on businesses. However, it is clear that businesses will need good supply chain visibility to mitigate potentially costly consequences of noncompliance.</p> <h3>Next steps</h3> <p>Historically, a provisional agreement has provided near certainty that legislation will be adopted without significant further changes. Recently, however, we have seen examples of provisional agreements not being formally adopted by the European Parliament and member states in the Council of the European Union.</p> <p>EU member states and the European Parliament now need to adopt the FLR for the ban to take effect. Following approval by the EU Council on 13 March 2024, the final step is for the European Parliament to approve the legislation during its April plenary. Once the law has entered into force, EU countries will have three years to start applying the new rules.</p>Wed, 13 Mar 2024 07:00:00 Z{D9593D87-88C1-4353-B9EB-2E64B5401794}https://www.cooley.com/news/insight/2024/2024-03-12-playing-nice-in-the-sandbox-fda-finally-harmonizes-medical-device-manufacturing-requirements-with-isoPlaying Nice in the Sandbox: FDA (Finally) Harmonizes Medical Device Manufacturing Requirements With ISO<p>On February 2, 2024, the US Food and Drug Administration (FDA) published a much-awaited final rule: the Quality Management System Regulation (QMSR).<sup>1</sup>&nbsp; By issuing this rule, FDA amended the medical device current good manufacturing practice (cGMP) requirements of 21 CFR Part 820 &ndash; the Quality System Regulation (QSR) &ndash; to align more closely with the quality management system (QMS) requirements used by other countries. The QMSR incorporates by reference the 2016 edition of ISO 13485, an international standard specific to device quality management systems set by the International Organization for Standardization (ISO). In addition, the QMSR incorporates by reference Clause 3 of ISO 9000:2015, &ldquo;Quality management systems &ndash; Fundamentals and Vocabulary&rdquo; (ISO 9000), which contains terms and definitions that are indispensable for the application of ISO 13485. </p> <p>The QMSR establishes additional requirements that clarify certain expectations and concepts used in ISO 13485, which ensure consistency with other applicable requirements in the Federal Food, Drug, and Cosmetic Act (FDCA) and its implementing regulations. Moreover, the QMSR makes conforming edits to 21 CFR Part 4 to clarify that these device cGMP requirements apply equally to combination products. </p> <p>The QMSR reflects FDA&rsquo;s continued efforts to align FDA&rsquo;s regulatory framework with that used by other regulatory authorities and promote consistency in the regulation of medical devices. ISO 13485 &ndash; an independent standard &ndash; is used internationally by many regulatory authorities to inform or govern quality management system requirements for device manufacturers, and also is used in regulatory harmonization programs, such as the Medical Device Single Audit Program (MDSAP). FDA and regulatory authorities from four other countries participate in the MDSAP. </p> <p>Recognizing that the requirements in ISO 13485 have become more closely aligned with the QSR requirements, FDA seized upon the opportunity for regulatory harmonization and amended Part 820<sup>2</sup>&nbsp; to replace the QSR with the QMSR. FDA issued the proposed rule on February 23, 2022, nearly two years before the recently issued final version. </p> <h3 class="h3">Important points to keep in mind while transitioning to the QMSR</h3> <h4 class="h4">1. Although the QMSR is &lsquo;substantially similar&rsquo; to the QSR, there are some key differences. </h4> <p>FDA determined that the requirements in ISO 13485 are, when taken in totality, &ldquo;substantially similar&rdquo; to the requirements of the QSR and provide a similar level of assurance in a firm&rsquo;s quality management system and in its ability to consistently manufacture devices that are safe, effective and otherwise in compliance with the FDCA. Although there are many similarities between the QMSR and QSR, there also are some key differences that should be noted, as discussed below. </p> <p>Similarities</p> <ul> <li><strong>The QMSR retains certain definitions from the QSR.</strong> These include the definitions for &ldquo;component,&rdquo; &ldquo;finished device,&rdquo; &ldquo;human cell, tissue, or cellular or tissue-based product (HCT/P) regulated as a device,&rdquo; &ldquo;manufacturer&rdquo; and &ldquo;remanufacturer.&rdquo; In addition, all definitions in section 201 of the FDCA &ndash; such as &ldquo;device,&rdquo; &ldquo;label&rdquo; and &ldquo;labeling&rdquo; &ndash; shall apply to and supersede the definitions in ISO 13485. This is to ensure that the definitions in the QMSR are consistent with the FDCA (FDA&rsquo;s operative statute) and its implementing regulations.</li> <li><strong>The QMSR has the same scope as the QSR. </strong>The QMSR, like the QSR, will apply only to manufacturers of finished devices, although, as was the case with the QSR, FDA has authority under the FDCA to extend QMSR requirements to manufacturers of components since &ldquo;components&rdquo; are part of the &ldquo;device&rdquo; definition under section 201(h) of the FDCA. In addition, the QMSR, like the QSR, will not apply to manufacturers of blood and blood components used for transfusion or for further manufacturing, even though such products may meet the definition of device under the FDCA. Rather, such manufacturers are subject to 21 CFR Parts 600 &ndash; 689, including the cGMP requirements for blood and blood components in 21 CFR Part 606.</li> </ul> <ul> <li><strong>The QMSR uses the definition of &ldquo;top management&rdquo; set forth in ISO 9000 rather than the term &ldquo;management with executive responsibility&rdquo; or its definition from the QSR.</strong> FDA clarified, however, that this change in terminology does not change FDA&rsquo;s expectation that manufacturers, led by individuals with executive responsibilities, embrace a culture of quality as a key component in ensuring the manufacture of safe and effective medical devices that otherwise comply with the FDCA.<sup>3</sup></li> </ul> <p>Differences </p> <ul> <li><strong>The QMSR places more emphasis than the QSR on risk management throughout the life cycle of medical devices to ensure their safety and effectiveness. </strong>The QMSR, unlike the QSR, includes a specific requirement that device manufacturers &ldquo;shall document one or more processes for risk management in product realization&rdquo; and shall maintain records of risk management.<sup>4</sup>&nbsp; Currently, risk management in the QSR is captured primarily in requirements concerning design controls in 21 CFR &sect; 820.30. According to FDA, &ldquo;the more explicit integration of risk management throughout ISO 13485 and incorporated into the QMSR will help best meet the needs of patients and users and facilitate access to quality devices along with the progress of science and technology.&rdquo;<span style="font-size: 13px;"><sup>5</sup></span></li> <li><strong>The QMSR will no longer use certain terms that are in the QSR. </strong>These terms include &ldquo;design history file,&rdquo; &ldquo;device manufacturing record&rdquo; and &ldquo;device history record.&rdquo; Moreover, the terms &ldquo;safety and performance&rdquo; in ISO 13485 will be used in lieu of, and be deemed to have the same meaning as, &ldquo;safety and effectiveness&rdquo; in the FDCA. Although it is debatable whether &ldquo;performance&rdquo; has the same meaning as &ldquo;effectiveness&rdquo; &ndash; and FDA acknowledged in the preamble to the QMSR that these terms are not interchangeable &ndash; FDA was satisfied that the provisions of the QMSR collectively are intended to assure that finished devices will be manufactured to meet the statutory requirement for safety and effectiveness under the FDCA.<sup>6</sup>&nbsp; Thus, &ldquo;safety and performance&rdquo; shall have the meaning of &ldquo;safety and effectiveness&rdquo; in Clause 0.1 of ISO 13485. Moreover, the QMSR explicitly stated that &ldquo;the phrase &lsquo;safety and performance&rsquo; does not relieve a manufacturer from any obligation to implement controls or other measures that provide reasonable assurance of safety and effectiveness.&rdquo;<sup>7</sup></li> <li><strong>The QMSR uses the term and definition of &ldquo;customer&rdquo; set forth in ISO 9000.</strong> Certain customer requirements in ISO 13485 are not grounded in the &ldquo;safety and effectiveness&rdquo; requirements of the FDCA. Thus, FDA noted in the preamble to the QMSR that FDA does not intend to enforce any customer requirements (e.g., requirements relating to customer property in Clause 7.5.10 of ISO 13485) to the extent that they are interpreted to go beyond the safety and effectiveness of the devices being manufactured. </li> </ul> <h4 class="h4">2. Device manufacturers must continue to comply with the QSR until the QMSR becomes effective on February 2, 2026. </h4> <p>FDA had initially proposed that the QMSR would become effective one year after its issuance. However, in response to public comments, FDA determined that one year would not be enough and agreed to a two-year transitional period in the final rule. </p> <p>While the QMSR is intended to streamline QMS regulations and harmonize these requirements with international standards by reducing the administrative burden of complying with multiple regulatory schemes, the QMSR may initially create disproportionate burden on small manufacturers that do not operate on an international scale and will need to adjust to the rule. </p> <p>Although device manufacturers must continue to comply with the QSR until the QMSR becomes effective, those unfamiliar with ISO 13485 should begin to become familiar with the QMSR, train their employees, and update their procedures and practices to ensure an effective transition. Those who have not begun or are getting ready to launch their first medical device should begin transitioning to QMSR now.<sup>8</sup></p> <h4 class="h4">3. Although the QMSR incorporates by reference only ISO 13485 and Clause 3 of ISO 9000, other international standards may provide useful guidance. </h4> <p>ISO 13485 references ISO 14971 and other standards that are not incorporated by reference in the QMSR, but FDA noted that &ldquo;such standards may be helpful in understanding application of ISO 13485,&rdquo; and &ldquo;organizations may choose to incorporate concepts, processes, or other aspects of ISO 9000 into their organization&rsquo;s QS &hellip; so long as the resultant system is compliant with the QMSR established in this rulemaking.&rdquo;<sup>9</sup></p> <h4 class="h4">4. FDA should continue to accept MDSAP audits in lieu of FDA inspections, but FDA will not require or rely solely on ISO 13485 certificates for regulatory oversight. ISO 13485 certificates from third-party auditing organizations are not substitutes for FDA inspections. </h4> <p>The MDSAP program is a voluntary certification program that allows for a single QMS audit based on ISO 13485, in addition to other applicable FDA device regulatory requirements. FDA should continue to accept MDSAP audits &ndash; which may discuss the manufacturer&rsquo;s certification to ISO 13485 &ndash; in lieu of routine FDA surveillance inspections. MDSAP audits are conducted by third-party auditing organizations that have applied for participation in MDSAP and received &ldquo;authorized&rdquo; or &ldquo;recognized&rdquo; status after having been evaluated by the participating regulatory authorities. FDA uses the MDSAP audit reports as an additional tool for regulatory oversight of audited manufacturers. </p> <p>While many device manufacturers undergo audits by third-party organizations outside of the MDSAP for compliance with ISO 13485, because FDA does not conduct oversight of non-MDSAP auditing organizations and does not evaluate the audit reports issued outside of the MDSAP, FDA will not require medical device manufacturers to obtain ISO 13485 certification and will not rely on ISO 13485 certificates to conduct its regulatory oversight of medical device manufacturers. Thus, FDA inspections will not result in the issuance of a certificate of conformity to ISO 13485, and FDA will not accept certification to ISO 13485 in place of FDA inspections.</p> <h4 class="h4">5. The QMSR requires additional recordkeeping that had been exempted under the QSR regime.</h4> <p>In an effort to move toward global harmonization, FDA decided to forego certain exceptions, such as those for management review, quality audits and supplier audits, which are inspected by other regulators and auditing entities (e.g., MDSAP auditing organizations). </p> <h4 class="h4">6. The QMSR continues to require certain information concerning complaints, as well as device labeling and packaging, to ensure consistency with the FDCA and FDA regulations. </h4> <p>The QMSR retains some QSR provisions that are not in ISO 13485 to avoid conflict with the existing requirements in the FDCA and implementing regulations. These include, for example, certain requirements for complaint records and device labeling and packaging controls. From a practical standpoint, the complaint handling requirements under the QSR will continue to apply with respect to entities serving as US agents of foreign manufacturers of medical devices. </p> <h4 class="h4">7. FDA acknowledges the tension between ISO 13485 and provisions of the FDCA and/or its implementing regulations. </h4> <p>Acknowledging the conflicts between certain ISO 13485 provisions and the FDCA, FDA included in the QMSR an express preemption provision &ndash; namely, that any conflict will be resolved in accordance with the FDCA and/or its implementing regulations. For example: </p> <ul> <li>The definitions of &ldquo;device&rdquo; and &ldquo;labeling&rdquo; in section 201 of the FDCA supersede the correlating definitions for &ldquo;medical device&rdquo; and &ldquo;labelling&rdquo; in ISO 13485.</li> <li>The terms &ldquo;safety and performance&rdquo; in ISO 13485 shall be construed to mean the same as &ldquo;safety and effectiveness&rdquo; in section 520(f) of the FDCA. </li> </ul> <p>The burden is on the manufacturers to comply with all relevant laws and regulations, so this is an issue manufacturers will need to be aware of as they make the transition to compliance with the QMSR.</p> <h4 class="h4">Notes</h4> <ol> <li>Medical Devices; Quality System Regulation Amendments, 89 Fed. Reg. 7496 (February 2, 2024), which is to be codified at 21 CFR Part 820 and Part 4.</li> <li>Using its authority under section 520(f) of the FDCA, FDA issued a final rule for device cGMP requirements in July 1978 and created Part 820 (43 Fed. Reg. 31508). Twenty years later, FDA significantly revised Part 820 in a final rule published in the Federal Register on October 7, 1996 (1996 Final Rule), which established the QSR still in effect today. See 61 Fed. Reg. 52602 (the QSR became effective on June 1, 1997). Until now, FDA had not undertaken a significant revision of Part 820 since then.</li> <li>89 Fed. Reg. at 7506.</li> <li>89 Fed. Reg. at 7500.&nbsp;&nbsp;</li> <li>89 Fed. Reg. at 7501.&nbsp;&nbsp;</li> <li>89 Fed. Reg. at 7513.&nbsp;&nbsp;</li> <li>89 Fed. Reg. at 7524.</li> <li>Both ISO 13485 and ISO 9000 are available at the <a rel="noopener noreferrer" href="https://ibr.ansi.org/Standards/iso1.aspx" target="_blank">American National Standards Institute (ANSI) Incorporated by Reference (IBR) Portal</a>, or a copy may be purchased from the <a rel="noopener noreferrer" href="https://www.iso.org/store.html" target="_blank">International Organization for Standardization</a>, BIBC II, Chemin de Blandonnet 8, CP 401, 1214 Vernier, Geneva, Switzerland; +41 22 749 01 11; <a href="mailto:customerservice@iso.org">customerservice@iso.org</a>.&nbsp;&nbsp;</li> <li>89 Fed. Reg. at 7506.