Summer 2010 1

Investment Management

Update

Summer 2010

In this issue:SEC Aims to Educate Investors about Target Date Funds .................................................. 1

Administration’s Financial Fraud Enforcement Task Force Seeks Nationwide Coordination of Law Enforcement Efforts ............................................. 1

Compliance Corner: Q&A on the Recent BSA Rule Changes Impacting Mutual Fund AML Programs ......................................................................... 2

Dodd-Frank: Reshaping the Investment Management Playing Field ..................................... 4

No SEC Fraud Charge for Simply “Using” a Prospectus .................................................. 6

Swaps Treatment Under Dodd-Frank—Registered Funds vs. Commodity Pools ...................... 7

Financial Services Authority to be Scrapped in Major Overhaul of UK Financial Regulation ... 9

Practice Highlight: K&L Gates Investment Adviser Practice ................................................ 9

Financial Services Reform Alerts ............................................................................... 13

Industry Events ...................................................................................................... 15

SEC Aims to Educate Investors about Target Date Funds By Gwendolyn A. Williamson

The SEC has proposed changes to the rules

governing the marketing and advertising of

“target date” mutual funds. The proposed rules,

SEC Chairman Mary L. Schapiro explained to

an open meeting on June 16, are intended to

“help clarify the meaning of a date in a target

date fund’s name and enhance the information

provided to investors in these funds as they

invest for retirement.” The new disclosure the

SEC proposes, Chairman Schapiro said,

“will enable investors to better prepare for

retirement.”

Evolution of Target Date

Funds in the Markets

Target date funds were introduced to investors

as asset allocation vehicles in the mid-1990s,

and usually include years in their names that

correspond to investors’ projected dates of

retirement (typically age 65). Since their

inception, target date funds have grown to

account for approximately

Administration’s Financial Fraud Enforcement Task Force Seeks Nationwide Coordination of Law Enforcement EffortsBy Matt T. Morley, Richard A. Kirby, and Andrew Edwin Porter

In November 2009, the Obama Administration announced the formation of the Financial Fraud

Enforcement Task Force (FFETF), which would be designed to coordinate federal, state and local efforts

to investigate and prosecute fraud and other financial misconduct. The FFETF expanded and supplanted

an earlier task force created to combat corporate fraud in the wake of the Enron scandal. Since the

FFETF’s formation, it has been involved in numerous coordinated enforcement actions, investigating and

prosecuting financial crimes, including securities fraud, Ponzi schemes, and mortgage and lending fraud.

The formation of the FFETF reflects the similar approach to financial reform that has been taken in other

areas, such as the creation of the Financial Stability Oversight Council established under Congress’

recently proposed financial reform legislation. The coordination of financial fraud enforcement under the

FFETF may be one part of a more sweeping set of changes that could result in considerable increases in

the magnitude, focus and efficiency of efforts to pursue financial wrongdoing.

First, the revised mandate of the task force signals the Administration’s focus on issues relevant to the

current financial crisis and to the use of economic recovery and stimulus funds. These include fraudulent

mortgage lending, retirement plan fraud, lending discrimination claims, and the misuse of federal

recovery funds.

Second, federal law enforcement agencies continue to significantly increase the resources devoted to

investigating and prosecuting financial misconduct. In this context, greater cooperation among these

agencies could enhance their overall impact.

Finally, the FFETF provides a mechanism for more coordination among federal, state, and local officials,

and while such cooperation has been difficult to achieve in the past, to the extent that federal, state, and

local authorities can work together, their combined efforts may become more focused and more consistent.

continued on page 10continued on page 12

Lawyers to the investment management industry

2 Investment Management Update

What is the difference between the Form 8300

and CTR filing obligations?

A CTR is required for a transaction involving a

transfer of more than $10,000 in “currency”

by, through, or to the mutual fund. Currency for

purposes of the CTR is less inclusive than in Form

8300 and includes only coin and paper money

and does not include cash equivalents such as

cashier’s checks, bank drafts, traveler’s checks,

and money orders. The change to CTRs ought to

streamline and reduce overall compliance burdens

for mutual funds and will bring mutual funds in line

with cash reporting requirements of banks and

broker-dealers.

What practical impact does the change from

filing Form 8300s to CTRs have on a mutual

fund’s AML program?

Mutual fund AML programs often state that the

fund will not accept payment in the form of paper

money or cash equivalents (cashier’s checks, bank

drafts, traveler’s checks, and money orders) and, if

the fund receives payments in such a form, it will

file a Form 8300. Such language will need to be

reviewed and updated to bring it in compliance

with the new CTR requirements. In addition, to the

extent that a mutual fund has delegated explicitly

the obligation to file Form 8300s to its transfer

agent, that delegation will need to be updated to

specify the obligation to file CTRs instead.

What is the “Travel Rule” and what does

it require?

The Travel Rule requires that “financial institutions,”

including mutual funds starting January 10,

2011, create and retain certain records for the

transmittal of funds and transmit information on

these transactions to other financial institutions in the

payment chain. In general, the Travel Rule applies

to transmittals of funds in amounts that equal or

exceed $3,000 and requires the transmittor’s

financial institution to obtain, retain, and include in

the transmittal order: (i) the name of the transmittor,

and if payment is ordered from an account, the

account number, (ii) address of the transmittor,

(iii) amount of the transmittal order, (iv) date of

the transmittal order, (v) identity of the recipient’s

financial institution, (vi) either the name and address

or numeric identifier of the transmittor’s financial

institution and (vii) as many of the following items

as are received with the transmittal order: (a)

name and address of the recipient, (b) account

number of the recipient, and (c) any other specific

identifier of the recipient. For each transmittal order

that a financial institution receives, the financial

institution must retain either the original or a copy

of the transmittal order. The foregoing information

must be retained for five years and generally must

be retrievable by the name of the transmittor or

its account number if the transmittor maintains an

account at the financial institution.

FinCEN recently adopted a rule to include mutual funds within the general definition of

“financial institution” in the regulations implementing the Bank Secrecy Act. This change directly

impacts current mutual fund anti-money laundering practices in two significant ways. First,

mutual funds no longer will be required to file IRS/FinCEN Form 8300s (Form 8300). Instead,

mutual funds, like banks and broker-dealers, will be required to file Currency Transaction Reports

(CTRs). Second, mutual funds will now be required to comply with the “Travel Rule.” The Travel

Rule requires “financial institutions” to retain certain information with respect to the transmittal of

funds, as discussed further below. The compliance date for filing CTRs was May 14, 2010.

The compliance date for the Travel Rule is January 10, 2011.

Q&A on the Recent BSA Rule Changes Impacting

Mutual Fund AML ProgramsBy Andras P. Teleki

ComplianceCorner

Summer 2010 3

Are there any noteworthy exceptions to the

Travel Rule?

