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Abstract: 

The Foreign Account Tax Compliance Act (FATCA) continues to draw responses from affected parties. In our first article, Ehab Farah reviews FATCA and focuses on the United States Treasury Department’s model intergovernmental agreement designed to reduce compliance burdens while still achieving the goals of the statute. Our second article also involves cross-border tax issues. Steven D. Bortnick and Timothy J. Leska discuss the Internal Revenue Service’s proposed regulations on the application of U.S. withholding taxes when sovereign wealth funds make investments into private equity funds. As controlled entities of foreign governments, sovereign wealth funds potentially are eligible for an exemption from U.S. taxation on their investment income, but there are limits on this exemption. The authors explain the existing and proposed rules, and discuss areas in need of further clarification. Kevin Vance takes up the subject of hedge fund side letters in our third article. Hedge fund side letters giving special treatment to some investors may subject funds to liability due to conflicts of interest. As Mr. Vance notes, the Securities and Exchange Commission’s regulatory authority over hedge fund managers has been enhanced, and the use of side letters may subject fund managers to governmental scrutiny and enforcement actions. The use of arbitration in consumer financial services contracts is is addressed in our fourth article. Archis A. Parasharami discusses the implications for arbitration provisions that stem from the 2011 Supreme Court decision in AT&T Mobility LLC v. Concepcion and the Consumer Financial Protection Bureau’s ongoing regulatory initiatives in the area. Our fifth article deals with what lenders should know about how post-closing changes can impact their interests in secured property. Annette C. Moore focuses, in particular, on how developments such as a debtor changing its name, relocating, or selling secured collateral may undermine the ability of a creditor to maintain its security interest. The issue’s final article takes up the topic of bad faith claims against insurers. Jerold Oshinsky and Christopher Lindsay discuss the details surrounding litigation of such claims, which have become particularly important for financial institutions seeking coverage in the wake of liability from the financial crisis.

Keywords: FATCA; Sovereign Wealth Fund Investment; Hedge Fund Side Letters; Arbitration; Post-Closing Changes; Bad Faith Claims

Affiliations:  1: New York Law School.