&nbsp;&nbsp;</li> </ol>Tue, 12 Mar 2024 13:38:39 Z{02822370-9FCF-45CE-B324-3DEBD047FC77}https://www.cooley.com/news/insight/2024/2024-03-07-federal-district-court-rules-corporate-transparency-act-unconstitutional-but-law-remains-in-effectFederal District Court Rules Corporate Transparency Act Unconstitutional, but Law Remains in Effect<p>Last Friday, a federal court in Alabama ruled in <em>National Small Business United v. Yellen</em>&nbsp;that the beneficial ownership information (BOI) reporting requirements established by the Corporate Transparency Act (CTA) are unconstitutional. These CTA provisions, implemented through the BOI reporting rule promulgated by the US Department of the Treasury&rsquo;s Financial Crimes Enforcement Network (FinCEN) in September 2022, just started taking effect on January 1, 2024. </p> <p>Pursuant to the CTA and the BOI reporting rule, unless exempt, any company formed in the US, or any foreign company that registers to do business in the US, by filing a document with a secretary of state or similar office is a covered &ldquo;reporting company&rdquo; that must submit information to FinCEN about the company and its beneficial owners (as defined by the CTA and by rule). </p> <p>The plaintiffs in the case argued that the CTA exceeded the Constitution&rsquo;s limits on the legislative branch and lacked a sufficient nexus to any enumerated power to be a necessary or proper means for achieving the policy goals of Congress. The court rejected FinCEN&rsquo;s arguments that the CTA was necessary and proper to carry out Congress&rsquo; foreign affairs, national security and taxing powers. Additionally, the court held that the CTA did not regulate interstate commerce or purely economic intrastate activity as authorized by the commerce clause. However, the <a rel="noopener noreferrer" href="https://www.govinfo.gov/content/pkg/USCOURTS-alnd-5_22-cv-01448/pdf/USCOURTS-alnd-5_22-cv-01448-0.pdf" target="_blank">ruling</a>&nbsp;only enjoins FinCEN and the Treasury Department from requiring the plaintiffs to comply with the CTA. FinCEN subsequently confirmed in a <a rel="noopener noreferrer" href="https://www.fincen.gov/news/news-releases/notice-regarding-national-small-business-united-v-yellen-no-522-cv-01448-nd-ala" target="_blank">brief notice</a> posted on its website late Monday, March 4, that it will comply with the court&rsquo;s order &ldquo;for as long as it remains in effect,&rdquo; and is not currently enforcing the CTA against the individually named plaintiff, reporting companies for which he is the beneficial owner or company applicant, the National Small Business Association, and members of the National Small Business Association (as of March 1, 2024). </p> <p>In other words, it appears that the CTA is still in effect, and FinCEN may still enforce the CTA against individuals and entities other than the plaintiffs. While the court&rsquo;s ruling and FinCEN&rsquo;s response leaves the door open to future litigation (or a legislative change), at this time there is nothing concrete that would suggest that other covered reporting companies do not need to comply and file BOI reports by the applicable deadline. While FinCEN or the Treasury Department also could appeal the district court&rsquo;s ruling and/or seek an injunction, as of March 6, 2024, the agencies do not appear to have done so or indicated that they will do so. </p> <p>Covered entities should continue to monitor for updates or additional guidance, as we anticipate that the situation will continue to develop. In addition, even leaving aside the CTA, companies should be mindful of other new BOI reporting obligations under new state laws based on the CTA, such as New York&rsquo;s <a rel="noopener noreferrer" href="https://legislation.nysenate.gov/pdf/bills/2023/S995B" target="_blank">LLC Transparency Act</a>, which remain unaffected by the court&rsquo;s decision in this case. </p> <p><em>Cooley associate Cailin Liu also contributed to this alert.</em> </p>Thu, 07 Mar 2024 22:19:00 Z{48ABAA28-336E-43B9-9FF1-3E3DE379B2E8}https://www.cooley.com/news/insight/2024/2024-03-07-sec-adopts-climate-reporting-requirementsSEC Adopts Climate Reporting Requirements<p>On March 6, 2024, the Securities and Exchange Commission (SEC) voted at an open meeting to adopt final rules to mandate climate-related disclosure by public companies. The long-awaited rules will require qualitative disclosure on climate risk, risk management, governance and targets, as well as quantitative emissions and expenditure reporting requirements under certain circumstances. Initial disclosures under the final rules for large accelerated filers will be due in 2026, with emissions and financial expenditures disclosures due in 2027. Please see the summary table at the end of this alert for more information on disclosure dates, including for other filers.</p> <p style="border: 3px solid #5046ff; padding: 20px; background-color: #eeeeee;">This initial publication will be followed by subsequent articles exploring the final climate rules in more detail, including their relationship to the California and European Union (EU) rules. Cooley also will be <a href="https://www.cooley.com/events/2024/2024-03-12-sec-climate-disclosure-rules-overview-of-the-newly-adopted-requirements-and-next-steps" target="_self">hosting a webinar on March 12 at 1 pm EDT/10 am PDT</a> to discuss the final rules, as well as key questions and next steps for issuers. </p> <p>While the adopted qualitative disclosure requirements are broadly consistent with the proposed requirements, the final rules introduce numerous significant changes with respect to emissions reporting and attestations that are intended to reduce reporting burdens on many companies and provide increased breathing room for disclosure preparation. SEC Chair Gary Gensler, in his prepared remarks, noted several times that the adopted rules are &ldquo;grounded in materiality,&rdquo; and almost all the new disclosure requirements will be subject to a materiality determination, in line with other parts of Regulation S-K. Of particular note, the final rules limit Scope 1 and 2 greenhouse gas (GHG) emissions reporting to material emissions and generally link climate expenditure, strategy, transition plans and targets disclosures to material risks and impacts. Additionally, the final rules do not include Scope 3 emissions reporting requirements and allow for significant phase-in periods for attestations of Scope 1 and 2 GHG emissions. The final rules also pare back the financial statement disclosure from the proposed rule by removing the requirement to disclose the impact of climate-related events on each line item of a company&rsquo;s financial statements.</p> <p>The SEC published its initial climate rule proposal on March 21, 2022, which went on to generate more than 24,000 comments from the public, in addition to extensive congressional, media and industry coverage. Adoption of the final rules was delayed several times, during which period other climate-related disclosure rules were published in the US and other jurisdictions. These include three climate reporting laws in California (<a href="https://www.cooley.com/news/insight/2023/2023-09-19-california-ghg-emissions-and-climate-risk-bills-near-finalization" target="_self">SB 253, SB 261</a> and <a href="https://www.cooley.com/news/insight/2023/2023-10-16-new-california-law-establishes-significant-disclosure-requirements-related-to-climate-goals-claims-and-offsets-beginning-january-1-2024" target="_self">AB 1305</a>) and the <a href="https://www.cooley.com/news/insight/2023/2023-08-11-eu-adopts-long-awaited-mandatory-esg-reporting-standards" target="_self">Corporate Sustainability Reporting Directive (CSRD) framework</a> in the EU. Although the SEC&rsquo;s modified emissions reporting requirements will likely be met with some relief for many issuers, as well as nonpublic companies in issuers&rsquo; value chains, the impact of these changes will be significantly blunted due to the broad Scope 1, 2 <strong>and</strong> 3 emissions reporting requirements under the California and EU rules, which are expected to apply to thousands of US companies.</p> <p>Disclosure will be required for both domestic and foreign private issuers in annual reports on Forms 10-K and 20-F, as applicable, as well as in registration statements under the Securities Act. The climate rules will apply similarly to foreign private issuers, except that an issuer that files consolidated financial statements under International Financial Reporting Standards (IFRS) as issued by the International Accounting Standards Board (IASB) would apply IFRS as the basis for calculating and disclosing the financial statement metrics rather than US generally accepted accounting principles (GAAP). Foreign private issuers that qualify to use the Multijurisdictional Disclosure System (MJDS) and file annual reports on Form 40-F are exempt from the final climate-related disclosure rules. </p> <p>The table below provides a high-level summary of the emissions and qualitative disclosure requirements under the new Regulation S-K Item 1500, as well as the financial statement disclosure requirements under the new Regulation S-X Article 14.</p> <img src="-/media/7beccd8682094429b4125d8bd6409729.ashx" alt="2024 03 07 SEC Climate Reporting Alert 1" />&nbsp; <h3>Disclosure compliance dates</h3> <p>Reporting requirements under the climate rules are based on fiscal years beginning in a given calendar year &ndash; or &ldquo;FYBs.&rdquo; For example, FYB 2025 would include fiscal years beginning on January 1 through December 31, 2025.</p> <img src="-/media/fe4407e3ac7e443a8cc5279bf145c555.ashx" alt="2024 03 07 SEC Climate Reporting Alert 2" />&nbsp; <p>* All filing dates assume December 31 fiscal year-ends.</p> <p>** To allow for additional time to prepare emissions data, disclosure of GHG emissions data may be forward incorporated into a company&rsquo;s second quarter 10-Q or filed in a 10-K/A by the filing deadline for the second quarter 10-Q. For foreign private issuers, GHG emissions data is due in a 20-F/A no later than 225 days after the fiscal year-end. In each case, to take advantage of this delay, the issuer must include a statement in its annual report on Form 10-K or 20-F, as applicable, to indicate its express intention to later amend its filing to make these GHG emissions disclosures.</p> <p>The new rules will become effective 60 days after publication in the Federal Register. Companies will be required to comply with the new rules based on filer status. For detailed information regarding filer status determination, refer to <a rel="noopener noreferrer" href="https://www.cooley.com/-/media/cooley/pdf/sec-filer-status-guide.pdf" target="_blank">Cooley&rsquo;s Guide to Determining Securities Exchange Act Filer and Smaller Reporting Company Status</a>.</p> <h5>Notes</h5> <ol> <li>AFs that are smaller reporting companies or emerging growth companies are not required to provide GHG emissions disclosure.</li> <li>&ldquo;Organizational boundaries&rdquo; refer to the company&rsquo;s determination of the boundaries that define the operations that it owns or controls for purposes of calculating GHG emissions. If such boundaries materially differ from the scope of entities and operations included in a company&rsquo;s consolidated financial statements, the rules will require a brief explanation of this difference.</li> <li>&ldquo;Operational boundaries&rdquo; refer to the boundaries that determine the direct and indirect emissions associated with the business operations owned or controlled by a registrant.</li> </ol>Thu, 07 Mar 2024 08:00:00 Z{7DB30367-F9B7-408F-83C1-534D5D430F8F}https://www.cooley.com/news/coverage/2024/2024-03-03-cooley-partner-appears-on-redefining-cybersecurityCooley Partner Appears on ‘Redefining CyberSecurity’<p>Cooley partner Andrew Goldstein appeared on the &ldquo;Redefining CyberSecurity&rdquo; podcast, discussing implications of the Securities and Exchange Commission&rsquo;s decision to charge SolarWinds&rsquo; chief information security officer in the aftermath of a cyberattack.</p> <p><a rel="noopener noreferrer" href="https://redefining-cybersecurity.simplecast.com/episodes/cyber-governance-alliance-and-the-effort-to-fight-for-ciso-liability-protections-a-conversation-with-emily-coyle-dr-amit-elazari-and-andrew-goldstein-redefining-cybersecurity-podcast-with-sean-martin" target="_blank" class="arrow-link">Listen to the episode</a></p> <p><a rel="noopener noreferrer" href="https://open.spotify.com/episode/6Aiqq2G5oRU4AV9FhIEAYB?si=c9BFp24bSbakR8to1Nt6sQ&amp;nd=1&amp;dlsi=0ea45cef6a1a4d82" target="_blank" class="arrow-link">Listen on Spotify</a></p> <p><a href="https://www.cooley.com/news/coverage/2024/2024-02-02-cooley-cybersecurity-leaders-file-brief-opposing-secs-solarwinds-cyberattack-case" class="arrow-link">Read more about Cooley&rsquo;s amicus brief filed in the SolarWinds case</a></p>Wed, 06 Mar 2024 20:39:00 Z{FF2E1DA0-B050-41F9-B16F-3D2DCD6BA3D5}https://www.cooley.com/news/coverage/2024/2024-03-06-adaptive-phage-therapeutics-enters-into-definitive-merger-agreement-with-biomxAdaptive Phage Therapeutics Enters Into Definitive Merger Agreement With BiomX<p><strong>Reston – March 6, 2024 –</strong> Cooley advised Adaptive Phage Therapeutics (APT), a US-based, privately held, clinical-stage biotechnology company pioneering the development of phage-based therapies to combat bacterial infections, on <a rel="noopener noreferrer" href="https://www.globenewswire.com/news-release/2024/03/06/2841300/0/en/BiomX-Announces-Entry-into-Merger-Agreement-with-Adaptive-Phage-Therapeutics-and-Concurrent-50-Million-Financing.html" target="_blank">its definitive merger agreement with BiomX</a> (NYSE: PHGE), a clinical-stage company advancing novel natural and engineered phage therapies that target specific pathogenic bacteria. Lawyers Christian Plaza, Matthew Silverman, Brian Leaf, Matthew Schwee, Joyce Li and Rasha Printz led the Cooley team advising APT.</p> <p>Immediately after the effective date of the merger, BiomX will own approximately 55%, and the former stockholders of APT will own approximately 45%, of the consolidated entity of BiomX and APT. The merger is expected to close within the next 30 days, subject to the satisfaction of the closing conditions described in the definitive merger agreement.</p>Wed, 06 Mar 2024 20:20:00 Z{7C5EFAAE-9C67-4150-9C26-81DF57B75FE8}https://www.cooley.com/news/insight/2024/2024-03-06-cfpb-issues-final-rule-to-reduce-credit-card-late-fees-to-8-for-large-credit-card-issuersCFPB Issues Final Rule to Reduce Credit Card Late Fees to $8 for Large Credit Card Issuers<p>On March 5, 2024, the Consumer Financial Protection Bureau (CFPB) <a rel="noopener noreferrer" href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-bans-excessive-credit-card-late-fees-lowers-typical-fee-from-32-to-8/" target="_blank">issued a final rule</a> amending provisions in Regulation Z that govern credit card late fee charges. The final rule follows the March 2023 release of the <a href="https://www.cooley.com/news/insight/2023/2023-02-03-cfpb-issues-notice-of-proposed-rulemaking-on-credit-card-late-fees" target="_self">proposed rule related to credit card late fees</a> and will take effect 60 days after publication in the Federal Register.</p> <p>For credit card issuers with one million or more open accounts, together with their affiliates, the final rule:</p> <ol> <li>Adjusts the safe harbor dollar amount for late fees from up to $41 to $8 and eliminates a higher safe harbor dollar amount for late fees for subsequent violations of the same type.</li> <li>Requires larger card issuers that want to charge late fees above the $8 threshold to prove that the higher fee is necessary to cover actual costs (but clarifies post-charge off costs cannot be included in the costs analysis).</li> <li>Limits a larger card issuer&rsquo;s ability to implement annual inflation adjustments for the safe harbor dollar amounts in connection with the late fee safe harbor amount. The CFPB instead will &ldquo;monitor the market&rdquo; and make adjustments to the safe harbor amount as necessary.</li> </ol> <p>The CFPB expects that the new $8 safe harbor amount will apply to the largest 30 to 35 credit card issuers, covering more than 95% of the total outstanding balances in the credit card market as of the end of 2022.</p> <h3>Who does the rule cover?</h3> <p>The final rule establishes different requirements for credit card issuers based on the number of accounts held by issuers and their affiliates. In supplementary information accompanying the final rule, the CFPB indicates that applying the rule to smaller card issuers would result in a &ldquo;heightened compliance burden.&rdquo; According to a statement issued by CFPB Director Rohit Chopra, the CFPB &ldquo;did not find evidence [that] these smaller companies are employing the fee churning business model, and in fact they generally charge much lower fees overall.&rdquo; </p> <p>As a result, smaller card issuers may continue to charge a higher safe harbor threshold for credit card late fees and automatically increase the safe harbor dollar amount based on the Consumer Price Index. Note that under the final rule, if a smaller card issuer had fewer than one million open credit card accounts for the entire preceding calendar year but meets or exceeds that number of open credit card accounts in the current calendar year, the entity will no longer be a smaller card issuer as of 60 days after meeting or exceeding that number of open credit card accounts.</p> <h3>Highlights of the final rule</h3> <h5>Lowering safe harbor dollar amount for late fees to $8</h5> <p>Currently under Regulation Z, a card issuer may not impose a penalty fee (e.g., late fees, over-the-limit fees and insufficient funds fees) for violating the terms of a credit card account unless the issuer has determined that the amount of the fee is a reasonable proportion of the total costs incurred by the issuer for that type of violation or complies with a safe harbor provision. The current safe harbor for credit card issuers is $30 for the first violation and $41 thereafter for a violation of the same type within the next six billing cycles. </p> <p>The final rule lowers this safe harbor threshold to $8 for larger card issuers in connection with late payment fees only. The $8 amount also would apply to all other subsequent late payment violations that occur within six months of the initial violation. The final rule permits larger card issuers to charge a fee greater than $8 if they can prove that the higher fee is necessary to cover their incurred collection costs. </p> <h5>Effective date</h5> <p>The final rule will take effect 60 days after publication in the Federal Register. The CFPB indicates that larger card issuers &ldquo;likely have the capacity and resources to comply with the revisions&rdquo; to Regulation Z within 60 days of the final rule being published.