Transmittal of funds is defined under the

regulations implementing the BSA as “a series

of transactions beginning with the transmittor’s

transmittal order, made for the purpose of

making payment to the recipient of the order.”

The term includes any transmittal order issued

by the transmittor’s financial institution or an

intermediary institution intended to carry out the

transmittal order. Fund transfers governed by the

Electronic Fund Transfer Act of 1978, as well as

any other fund transfers that are made through

an automated clearinghouse, an automated teller

machine, or a point-of-sale system, are excluded

from the definition. In addition, in general, the

transmittals of funds where the transmittor and the

recipient are any of the following are excluded

from the requirements of the Travel Rule: banks;

broker-dealers; futures commission merchants

or introducing brokers in commodities; mutual

funds; federal, state, and local governments; and

federal, state, and local government agencies or

instrumentalities.

Does the Travel Rule apply only to wires?

No. The Travel Rule applies to fund transfers and

transmittals of funds, which cover a broad range

of methods of moving funds. The Travel Rule

covers transfers within a financial institution if the

originator and the recipient are different persons,

as well as orders made by telephone, facsimile,

or electronic messages.

What practical impact does the new Travel Rule

requirement have on mutual funds?

Mutual funds will need to update their AML

programs to address the Travel Rule requirements.

In addition, transaction processing and

recordkeeping systems may need to be updated

to comply with the Travel Rule requirements.

Finally, to the extent that a mutual fund delegates

compliance with the Travel Rule to a third party,

such as a transfer agent, the delegation should be

appropriately documented.

Does the Travel Rule require reporting to

FinCEN or some other government entity?

No. If, however, the transmittal of funds is

suspicious, the mutual fund may be required to file

a Suspicious Activity Report.

Does the designation of a mutual fund as a

“financial institution” under the BSA regulations

subject it to any other new recordkeeping

regulation under the BSA regulations?

As a result of being defined as a “financial

institution,” mutual funds are subject to the rules on

the creation and retention of records for extensions

of credit and cross-border transfers of currency,

monetary instruments, checks, investment securities,

and credit. These recordkeeping requirements

apply to transactions exceeding $10,000.

4 Investment Management Update

Background

President Obama’s signature enacting the Act

came after the Senate adopted the conference

report on H.R. 4173 on July 15. The House

adopted the conference report on June 30.

The Obama Administration initially unveiled its

Financial Regulatory Reform Plan on June 17,

2009. In the weeks and months that followed, the

Obama Administration released several rounds

of proposed legislation; House Financial Services

Committee Chairman Barney Frank (D-MA) quickly

followed with the release of House legislative

text, demonstrating a high degree of coordination

between the White House and the House. The

House Financial Services Committee held a

six-week markup in the fall, followed by House

passage of H.R. 4173, the “Wall Street Reform

and Consumer Protection Act of 2009,” on

December 12, 2009 by a vote of 223 to 209.

Senate consideration occurred in fits and starts.

Senate Banking Committee Chairman Chris Dodd

(D-CT) released the Chairman’s Mark on March

15. The Chairman’s Mark, which had been in

development for months, replaced a discussion

draft previously circulated by Chairman Dodd

on November 10, 2009. The Senate Banking

Committee’s March 22 markup lasted only 21

minutes, with Members voting along party lines to

favorably report the legislation to the full Senate.

After three weeks of Floor consideration, the

Senate passed the “Restoring American Financial

Stability Act of 2010” on May 20 by a vote of

59 to 39.

The Act

The Act reforms numerous aspects of the financial

services industry, including:

• Financial and Systemic Stability

• Bank Regulation and Resolution

• Hedge and Private Equity Funds

• Over-the-Counter Derivatives (OTC derivatives)

• Investor Protection

• Credit Rating Agencies

• Securitization

• Executive Compensation and Corporate

Governance

• Consumer Financial Protection

• Mortgage Reform and Anti-Predatory Lending

• Insurance

Significantly, the Act creates a Financial Services

Oversight Council (FSOC), which has the

authority to require, by a 2/3 vote, that nonbank

financial companies—including large mutual

fund companies—whose failure would pose

systemic risk be placed under the supervision of

the Board of Governors of the Federal Reserve

System (Federal Reserve). It should be noted

that, for mutual funds, some degree of mitigation

is provided by requiring that the FSOC, when

making its determination, consider the extent to

which assets are managed rather than owned by

On July 21, 2010, President Barack Obama signed into law the Dodd-Frank Wall Street

Reform and Consumer Protection Act (Act), which has been in development for well over

one year. The Act will create a host of new regulatory requirements for the financial services

industry. Moreover, by creating an entirely new regulatory structure in certain cases, the Act

could change the competitive dynamics between various investment vehicles.

Dodd-Frank: Reshaping the Investment Management Playing Field By Daniel F. C. Crowley, Bruce J. Heiman, Karishma Shah Page, Margo A. Dey

The Act will create a host of new regulatory requirements for the financial services industry.

Summer 2010 5

the company and the extent to which ownership

of assets under management is diffuse. The

Act also establishes a Liquidation Authority for

winding down a financial company. Under these

provisions, the Treasury Secretary, upon a written

recommendation approved by 2/3 votes of

the boards of both the Federal Reserve and the

Federal Deposit Insurance Corporation (FDIC),

may decide to appoint the FDIC as a receiver for

a financial company that is in danger of default

and such default would have a systemically

significant impact.

The Act also creates for the first time an entirely

new structure to regulate private funds. The Act

generally requires advisers to private funds, with

certain exceptions, to register with the SEC if

the adviser has assets under management of

$100 million or more. The Act subjects advisers

to private funds to recordkeeping and reporting

requirements related to the private funds they

advise and subjects those advisers (with some

exceptions) to SEC examination.

Additionally, the Act establishes a new regulatory

regime for the OTC derivatives market. The Act

requires the clearing of swaps and security-based

swaps that have been accepted to be cleared

by a clearinghouse and approved by the CFTC

and/or SEC. If a swap or security-based swap

is required to be cleared, it must be exchange-

traded if a designated contract market, swap

execution facility, national securities exchange, or

security-based swap execution facility will accept

it for trading.

Further, the Act contains provisions known as the

“Volcker Rule,” named after the provisions’ main

advocate, former Federal Reserve Chairman Paul

Volcker. The Volcker Rule generally prohibits banks

from engaging in proprietary trading or sponsoring

or owning an equity interest in a hedge or private

equity fund. The FSOC has six months to conduct

a study on implementing the Volcker Rule, after

which the Federal banking agencies, the SEC, and

the CFTC will have nine months to coordinate the

promulgation of regulations. The Volcker Rule applies

to insured depository institutions, their holding

companies, companies treated as bank holding

companies, and any subsidiary of these companies.

