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Soonghee Lee In late 2013, the Supreme Court rendered a decision involving the issue of whether the contents of an investment prospectus is contractually binding if it differs from the contents of the trust agreement provided to the investor under an investment trust agreement. In this case, the plaintiffs claimed damages against financial companies on the grounds that the asset management company, without the plaintiffs' prior consent, changed the transaction counterparty to Lehman Brothers Asia, which was different to that stated in the investment prospectus. Further, they stated that the sales companies sold more than W20 billion ($18.5 million) of beneficiary certificates for the fund without considering the possibility of such change in transaction counterparties, and therefore, since the plaintiffs were provided information which made it impossible for them to be aware of the relevant facts (due to the different investment subject and investment limit from those contained in the investment prospectus) such acts constituted tortious conduct and default of contractual obligations. At the appellate level (before appeal to the Supreme Court), the plaintiffs partially prevailed against the asset management company. But the Supreme Court reversed the appellate court's decision on the grounds that (among others): (i) since the part of the investment prospectus which stated that the transaction counterparty to the OTC derivative products was BNP Paribas, cannot be viewed as merely an elaboration on the terms of the trust agreement, such contents cannot be viewed as a part of the terms of the investment trust agreement and contractually binding; and (ii) given that the bankruptcy of Lehman Brothers could not have been predicted, the change of the transaction counterparty to the OTC derivative product due to unavoidable circumstances, with a payment guarantee of Lehman Brothers (which has a similar credit rating as BNP Paribas) cannot be viewed as a breach of the investment prospectus or breach of fiduciary duty.

Alexei Bonamin Ricardo Mastropasqua On December 20 2013, the Brazilian Exchange Securities Commission (CVM) issued a set of rules which regulate the rendering of services related to the Brazilian capital markets' infrastructure, as follows: (i) CVM Instruction 541 regulates matters regarding the centralised deposit of securities; (ii) CVM Instruction 542 governs the rendering of securities custody services; and (iii) CVM Instruction 543 regulates securities bookkeeping services and the issuance of securities certificates. In accordance with CVM Instruction 541, the centralised deposit service of securities comprises the following activities: (i) securities' safekeeping by the central depository; (ii) controlling the chain of ownership of securities in the deposit accounts maintained on behalf of investors; (iii) restricting practices related to securities' disposal by the ultimate investor or by any third party outside the central depository environment; and (iv) the handling of trading instructions and of incidental events that affect the deposited securities, with the corresponding records on the deposit accounts. CVM Instruction 541 does not apply to positions held in the derivatives market outside the central depository environment. However, it does apply to the establishment of liens and encumbrances on positions held in derivative agreements of any kind, provided that the central depository is also authorised to provide registration services to such agreements. CVM Instruction 541 also applies to financial bills and other instruments that are subject to the jurisdiction of CVM.

The US regulator's investigation into the rate-rigging scandal poses difficult questions for jurisdictions around the world. University of New South Wales' Professor Justin O'Brien explains why

John Breslin Karole Cuddihy In a recent decision, the Irish High Court held that if an investor has paid money to a firm based on a fraudulent misrepresentation, the payer has a proprietary claim to the payment (In re Custom House Capital; Scott v Wallace 2013 IEHC 559). This is obviously crucial where a firm is in insolvent liquidation. The Irish High Court (Justice Finlay Geoghegan) held that monies held on account by Custom House Capital Limited (CHC) before its winding up were held on trust for one of its clients. The client of CHC had, between April and July 2009, transferred most of her personal savings and pension funds to CHC for investment, including a sum of €145,000 ($202,000), referred to as a deposit. The client had agreed that the latter sum would be invested by way of a subordinated loan agreement.

Disintermediation via group insurers is the low hanging fruit for longevity de-risking

George Borovas,

Prior to the enactment of Capital Markets Law 6362 and of December 30 2012 (the Law), it was not clear whether over-the-counter (OTC) derivatives were subject to the Capital Markets Board's (CMBs) regulations under the old legislation. This was because the old legislation did not provide clear rules in terms of OTC derivatives. According to the CMB's principle decisions issued under the old legislation, OTC derivatives were not subject to the CMB regulations. Accordingly, it was generally understood that OTC derivatives did not require an authorisation from the CMB under the old legislation. However, given the fact that Article 6/8 of Decree No. 32 requires such transactions to be carried out through CMB-licensed intermediary institutions operating in Turkey, or by intermediary institutions abroad, this gave rise to an uncertainty amongst banks in particular that were willing to execute OTC derivatives with their customers.

The public auction of the Australian diary company saw local and foreign bidders use regulatory processes to win board votes and stall competitors

Recent progress in proposals to amend the European Insolvency Regulation could change how debt restructurings are carried out in the region

The US has proposed a $1 billion loan guarantee programme for Ukraine. Arnold & Porter's Steven Tepper explains why this marks a significant expansion of the government's foreign assistance tool