</p> <h5>Other penalty fees </h5> <p>Pursuant to annual adjustments for safe harbor dollar amounts, the final rule increases the amount that smaller card issuers are permitted to charge for credit card late fees, as well as the amount that all card issuers may charge for all other penalty fees. For the initial violation, the safe harbor amount increased to $32 and to $43 for subsequent violations of the same type that occur during the same billing cycle or in one of the next six billing cycles. </p> <p>Again, these higher amounts do not apply to late fees charged by larger institutions. This means that larger card issuers may continue to charge up to $43 for penalty fees (other than late fees), such as returned payment fees. Still, the CFPB reiterated that it will monitor the market for any notable increases in the prevalence of other types of penalty fees, including over-the-limit fees. </p> <h5>Cost analysis</h5> <p>The final rule also clarifies that with respect to all penalty fees (including late fees), for both smaller and larger card issuers, the cost analysis for determining whether a fee is reasonable may not include any collection costs that are incurred after an account is charged off pursuant to loan loss provisions. In the supplementary information accompanying the final rule, the CFPB stated its belief that permitting issuers to recover losses &ndash; like post-charge off costs &ndash; through late fees is not consistent with the intent of credit card-related laws and regulations. Rather, according to the CFPB, issuers have other means to recover these costs, including through upfront rates.</p> <h5>Rate and fee increases</h5> <p>The CFPB indicates <a rel="noopener noreferrer" href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-bans-excessive-credit-card-late-fees-lowers-typical-fee-from-32-to-8/" target="_blank">in its press release</a> and in the supplementary information accompanying the final rule that card issuers have several tools at their disposal for deterring and managing higher risks posed by late payments &ndash; including increasing interest rates, raising annual and monthly fees, and reducing credit lines. However, larger card issuers that consider increasing annual percentage rates in response to adjusting their late payment structure will be required to perform a rate reevaluation under Section 1026.59 of Regulation Z. </p> <h5>Card issuers may charge late fees up to the amount of the required minimum payment </h5> <p>The CFPB initially proposed a restriction on any late fee charge higher than 25% of the required minimum payment. As currently permitted under Regulation Z, card issuers may continue to charge a late fee that is 100% of the required minimum payment owed by the cardholder, pursuant to any cost-analysis requirements under Regulation Z.</p> <p>The CFPB received several comments from trade associations, banks and credit unions in opposition to the proposed 25% cap. Among other things, these commenters expressed concerns that the 25% limitation would:</p> <ul> <li>Be an impediment to card issuers&rsquo; ability to cover current or future increased costs associated with late payments.</li> <li>Increase the upfront costs that card issuers would incur due to a change in terms on all accounts.</li> <li>Cause issuers to raise their minimum payment requirements to charge a higher late fee.</li> </ul> <p>As a result, the CFPB declined to include this provision in the final rule.</p> <h5>No courtesy period requirement </h5> <p>Under the proposed rule, the CFPB considered requiring card issuers to provide a 15-day courtesy period before assessing a late fee to consumers. The final rule does not implement a courtesy period for late fees or any other penalty fees. The CFPB indicates that the potential benefits of imposing a courtesy period were outweighed by the burden it could cause, such as the potential to cause consumer confusion regarding when a minimum payment would be due.</p> <h3>What does this mean for you?</h3> <p>Larger card issuers will need to assess their late fee policies, including whether to implement the $8 safe harbor or to employ a cost analysis to support imposing late fees that exceed $8.</p> <p>Larger card issuers also may need to identify any disclosures impacted by the rule &ndash; including advertising disclosures, account-opening disclosures, periodic statements and renewal notices &ndash; and make changes accordingly. The appendices included in the final rule provide revisions to model disclosures in Regulation Z. Larger card issuers also may want to consider how they will notify consumers and credit card holders of any changes to late fees, if applicable. Regulation Z does not require issuers to provide a change in terms notice when reducing the late fee amount. </p> <p>All card issuers may want to continue to monitor penalty fee policies, particularly as the CFPB and other regulators have demonstrated a focus on regulating so-called junk fees, as well as unfair, deceptive, and abusive acts and practices. This means understanding what fees can be charged, how different types of fees interact with each other and the requirements for disclosing those fees.</p> <p>We will be monitoring the implementation of the rule, particularly in light of the fact that certain lobbying groups and other stakeholders, including the US Chamber of Commerce, have indicated intentions to challenge the final rule. A representative from the Chamber of Commerce <a rel="noopener noreferrer" href="https://www.uschamber.com/finance/u-s-chamber-opposes-new-cfpb-credit-card-late-fees-rule-that-limits-access-to-affordable-consumer-credit" target="_blank">issued a public statement</a>, noting that the &ldquo;Chamber will be filing a lawsuit against the [CFPB] imminently to prevent this misguided and harmful [late fees] rule from going into effect.&rdquo; </p>Wed, 06 Mar 2024 08:00:00 Z{D4129732-D6A1-4ECC-9FC9-7B41E6E777EF}https://www.cooley.com/news/coverage/2024/2024-03-04-viking-therapeutics-announces-632-5-million-public-offering-of-common-stockViking Therapeutics Announces $632.5 Million Public Offering of Common Stock<p><strong>San Francisco &ndash; March 4, 2024 &ndash; </strong>Cooley advised the underwriters of Viking Therapeutics (Nasdaq: VKTX), a clinical-stage biopharmaceutical company focused on the development of novel therapies for metabolic and endocrine disorders, on its $632.5 million public offering of common stock. Partners Denny Won, Kristin VanderPas, Charlie Kim and David Peinsipp led the Cooley team advising the underwriters. </p> <p>Listed on Nasdaq as VKTX, Viking issued and sold 7,441,650 shares of common stock, priced at $85 per share, which includes the full exercise of the underwriters&rsquo; option to purchase 970,650 additional shares of Viking&rsquo;s common stock. The offering closed on March 4, 2024. </p> <p>Morgan Stanley, Leerink Partners, William Blair, Raymond James, Stifel and Truist Securities acted as joint book-running managers for the offering, while Oppenheimer &amp; Co. acted as lead manager. BTIG, HC Wainwright &amp; Co., Maxim Group, and Laidlaw &amp; Company (UK) Ltd. acted as co-managers for the offering. </p>Mon, 04 Mar 2024 14:39:00 Z{73A42DF4-E4EE-4CDB-9EAA-D0D8B5327353}https://www.cooley.com/news/insight/2024/2024-03-04-cfpb-warns-digital-marketers-about-abusive-steering-practicesCFPB Warns Digital Marketers About ‘Abusive’ Steering Practices<p>On February 29, 2024, the Consumer Financial Protection Bureau (CFPB) issued <a rel="noopener noreferrer" href="https://www.consumerfinance.gov/compliance/circulars/consumer-financial-protection-circular-2024-01-preferencing-and-steering-practices-by-digital-intermediaries-for-consumer-financial-products-or-services/" target="_blank">Circular 2024-01</a>, warning operators of &ldquo;digital comparison-shopping tools&rdquo; and &ldquo;lead generators&rdquo; that they may be &ldquo;covered persons&rdquo; subject to CFPB jurisdiction <strong>and</strong> their activities may put them at risk of engaging in &ldquo;abusive&rdquo; acts or practices in violation of federal law. </p> <p>Specifically, the circular describes in detail how certain advertising compensation models that incentivize the promotion of products in the operator or lead generator&rsquo;s financial interest over that of the consumer&rsquo;s may constitute an abusive act or practice. In light of this circular &ndash; and the CFPB&rsquo;s <a href="https://www.cooley.com/news/insight/2024/2024-02-26-cfpb-executes-on-promise-to-utilize-dormant-authority-to-supervise-high-risk-nonbanks" target="_self">recent push to expand jurisdiction</a> over nonbank providers of financial services &ndash; operators, their affiliates, and other financial institutions using online product comparison tools should review their marketing practices and third-party relationships.</p> <h3>CFPB asserts jurisdiction over comparison-shopping websites</h3> <p>Many consumers visit operators to compare costs, features, or other terms for a set of comparable financial products or services. Similarly, lead generators may advertise financial products to consumers, and then sell information they collect through consumer engagement with these advertisements to third-party financial services providers.</p> <p>The Consumer Financial Protection Act prohibits &ldquo;covered persons&rdquo; and &ldquo;service providers&rdquo; from engaging in any abusive act or practice. As a predicate to its guidance, the CFPB describes how operators and lead generators can either be &ldquo;covered persons&rdquo; or &ldquo;service providers&rdquo; &ndash; and therefore subject to CFPB supervision and enforcement, depending in part on their business model. The CFPB takes the position that certain operators or lead generators may be sufficiently engaging with consumers such that they are &ldquo;brokering&rdquo; a credit product &ndash; an activity that is expressly regulated by the CFPB. However, even if the entity is not actually brokering loans, the CFPB also could claim the operator or lead generator is providing consumers with &ldquo;financial advisory services,&rdquo; another defined activity that brings an entity under the CFPB&rsquo;s purview as a covered person. Failing that, the CFPB previously has indicated it considers certain of these businesses to be &ldquo;service providers&rdquo; to actual providers of financial services, and therefore subject to CFPB jurisdiction (as <a href="https://www.cooley.com/news/insight/2022/2022-08-12-cfpb-bolsters-jurisdictional-claim-over-financial-services-digital-marketing-vendors" target="_self">addressed in more detail in a 2022 interpretive rule</a>).</p> <h3>When is a digital comparison-shopping presentation &lsquo;abusive&rsquo;?</h3> <p>An act is &ldquo;abusive&rdquo; when, among other things, it takes &ldquo;unreasonable advantage&rdquo; of the consumer&rsquo;s &ldquo;reasonable reliance&rdquo; on the institution to act in the interests of the consumer. (For a refresher, check out our <a href="https://www.cooley.com/news/insight/2023/2023-04-11-cfpb-issues-policy-statement-on-cfpas-prohibition-on-abusive-conduct" target="_self">April 2023 client alert</a> on the CFPB&rsquo;s abusiveness policy statement.) As highlighted in the circular, operators of &ldquo;digital comparison-shopping tools&rdquo; may have a higher risk of being accused of engaging in allegedly abusive acts or practices where their stated goal is to help consumers make informed decisions about available financial products and services. When an operator presents more expensive or less favorable products to consumers based on the operator&rsquo;s own financial interests, the CFPB suggests there is risk of abusive conduct. The CFPB also warns it considers an operator or lead generator&rsquo;s ability to gather data as a benefit relevant to its abusive analysis. The circular further indicates that the CFPB will carefully consider any affirmative (or implicit) representations made by operators to consumers about the nature of their services in evaluating potential abusiveness. </p> <p>To illustrate its concerns, the CFPB details eight hypothetical abusive presentation models. A number of the examples merely highlight the practice of promoting a particular product based on financial gain to the operator rather than the consumer&rsquo;s interest, particularly when the consumer can identify product features of importance to them. However, the CFPB suggests that other presentation features intended to influence consumer choice, such as a dynamic user interface or requiring fewer clicks to access product information, also will be evaluated. The circular also indicates that steering consumers to certain products to satisfy advertising volume allocations, or using dynamic bidding or a &ldquo;bounty system&rdquo; to determine the presentation of offers to consumers with certain demographic or other characteristics, could be abusive.</p> <h3>Looking ahead</h3> <p>This circular is part of the CFPB&rsquo;s multiyear push to target dark patterns in the offering of financial products and services, and to make unfair, deceptive, or abusive acts and practices (UDAAP) concepts relevant to today&rsquo;s digital marketplace. Importantly, one of the reasons the CFPB issues circulars is to promote consistency in approach across enforcement agencies. To that end, the circular provides guidance specifically directed to other enforcement agencies &ndash; including the Federal Trade Commission (FTC), which has aggressively pursued alleged dark patterns, and state attorneys general, all of which are empowered to enforce the CFPB&rsquo;s abusiveness standard (in addition to their independent enforcement authority over unfair and deceptive practices).</p>Mon, 04 Mar 2024 08:00:00 Z{5B9235DF-DCFD-4657-839B-1AE2E4C540FC}https://www.cooley.com/news/coverage/2024/2024-03-01-nasdaq-private-market-closes-62-4-million-series-bNasdaq Private Market Closes $62.4 Million Series B<p><strong>New York &ndash; March 1, 2024 &ndash;</strong> Cooley advised Nasdaq Private Market (NPM), a top provider of liquidity solutions to private companies, their employees and investors, on <a rel="noopener noreferrer" href="https://www.nasdaq.com/press-release/nasdaq-private-market-closes-$62.4-million-series-b-financing-led-by-nasdaq-with-new" target="_blank">the close of its $62.4 million Series B financing</a>. Lawyers Sacha Ross, Andrew Gunther and Zo&euml; Egelman led the Cooley team advising NPM.</p> <p>The financing was led by Nasdaq, with participation from current investors &ndash; including Allen &amp; Company, Citi and Goldman Sachs &ndash; and new investors BNP Paribas, DRW Venture Capital, UBS and Wells Fargo. Since its spinout from Nasdaq in 2021, NPM has operated independently through an industry-backed consortium, with a mission to deploy cutting-edge technology to accelerate the availability of secondary liquidity in private shares through its high-integrity trading, settlement and data platform. NPM services some of the world&rsquo;s most innovative private companies with their liquidity needs for employees and institutional investors.</p>Fri, 01 Mar 2024 16:52:27 Z{3A40FA20-7424-44BE-A1DA-B151DF6A14D6}https://www.cooley.com/news/coverage/2024/2024-03-01-three-cooley-partners-recognized-as-notable-women-in-lawThree Cooley Partners Recognized as Notable Women in Law<p><strong>Chicago &ndash; March 1, 2024</strong> &ndash; Chicago-based Cooley partners Tiana Demas, Erin Kirchner, and Lei&nbsp;Shen were recognized as Notable Women in Law by Crain&rsquo;s Chicago Business.</p> <p><a rel="noopener noreferrer" href="https://www.chicagobusiness.com/awards/tiana-demas-notable-women-law-2024" target="_blank">Demas</a>, a litigation partner, was recognized for her work on complex cybersecurity, data and privacy issues, and white-collar criminal defense, including her work as a federal prosecutor in New York. She was noted for representing Dotdash Meredith in a <a href="https://www.cooley.com/news/coverage/2023/2023-02-24-litigator-of-the-week-shout-out">pleadings-stage defense win</a> regarding the Video Privacy Protection Act.</p> <p><a rel="noopener noreferrer" href="https://www.chicagobusiness.com/awards/erin-kirchner-notable-women-law-2024" target="_blank">Kirchner</a>, an M&amp;A partner, was noted for representing acquirers, founders and private equity investors in M&amp;A transactions, joint ventures and financing activities. In 2023, she led the team advising Sprout Social on <a href="https://www.cooley.com/news/coverage/2023/2023-08-04-sprout-social-acquires-tagger-media">its acquisition of Tagger Media</a> and beverages and spirits company AMASS Brands in <a href="https://www.cooley.com/news/coverage/2024/2024-01-25-cooley-recognized-for-award-winning-bankruptcy-matter">its strategic purchase of a wine retail and subscription</a> business through a bankruptcy sale.</p> <p><a rel="noopener noreferrer" href="https://www.chicagobusiness.com/awards/lei-shen-notable-women-law-2024" target="_blank">Shen</a>, a data privacy partner, was highlighted for her work advising on data protection strategies and emerging technologies &ndash; such as artificial intelligence, biometric data, and autonomous vehicles. Shen was also noted for representations related to recent California attorney general investigations regarding the California Consumer Privacy Act.</p> <p><a rel="noopener noreferrer" href="https://www.chicagobusiness.com/notables/crains-notable-women-law-chicago-2024" target="_blank" class="arrow-link">Read the full list of Notable Women in Law (subscription required)</a></p> <p>Honorees are chosen based on their experience, work impact, service as mentors and role models to women attorneys and how they demonstrate leadership in civic and community initiatives.