The Act contains numerous provisions designed

to protect investors. In addition to reforms aimed

at strengthening the SEC (including examination

and enforcement), the Act calls for a study by the

SEC of the standards of care for brokers, dealers,

and investment advisers in connection with

providing personalized investment advice to retail

customers and for rules prohibiting short selling.

The Act also contains executive compensation

and corporate governance provisions, including

rules providing shareholders of public companies

with an advisory vote on executive compensation,

requiring independent compensation committees,

and providing the SEC with authority to

promulgate rules on proxy access.

Creating these entirely new regulatory structures,

the Act, in certain cases, changes the competitive

dynamics between various investment vehicles.

For example, mutual funds will be competing on

more level regulatory terrain with private funds,

hedge funds, and OTC derivatives. Institutional

investors in previously unregulated products

may find themselves attracted to funds that are

more accustomed to operating in a regulated

environment. Further, limitations such as the Volcker

Rule may benefit currently registered products, such

as mutual funds, as depository institutions and their

holding companies seek investment alternatives.

Looking Ahead

Enactment of this legislation only marks the

beginning point, as Congress did not fully

resolve many of the most contentious policy

decisions. In certain ways, the Act creates

a framework to govern the next stage of the

policymaking process. The legislation contains

315 rulemaking requirements and 145 study and

reporting provisions. Additionally, Congress will

exercise unprecedented, rigorous oversight and

will inevitably consider subsequent legislation.

As such, the substance of these policies will

be developed and detailed through rounds of

administrative and legislative processes over the

next several years.

See page 13 for a complete list of our series of Alerts

on http://www.klgates.com providing information on

substantive provisions in the Dodd-Frank Act.

6 Investment Management Update

Over the last decade, courts have differed

over whether primary liability for making a

misrepresentation should be limited to persons

to whom a statement is formally “attributed”—

effectively the speaker or writer of the statement

—or whether it should extend to those who

“substantially participate” or are “intimately

involved” in preparing the statement. This new

decision answers the next question, which

is whether primary fraud liability can extend

beyond makers or preparers of misstatements

and reach securities professionals who merely

“use” the documents containing the misstatements

in selling securities.

The SEC’s complaint in the case, SEC v. Tambone,

No. 07-1384 (1st Cir. March 10, 2010),

charged a co-president and a managing director

of Columbia Funds Distributor, Inc. with securities

fraud under Exchange Act Rule 10b-5. The SEC

contended that the defendants knowingly permitted

certain preferred customers to market time 16

Columbia mutual funds while aware of or recklessly

ignoring prospectus statements that the funds did

not permit market timing and that the funds had

adopted measures to discourage the practice.

Defendants moved to dismiss the SEC’s case

based on the SEC’s failure to plead that they had

“made” a misrepresentation, a required element

under Rule 10b-5, and the trial court granted the

dismissal motion. On appeal, the SEC principally

argued that defendants made misrepresentations

by simply “using” the prospectuses to sell securities,

regardless of whether they personally had any role

in actually crafting the statements. A three-judge

panel of the appeals court initially sided with

the SEC, but after further review, the full en banc

appeals court rejected this SEC argument. (En

banc review is by all of an appeals court’s judges

in regular active service.)

The court reasoned that the plain language of Rule

10b-5, its place in the statutory framework, and

its judicial interpretation over many years could

not support the SEC’s “expansive” reading of what

it takes to “make” a statement. Additionally, the

court saw a danger that such a reading would blur

the line between primary liability and aiding-and-

abetting liability, and said that the Supreme Court’s

1994 Central Bank decision underscored the

need to “hold the line” between such primary and

secondary forms of liability.

The federal appeals court in Boston recently issued an en banc decision that limits the SEC’s

ability to tag securities professionals with fraud liability for alleged misrepresentations in

prospectuses and other offering materials. Essentially the court held that, for purposes of

determining liability, simply “using” a prospectus to sell mutual fund shares is not the same thing

as “making” the statements contained in the prospectus. While the decision technically binds

only the federal courts in four states, Massachusetts, Maine, New Hampshire, and Rhode

Island, it likely will influence federal courts around the country.

Alternatively, the SEC argued that defendants

“made” a misrepresentation by directing the

offering of securities on behalf of an underwriter,

thus making an “implied” statement to prospective

investors that they had a reasonable basis to

believe that key representations in the prospectuses

were truthful and complete. The SEC did no

better with this argument, as the court rejected

it as another attempt to impose primary liability

on securities professionals “regardless of who

prepared the prospectus.” The court refused to find

such “a free-standing and unconditional duty to

disclose,” which it found inconsistent with Supreme

Court precedent.

In a concurring opinion, two judges further

observed that the SEC’s argument would have the

courts treat securities professionals “as impliedly

representing the entire contents of prospectuses”

and that it would allow the SEC to charge

“virtually anyone involved in the underwriting

process” as having “made” a misstatement found

in a prospectus. However, two other judges

dissented and found that underwriters’ access to

information, statutory duty to review and confirm

information in sales documentation, and “trail

guide” relationship with investors means that they

impliedly represent that they have a reasonable

basis for believing that statements in a prospectus

are accurate. The case was remanded to the trial

court for further proceedings on separate SEC

claims not reviewed by the en banc appeals

court, including negligence-based and aiding-and-

abetting charges.

No SEC Fraud Charge for Simply “Using” a Prospectusby Stephen J. Crimmins

Summer 2010 7

Swaps Treatment Under Dodd-Frank—Registered Funds vs. Commodity Pools

by Susan Gault-Brown

The jurisdictional divide established by Dodd-

Frank for swaps regulation can be viewed

as the latest chapter in the long history of

jurisdictional battles between the SEC and CFTC.

In the mid-1980s, the agencies solved part of

their longstanding jurisdictional battle over the

regulation of futures by agreeing that funds that

invested primarily in futures (including futures

based on broad-based securities indices) would

be regulated by the CFTC as commodity pools,

and funds that invested primarily in securities

would be regulated by the SEC as investment

companies. The issue regarding which agency

had jurisdiction over futures based on narrow-

based securities indices and single securities was

sidelined until finally resolved by Congress in

2000 in the Commodity Futures Modernization

Act (CFMA). That act added the new term

“security futures” to the securities laws and CEA.

A security futures contract is a futures contract

based on a narrow-based securities index or a

single security, and jurisdiction over such futures

is split between the SEC and CFTC depending

on whether the futures contract is traded on a

securities exchange or a commodities exchange.

As a result, a fund that invests primarily in futures

contracts based on a broad-based securities

index may be regulated as a commodity pool

and not as an investment company, but a fund

that invests primarily in futures contracts based

on a narrow-based securities index traded on a

securities exchange is regulated as an investment

company and not as a commodity pool.

In addition to resolving lingering jurisdictional

issues over the regulation of futures, the CFMA

also was intended to prevent the SEC or the

CFTC from regulating swaps. Pursuant to the

CFMA, swaps were excluded from the definition

of commodity in the CEA, and, therefore, a

fund that invested only in swaps (as opposed

to futures) was not subject to CFTC oversight as

a commodity pool. The CFMA also specifically

excluded swaps (both security-based and non-

security-based) from the definition of security

under the Securities Act and the Exchange Act.

The CFMA did not similarly exclude swaps

from the definition of security in the Investment

Company Act or the Investment Advisers Act.

Nevertheless, based on the CFMA exclusions for

swaps in the Securities Act and Exchange Act, a

fund that invested only in swaps arguably would

The Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) drew a statutory

line distinguishing “security-based swaps,” which it defines as “securities” under the Securities

Act and the Exchange Act, from all other swaps. Dodd-Frank subjects all other swaps to CFTC

jurisdiction under the Commodity Exchange Act (CEA) as commodities. These revisions alter the

pre-Dodd-Frank jurisdictional divide between the SEC and the CFTC with respect to funds that

invest primarily in swaps (swap funds) and, in the future, may prevent funds that invest primarily

in certain kinds of swaps from registering with the SEC as investment companies.

not have needed to register with the SEC as

an investment company, because an investment

company, definitionally, is a fund that invests

primarily in “securities.”

Until now, the SEC and its staff have permitted

funds that invest primarily in security-based

swaps (including swaps based on broad-based

securities indices, narrow-based securities

indices, and single securities) to register as

investment companies, despite the argument that

they may not be engaged primarily in investing

in “securities.” Presumably, the SEC’s rationale

for permitting such funds to register as investment

companies is based in large part on the

argument that the definition of “security” under

the Investment Company Act is broader than the

corresponding definition under the Securities Act

and the Exchange Act. The SEC staff has been

more tentative in asserting jurisdiction under

the Investment Company Act over funds that

invest primarily in swaps that do not reference

securities. However, the staff has allowed funds

that invest primarily in currency swaps to register

as investment companies under the Investment

Company Act. It has also permitted funds that

invest primarily in commodity swaps to register

as investment companies under the Investment

Company Act, although, for tax purposes,

such funds typically invest in commodity swaps

through wholly-owned subsidiaries.

8 Investment Management Update

Because Dodd-Frank revises the CEA to make

all swaps, other than “security-based swaps,”

subject to CFTC jurisdiction as commodities,

funds that invest in non-security-based swaps

will become subject to regulation as commodity

pools, like their cousins that invest in futures

contracts. Although “security-based swaps” are

now clearly within the definition of “security” and

subject to SEC jurisdiction, the new definition of

“security-based swaps” is narrower than the old

definition that included all swaps referencing

any securities and now includes only swaps

that reference a narrow-based security index or

a single security. As a result, swaps based on

broad-based securities indices (as well as non-

security-based swaps like commodities swaps)

are excluded from the definition of security, and

are subject to CFTC jurisdiction.

Dodd-Frank’s new regulatory structure creates new

uncertainties for managers seeking to register

swap funds as investment companies under the

Investment Company Act. (Many managers seek

to register their funds as investment companies

because, among other reasons, investment

company registration offers pass-through tax

treatment under Subchapter M, exemption

from ERISA, and well-developed distribution

channels, and the Investment Company Act’s

investor protections appeal to many investors.)

Until now, a fund that invested primarily in

swaps based on a broad-based securities index

had been able to register as an investment

company. However, under Dodd-Frank, such a

fund may instead be treated as a fund that does

not invest in “securities,” particularly since such

a fund is explicitly subject to CFTC jurisdiction

as a commodity pool. (Nevertheless, funds that

invest primarily in swaps based on narrow-

based indices and single securities would still be

permitted to register as investment companies.)

It is possible that the SEC and its staff could

take the position that the Investment Company

Act definition of “security” is broader than the

Securities Act and the Exchange Act definitions

and permit the registration of funds that invest

primarily in swaps referencing broad-based

securities indices; however, such a reading

may be unlikely given Dodd-Frank’s specific

empowerment of the CFTC to regulate such

instruments. As a result of the new legislation,

managers to registered funds and funds seeking

to register with the SEC may have to rethink their

use of swaps in connection with their ability to

register their funds as investment companies.

Summer 2010 9

Our attorneys are highly experienced in the needs of registered and unregistered investment advisers.

Leveraging our global footprint, including our offices in major international financial centers such as

New York, Chicago, San Francisco, London, Frankfurt, Hong Kong, Taipei, Shanghai, and Singapore,

we have the worldwide reach and the experience necessary to address the regulatory and legal issues

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quality service in the most cost-effective manner possible.

Our clients include many of the largest global asset management firms, as well as start-up managers

and specialized firms. As the industry has developed, grown and innovated, our attorneys have

been at the forefront of those developments. In today’s political and financial climate, advisers face a

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and globally. We provide integrated regulatory advice based on our experience practicing before

the U.S. Securities and Exchange Commission, Commodity Futures Trading Commission, Financial

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K&L Gates is well versed in legal and regulatory issues relating to investment advisers, as well as all

aspects of their operations, from day-to-day compliance to the sale, merger, and consolidation of advisers.

Practice Highlight K&L Gates Investment Adviser Practice

On June 15, 2010, U.K. Chancellor of the Exchequer, George Osborne, announced the scrapping of the

Financial Services Authority as part of a major shake-up of the regulation of financial services in the U.K.

The FSA will be replaced by:

• a new prudential regulator, which will be a subsidiary of the Bank of England, and will be

responsible for oversight of U.K.-based retail lenders, investment banks, building societies and

insurers and regulation of capital requirements of financial institutions;

• a Consumer Protection and Markets Authority, responsible for the protection of consumers and day-to-

day policing of financial firms; and

• a new financial crime agency, incorporating the current financial crime powers of the FSA, the

Serious Fraud Office, and the Office of Fair Trading.

The FSA will be wound down over the next two years, with its full abolition set for some time in 2012.

For more information, please visit our Global Financial Markets Watch blog at klgates.com.

Financial Services Authority to Be Scrapped in Major Overhaul of U.K. Financial Regulation

10 Investment Management Update

press conference, Treasury Secretary Geithner

said that the FFETF seeks to bring “a more

aggressive, preemptive and proactive approach,

across federal agencies and alongside state

governments, to stop trends in financial fraud as

early as possible.”

What’s New about the FFETF?

Like its predecessor, the FFETF is charged with

providing advice to the Attorney General on the

investigation and prosecution of financial misconduct.