</p>Fri, 01 Mar 2024 15:29:30 Z{3FC56F65-B57C-4A8A-B6B8-43D4EA907787}https://www.cooley.com/news/coverage/2024/2024-02-29-inspired-capital-announces-$330-million-fund-iiiInspired Capital Announces $330 Million Fund III<p><strong>Palo Alto &ndash; February 29, 2024 &ndash; </strong>Cooley advised Inspired Capital, a venture capital firm headquartered in New York City that backs early-stage founders with transformative ideas, brilliant teams and relentless determination, on the closing of its Inspired Capital Fund III, with $330 million in total capital commitments. Inspired Capital was founded in 2019 by Alexa von Tobel and Penny Pritzker. With the closing of its third fund, Inspired Capital now has nearly $900 million in assets under management &ndash; just under five years since its inception. Partners Shane Goudey and Katelyn Kimber led the Cooley team advising Inspired Capital. </p> <p>Inspired Capital will make investments between $1 million and $15 million in pre-seed and Series A companies with fearless founders who are solving the hardest challenges facing humanity. </p> <p>Cooley previously advised Inspired Capital on its <a href="https://www.cooley.com/news/coverage/2021/2021-09-21-inspired-capital-closes-second-fund-at-281-million">$281 million second fund in September 2021</a>. </p>Thu, 29 Feb 2024 17:53:00 Z{463C8587-0BB3-4FE9-B82F-E6A117B3BD8A}https://www.cooley.com/news/coverage/2024/2024-02-26-cooley-expands-commercial-litigation-capabilities-with-key-hire-in-los-angelesCooley Expands Commercial Litigation Capabilities With Key Hire in Los Angeles<p><strong>Los Angeles &ndash; February 28, 2024 &ndash;</strong> Cooley continues to bolster its exceptional commercial litigation and class action practices with the addition of partner Teresa Michaud, who joins the firm&rsquo;s growing downtown Los Angeles office. She arrives from Baker McKenzie, where she served on the global steering committee of the technology, media and telecommunications industry group and co-chaired the firm&rsquo;s North American class action team. Michaud&rsquo;s practice centers on advising clients in all aspects of dispute resolution, including complex business disputes, class actions and privacy litigation.</p> <p>&ldquo;Teresa&rsquo;s background representing innovative global companies aligns perfectly with Cooley&rsquo;s core strengths &ndash; and will bolster our ability to meet rising demand in Southern California and beyond,&rdquo; said Mike Attanasio, chair of Cooley&rsquo;s global litigation department. &ldquo;Her client roster includes leading players in technology, media and telecommunications. We are thrilled to welcome another experienced litigator and strong leader as we continue to build our team of elite, next-generation advocates to defend the most cutting-edge and disruptive companies in the world.&rdquo;</p> <p>&ldquo;We are thrilled to welcome Teresa to Cooley&rsquo;s growing and cross-functional Los Angeles team,&rdquo; said John-Paul Motley, partner in charge of the firm&rsquo;s downtown Los Angeles office. &ldquo;She is an industry-leading litigator, and her extensive experience and global perspective serves as a natural pairing with the needs of our current and future clients.&rdquo;</p> <p>Michaud has deep experience representing some of the nation&rsquo;s top technology and ecommerce brands on all aspects of commercial litigation, including multi-jurisdictional contract disputes, and consumer class actions under California and federal law. She also has a broad understanding in matters involving consumer protection and privacy. She regularly advises global companies on litigation avoidance practices &ndash; including contract provisions, ecommerce terms and conditions, content moderation and regulation, and data privacy and security. Complementing Cooley&rsquo;s increasingly global litigation practice, Michaud also is a qualified solicitor in England and Wales.</p> <p>&ldquo;Cooley has an unmatched track record representing the world&rsquo;s most innovative, high-growth organizations across the full gamut of complex class action and commercial disputes,&rdquo; Michaud said. &ldquo;I am excited to work with the outstanding multidisciplinary litigation and corporate teams in the downtown Los Angeles office. Cooley is a perfect fit for my practice because of its culture, its platform and the entrepreneurial DNA that runs through the entire firm.&rdquo;</p> <p>Cooley&rsquo;s commercial litigation practice is led by some of the world&rsquo;s most sophisticated advocates, and it has a long history of solving complex issues at the intersection of law and innovation. The firm&rsquo;s class action practice is one of the most active of its kind in the US, handling an average of 50+ class actions every year on matters including consumer protection, fraud, wage and hour, Racketeer Influenced and Corrupt Organizations Act (RICO), healthcare, finance and banking, copyright, internet transactions and payment processing, privacy, antitrust, mass torts, and statutory violations. Cooley has won some of the largest, complex and highly publicized cases in recent years, and the firm is consistently regarded as a top choice for innovative companies facing any type of commercial dispute.</p>Wed, 28 Feb 2024 22:54:00 Z{84459979-F46E-49BD-BEB8-9A8497DD87DD}https://www.cooley.com/news/insight/2024/2024-02-28-uspto-offers-guidance-on-inventorship-for-ai-human-collaborationsUSPTO Offers Guidance on Inventorship for AI-Human Collaborations<p>As global interest in artificial intelligence reaches a fever pitch, the US Patent and Trademark Office (USPTO) has entered the conversation. On February 13, 2024, the USPTO published <a rel="noopener noreferrer" href="https://www.federalregister.gov/documents/2024/02/13/2024-02623/inventorship-guidance-for-ai-assisted-inventions" target="_blank">Inventorship Guidance for AI-Assisted Inventions</a> in the Federal Register, explaining how the USPTO plans to assess inventorship for inventions that were &ldquo;assisted by&rdquo; AI, and soliciting public comment through an ensuing 90-day comment period. The guidance was prepared in response to the October 2023 <a rel="noopener noreferrer" href="https://www.whitehouse.gov/briefing-room/presidential-actions/2023/10/30/executive-order-on-the-safe-secure-and-trustworthy-development-and-use-of-artificial-intelligence/" target="_blank">Executive Order on the Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence</a>, which required the USPTO to &ldquo;publish guidance to USPTO patent examiners and applicants addressing inventorship and the use of AI, including generative AI, in the inventive process, including illustrative examples in which AI systems play different roles in inventive processes and how, in each example, inventorship issues ought to be analyzed.&rdquo;</p> <p>The USPTO&rsquo;s guidance is a reminder that patents serve to incentivize the ingenuity of humans (referred to as &ldquo;natural persons&rdquo;), and thus only humans &ndash; not AI &ndash; can be inventors. The guidance qualifies a human as an inventor on an AI-assisted invention if that human provided a &ldquo;significant contribution&rdquo; to the invention&rsquo;s conception. Although this &ldquo;significant contribution&rdquo; standard has historically been used in &ldquo;<strong>joint </strong>inventorship&rdquo; (emphasis added) contexts &ndash; for example, where two or more people took part in the inventing &ndash; it is nevertheless possible for a human meeting this standard to be the <strong>sole</strong> inventor of an AI-assisted invention. </p> <p>The guidance also cautions that <a rel="noopener noreferrer" href="https://www.uspto.gov/web/offices/pac/mpep/s2001.html" target="_blank">the duty to disclose</a> all known information that is material to patentability includes a duty to disclose information related to improper inventorship. Patent applicants and others associated with prosecuting a patent application have an affirmative &ldquo;duty of disclosure,&rdquo; to disclose to the USPTO any &ldquo;information&rdquo; that is &ldquo;material to patentability.&rdquo; As incorrect inventorship is a ground of rejection, information about inventorship being incorrect (regardless of whether the invention is AI-assisted or not) is &ldquo;material to patentability&rdquo; and must be disclosed to the USPTO. So, the USPTO is reminding people that this obligation remains in place, as it is laying out an additional circumstance &ndash; human and AI collaborations &ndash; in which inventorship must be assessed.</p> <p>Two hypothetical practical examples &ndash; &ldquo;Transaxle for Remote Control Car&rdquo; and &ldquo;Developing a Therapeutic Compound for Treating Cancer&rdquo; &ndash; were published on the USPTO&rsquo;s <a rel="noopener noreferrer" href="https://www.uspto.gov/initiatives/artificial-intelligence/artificial-intelligence-resources" target="_blank">AI-related resources webpage</a> in connection with the release of the guidance. These examples illustrate guiding principles set forth in the guidance which, while not dispositive on their own, are intended to facilitate inventorship analysis. Among these guiding principles are acknowledgements that the following may constitute significant contributions to an invention:</p> <ol> <li>Designing, building or training an AI system.</li> <li>Constructing an AI prompt &ldquo;in view of a specific problem to elicit a particular solution.&rdquo;</li> <li>Performing a successful experiment using an output of an AI system. </li> </ol> <p>It is noted, however, that neither the ownership/oversight of an AI system nor the mere presentation of a problem to an AI system is itself sufficient to constitute a significant contribution to an invention.</p>Wed, 28 Feb 2024 21:28:29 Z{B998E6EA-776E-40F2-8409-0CBBCF1A7733}https://www.cooley.com/news/coverage/2024/2023-02-28-cooley-lawyer-appears-in-cnbcs-squawk-boxCooley Lawyer Appears in CNBC’s ‘Squawk Box’<p>Cooley partner Kathleen O&rsquo;Neill appeared in a CNBC&rsquo;s &ldquo;Squawk Box&rdquo; segment, to discuss the US Federal Trade Commission&rsquo;s lawsuit blocking Kroger Company&rsquo;s $24.6 billion acquisition of the Albertsons Companies and whether the deal can lead to higher food prices and lower wages.</p> <p><a rel="noopener noreferrer" href="https://www.cnbc.com/video/2024/02/27/ftc-sues-to-block-kroger-albertsons-merger-heres-what-to-know.html" target="_blank" class="arrow-link">Watch the segment</a></p>Wed, 28 Feb 2024 20:28:31 Z{FCB32F69-32E1-47B2-BF44-1D1037C01485}https://www.cooley.com/news/coverage/2024/2024-02-28-oncerenowned-us-health-fraud-unit-in-boston-gets-an-inside-edgeOnce-Renowned US Health Fraud Unit in Boston Gets an Inside Edge<p>Cooley partner Zachary Hafer was quoted by Bloomberg Law on acting US attorney for the district of Massachusetts Joshua Levy&rsquo;s approach to biopharmaceutical investigations and healthcare fraud.</p> <p><a rel="noopener noreferrer" href="https://news.bloomberglaw.com/us-law-week/once-renowned-us-health-fraud-unit-in-boston-gets-an-inside-edge" target="_blank" class="arrow-link">Read the article</a></p>Wed, 28 Feb 2024 16:43:02 Z{D6B3044C-1E39-4F35-91C2-D749A1C55ED4}https://www.cooley.com/news/coverage/2024/2024-02-28-existential-risks-ai-anxiety-fueling-stream-of-shareholder-proposals'Existential Risks’: AI Anxiety Fueling Stream of Shareholder Proposals<p>Cooley partner Nicolas Dumont was quoted by Law.com about the broad use of artificial intelligence by companies &ndash; and how AI could find its way into shareholder proposals.</p> <p><a rel="noopener noreferrer" href="https://www.law.com/corpcounsel/2024/02/27/existential-risks-ai-anxiety-fueling-stream-of-shareholder-proposals/" target="_blank" class="arrow-link">Read the article (subscription required)</a></p>Wed, 28 Feb 2024 16:22:55 Z{6644602B-18CE-4896-863B-6F3A107931F9}https://www.cooley.com/news/coverage/2024/2024-02-27-cooley-achieves-us-uk-mansfield-rule-certification-statusCooley Achieves US, UK Mansfield Rule Certification Status<p><strong>New York &ndash; February 27, 2024 &ndash;</strong> Cooley has achieved Mansfield Rule Certification status in the US and UK after completing Diversity Lab&rsquo;s rigorous 12-month certification process pursuant to Mansfield Rule 6.0 US and Mansfield Rule 2.0 UK. The status distinguishes the firm and its continued commitment to achieving the high standards Diversity Lab sets for certification.</p> <p>Mansfield Rule Certification measures whether law firms have affirmatively considered women, underrepresented racial and ethnic groups, LGBTQ+ lawyers, and lawyers with disabilities for leadership and governance roles, equity partner promotions, formal client pitch opportunities, and senior lateral positions. Firms participating in the program have demonstrated an unwavering commitment to diversity, equity and inclusion (DEI) and are making meaningful progress on diversifying law firm leadership.</p> <p>Cooley&rsquo;s accomplishments that supported attaining this certification include:</p> <ul> <li>Exceeding more than 30% representation of lawyers from historically underrepresented backgrounds in firm leadership roles.</li> <li>Publishing partner compensation criteria and processes to all lawyers in the firm.</li> <li>Tracking candidate pools to measure the impact of the Mansfield Rule across underrepresented groups.</li> <li>Nominating more than 30% of underrepresented lawyers for recognition in Chambers USA to increase their external visibility.</li> <li>Considering more than 30% of underrepresented individuals when hiring and promoting C-level and other senior-level business professionals.</li> </ul> <p>Cooley will continue to participate in the Mansfield Rule program with the launch of Mansfield Rule 7.0 in the US and Mansfield Rule 3.0 in the UK. Additionally, the firm recently became an inaugural signatory to Diversity Lab&rsquo;s <a rel="noopener noreferrer" href="https://www.diversitylab.com/pilot-projects/disability-inclusion-commitments/" target="_blank">Disability Inclusion Commitments</a>, through which signatories will implement one or more reforms to continue fostering a culture of disability inclusivity.</p> <p>Cooley is dedicated to maintaining a workplace that values and celebrates differences. The firm is widely recognized for its DEI efforts by leading industry organizations and publications, including earning a score of 100 on the&nbsp;<a href="https://www.cooley.com/news/coverage/2023/2023-12-13-cooley-earns-top-score-on-hrc-foundations-corporate-equality-index">Human Rights Campaign Foundation&rsquo;s Corporate Equality Index</a> for the seventh time, being named to&nbsp;<a href="https://www.cooley.com/news/coverage/2023/2023-10-02-cooley-recognized-among-best-law-firms-for-women-and-diversity-for-12th-time">Seramount&rsquo;s Best Law Firms for Women and Diversity</a> for the 12th consecutive year, and being honored with the <a href="https://www.cooley.com/news/coverage/2023/2023-07-11-wilef-awards-cooley-12th-us-gold-standard-certification">Women in Law Empowerment Forum&rsquo;s US Gold Standard certification</a> for the 12th straight year.</p> <p>To learn more about Cooley&rsquo;s DEI efforts, please visit the <a href="https://www.cooley.com/about/diversity">firm&rsquo;s DEI webpage</a>.</p>Tue, 27 Feb 2024 20:07:01 Z{8B8D975D-445E-4F43-BC95-6598550F02ED}https://www.cooley.com/news/coverage/2024/2024-02-27-cooley-partner-appears-in-nyses-floor-talk2024 02 27 Cooley Partner Appears in NYSEs Floor Talk<p>Cooley partner Div Gupta recently appeared on New York Stock Exchange&rsquo;s &ldquo;Floor Talk&rdquo; segment to share his insights for companies that are contemplating going public through an initial public offering (IPO) within the next 12 to 24 months, as well as his outlook on IPOs in the biotechnology industry in 2024.</p> <p><a rel="noopener noreferrer" href="https://www.youtube.com/watch?v=YOVyoQfrWO0" target="_blank" class="arrow-link">Watch the segment</a></p>Tue, 27 Feb 2024 19:29:51 Z{49AB3682-7464-4C0A-8422-B68405A07F76}https://www.cooley.com/news/coverage/2024/2024-02-27-cooley-again-1-law-firm-for-venturebacked-companies-in-pitchbooks-annual-global-league-tablesCooley Again #1 Law Firm for Venture-Backed Companies in PitchBook’s Annual Global League Tables<p><strong>Palo Alto – February 27, 2024 – </strong>For the fourth consecutive year, PitchBook has named Cooley the #1 law firm representing companies in venture capital financings in the US and globally. <a rel="noopener noreferrer" href="https://pitchbook.com/news/articles/global-league-tables-2023-annual" target="_blank">PitchBook’s Annual Global League Tables</a> are a comprehensive, year-end report on the top investors, advisers and more across private equity and venture capital. The publication also named Cooley the second-most active law firm in the US and globally for representation of investors in venture capital deals.</p> <p>During calendar year 2023, Cooley handled 1,167 reported venture capital financings, representing $25 billion of invested capital.</p> <p>PitchBook also designated Cooley as the most active firm, in the US and globally, based on representation of venture-backed companies for all deals, inclusive of venture capital, M&amp;A and private equity. The firm received high rankings based on activity across all deal types, including early- and late-stage deals, along with ranking #1 for representation of VC-backed companies in exits. Additionally, Cooley ranked #1 overall in representation of venture capital financings in several industry sectors – including pharma and biotech and healthcare services and systems – as well as receiving high rankings in consumer goods and services, media, IT hardware and software, energy, and healthcare devices and supplies.