But there are differences in several respects:

• Expanded focus. In addition to addressing

securities fraud, mail and wire fraud, tax

fraud, and money laundering, the FFETF is to

focus on the pursuit of additional offenses,

including bank, mortgage, loan, and lending

fraud; commodities fraud; retirement plan

fraud; False Claims Act violations; unfair

competition; and discrimination.

• Coordination with non-federal

authorities. The prior task force had been

directed to advise the Attorney General

on ways to enhance cooperation among

federal, state, and local authorities. The

FFETF has a stronger mandate, having been

directed to “coordinate law enforcement

operations” with representatives of state,

local, tribal, and territorial law enforcement.

The Formation of the FFETF

Federal authorities have formed a task force that

seeks to coordinate federal, state and local efforts

to investigate and prosecute fraud and other

financial misconduct. The FFETF was established

on November 17, 2009, pursuant to an

Executive Order signed by President Obama.

At a press conference led by three cabinet-level

officials and the Director of Enforcement of the

Securities and Exchange Commission (SEC),

Attorney General Eric Holder noted “a growing

sentiment that Wall Street does not play by the

same rules as Main Street,” and promised that

the government “will not allow these actions to

go unpunished.” Mr. Holder said that the task

force will focus on enforcement efforts that are

significant “in this time of economic recovery,”

including mortgage fraud, securities fraud,

fraud related to economic recovery efforts and

discrimination in lending and financial markets.

Housing and Urban Development (HUD)

Secretary Shaun Donovan stated that interagency

collaboration is “absolutely essential” to avoid

duplication of efforts and to achieve “more

effective investigations and enforcement.” Treasury

Secretary Tim Geithner also noted that while

efforts to reform regulation of the financial system

are important, “we need more than new rules.

We need more than a new system with fewer

gaps and greater oversight. We also need a

much more aggressive strategy of enforcement.”

The FFETF replaces an earlier task force created

by the Bush Administration in the wake of Enron

and other corporate scandals in 2002, the

President’s Corporate Fraud Task Force. This

task force claimed to have obtained more than

1,300 corporate fraud convictions, although one

could argue that it failed to address many of the

issues relating to the financial crisis that emerged

during 2008. At the November 17, 2009

continued from page 1

Administration’s Financial Fraud Enforcement Task Force Seeks Nationwide Coordination of Law Enforcement Efforts

• Expanded membership. The FFETF will

include representatives of seven Executive

Branch departments, nine regulatory agencies,

and nine other government agencies.

The prior task force was comprised of the

Assistant Attorneys General of the Criminal and

Tax Divisions, the Director of the Federal Bureau

of Investigation, and U.S. Attorneys for seven

specified districts (C.D. Cal., N.D. Cal., N.D. Ill.,

E.D.N.Y., S.D.N.Y., E.D. Pa., and S.D. Tex.). The

FFETF does not include these officials.

The prior task force also had included an

interagency group comprised of the heads of

the Departments of Labor and Treasury; the

Chairpersons of the SEC, the CFTC, and the

FCC; and the Chief Inspector of the Postal

Service. This group was expanded in January

2009 to include the Director of the Federal

Housing Finance Agency, the Comptroller of

the Currency, the Director of the Office of Thrift

Supervision, the Chairman of the Federal Reserve

Board, the Secretary of HUD, and the Special

Inspector General for the Troubled Asset Relief

Program (TARP).

The FFETF provides for each of these entities to

designate a representative to the task force, and

expands this list to include representatives of

the Departments of Commerce, Education, and

Homeland Security; the Federal Trade Commission;

the Federal Deposit Insurance Corporation; the

Small Business Administration; the Social Security

Administration; the Internal Revenue Service’s

Criminal Investigations Division; the Financial

Crimes Enforcement Network; the Secret Service;

Immigration and Customs Enforcement; and the

Inspectors General for HUD and the Recovery

Accountability and Transparency Board.

Federal authorities have formed a task force that seeks to ... investigate and prosecute fraud and other financial misconduct.

Summer 2010 11

The Executive Order creating the FFETF provides

for expansion of its membership to include

Inspectors General of other federal entities, and

other federal officials, as necessary.

The Executive Order also encourages the Attorney

General to invite the participation, as appropriate,

of state attorneys general, local district attorneys,

and any other state, local, tribal, or territorial law

enforcement officials.

Perhaps in recognition of the very large

membership of the task force, the FFETF’s mandate

authorizes the Attorney General to create a

steering committee chaired by the Deputy Attorney

General, as well as subcommittees to address

enforcement efforts, training, information sharing,

and victims rights issues.

What Might Be the

Significance of the FFETF?

The creation of the FFETF does not, in itself,

seem to significantly alter the law enforcement

landscape. It is our view that the efforts by the

FFETF signal the Administration’s approach

to combat financial fraud. The FFETF recently

announced coordinated enforcement actions

combating bank fraud, lending fraud, and Ponzi

schemes. One such effort that indicates the

FFETF’s approach to combating financial fraud

is “Operation Stolen Dreams,” which focused

on criminal and civil enforcement of mortgage

fraud schemes nationwide. This effort reflects the

Administration’s stated desire to include issues

directly relevant to the current crisis and to the use

of economic recovery and stimulus funds. We are

likely to see further efforts relating to fraudulent

mortgage lending practices, and also to retirement

plan fraud, lending discrimination claims, and the

misuse of federal recovery funds (as evidenced by

the inclusion of the Inspectors General for HUD,

the Recovery Accountability and Transparency

Board, and the TARP.)

Efforts like “Operation Stolen Dreams” signal the

expanded scope of law enforcement efforts. The

FFETF described “Operation Stolen Dreams” as

being the largest collective enforcement effort

ever brought to confront mortgage fraud. With the

collaboration of the Department of Justice, the FBI,

the HUD Office of Inspector General, and other

agencies, the operation involved over a thousand

alleged criminal defendants and also involved

over several hundred civil enforcement actions.

Finally, the FFETF provides a mechanism for more

coordination among federal, state, and local

officials. In the past, such coordination has been

rare—indeed, as was the case with the research

analyst and market timing scandals earlier in the

decade, state and federal authorities more often

seem in competition with each other. “Operation

Stolen Dreams” involved not only federal efforts,

but the collaboration of numerous state and local

enforcement entities to combat mortgage fraud

on a regional level. To the extent that federal,

state and local authorities can cooperate, their

combined efforts could become more focused

and more consistent, and if this potential can be

realized, the task force will have a real impact.

12 Investment Management Update

continued from page 1

SEC Aims to Educate Investors about Target Date Funds

$270 billion of investors’ retirement funds. This

growth is due, in part, to the increased use of target

date funds by 401(k) plan investments following the

Department of Labor’s designation of target date

funds as qualified default investment alternatives.