</p> <p>In addition to the rankings provided in the Global League Tables, according to PitchBook’s <a rel="noopener noreferrer" href="https://my.pitchbook.com/" target="_blank">deal database</a>, the firm ranked second for <a href="https://www.cooley.com/news/coverage/2024/2024-02-23-cooley-ranked-market-leader-for-artificial-intelligence-transactions">venture capital transactions involving artificial intelligence (AI) companies</a>,* representing AI companies and their investors in 244 reported deals, totaling approximately $16.6 billion in deal value.</p> <p>PitchBook is the premier data provider for the private and public equity markets, serving more than 90,000 investment professionals and business leaders.</p> <p>Cooley works with 7,000+ innovative, high-growth private company clients, from newly formed companies to some of the largest and most sophisticated companies in the world, including more than 30% of US-based unicorns. Hallmarks of Cooley’s commitment to innovation include <a rel="noopener noreferrer" href="https://www.cooleygo.com/" target="_blank">Cooley GO</a>, a platform offering easy-to-navigate resources and document generators to help entrepreneurs grow their businesses, and <a href="https://www.cooley.com/protect">Cooley Protect</a>, a resource providing entrepreneurs and growth companies the information they need to make informed decisions about patent protection and strategy. Cooley GO also offers <a rel="noopener noreferrer" href="https://www.cooleygo.com/data/" target="_blank">quarterly reports on venture capital financing trends</a>.</p> <p><em>* Platform data has not been reviewed by PitchBook analysts.</em></p>Tue, 27 Feb 2024 18:27:52 Z{5969D76A-7106-40F4-A590-462D817EA1E3}https://www.cooley.com/news/coverage/2024/2024-02-27-dutch-bros-announces-240-million-secondary-public-offeringDutch Bros Announces $240 Million Secondary Public Offering<p><strong>Palo Alto &ndash; February 27, 2024 &ndash;</strong> Cooley advised Dutch Bros, a publicly held drive-thru coffee chain, on its <a rel="noopener noreferrer" href="https://www.businesswire.com/news/home/20240227420250/en/Dutch-Bros-Inc.-Announces-Pricing-of-Secondary-Public-Offering-of-Class-A-Common-Stock" target="_blank">$240 million secondary public offering of Class A common stock</a>. Partners Eric Jensen and Alan Hambelton led the Cooley team advising Dutch Bros.</p> <p>Dutch Bros priced the previously announced registered underwritten public offering by certain selling stockholders associated with TSG Consumer Partners of 8,000,000 shares of its Class A common stock, par value $0.00001 per share at $29.05 per share. The offering is expected to close on or about March 1, 2024, subject to the satisfaction of customary closing conditions.</p> <p>Cooley previously advised Dutch Bros on its <a href="https://www.cooley.com/news/coverage/2023/2023-09-06-dutch-bros-announces-300-million-underwritten-public-offering">$300 million underwritten public offering in September 2023</a> and its <a href="https://www.cooley.com/news/coverage/2021/2021-09-24-dutch-bros-556-8-million-ipo">$556.8 million IPO in September 2021</a>.</p>Tue, 27 Feb 2024 16:00:00 Z{785245D3-02C0-4AE1-AB2E-057365FB6F41}https://www.cooley.com/news/insight/2024/2024-02-27-ai-regulatory-update-national-telecommunications-and-information-administration-seeks-comments-on-dual-use-foundation-modelsAI Regulatory Update: National Telecommunications and Information Administration Seeks Comments on Dual-Use Foundation Models<p>The National Telecommunications and Information Administration (NTIA) announced a <a rel="noopener noreferrer" href="https://www.ntia.doc.gov/federal-register-notice/2024/dual-use-foundation-artificial-intelligence-models-widely-available" target="_blank">request for comment</a> regarding the potential risks and benefits of dual-use foundation models with weights that are widely available. NTIA also asked for comment on potential regulatory models that could promote the benefits of dual-use foundation models while mitigating any associated risks from these models, or any others that fall outside the primary scope of the request for comment.</p> <p>NTIA&rsquo;s request was mandated by President Joe Biden&rsquo;s October 30, 2023, <a rel="noopener noreferrer" href="https://www.whitehouse.gov/briefing-room/presidential-actions/2023/10/30/executive-order-on-the-safe-secure-and-trustworthy-development-and-use-of-artificial-intelligence/" target="_blank">executive order</a> on &ldquo;Safe, Secure, and Trustworthy Development and Use of Artificial Intelligence&rdquo; and regulatory approaches of those models. The executive order charges NTIA to solicit comments &ldquo;from the private sector, academia, civil society, and other stakeholders through a public consultation process on the potential risks, benefits, other implications, and appropriate policy and regulatory approaches related to dual-use foundation models for which the model weights are widely available.&rdquo; NTIA will review comments received and then collaborate with the secretaries of commerce and state to prepare a report to the president. That report likely will provide specific policy and regulatory recommendations pertaining to dual-use foundation models. </p> <p>In the request for comment, NTIA seeks public input on a number of questions regarding the issues impacting dual-use foundation models, including the following:</p> <ul> <li>How should NTIA define &ldquo;open&rdquo; or &ldquo;widely available&rdquo; when thinking about foundation models and model weights?</li> <li>How do the risks associated with making model weights widely available compare to the risks associated with nonpublic model weights?</li> <li>What are the benefits of foundation models with model weights that are widely available as compared to fully closed models?</li> <li>Are there other relevant components of open foundation models that &ndash; if simultaneously widely available &ndash; would change the risks or benefits presented by widely available model weights? If so, please list them and explain their impact.</li> <li>What are the safety-related or broader technical issues involved in managing the risks and amplifying the benefits of dual-use foundation models with widely available model weights?</li> <li>What are the legal or business issues or effects related to open foundation models?</li> <li>What are current or potential voluntary, domestic regulatory, and international mechanisms to manage the risks and maximize the benefits of foundation models with widely available weights? What kind of entities should take a leadership role and across which features of governance?</li> <li>In the face of continually changing technology, and given unforeseen risks and benefits, how can governments, companies and individuals make decisions or plans today about open foundation models that will be useful in the future?</li> <li>What other issues, topics or adjacent technological advancements should be considered when analyzing the risks and benefits of dual-use foundation models with widely available model weights?</li> </ul> <p>Comments are due on March 27, 2024. NTIA staff is interested in hearing from a wide range of stakeholders, as this is a key issue for developing an AI regulatory framework. We encourage companies developing AI to contact one of the Cooley lawyers listed below to determine how best to communicate their message to NTIA.</p>Tue, 27 Feb 2024 08:00:00 Z{27E13B7F-1E3E-4D13-B021-8056495A7DBD}https://www.cooley.com/news/coverage/2024/2024-02-26-ninth-circuit-affirms-biomarins-win-in-securities-class-actionNinth Circuit Affirms BioMarin’s Win in Securities Class Action<p><strong>Palo Alto &ndash; February 26, 2024 &ndash;&nbsp;</strong>Cooley secured a strong win on behalf of BioMarin Pharmaceutical, a global biotechnology company, before the US Court of Appeals for the Ninth Circuit. The win affirmed a 2023 dismissal of a putative class action alleging violations of the Securities Exchange Act of 1934. Lawyers Patrick Gibbs, John Dwyer, Brett De Jarnette, Samantha Kirby and Amie Simmons led the Cooley team representing BioMarin.</p> <p>In 2021, a lawsuit was filed in the US District Court for the Northern District of California alleging that BioMarin made false or misleading statements regarding one of its gene therapy candidates. In 2023, US Senior District Court Judge Maxine Chesney issued an order dismissing all claims, holding that the plaintiffs did not adequately plead that any of BioMarin&rsquo;s public statements were false or misleading.</p> <p>The Ninth Circuit recently agreed with Judge Chesney, holding that the plaintiffs failed to state a securities fraud claim. The court concluded that the plaintiffs&rsquo; allegations &ldquo;depend on a specific chronology of events,&rdquo; but the plaintiffs &ldquo;d[id] not allege sufficient, particularized facts to support that proffered chronology.&rdquo;</p> <p>The successful appellate outcome <a href="https://www.cooley.com/news/coverage/2024/2024-02-23-litigator-of-the-week-shout-out">earned the Cooley team a shout out</a> as part of The American Lawyer&rsquo;s Litigation Daily Litigator of the Week Runners-Up and Shout Outs list.</p>Mon, 26 Feb 2024 19:33:00 Z{44B667D2-F7CA-445F-9044-C7F909F4394B}https://www.cooley.com/news/coverage/2024/2024-02-26-jmi-equity-sells-incident-iq-to-cove-hill-partnersJMI Equity Sells Incident IQ to Cove Hill Partners<p><strong>Boston &ndash; February 26, 2024 &ndash;</strong> Cooley advised JMI Equity, a growth equity firm focused on investing in top software companies, on the <a rel="noopener noreferrer" href="https://www.incidentiq.com/newsroom/announcements/incident-iq-to-accelerate-growth-with-strategic-investment-from-cove-hill-partners" target="_blank">sale of Incident IQ to Cove Hill Partners</a>. Partners Alfred Browne and Amelia Runyan Davis led the Cooley team advising JMI Equity.</p> <p>Incident IQ is a JMI Equity portfolio company and a workflow management platform for K-12 school districts. To date, JMI has invested in 180+ software businesses in North America and Europe, has completed more than 115 exits, and has a portfolio of industry-leading cloud software companies representing $8 billion in combined revenue, $65 billion in aggregate enterprise value and more than 34,000 jobs.</p>Mon, 26 Feb 2024 18:21:00 Z{AB6CBC6B-BE01-4D97-81CD-97947E87E477}https://www.cooley.com/news/coverage/2024/2024-02-26-cooley-lawyers-join-leadership-council-on-legal-diversitys-fellows-and-pathfinders-programsCooley Lawyers Join Leadership Council on Legal Diversity’s Fellows and Pathfinders Programs<p><strong>San Diego &ndash; February 26, 2024</strong> &ndash; The Leadership Council on Legal Diversity (LCLD) has welcomed Cooley partner Carlos Ramirez as a member of its Fellows Program, and Cooley associates Colette Ghazarian and Dennis Craig as members of its Pathfinders Program.</p> <p>Ramirez is a corporate and securities lawyer who focuses on public company representation and capital markets transactions in Cooley&rsquo;s San Diego office. He was previously part of LCLD&rsquo;s Pathfinders Program in 2017. Ghazarian is based in the firm&rsquo;s Los Angeles office and focuses her practice on trademark and copyright litigation and trademark prosecution, clearance, enforcement and counseling. Craig serves as a trusted adviser to&nbsp;<strong></strong>high-growth companies and their investors &ndash; from formation to exit &ndash; and is based in the firm&rsquo;s Washington, DC, office.</p> <p>&ldquo;We are thrilled to express our support for our most recent LCLD program participants. Their participation in these programs reflects our unwavering commitment to DEI at Cooley,&rdquo; said Rachel Proffitt, Cooley&rsquo;s CEO. &ldquo;By fostering a culture that values excellence, entrepreneurship, collaboration and creativity, we create an environment where everyone feels included, valued and empowered to contribute their unique perspectives. Our partnership with LCLD further strengthens our dedication to promoting diversity and inclusion in the legal industry.&rdquo;</p> <p>This is the 11th year that Cooley has participated in LCLD&rsquo;s programs. The Pathfinders Program connects high-potential, early-career lawyers of diverse backgrounds and perspectives from LCLD member organizations with foundational leadership skills and relationship-building resources during a seven-month professional development program. The Fellows Program prepares high-potential, mid-career lawyers of diverse backgrounds and perspectives at LCLD member organizations with professional and personal development opportunities, leadership training, relationship-building resources and access to LCLD members (including managing partners and general counsel).</p> <p>Founded in 2009, LCLD is made up of more than 400 corporate chief legal officers and law firm managing partners seeking to build a legal profession as diverse and dynamic as the country it serves.</p> <p>Cooley is dedicated to maintaining a workplace that values and celebrates differences. The firm is widely recognized for its diversity, equity and inclusion (DEI) efforts by leading industry organizations and publications &ndash; including earning a score of 100 on the <a href="https://www.cooley.com/news/coverage/2023/2023-12-13-cooley-earns-top-score-on-hrc-foundations-corporate-equality-index">Human Rights Campaign Foundation&rsquo;s Corporate Equality Index</a> for the seventh time, being named to <a href="https://www.cooley.com/news/coverage/2023/2023-10-02-cooley-recognized-among-best-law-firms-for-women-and-diversity-for-12th-time">Seramount&rsquo;s Best Law Firms for Women and Diversity</a> for the 12th time, being honored with the <a href="https://www.cooley.com/news/coverage/2023/2023-07-11-wilef-awards-cooley-12th-us-gold-standard-certification">Women in Law Empowerment Forum&rsquo;s US Gold Standard certification</a> for the 12th consecutive year, and consistently achieving <a href="~/link.aspx?_id=6644602B18CE4896863B6F3A107931F9&amp;_z=z">Diversity Lab&rsquo;s Mansfield Rule Certification status</a>.</p> <p>To learn more about Cooley&rsquo;s DEI efforts, please visit the <a href="https://www.cooley.com/about/diversity">firm&rsquo;s DEI webpage</a>.</p>Mon, 26 Feb 2024 18:00:33 Z{ED73C6C1-53CC-4D4A-8B47-E1EA58380D35}https://www.cooley.com/news/coverage/2024/2024-02-26-hiredscore-to-be-acquired-by-workdayHiredScore to Be Acquired by Workday<p><strong>New York &ndash; February 26, 2024 &ndash;</strong> Cooley advised HiredScore, which provides artificial intelligence-powered talent orchestration solutions, on <a rel="noopener noreferrer" href="https://www.prnewswire.com/news-releases/workday-announces-intent-to-acquire-hiredscore-302071543.html" target="_blank">its acquisition by Workday</a> (NASDAQ: WDAY), a provider of solutions to help organizations manage their people and money. Partners Stephane Levy and Kevin Cooper led the Cooley team advising HiredScore.</p> <p>The combination of the Workday Talent Management platform, Workday Skills Cloud and HiredScore&rsquo;s Talent Orchestration solutions will provide customers with a comprehensive, transparent, and intelligent talent acquisition and internal mobility offering, helping them better address their ever-evolving people-related needs. Subject to the satisfaction of customary closing conditions and required regulatory approvals, the transaction is expected to close in the first quarter of Workday&rsquo;s fiscal year 2025, ending April 30, 2024.</p> <p>Cooley has advised HiredScore since its formation in 2013.</p>Mon, 26 Feb 2024 16:10:00 Z{FF43011A-E5AA-4E34-B41F-DBF8D2D2E048}https://www.cooley.com/news/coverage/2024/2024-02-26-nlx-raises-12-million-series-aNLX Raises $12 Million Series A<p><strong>New York &ndash; February 26, 2024 &ndash;</strong> Cooley advised NLX, a company revolutionizing the way artificial intelligence powers customer experiences for large and enterprise brands, on <a rel="noopener noreferrer" href="https://nlx.ai/news/nlx-raises-12m-in-series-a-funding" target="_blank">its $12 million Series A financing</a>. Partner Tamim Bazzi led the Cooley team advising NLX.</p> <p>The financing was led by Cercano and joined by Thayer Ventures and H/L Ventures, as well as initial investors IAG Capital Partners, JetBlue Ventures and Tech Square Ventures&rsquo; Engage. The proceeds will fuel NLX&rsquo;s market expansion, strategic hires and even more market-defining capabilities &ndash; such as its patented multimodal technology.</p>Mon, 26 Feb 2024 15:39:00 Z{3A7A5359-4A9A-4447-BCC0-AAB9B922199C}https://www.cooley.com/news/insight/2024/2024-02-26-cfpb-executes-on-promise-to-utilize-dormant-authority-to-supervise-high-risk-nonbanksCFPB Executes on Promise to Utilize ‘Dormant’ Authority to Supervise High-Risk Nonbanks<p>On February 23, 2024, the Consumer Financial Protection Bureau (CFPB) made public an <a rel="noopener noreferrer" href="https://www.consumerfinance.gov/about-us/newsroom/cfpb-orders-federal-supervision-for-installment-lender-following-contested-designation/" target="_blank">order establishing supervisory authority over a nonbank installment lender</a> on the basis the institution poses risks to consumers. The order gives insight into the procedural aspects of the CFPB&rsquo;s exercise of this <a href="https://www.cooley.com/news/insight/2022/2022-04-28-cfpb-revives-its-dormant-nonbank-authority-to-supervise-high-risk-institutions" target="_self">never-before-used authority</a> &ndash; and the standards it might use to assess whether an institution poses risk to consumers, and therefore warrants ongoing supervision. While the CFPB has a long-standing nonbank supervision program in the mortgage, student lending, and short-term, small-dollar lending space, and can also examine larger participants in certain financial markets (e.g., auto and debt collection), the order sets forth the path for the CFPB to supervise smaller, yet &ldquo;risky,&rdquo; nonbank financial services providers, as well as fintechs offering novel products.</p> <h3>Consumer complaints, product offerings can drive CFPB&rsquo;s supervisory determination</h3> <p>Consistent with the CFPB&rsquo;s April 25, 2022, announcement, the CFPB&rsquo;s determination that the installment lender poses risks to consumers was based on a mixture of consumer complaints and the nature of the lender&rsquo;s products, services, and operations. Specifically, the CFPB said it has reasonable cause for concern based on:</p> <ul> <li>The manner in which the lender describes optional insurance products to consumers and incorporates them into loans.</li> <li>Debt collection practices, including claims of harassment and coercion that jeopardize consumer employment or cause stress.</li> <li>Accuracy in furnishing information to consumer reporting agencies.</li> <li>The percentage of existing small-dollar loans that are refinanced with new small-dollar loans.</li> </ul> <p>The CFPB&rsquo;s determination appears to rely heavily upon the content of consumer complaints &ndash; reliance the lender cautioned against during the determination proceeding because those complaints may be inaccurate, not credible or contradicted by other evidence. Interestingly, the CFPB turned this argument against the lender during the proceeding, suggesting this is the very reason supervision is necessary &ndash; to learn more about the lender&rsquo;s practice and resolve any factual uncertainty between the conduct alleged in the complaints and reality. The CFPB also uses the order to criticize the manner in which the lender responds to customer complaints, saying the institution&rsquo;s responses inappropriately disregard the substance of the complaint, offer a conclusory denial of wrongdoing, or describe the relevant facts differently than those presented by the consumer without substantiating evidence.</p> <h3>Designation process took approximately eight months, required at least three submissions by now-supervised lender</h3> <p>The order makes clear that the designation process will take up significant institutional resources. The CFPB issued the lender its official notice of intent to supervise on March 10, 2023 &ndash; one year after it announced its intent to begin utilizing the authority. The lender submitted a written response to the notice on April 12, 2023, then made an oral presentation to the CFPB on May 17, 2023. The CFPB reviewed the file and the lender&rsquo;s briefings, collected additional information &ndash; including what appeared to be an in-depth review of consumer complaints &ndash; and permitted the lender to file a supplemental briefing on October 16, 2023, even though this is not required under the CFPB&rsquo;s procedures. CFPB Director Rohit Chopra made his determination the CFPB would subject the lender to supervision on November 30, 2023, although the order, which was lightly redacted, was made public three months after it was issued.</p> <h3>What&rsquo;s next?</h3> <p>This order serves as a warning to entities not subject to the CFPB&rsquo;s automatic supervisory authority that the CFPB is still monitoring the broader marketplace. For those in need of a reminder, the CFPB has automatic supervisory authority over institutions engaged in mortgage lending and servicing, private student lending, payday lending, and larger participants involved in consumer reporting, debt collection, student loan servicing, international money transfers, and auto lending. In November 2023, the CFPB also <a href="https://www.cooley.com/news/insight/2023/2023-11-13-cfpb-proposes-increased-oversight-of-digital-wallet-and-payments-providers-through-new-larger-participant-rule" target="_self">proposed establishing supervisory authority over digital wallet and payment app providers</a>. Institutions not subject to the CFPB&rsquo;s supervisory authority must still maintain comprehensive compliance management systems and properly resolve consumer complaints filed with the CFPB, as well as other regulatory agencies.</p>Mon, 26 Feb 2024 08:00:00 Z{6DD0E7A6-D742-4F52-A0CE-90DD1DCF394D}https://www.cooley.com/news/coverage/2024/2024-02-23-cooley-white-collar-litigator-named-among-top-us-lateralsCooley White Collar Litigator Named Among Top US Laterals<p>Cooley partner Rebekah Donaleski was recognized as one of Big Law&rsquo;s top lateral hires in The American Lawyer&rsquo;s 2024 Laterals Report. Donaleski was noted for spending nearly a decade as the chief of the public corruption unit in the US Attorney&rsquo;s Office for the Southern District of New York (SDNY). She also was highlighted for trying nine cases leading to guilty verdicts and supervising 10 trials during her tenure at SDNY, including the investigation and indictment of US Sen. Robert Menendez, the trial of Ghislaine Maxwell and the foreign election interference case against Lev Parnas.</p> <p><a href="-/media/2147262f398542209843150ae69a7842.ashx" class="arrow-link">Read the article</a></p> <p><a href="https://www.cooley.com/news/coverage/2023/2023-11-14-cooley-continues-expansion-of-white-collar-defense-investigations-practice-with-addition-of-key-former-sdny-prosecutor" class="arrow-link">Read more about Donaleski&rsquo;s arrival at Cooley</a></p> <p>In addition to identifying the 25 most significant lateral moves of the previous year, The American Lawyer&rsquo;s annual Laterals Report series examines hiring data, compensation system changes used as recruiting tools, how the world of recruiting really works and how firms evaluate the ultimate success of lateral hires.</p>Fri, 23 Feb 2024 18:29:15 Z{47C16CD5-A781-46B3-A780-61802830E33E}https://www.cooley.com/news/coverage/2024/2024-02-23-litigator-of-the-week-shout-out2024 02 23 Litigator of the Week Shout Out<p>Cooley lawyers Patrick Gibbs, John Dwyer, Brett De Jarnette, Samantha Kirby and Amie Simmons earned a spot on The American Lawyer&rsquo;s Litigation Daily Litigator of the Week Runners-Up and Shout Outs list when the US Court of Appeals for the Ninth Circuit upheld the dismissal of securities fraud claims against BioMarin Pharmaceutical.</p> <p>In the case, plaintiffs alleged that the company made false or misleading statements regarding the status and development of one of the company&rsquo;s gene therapy drug candidates. The Ninth Circuit affirmed dismissal, holding that the plaintiffs failed to adequately plead a false or misleading statement.</p> <p><a rel="noopener noreferrer" href="https://www.law.com/litigationdaily/2024/02/23/litigator-of-the-week-runners-up-and-shout-outs-70/" target="_blank" class="arrow-link">Read the article (subscription required)</a></p>Fri, 23 Feb 2024 18:25:36 Z{3E6CFC42-36E4-4301-9C90-855AD034E9FF}https://www.cooley.com/news/coverage/2024/2024-02-23-hong-kong-firms-25-6-million-deepfake-scam-raises-alarm-to-improve-fraud-controlHong Kong Firm’s $25.6 Million Deepfake Scam Raises Alarm to Improve Fraud Control<p>Cooley associate Zhijing Yu was quoted in Corporate Treasurer on deploying deepfakes to carry out fraud, following a case in Hong Kong where a finance team employee was instructed to transfer HK$200 million to a designated account.</p> <p><a rel="noopener noreferrer" href="https://www.thecorporatetreasurer.com/article/hong-kong-firms-25-6-million-deepfake-scam-raises-alarm-to-improve-fraud-contro/494249" target="_blank" class="arrow-link">Read the article (subscription required)</a></p>Fri, 23 Feb 2024 17:37:50 Z{6BAE03D7-EA31-48A0-A77E-E39409748973}https://www.cooley.com/news/coverage/2024/2024-02-23-cooley-ranked-market-leader-for-artificial-intelligence-transactionsCooley Ranked Market Leader for Artificial Intelligence Transactions<p><strong>New York</strong> &ndash; February 23, 2024 &ndash; According to <a rel="noopener noreferrer" href="https://my.pitchbook.com/loginAction.do?action=login" target="_blank">PitchBook&rsquo;s deal database</a>, in 2023 Cooley worked on the most M&amp;A transactions involving artificial intelligence (AI) companies.<em>*</em> PitchBook data shows that in 2023, Cooley handled 21 M&amp;A AI deals. This total deal volume reflected an aggregate value of nearly $1.1 billion.</p> <p>In addition, Cooley ranked second for venture capital transactions, representing AI companies and their investors on 244 reported venture capital transactions totaling approximately $16.6 billion in deal value.</p> <p>Cooley represents top high-growth companies across the entire AI ecosystem in corporate transactions, ranging from financings and M&amp;A to private equity and capital markets transactions. The firm also represents companies and funds on investments in &ndash; and acquisitions of &ndash; AI companies and technologies.</p> <p><em>* Platform data has not been reviewed by PitchBook analysts.</em></p>Fri, 23 Feb 2024 17:30:55 Z{A0F3E82D-E698-41DD-9D8D-C8C3AE8932A2}https://www.cooley.com/news/coverage/2024/2024-02-23-a-conversation-with-sepideh-mousakhaniA Conversation With Sepideh Mousakhani<p>Cooley partner Sepideh Mousakhani recently was featured as a guest on a &ldquo;Hsu Untied&rdquo; podcast episode. She discussed her background as an educator with Teach for America and how that experience weaves into her career as a lawyer.</p> <p><a rel="noopener noreferrer" href="https://hsuuntied.com/smousakhani/" target="_blank" class="arrow-link">Listen to the podcast</a></p>Fri, 23 Feb 2024 15:29:06 Z{56537B87-1830-49C7-A109-B74CBEF6F866}https://www.cooley.com/news/insight/2024/2024-02-22-fincen-proposes-rule-requiring-investment-advisers-to-establish-anti-money-laundering-programsFinCEN Proposes Rule Requiring Investment Advisers to Establish Anti-Money Laundering Programs<p>On February 13, 2024, the US Department of the Treasury&rsquo;s Financial Crimes Enforcement Network (FinCEN) <a rel="noopener noreferrer" href="https://www.fincen.gov/news/news-releases/fincen-proposes-rule-combat-illicit-finance-and-national-security-threats" target="_blank">issued a notice of proposed rulemaking</a> that would expressly include certain investment advisers in the definition of a &ldquo;financial institution&rdquo; under the Bank Secrecy Act (BSA) and its implementing regulations, which collectively establish the US anti-money laundering (AML) and counter-terrorism financing (CFT) regime. The proposal would subject covered investment advisers to AML/CFT requirements &ndash; including implementing and maintaining a risk-based AML/CFT program, reporting suspicious activity to FinCEN, and meeting recordkeeping requirements. FinCEN would have the authority to seek civil penalties for noncompliance. </p> <p>FinCEN states in the press release that the proposed rule is part of a larger effort by the agency to combat illicit finance risks and add transparency to the US financial systems. For example, FinCEN recently issued a proposed rule requiring increased reporting around all-cash real estate transactions. Additionally, FinCEN&rsquo;s beneficial ownership information (BOI) reporting rule, which implements the <a rel="noopener noreferrer" href="https://www.cooleygo.com/beneficial-ownership-reporting-requirements-under-the-corporate-transparency-act-what-you-need-to-know/" target="_blank">Corporate Transparency Act</a> (CTA), took effect on January 1, 2024, requiring nonexempt companies created or registered in the US to submit BOI reports to FinCEN. </p> <p>According to FinCEN Director Andrea Gacki, the goal of the proposed rule is to prevent criminals and foreign adversaries from exploiting the US financial system through investment advisers, which oversee tens of trillions of dollars. The proposal revisits the substance of a 2015 notice of proposed rulemaking that similarly would have extended AML/CFT requirements to investment advisers. </p> <p>The deadline to submit comments on the proposed rule is April 15, 2024. </p> <h3 class="h3">Which entities are covered? </h3> <p>The <a rel="noopener noreferrer" href="https://public-inspection.federalregister.gov/2024-02854.pdf" target="_blank">proposed rule</a> would revise the definition of a &ldquo;financial institution&rdquo; under the BSA&rsquo;s implementing regulations to include the following two types of investment advisers.</p> <ol> <li> Investment advisers registered with the Securities and Exchange Commission (SEC), also known as registered investment advisers (RIAs).</li> <li>Investment advisers that report to the SEC as exempt reporting advisers (ERAs). </li> </ol> <p>Under the proposed rule, the definition of an investment adviser would exclude state-registered investment advisers and non-US investment advisers that rely on the foreign private adviser exemption. </p> <p>While the statutory BSA provisions do not include investment advisers in the definition of a financial institution, FinCEN has the authority to add businesses that engage in any activity &ldquo;similar to, related to, or a substitute for&rdquo; activities in which any of the enumerated financial institutions are authorized to engage. FinCEN states in the commentary to the proposed rule that the asset management services provided by investment advisers are similar to or a substitute for those offered by other financial institutions already covered under the BSA, including broker-dealers, banks and insurance companies. </p> <h3 class="h3">The proposed rule </h3> <h4 class="h4">AML/CFT requirements </h4> <p>The proposed rule would require that covered investment advisers comply with certain AML/CFT requirements, including the following: </p> <p><strong>1. Implement a risk-based AML/CFT program. </strong>Investment advisers covered by the proposed rule would be required to implement a reasonably designed risk-based AML/CFT program to combat money laundering and the financing of terrorism through the institution. The AML/CFT program requirement would not be a one-size-fits-all solution, but rather the individual investment adviser&rsquo;s program would need to be commensurate with the adviser&rsquo;s specific risks, services and customer base. </p> <p>As proposed, the AML/CFT program would be required to include, at a minimum, the following:</p> <ul> <li>The development of internal policies, procedures and controls.</li> <li>The designation of a person or persons responsible for implementing and monitoring the operations and internal controls of the program (e.g., a compliance officer).</li> <li>Risk-based procedures for ongoing customer due diligence (CDD).</li> <li>Risk-based procedures to understand the nature and purpose of customer relationships to develop customer risk profiles.</li> <li>An ongoing employee training program.</li> <li>An independent audit function to test programs. </li> </ul> <p>FinCEN also expects investment advisers to maintain sufficient oversight of third-party service providers. The proposed rule would require an investment adviser&rsquo;s board of directors (or a similar body) to approve the AML/CFT program. </p> <p>For investment advisers dually categorized as other financial institutions (e.g., banks and broker-dealers), there would be no requirement for separate AML/CFT programs to be established for each line of business. Rather, in these instances, there should be a comprehensive AML/CFT program that covers all of the entity&rsquo;s business and activities that are subject to BSA requirements.</p> <p><strong>2. Submit suspicious activity reports (SARs).