Target date funds have been marketed as a simple

“set it and forget it” approach to investing that

is designed to free investors from the chore of

managing their investments. Generally, a target date

fund invests in a mix of stocks, bonds and cash/

cash equivalents that becomes more conservative

over time following the “glide path” set forth in

its prospectus, which reflects the fund’s gradual

reduction in equity exposure before it reaches

a “landing point” at which the asset allocation

becomes static.

However, not all target date funds with the same

target date are similarly “conservative” at certain

defined points in time. For example, a review

conducted by the SEC staff found that the equity

allocation of target date funds ranged from 25

percent to 65 percent at their target dates and from

20 percent to 65 percent at their landing dates, and

that the 2009 year-end returns of 2010 target date

funds ranged from 7 percent to 31 percent. These

are significant differences, particularly considering

that target date funds with the same target year are

marketed to individuals who will reach retirement age

at the same time and who, “almost by definition, [are]

not active market observers or researchers.”

During the 2008 market crisis, target date funds

did not perform as the “secure investments with

minimal risks” that many investors believed them to

be: 2010 target date funds suffered an average

of 24 percent in losses during 2008 due to their

exposure to the equity markets. “In the wake of the

2008 returns,” Chairman Schapiro noted, “many

were surprised that funds with such near-term target

dates were invested so heavily in the equity markets

and lost such a sizable portion of their value.” These

losses, combined with the “increasing significance

of target date funds in 401(k) plans, have given

rise to concerns…regarding how target date funds

are named and marketed” and “the potential for

a target date fund’s name to contribute to investor

misunderstanding” about a fund and its investment

strategies and related risks.

“Investors need more information than just the date

in a fund’s name,” Chairman Schapiro reported,

“they need context in order to evaluate what the

date means and what the fund’s projected investment

glide path is.” The “simplicity” of the message

presented in target date fund marketing materials,

the rule proposal states, “at times belies the fact

that asset allocation strategies among target date

fund managers differ and that investments that are

appropriate for an investor depend not only on his

or her retirement date, but on other factors, including

appetite for certain types of risk, other investments,

retirement and labor income, expected longevity,

and savings rate.”

The Rule Proposal

As a result, the SEC has proposed amendments

to three key areas of mutual fund advertising and

marketing rules under Securities Act rules 156 and

482, and Investment Company Act rule 34b-1.

• Fund Name and Asset Allocation Tag

Line. The SEC proposed that “advertisements

and marketing materials for target date

funds that include a date in their name [also

be required to] include the fund’s expected

asset allocation at the target date. The asset

allocation would appear immediately adjacent

to the fund’s name…[as] a tag line.” Such

information, Chairman Schapiro said, “would

enable investors to assess the asset allocation

variability among target date funds and

consider whether the asset allocation meets the

investor’s conservative, moderate, or aggressive

expectations. The tag line gives investors

more than just a date to go on when looking

at a fund name in advertising and marketing

materials.”

• Asset Allocation Illustration—the Glide

Path. The proposal would require that target

date fund marketing materials “include a

visual depiction—such as a table, chart, or

graph—showing a fund’s glide path over time.”

Immediately preceding the illustration would be

a statement explaining that “the asset allocation

changes over time, noting that the asset allocation

eventually becomes final and stops changing;

stating the number of years after the target date

at which the asset allocation becomes final; and

providing the final asset allocation.”

• Additional Risks and Considerations. If adopted, the proposal will require target date

marketing materials to state that: (i) a target

date fund should not be selected solely based

on age but also on a consideration of the

investor’s risk tolerance, personal circumstances,

and complete financial situation; (ii) the

fund is not a guaranteed investment and it is

possible to lose money by investing in the fund,

including at and after the target date; and (iii)

the fund’s asset allocations may be subject to

change, and the extent to which those changes

may be made without a vote of shareholders.

The proposal also includes changes to the SEC’s

antifraud guidance: it proposes that statements

in a target date fund’s marketing materials could

be deemed to be misleading because of (i) the

emphasis placed on a single factor, such as age

or tax bracket, as the basis for determining that an

investment is appropriate and/or (ii) representations

that investing in the fund is a simple investment plan

or requires little or no monitoring.

Taking the Proposal a Step Further?

The rule proposal is aimed at marketing and

advertising materials because the SEC currently

believes that target date fund investors are

more likely to read these materials than they are

prospectuses or shareholder reports. Still, the rule

proposal solicits comment on a wide variety of

issues, including whether rule 35d-1 under the

Investment Company Act—the so-called “names

rule”—should be amended to require that the target

date asset allocation be included in a fund’s name.

The SEC also asks for input on whether Form N-1A

should be amended to require specific prospectus

disclosure, such as the landing point, for target date

funds, and whether the disclosure proposed to be

required in marketing and advertising materials

should be woven into the summary prospectus for

target date funds.

Summer 2010 13

Financial Services Reform On Wednesday, July 21, 2010, President Barack Obama signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act), the most dramatic revision of the U.S. financial regulatory framework since the Great Depression. The Dodd-Frank Act will have a very broad impact on the financial services industry and any related entities. To assist our clients in better understanding the impact of this law, K&L Gates attorneys from the Financial Services, Corporate, and Policy and Regulatory Practices have issued a series of Alerts, each of which provides information on a substantive provision in the Act.

These Alerts may be viewed at http://www.klgates.com and are listed below.

The Impact of the Dodd-Frank Act on Registered Investment Companies—August 6, 2010

Municipal Securities Provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act—August 1, 2010

Financial Reform Bill Strengthens Regulation, Expands Potential Liability of Credit Rating Agencies—July 22, 2010

Congressional Overhaul of the Derivatives Market in the United States—July 21, 2010

Dodd-Frank Act Includes Immediate Change to 'Accredited Investor' Definition for Natural Persons—July 21, 2010

Originate-to-Distribute Lives on in Securitizations of Plain Vanilla Residential Mortgages: The Securitization Reform Provisions of the Dodd-Frank Act—July 21, 2010

A New Era: Depository Institutions and Their Holding Companies Face a Deluge of Regulatory Changes—July 20, 2010

HVCC's Sunset and Other Appraisal Reforms on the Horizon—July 19, 2010

The Resolution of Systemically Important Nonbank Financial Companies… Will It Work?—July 16, 2010

Loan Servicing Déjà Vu—July 14, 2010

Financial Regulatory Reform Increases Federal Involvement in Insurance—July 13, 2010

Preemption for National Banks and Federal Thrifts After Dodd-Frank: Answers to the Ten Most Asked Questions—July 9, 2010

Increased Regulation of U.S. and Non-U.S. Private Fund Advisers Under the Dodd-Frank Act —July 9, 2010

Hope You Like Plain Vanilla! Mortgage Reform and Anti-Predatory Lending Act (Title XIV) —July 8, 2010