</strong> Investment advisers would be required to submit SARs, replacing the joint FinCEN/Internal Revenue Service Form 8300 that investment advisers currently use to report suspicious activity. Reportable suspicious transactions would be those that are conducted or attempted by, at or through an investment adviser and involve or aggregate at least $5,000 in funds or other assets. Investment advisers would still be required to comply with all other reporting requirements imposed by the SEC. </p> <p>SARs would be required to be kept confidential and submitted within 30 days of identifying acts that may be the basis of the suspicious activity. According to the commentary on the proposed rule, identifying suspicious activity would be fact-specific, but could include activities such as potential fraud, manipulation of customer funds directed by the investment adviser, insider trading, market manipulation, transferring funds or assets involving third parties with no plausible relationship to the customer, or unusual wire transfer requests. </p> <p><strong>3. Recordkeeping and reporting. </strong>Under the proposed rule, investment advisers would be required to comply with existing recordkeeping requirements under the BSA, including the &ldquo;Travel Rule,&rdquo; to the extent applicable. The Travel Rule (31 CFR 1010.410(e),(f)) requires financial institutions to create and retain records for fund transmittals that equal or exceed $3,000 and include certain information (e.g., sender&rsquo;s name and address, transaction information, and sender&rsquo;s financial institution) with the transmittal order so that it &ldquo;travels&rdquo; to the next financial institution in the payment chain. In at least some cases, transactions processed by investment advisers may be excluded from Travel Rule requirements, based on the definition of a covered &ldquo;transmittal of funds&rdquo; and the exemption for transfers between certain financial institutions. Investment advisers also would be required to create and retain records for extensions of credit and cross-border transfers of currency, monetary instruments, checks, investment securities and credit. </p> <p>Additionally, under FinCEN&rsquo;s regulations, investment advisers are currently required to report transactions involving the receipt of more than $10,000 in cash and negotiable instruments using Form 8300. Under the proposed rule, investment advisers would still have the obligation to report such transactions, but would be required to submit reports for transactions involving a transfer of more than $10,000 in currency by, through or to the investment adviser, unless subject to an applicable exemption, and submit relevant information using currency transaction reports (CTRs), as required under the BSA, instead of using Form 8300. </p> <h4 class="h4">Other obligations and considerations </h4> <p>Investment advisers also would be required to implement risk-based procedures for customer due diligence pursuant to the Customer Due Diligence (CDD) Rule for covered financial institutions (currently banks, mutual funds, brokers or dealers in securities, futures commission merchants and introducing brokers in commodities). The CDD Rule requires covered financial institutions to identify and verify the beneficial owners of legal entity customers as part of the covered entity&rsquo;s customer identification program (CIP). The CDD Rule is currently subject to modification in connection with the recent implementation of the BOI Rule and, therefore, FinCEN is not proposing to impose the same CDD Rule on investment advisers that currently applies to banks and other covered financial institutions. Instead, FinCEN is taking a partial step toward doing so by including investment advisers in the definition of &ldquo;covered financial institutions&rdquo; under 31 CFR 1010.605(e)(1) for purposes of the CDD Rule. But, because the applicability of the CDD Rule is predicated on a financial institution having express CIP obligations, the CDD Rule will not &ndash; at least initially &ndash; be operationalized with respect to investment advisers. </p> <p>To begin with, therefore, investment advisers would be required to establish AML programs that include risk-based customer due diligence procedures that include, but are not limited to, understanding the nature and purpose of customer relationships for the purpose of developing a customer risk profile, as well as conducting ongoing monitoring to identify and report suspicious transactions and &ndash; on a risk basis &ndash; to maintain and update customer information. However, the proposed rule would not impose a CIP requirement or, in turn, express requirements to obtain BOI. FinCEN will instead collaborate with the SEC to develop such CIP and beneficial owner requirements, which also will be informed by future CDD rulemakings under the CTA and its implementing regulations. </p> <p>Finally, to avoid redundancy under the proposed rule, investment advisers would not be required to apply AML/CFT program or SAR filing requirements to the mutual funds they advise. Mutual funds are currently included in the definition of a financial institution and therefore have their own similar obligations under the BSA. </p> <h4 class="h4">SEC&rsquo;s examination authority </h4> <p>As part of the proposal, FinCEN seeks to delegate examination authority for the rule to the SEC, given the SEC&rsquo;s expertise with investment advisers and experience in examining other financial institutions with AML responsibilities and requirements. FinCEN currently delegates to the SEC the authority to examine mutual funds, as well as brokers and dealers in securities, for compliance with the BSA. Still, FinCEN retains its rulemaking and enforcement authorities in its administration of AML/CFT rules and requirements applicable to investment advisers. </p> <h3 class="h3">Next steps </h3> <p>Under the proposed rule, covered investment advisers would be required to comply with the rule on or before 12 months from the final rule&rsquo;s effective date. Investment advisers should review the rule to assess the potential impact and may wish to consider providing comments to FinCEN by the April 15 deadline. </p>Thu, 22 Feb 2024 20:04:27 Z{28F74381-529D-448A-9B72-A3EFBC85412F}https://www.cooley.com/news/insight/2024/2024-02-22-new-fcc-rules-limit-when-you-can-send-commercial-calls-textsNew FCC Rules Limit When You Can Send Commercial Calls, Texts<p>As part of its long-standing effort to give consumers tools to limit unwanted commercial calls and texts, <a rel="noopener noreferrer" href="https://docs.fcc.gov/public/attachments/FCC-24-24A1.pdf" target="_blank">the Federal Communications Commission has adopted an order</a> that clarifies the obligations of calling parties when consumers seek to opt out of receiving calls under the Telephone Consumer Protection Act.</p> <h3>Process for opting out</h3> <p>Under the order, these new requirements will apply to requests to revoke consent for calls and texts:</p> <ul> <li>A calling party that initiates calls and texts must honor any request made using an automated, interactive voice or key press-activated opt-out mechanism offered during a call.</li> <li>If a called party replies to a text with a message that includes &ldquo;stop,&rdquo; &ldquo;quit,&rdquo; &ldquo;end,&rdquo; &ldquo;revoke,&rdquo; &ldquo;opt out,&rdquo; &ldquo;cancel&rdquo; or &ldquo;unsubscribe,&rdquo; the reply must be treated as a revocation of consent for future messages.</li> <li>Even if a reply to a text does not use any of the specified words, the calling party must treat the called party&rsquo;s reply as revoking consent for future messages if a reasonable person would understand the called party&rsquo;s words to have conveyed a request to revoke consent.</li> <li>If a text is sent via a mechanism that does not permit replies, the text must include a statement explaining that replies are not permitted for technical reasons, along with a clear and conspicuous description of reasonable alternative ways to revoke consent.</li> <li>Any calling party must honor a valid request to revoke consent no later than 10 business days after the request is made.</li> <li>Revoking consent for voice calls also revokes consent for texts and vice versa.</li> </ul> <p>A calling party may not limit the ways that consumers can revoke consent to those listed in the rules, but instead must accept any reasonable method that a consumer chooses to use, including &ldquo;voicemail or email to any telephone number or address at which the consumer can reasonably expect to reach the caller,&rdquo; even if using that number or address has not been designated as a way to revoke consent. The order establishes specific criteria that the FCC will use in determining whether a valid request was made, which will be evaluated based on the totality of evidence. </p> <p>A calling party that sends text messages still is permitted to send a single text following the revocation request to acknowledge the request has been received. Acknowledgments sent within five minutes of a request will be presumed to fall within the consumer&rsquo;s previous consent, but the calling party must demonstrate why the delay was reasonable if the acknowledgment takes longer than that.</p> <h3>Other opt-out issues</h3> <p>The FCC&rsquo;s order clarifies that consumers whose numbers are on the National Do Not Call Registry but have consented to calls from specific companies can revoke their consent. In addition, the order concludes that consumers can revoke their consent to receive informational calls or texts, such as balance alerts from banks or notifications from delivery companies.</p> <p>The order also clarifies that revocation of consent for calls or messages that require consent does not revoke consent for other calls or messages. Consequently, if a consumer has consented to receive marketing messages from a caller but also receives informational messages that do not require consent, such as delivery notifications, revoking consent for the marketing messages will not revoke consent for the informational messages. However, if a consumer revokes consent for informational messages, that revocation must be treated as also revoking consent for marketing calls.</p> <p>In addition, if a consumer is receiving multiple types of informational messages from a single party, the FCC will permit the calling party to send a single text requesting clarification of whether the consumer meant to revoke consent for all or some of those messages, instead of an acknowledgment text. These messages may not contain any marketing or promotional content. If the consumer does not reply to the text, the calling party must treat the revocation of consent as covering all types of messages. This exception applies only to informational messages.</p> <h3>Implementation</h3> <p>These rules will go into effect six months after the federal Office of Management and Budget has completed its review under the Paperwork Reduction Act. This process typically takes six months to a year, and it cannot begin until the order is published in the Federal Register, which likely will occur in March 2024. After the review is complete, the FCC will issue a public notice announcing the effective date of the rules.</p>Thu, 22 Feb 2024 08:00:00 Z{C152CBB1-E552-4858-A8F8-52AEB3CBF000}https://www.cooley.com/news/coverage/2024/2024-02-21-hadrian-automation-announces-117-million-series-bHadrian Automation Announces $117 Million Series B<p><strong>San Francisco &ndash; February 21, 2024 &ndash; </strong>Cooley advised Hadrian Automation, a company building highly automated factories to accelerate the entire advanced manufacturing sector and bring the future forward faster, on its $117 million Series B financing. Lawyers Peter Werner, Zander Olsson, Carl Min and Erin Wright led the Cooley team advising Hadrian. </p> <p>The financing included participation from RTX Ventures &ndash; the venture arm of US Department of Defense prime contractor RTX (formerly called Raytheon) &ndash; as well as Construct Capital, WCM Investment Management, Bracket Capital, Shrug Capital, Lux Capital, Andreessen Horowitz, Founders Fund, S&amp;A, Silent Ventures, Cubit Capital, Caffeinated Capital, Tru Arrow Partners, and other existing investors. The proceeds will be used to grow the company&rsquo;s automation and software teams to improve processes and meet new customer demand. </p> <p>Cooley has advised Hadrian Automation since 2021, including its Series Seed and Series A financing rounds. </p>Wed, 21 Feb 2024 20:32:00 Z{3BA8BA34-2C0F-499E-A255-EBC48EF21AEF}https://www.cooley.com/news/insight/2024/2024-02-21-fcc-proposes-new-regulatory-framework-for-in-space-servicing-assembly-and-manufacturing-operationsFCC Proposes New Regulatory Framework for In-Space Servicing, Assembly and Manufacturing Operations<p>In its latest effort to promote the commercial space industry, the Federal Communications Commission (FCC) released a <a rel="noopener noreferrer" href="https://docs.fcc.gov/public/attachments/FCC-24-21A1.pdf" target="_blank">notice of proposed rulemaking</a> (NPRM) introducing a potential framework for licensing commercial in-space servicing, assembly and manufacturing (ISAM) operations. The NPRM aligns with the White House&rsquo;s <a rel="noopener noreferrer" href="https://www.whitehouse.gov/wp-content/uploads/2022/04/04-2022-ISAM-National-Strategy-Final.pdf" target="_blank">ISAM National Strategy</a> released in April 2022 and the FCC&rsquo;s <a rel="noopener noreferrer" href="https://www.cooley.com/news/insight/2022/2022-07-28-fcc-plans" target="_blank">ISAM notice of inquiry</a> released in August 2022. </p> <p>The FCC asks for comment on proposed rules that ISAM industry participants would have to follow to obtain licenses. To begin, the proposed rules define an &ldquo;ISAM space station&rdquo; as: </p> <p style="margin-left: 40px;">A space station which has the primary purpose of conducting in-space servicing, assembly, and/or manufacturing activities used on-orbit, on the surface of celestial bodies, and/or in transit between these regimes and which are supported by radiofrequency operations. Servicing activities include but are not limited to in-space inspection, life extension, repair, refueling, alteration, and orbital transfer of a client space object, including collection and removal of debris on orbit. Assembly activities involve the construction of space systems in space using pre-manufactured components. Manufacturing activities involve the transformation of raw or recycled materials into components, products, or infrastructure in space. </p> <p>The proposed rules do not define the &ldquo;primary purpose&rdquo; of conducting ISAM activities, but the FCC asks whether it should define the phrase. </p> <p>The proposal provides two potential application authorization paths for ISAM space stations &ndash; the &ldquo;regular part 25 licensing process&rdquo; or the &ldquo;streamlined processes for small satellites and small spacecraft.&rdquo; </p> <h3 class="h3">Licensing modification for space stations affected by ISAM operations </h3> <p>The proposed rules would require ISAM space station applicants to submit comprehensive proposals, so that the FCC can evaluate the impact of the ISAM operations, such as changes in orbital locations or orbital extensions, on other space stations authorized by the US or other nations. The NPRM also proposes allowing ISAM space station operators to apply for US authorizations or grants of US market access. </p> <p>If the proposed rules are approved, ISAM space station applicants must provide the following information in order to determine whether a license modification for any affected space station is necessary:</p> <ul> <li>For US-licensed operators, a list of FCC file numbers or call signs for any applications or FCC grants related to the proposed operations, including those of client space stations with which the applicant will seek to work or collaborate with in its operations.</li> <li>For operators licensed outside the US, a list of the International Telecommunications Union filings and United Nations registration information for any space stations not licensed or granted market access by the US that are related to the proposed operations, the regulatory requirements that the operator and partners are subject to, and the status of any required regulatory approvals. </li> </ul> <h3 class="h3">Exemption from processing rounds and &lsquo;first-come-first-served&rsquo; process </h3> <p>In an effort to provide flexibility, the FCC proposes to exempt ISAM space station authorization applicants from the processing round rules for non-geostationary orbit space stations and the &ldquo;first-come-first-served&rdquo; process for geostationary orbit space stations, which is how most satellite licensing currently operates. </p> <p>To obtain the exemption, the proposed new rules require ISAM space stations to submit a narrative description demonstrating spectrum-sharing capabilities, noting that operations will not materially constrain other ISAM operations in the requested frequency band. The proposed new rules also require the exemption applicants to certify that they will be compatible with and will not constrain operations of future space stations. </p> <h3 class="h3">Surety bonds </h3> <p>ISAM operators would not be required to post surety bonds after licensing unless they do not meet the FCC&rsquo;s milestone requirements within the first year after license grant. </p> <h3 class="h3">ISAM spectrum needs addressed individually </h3> <p>Despite requests from the ISAM industry, the FCC did not propose a new spectrum allocation for ISAM operations. However, the FCC seeks comment on its proposal to &ldquo;require frequency use authorization on a case-by-case basis,&rdquo; which would ensure that operations would be nonexclusive and could not cause interference to incumbent operators. </p> <h3 class="h3">Orbital debris regulation </h3> <p>The NPRM also proposes requiring ISAM space station operators to conduct debris remediation, comply with the current orbital debris mitigation rules applicable to non-ISAM operators and submit orbital debris mitigation plans on a case-by-case basis. However, the FCC also asks whether ISAM operators should be required to undertake additional debris remediation to further minimize the risk of harm. </p> <p>Comments and reply comments for the NPRM will be due 45 and 75 days, respectively, after publication in the Federal Register. FCC Space Bureau staff is interested in hearing from any company that plans to engage in ISAM operations, and we encourage any such company to contact one of the Cooley lawyers listed below to determine how best to communicate its message to the FCC. </p>Wed, 21 Feb 2024 19:43:16 Z{C7567C4C-0FC0-47FD-962D-42791A5BC069}https://www.cooley.com/news/insight/2024/2024-02-21-bipartisan-bicameral-legislation-targeting-foreign-biotechnology-companies-of-concern-may-impact-recipients-of-government-funding-contractsBipartisan, Bicameral Legislation Targeting Foreign Biotechnology Companies of Concern May Impact Recipients of Government Funding, Contracts<p>On January 25, 2024, bipartisan members of the US House of Representatives introduced legislation &ndash; the BIOSECURE Act &ndash; aimed at preventing certain foreign biotechnology firms deemed to present threats to US national security interests from obtaining US government funding and imposing related US government contracting