Consumer Financial Services Industry, Meet Your New Regulator—July 7, 2010

New Executive Compensation and Governance Requirements in Financial Reform Legislation —July 7, 2010

Financial Regulatory Reform—The Next Chapter: Unprecedented Rulemaking and Congressional Activity—July 7, 2010

Investor Protection Provisions of Dodd-Frank—July 1, 2010

Senate Financial Reform Bill Would Dramatically Step Up Regulation of U.S. and Non-U.S. Private Fund Advisers—June 8, 2010

Approaching the Home Stretch: Senate Passes “Restoring American Financial Stability Act of 2010”—June 8, 2010

14 Investment Management Update

The Dodd-Frank Act will require, within a relatively short implementation period, all existing over-

the-counter (OTC) derivative trades to be collateralized and most OTC trades in the United States

to be exchange-traded. Industry sources in the United States put the new amounts to collateralize

positions at $1 trillion. In addition, the CFTC and SEC will have to issue nearly thirty new rules to

implement the new law, most with significant and costly implications. The overall effect will be a

sea change to the U.S. (and possibly global) derivatives industry and market. In this seminar, we

will review the new law, discuss the likely directions that the new rules will take, and analyze their

likely practical implications.

This seminar will be held at K&L Gates offices in Boston, New York, Chicago, San Francisco, Los

Angeles, Orange County, and Seattle in late September and early October. Watch your e-mail for

our invitation with additional details and online RSVP form.

Watch your e-mail for our Seminar Invitation on:

Practical Implications of Changes to Derivatives Trading under Dodd-Frank

Asia

Anchorage

Seattle

Portland

Spokane/Coeur d’Alene

Beijing

Shanghai

TaipeiHong Kong

San FranciscoPalo Alto

Austin

Fort Worth Dallas

Miami

RaleighCharlotte

Research Triangle Park

Washington, D.C.

PittsburghHarrisburg Newark

New YorkBoston

San DiegoLos Angeles

Orange County

Chicago

Singapore

K&L Gates has more than 100 lawyers in 14 offices across the globe

who focus their practice on providing legal services to the investment

management and professional investor communities.

Investment Management, Hedge Funds and Alternative Investments

K&L Gates Office

K&L Gates Office with Investment Management, Hedge Funds and Alternative Investments lawyers

Middle East

Dubai

Tokyo

Berlin

Paris

Moscow

LondonFrankfurt

Europe

Warsaw

Summer 2010 15

Mark D. Perlow: Is Your 401(k) Default Investment Alternative on Target: New SEC and DOL Guidance on Target Date Funds, American Bar Association Annual Meeting, August 8, 2010, San Francisco, CA

Mark D. Perlow: Investment Company Use of Derivatives and Leverage, American Bar Association Annual Meeting, August 9, 2010, San Francisco, CA

Stravroula E. Lambrakopoulos: Creating an Effective Insider Trading Program for Investment Advisers: SEC Enforcement Actions, August 17, 2010, ACA Compliance Group Webcast

Mark J. Duggan: The Legislative Landscape, Retirement Investment & Income Executive Council Forum, September 15, 2010, Boston, MA

Michael S. Caccese and Stuart Fross: The 6th Annual Marketing & Advertising Compliance Forum for Investment Advisers, Financial Research Associates, LLC, September 16-17, 2010, New York, NY

Michael S. Caccese: 10th Annual Sub-Advised Funds Forum, Financial Research Associates, LLC, September 21-22, 2010, Boston, MA

Michael S. Caccese and Mark D. Perlow: NRS Annual Fall Investment Adviser and Broker-Dealer Compliance Conference, National Regulatory Services, October 4-6, 2010, Scottsdale, AZ

Mark D. Perlow: Oversight of Investment Risk, IDC Investment Company Directors Conference, October 26, 2010, Chicago, IL

Clifford J. Alexander, Ndenisarya M. Bregasi and Michael S. Caccese: National Society of Compliance Professionals Annual Meeting, November 1-3, 2010, Baltimore, MD

Jonathan Lawrence: Islamic Finance News Roadshow, November 12, 2010, London, UK

Michael S. Caccese: FRA Hedge Fund Compliance Summit, Financial Research Associates, LLC, November 15-16, 2010, New York, NY

Please visit www.klgates.com for more information on the following upcoming investment management events in which K&L Gates attorneys will be participating:

Save the Date for our 2010 Investment Management Conferences

At these conferences, lawyers from our Investment Management practice will discuss a broad range of topics and practical issues. Each program will also focus on issues confronting the investment management industry, including the regulatory changes that arise from the Dodd-Frank Act and numerous SEC initiatives. Watch your e-mail for our program invitation which will be sent out shortly after Labor Day. Registrations will be accepted at that time.

Wednesday and Thursday, October 27 and 28

Live at K&L Gates Washington, DC and video conferenced to K&L Gates Charlotte, K&L Gates Dallas, K&L Gates Miami, K&L Gates Newark and K&L Gates Pittsburgh

Thursday, November 4 Live at K&L Gates Chicago

Wednesday, November 10 Live in San Francisco

Wednesday, November 17 Live at K&L Gates Boston

Thursday, November 18Live at K&L Gates Los Angeles and video conferenced to K&L Gates Orange County, K&L Gates San Diego and K&L Gates Seattle

Tuesday, December 7 Live at K&L Gates New York

Please join us for our Seminar:

Financial Services Reform in the U.S.

Thursday, September 30, 2010, London, U.K.

The U.S. Congress has just approved a landmark overhaul of financial regulations in the United States, which will affect almost all financial and commercial firms with U.S. operations. The bill will mean tighter regulations on financial entities, as well as tougher registration, reporting and governance standards. Consumer protections will be strengthened, with banks being forced to reduce certain trading and investing activities, and new safeguards will be placed on derivatives trading. This half-day seminar will cover how to deal with these new financial regulations. To register for this event, please go to www.klgates.com/events.

Speakers: Diane E. Ambler, Michael S. Caccese, Daniel F. C. Crowley, Vanessa C. Edwards, Ian G. Fraser, Bruce J. Heiman, Rebecca H. Laird, R. Charles Miller, Michael J. Missal, Philip J. Morgan, Stephen H. Moller, Gordon F. Peery, Andrew Peterson, Laurence Platt

Industry Events

To learn more about our Investment Management practice, we invite you to contact one of the lawyers listed below, or visit www.klgates.com.

AustinRobert H. McCarthy, Jr. 512.482.6836 robert.mccarthy@klgates.com

BostonJoel D. Almquist 617.261.3104 joel.almquist@klgates.comMichael S. Caccese 617.261.3133 michael.caccese@klgates.comMark J. Duggan 617.261.3156 mark.duggan@klgates.comStuart E. Frass 617.261.3135 stuart.frass@klgates.comMark P. Goshko 617.261.3163 mark.goshko@klgates.comNicholas S. Hodge 617.261.3210 nicholas.hodge@klgates.comClair E. Pagnano 617.261.3246 clair.pagnano@klgates.comGordon F. Peery 617.261.3269 gordon.peery@klgates.com Rebecca O’Brien Radford 617.261.3244 rebecca.radford@klgates.comGeorge Zornada 617.261.3231 george.zornada@klgates.com

ChicagoCameron S. Avery 312.807.4302 cameron.avery@klgates.comPaul H. Dykstra 312.781.6029 paul.dykstra@klgates.comDavid P. Glatz 312.807.4295 david.glatz@klgates.comAlan P. Goldberg 312.807.4227 alan.goldberg@klgates.comThomas F. Joyce 312.807.4323 thomas.joyce@klgates.com D. Mark McMillan 312.807.4383 mark.mcmillan@klgates.comAnna Paglia 312.781.7163 anna.paglia@klgates.comPaulita A. Pike 312.781.6027 paulita.pike@klgates.comDonald S. Weiss 312.807.4303 donald.weiss@klgates.com

Fort Worth Scott R. Bernhart 817.347.5277 scott.bernhart@klgates.com

London Philip J. Morgan +44.20.7360.8123 philip.morgan@klgates.com Los Angeles William P. Wade 310.552.5071 william.wade@klgates.com New York David Dickstein 212.536.3978 david.dickstein@klgates.comEdward G. Eisert 212.536.3905 edward.eisert@klgates.comKay A. Gordon 212.536.4038 kay.gordon@klgates.comBeth R. Kramer 212.536.4024 beth.kramer@klgates.com RaleighF. Daniel Bell III 919.743.7335 dan.bell@klgates.com

San Francisco Kurt J. Decko 415.249.1053 kurt.decko@klgates.com J. Matthew Mangan 415.249.1046 matt.mangan@klgates.comDavid Mishel 415.249.1015 david.mishel@klgates.comMark D. Perlow 415.249.1070 mark.perlow@klgates.comRichard M. Phillips 415.249.1010 richard.phillips@klgates.com Taipei Christina C. Y. Yang +886.2.2175.6797 christina.yang@klgates.com Washington, D.C. Clifford J. Alexander 202.778.9068 clifford.alexander@klgates.comDiane E. Ambler 202.778.9886 diane.ambler@klgates.comMark C. Amorosi 202.778.9351 mark.amorosi@klgates.comCatherine S. Bardsley 202.778.9289 catherine.bardsley@klgates.comNdenisarya M. Bregasi 202.778.9021 ndenisarya.bregasi@klgates.com Beth Clark 202.778.9432 beth.clark@klgates.comDaniel F. C. Crowley 202.778.9447 dan.crowley@klgates.comArthur C. Delibert 202.778.9042 arthur.delibert@klgates.comStacy L. Fuller 202.778.9475 stacy.fuller@klgates.comSusan Gault-Brown 202.778.9083 susan.gaultbrown@klgates.comJennifer R. Gonzalez 202.778.9286 jennifer.gonzalez@klgates.comRobert C. Hacker 202.778.9016 robert.hacker@klgates.comKathy Kresch Ingber 202.778.9015 kathy.ingber@klgates.comRebecca H. Laird 202.778.9038 rebecca.laird@klgates.comDeborah A. Linn 202.778.9874 deborah.linn@klgates.comCary J. Meer 202.778.9107 cary.meer@klgates.comMarc Mehrespand 202.778.9191 marc.mehrespand@klgates.comR. Charles Miller 202.778.9372 chuck.miller@klgates.comDean E. Miller 202.778.9371 dean.miller@klgates.comR. Darrell Mounts 202.778.9298 darrell.mounts@klgates.comMolly Moynihan 202.778.9058 molly.moynihan@klgates.comLawrence B. Patent 202.778.9219 lawrence.patent@klgates.comC. Dirk Peterson 202.778.9324 dirk.peterson@klgates.comDavid Pickle 202.778.9887 david.pickle@klgates.comAlan C. Porter 202.778.9186 alan.porter@klgates.comTheodore L. Press 202.778.9025 ted.press@klgates.comEric S. Purple 202.778.9220 eric.purple@klgates.comFrancine J. Rosenberger 202.778.9187 francine.rosenberger@klgates.comBruce A. Rosenblum 202.778.9239 bruce.rosenblum@klgates.comRobert H. Rosenblum 202.778.9464 robert.rosenblum@klgates.comWilliam A. Schmidt 202.778.9373 william.schmidt@klgates.comLori L. Schneider 202.778.9305 lori.schneider@klgates.comLynn A. Schweinfurth 202.778.9876 lynn.schweinfurth@klgates.comDonald W. Smith 202.778.9079 donald.smith@klgates.comAndras P. Teleki 202.778.9477 andras.teleki@klgates.comStacy H. Winick 202.778.9252 stacy.winick@klgates.comRoger S. Wise 202.778.9023 roger.wise@klgates.comRobert A. Wittie 202.778.9066 robert.wittie@klgates.comRobert J. Zutz 202.778.9059 robert.zutz@klgates.com

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K&L Gates includes lawyers practicing out of 36 offices located in North America, Europe, Asia and the Middle East, and represents numerous GLOBAL 500, FORTUNE 100, and FTSE 100 corporations, in addition to growth and middle market companies, entrepreneurs, capital market participants and public sector entities. For more information, visit www.klgates.com. K&L Gates comprises multiple affiliated entities: a limited liability partnership with the full name K&L Gates LLP qualified in Delaware and maintaining offices throughout the United States, in Berlin and Frankfurt, Germany, in Beijing (K&L Gates LLP Beijing Representative Office), in Dubai, U.A.E., in Shanghai (K&L Gates LLP Shanghai Representative Office), in Tokyo, and in Singapore; a limited liability partnership (also named K&L Gates LLP) incorporated in England and maintaining offices in London and Paris; a Taiwan general partnership (K&L Gates) maintaining an office in Taipei; a Hong Kong general partnership (K&L Gates, Solicitors) maintaining an office in Hong Kong; a Polish limited partnership (K&L Gates Jamka sp.k.) maintaining an office in Warsaw; and a Delaware limited liability company (K&L Gates Holdings, LLC) maintaining an office in Moscow. K&L Gates maintains appropriate registrations in the jurisdictions in which its offices are located. A list of the partners or members in each entity is available for inspection at any K&L Gates office.

This publication is for informational purposes and does not contain or convey legal advice. The information herein should not be used or relied upon in regard to any particular facts or circumstances without first consulting a lawyer.

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