restrictions (see <a rel="noopener noreferrer" href="https://selectcommitteeontheccp.house.gov/sites/evo-subsites/selectcommitteeontheccp.house.gov/files/evo-media-document/text-biosecure-act.pdf" target="_blank">House Bill 7085</a>). A substantively identical bipartisan bill also was introduced in the US Senate (<a rel="noopener noreferrer" href="https://www.congress.gov/118/bills/s3558/BILLS-118s3558is.pdf" target="_blank">Senate Bill 3558</a>). Together, the House and Senate bills are related to ongoing congressional concerns, as well as <a rel="noopener noreferrer" href="https://selectcommitteeontheccp.house.gov/media/press-releases/bipartisan-group-select-committee-members-lead-coalition-introducing-house-and" target="_blank">an investigation</a> by the House Select Committee on Strategic Competition between the United States and the Chinese Communist Party, which focuses on possible access by certain Chinese companies to American citizens&rsquo; genetic information and other sensitive health data. </p> <p>As currently drafted, the BIOSECURE Act would prohibit federal agencies from contracting with the following:</p> <ul> <li>BGI (formerly Beijing Genomics Institute), MGI, Complete Genomics, WuXi Apptec, and any subsidiary, parent affiliate, or successor of such entities; or</li> <li>Any entity from China, Russia, Iran or North Korea designated on a list published by the Director of the Office of Management and Budget, in consultation with the Secretary of Defense, Attorney General, Secretary of Health and Human Services, Secretary of Commerce, Director of National Intelligence, Secretary of Homeland Security and Secretary of State (each of the foregoing a <strong>&ldquo;Biotechnology Company of Concern&rdquo;</strong>). </li> </ul> <p>Notably, the BIOSECURE Act also seeks to prohibit the US government from entering into, extending or renewing a contract with any entity that uses biotechnology equipment originating from &ndash; or services provided by &ndash; a Biotechnology Company of Concern. This may cause companies receiving government funding to terminate the use of biotechnology equipment or receipt of services linked to a Biotechnology Company of Concern. </p> <p>Preliminarily, biotechnology equipment is defined broadly to include equipment, instruments, apparatus machines or devices (including components and accessories thereof) designed for use in research, development, production or analysis of biological materials. Examples of biotechnology equipment include genetic sequencers, mass spectrometers, polymerase chain reaction machines, and software, firmware, or other digital components specifically designed for use in &ndash; and necessary to operate &ndash; such equipment. Biotechnology services are defined broadly to include any service for the research, development, production, analysis, detection or provision of information, including data storage and transmission related to biological materials. Biotechnology services include advising, consulting or support services for the use or implementation of any biotechnology equipment and genealogical information. Additional biotechnology equipment or services may be added to the scope. </p> <p>Although the current House and Senate bills remain in the early stages of the legislative process, bipartisan support and textual similarities may increase the likelihood that some version of the bills may become law. In anticipation thereof, life sciences companies should consider assessing the scope of their existing or contemplated federal contracts (including subcontractor arrangements with federal government contractors), understanding and possibly revising relevant termination provisions, and evaluating their equipment inventories and other activities relating to Biotechnology Companies of Concern. </p> <p>Cooley will continue to monitor the progress of the House and Senate bills. Please feel free to contact a member of our team with any questions. </p>Wed, 21 Feb 2024 18:02:43 Z{A73D535A-8DD6-4305-9498-9C0D5861666D}https://www.cooley.com/news/coverage/2024/2024-02-20-cooley-partner-joins-biotechnology-innovation-organizations-board-of-directorsCooley Partner Joins Biotechnology Innovation Organization’s Board of Directors<p>Sonia Nath, Cooley partner and chair of the firm&rsquo;s global life sciences and healthcare regulatory practice group, was appointed to the Emerging Companies Section Governing Board of the Biotechnology Innovation Organization (BIO), an advocacy association that represents the biotech industry.</p> <p><a rel="noopener noreferrer" href="https://www.bio.org/about/bio-leadership/board-directors" target="_blank" class="arrow-link">View the full list</a></p> <p>BIO has a Board Executive Committee and three section governing boards organized by industrial sector and policy interest &ndash; the Emerging Companies Section (ECS) Governing Board, the Agriculture &amp; Environment (A&amp;E) Section Governing Board and the Health Section Governing Board. These boards are comprised of thought leaders who bring experience to bear on major issues affecting their specific area of the biotechnology industry.</p>Tue, 20 Feb 2024 21:07:33 Z{23FF5034-37B5-4B58-89FA-34B1DD8ED182}https://www.cooley.com/news/coverage/2024/2024-02-23-bluestein-ventures-closes-$45-million-fund-iiiBluestein Ventures Closes $45 Million Fund III<p><strong>Chicago &ndash; February 20, 2024 &ndash;</strong> Cooley advised Bluestein Ventures, a venture capital fund that invests in the future of food, on the close of its $45 million in capital commitments for its third foodtech fund. Partners Rachel Goddard and Rick Ginsberg led the Cooley team advising Bluestein. </p> <p>Proceeds from the fund will be invested in 20 to 25 pre-seed to Series A companies targeting consumer-facing technology across the supply chain &ndash; such as health and wellness, proprietary foodtech, commerce and digital technology. Bluestein Ventures has already invested in a few companies, including BiomeSense, WECO Hospitality and Attane Health. In addition to capital from the Bluestein family, the third fund is the first Bluestein Ventures fund to include external investors. </p>Tue, 20 Feb 2024 19:12:00 Z{2591B094-03B1-4601-BE0F-4A05020F48EA}https://www.cooley.com/news/coverage/2024/2024-02-20-cooley-adds-former-house-oversight-committee-chief-counsel-to-lead-new-congressional-investigations-practiceCooley Adds Former House Oversight Committee Chief Counsel to Lead New Congressional Investigations Practice<p><strong>Washington, D.C. &ndash; February 20, 2024</strong> &ndash; Susanne Grooms has joined Cooley as a litigation partner to launch the firm&rsquo;s congressional investigations practice based in Washington, D.C. A former federal prosecutor and Capitol Hill veteran, Grooms previously served for more than a decade in the senior leadership of the Committee on Oversight and Reform, the principal investigative committee of the U.S. House of Representatives, and most recently led congressional investigations as a partner at Kaplan Hecker &amp; Fink. She will advise clients as they navigate high stakes investigations launched by Congress and federal and state agencies, with a particular focus on inquiries involving significant reputational issues and media scrutiny.</p> <p>Susanne is widely recognized as one of the nation&rsquo;s foremost leaders in congressional investigations and her experience handling high profile, complex investigations &ndash; grounded in her deep, first-hand knowledge of the current environment on Capitol Hill &ndash; will be a tremendous benefit to our clients,&rdquo; said Mike Attanasio, chair of Cooley&rsquo;s global litigation department. &ldquo;She is another addition to the cohort of elite, next generation partners we have recruited to Cooley as we continue build a dominant practice that is uniquely positioned to advocate for the world&rsquo;s most transformative companies.</p> <p>Susanne is the ideal leader to build a destination congressional investigations practice at Cooley and a natural complement to our extensive regulatory and enforcement platform,&rdquo; added Andrew Goldstein, head of Cooley&rsquo;s white collar defense &amp; investigations group. &ldquo;Her experience on some of the highest stakes investigations and reputational challenges will be invaluable as technology companies and other disruptors face increased Congressional oversight and other governmental investigations.</p> <p>Grooms brings an extensive record of assisting clients with congressional investigations, other government and regulatory investigations, internal investigations, and crisis management. Leading the investigative staff of the House Committee on Oversight and Reform from 2011 to 2021, Grooms oversaw a team that conducted hundreds of investigations and congressional hearings on a wide variety of matters, and served as the general counsel for the Select Committee on Benghazi.</p> <p>Cooley has impressively expanded its presence in Washington, D.C., and I&rsquo;m excited to build a leading congressional practice in collaboration with such a diverse team of talented litigators,&rdquo; said Grooms. &ldquo;I look forward to leveraging my experience in both government and private practice to help Cooley&rsquo;s innovative and disruptive clients navigate high-stakes and high-profile congressional investigations and other legal and regulatory challenges.</p> <p>Susanne is a fantastic addition to our rapidly expanding presence in Washington, D.C.,&rdquo; said Cullen Speckhart, Partner in Charge of the firm&rsquo;s D.C. office. &ldquo;I am especially proud that she is the latest in an impressive roster of women litigators who have recently joined the firm, and our entire team is looking forward to working with her.</p> <p>Other recent prominent additions to Cooley&rsquo;s litigation team include Rebekah Donaleski and Russell Capone (SDNY) in New York, and Ethan Glass and Kathy O&rsquo;Neill (DOJ Antitrust), Michelle Rogers (financial enforcement), Sonia Nath (FDA), and Andrew Goldstein (SDNY) in Washington, DC, among many others.&nbsp;</p>Tue, 20 Feb 2024 16:49:00 Z{5D18B8C2-C68B-49C7-BFFA-C759FCD30152}https://www.cooley.com/news/coverage/2024/2024-02-15-cooley-named-best-of-the-best-in-generative-ai-leading-edge-law-firmCooley Named “Best of the Best“ in Generative AI, Leading Edge Law Firm<p>In a recent BTI Consulting Group report based on more than 300 interviews with in-house legal leaders, Cooley was named among the “best of the best” when it comes to the use of generative artificial intelligence (AI). According to BTI, generative AI is among the new criteria that “top legal decision-makers rely on for high-end work.” BTI also found that “corporate clients want multiple viewpoints as they sort through the implications of AI,” and praised firms for their use of AI.</p> <p><a rel="noopener noreferrer" href="https://www.law360.com/articles/1797800/ai-use-among-new-criteria-differentiating-outside-counsel" target="_blank" class="arrow-link">Read the article (subscription required)</a></p> <p>Cooley also was named in the highest tier in BTI’s Leading Edge Law Firms 2024 report – which named firms praised by corporate counsel for delivering on new expectations amid the rapid pace of change in legal services. In addition to using and understanding generative AI, corporate counsel cited the importance of serving as a source of new ideas, delivering novel strategies to solve problems, being tech savvy in delivering legal services and providing creative interpretations of government regulations.</p> <p><a rel="noopener noreferrer" href="https://bticonsulting.com/themadclientist/clients-single-out-the-law-firms-on-the-leading-edge-helping-clients-with-biggest-strategic-change" target="_blank" class="arrow-link"><span class="normaltextrun">Read the full list</span></a></p>Thu, 15 Feb 2024 19:22:46 Z{67BB6C17-7CC7-4556-9A0E-6371897DE4EF}https://www.cooley.com/news/insight/2024/2024-02-15-fcc-ai-generated-robocalls-illegal-under-the-tcpaFCC: AI-Generated Robocalls Illegal Under the TCPA<p>In a unanimous, bipartisan decision, the Federal Communications Commission (FCC) has issued a <a rel="noopener noreferrer" href="https://www.fcc.gov/document/fcc-makes-ai-generated-voices-robocalls-illegal" target="_blank">declaratory ruling</a> to confirm that artificial intelligence-generated voices are &ldquo;artificial&rdquo; under the Telephone Consumer Protection Act (TCPA). The FCC&rsquo;s decision comes on the heels of an <a rel="noopener noreferrer" href="https://www.fcc.gov/document/fcc-demands-entity-behind-nh-robocalls-stop-illegal-effort" target="_blank">FCC cease-and-desist letter</a> issued to a company that originated robocalls to New Hampshire presidential primary voters using an AI-generated voice that sounded like President Joe Biden, and just a week after <a rel="noopener noreferrer" href="https://www.fcc.gov/document/fcc-chairwoman-make-ai-voice-generated-robocalls-illegal" target="_blank">FCC Chairwoman Jessica Rosenworcel issued a press release</a> saying she had proposed to &ldquo;make AI voice-generated robocalls illegal.&rdquo;</p> <h3>FCC&rsquo;s AI inquiry</h3> <p>The TCPA protects consumers from unwanted calls made &ldquo;using an artificial or prerecorded voice to deliver a message without the prior express consent of the called party&rdquo; unless an exemption applies. Recognizing that AI could be used to protect against or make illegal calls, the <a href="https://www.cooley.com/news/insight/2023/2023-11-21-fcc-explores-impact-of-ai-on-robocalls-and-robotexts" target="_self">FCC opened an inquiry in November 2023</a> on how AI technologies impact the TCPA regulatory regime. The FCC did not propose specific rules, but rather asked for general comment on the benefits and risks associated with AI technologies, including voice cloning, in the TCPA space. </p> <p>Numerous parties filed comments in response to the FCC&rsquo;s inquiry, including on the issue of using AI technologies to simulate a human voice. Commenters urged the FCC to confirm that AI technologies such as voice cloning fall within the TCPA&rsquo;s existing prohibition on artificial or prerecorded voice messages.</p> <h3>New Hampshire robocalls</h3> <p>As was widely reported in the general press, a few days before the New Hampshire presidential primary, New Hampshire voters received recorded calls telling them not to cast their ballots. The calls used a voice crafted to sound like Biden. In addition to using an imitation of Biden&rsquo;s voice, the calls also used a spoofed telephone number to falsely suggest the call was sent out by a former chair of the New Hampshire Democratic Party.</p> <p>The FCC, in coordination with New Hampshire&rsquo;s attorney general and telecom industry trade groups, traced the calls back to Lingo Telecom and identified the party that allegedly initiated the calls. Following its usual procedures, the FCC issued a&nbsp;<a rel="noopener noreferrer" href="https://docs.fcc.gov/public/attachments/DOC-400264A1.pdf" target="_blank">cease-and-desist letter directing Lingo</a> to stop carrying illegal traffic and <a rel="noopener noreferrer" href="https://docs.fcc.gov/public/attachments/DA-24-102A1.pdf" target="_blank">alerted other telecom providers</a> that they could lawfully block Lingo&rsquo;s voice traffic if Lingo did not effectively mitigate its illegal traffic within 48 hours. Because the spoofed telephone number was sufficient to deem the calls illegal, the FCC did not have to specifically address whether the use of an artificial voice in a call made for political purposes also was illegal, or whether it was permissible under a TCPA exemption. </p> <h3>Declaratory ruling</h3> <p>The FCC typically cannot adopt new rules without going through a notice and comment rulemaking proceeding. The FCC can, however, issue a declaratory ruling to issue guidance and clarify its existing rules. Here, the FCC&rsquo;s November 2023 AI inquiry was not a notice of proposed rulemaking, so it could not be the basis for the FCC to adopt new rules. Accordingly, while the FCC cited the November AI inquiry and the comments urging the FCC to find that AI-generated voices are &ldquo;artificial&rdquo; under the TCPA, the declaratory ruling stated that it was &ldquo;clarifying&rdquo; and &ldquo;confirming&rdquo; that current TCPA rules apply to AI technologies &ndash; it was not formulating new rules. While the declaratory ruling itself does not reference the New Hampshire Biden robocalls, <a rel="noopener noreferrer" href="https://docs.fcc.gov/public/attachments/FCC-24-17A3.pdf" target="_blank">FCC Commissioner Geoffrey Starks discussed the calls in his concurring statement</a>. </p> <p>As the FCC was merely clarifying and confirming existing rules, the declaratory ruling is effective immediately. </p> <h3>Next steps</h3> <p>Most parties agree with the FCC that the declaratory ruling did not change or expand the TCPA rules, as the use of AI voice cloning is just another means of simulating a human voice. Further, because of the many exemptions under the TCPA, such as exemptions when calls are made for noncommercial purposes, it is not clear that the declaratory ruling will provide a basis to stop bad actors from spoofing voices in the context of a political campaign. Parties should, however, take the FCC&rsquo;s actions as an indication of its concern about the use of AI to create or send robocalls. Accordingly, any use of artificial voice technology to create telephone messages, or any calls made using a prerecorded human voice, should be reviewed by counsel.</p>Thu, 15 Feb 2024 16:54:01 Z