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Financial Regulations and Compliance
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Dodd-Frank Wall Street Reform and Consumer Protection Act
A comprehensive set of financial regulations passed in response to the 2008 financial crisis, aiming to reduce risks in the U.S. financial system through increased transparency and oversight. It impacts corporate finance by enforcing stricter capital requirements and introducing more rigorous derivatives trading rules.
Sarbanes-Oxley Act (SOX)
Legislation enacted to protect investors from fraudulent financial reporting by corporations. It impacts corporate finance by requiring stricter internal controls and reporting requirements, thus increasing compliance costs.
Basel III Accords
A set of international banking regulations developed by the Basel Committee on Banking Supervision, designed to improve the banking sector's ability to deal with financial stress, improve risk management, and strengthen banks' transparency. In corporate finance, Basel III impacts the cost and availability of credit through higher capital requirements and tighter liquidity rules.
Securities Act of 1933
Regulation governing the initial offering and sale of securities to the public, requiring full disclosure to protect investors from fraud. In corporate finance, it impacts the process of issuing new securities and the associated costs due to the necessary registration with the SEC.
Securities Exchange Act of 1934
Legislation created to govern the secondary trading of securities (stocks, bonds, and debentures) in the U.S. It impacts corporate finance by establishing the Securities and Exchange Commission (SEC) and requiring periodic reporting, thus influencing disclosure practices and investor relations.
Investment Company Act of 1940
This act regulates the organization of investment companies and the activities they engage in, including mutual funds. It impacts corporate finance by imposing standards on the investment company industry and affecting how companies can package and sell their securities.
Investment Advisers Act of 1940
Regulation overseeing the conduct and obligations of investment advisers. It impacts corporate finance by mandating registration, transparency, and ethical practices, which may influence investor confidence and access to capital markets.
Jumpstart Our Business Startups Act (JOBS)
Legislation aimed at encouraging the funding of small businesses in the U.S. by easing various securities regulations. It impacts corporate finance by allowing greater access to public capital markets, especially for smaller companies, through mechanisms like crowdfunding.
Credit Rating Agency Reform Act of 2006
This act seeks to improve the regulation of credit rating agencies and the transparency and accountability of their processes. It impacts corporate finance by potentially affecting the perceived risk and thus the costs of raising capital via debt instruments.
Foreign Account Tax Compliance Act (FATCA)
Regulation targeting non-compliance by U.S. taxpayers using foreign accounts. It imposes significant impact on corporate finance by requiring foreign financial institutions to report information on financial accounts held by U.S. taxpayers.
Financial Institutions Reform, Recovery, and Enforcement Act (FIRREA)
Regulation established in the wake of the savings and loan crisis to reform, recapitalize, and consolidate the Federal Deposit Insurance system. It affects corporate finance by revising the regulatory framework for savings and loans and banks, which can influence lending practices.
Commodity Exchange Act (CEA)
Legislation that provides federal regulation of all commodities and futures trading activities and requires all futures and commodity options to be traded on organized exchanges. It impacts corporate finance by affecting how companies hedge risks and the transparency and stability of derivative markets.
Fair Credit Reporting Act (FCRA)
This act promotes the accuracy, fairness, and privacy of consumer information contained in the files of credit reporting agencies. It impacts corporate finance by influencing the way consumer credit information is handled, which can affect lending decisions and risk management.
Gramm-Leach-Bliley Act (GLBA)
Legislation that repealed the Glass-Steagall Act's separation of commercial and investment banking. It impacts corporate finance by allowing financial institutions to offer a combination of services like banking, securities, and insurance, which can lead to diversified financial service conglomerates.
Emergency Economic Stabilization Act of 2008 (EESA)
Legislation enacted to address the subprime mortgage crisis, which authorized the Treasury to purchase distressed assets. It impacts corporate finance by providing liquidity to financial markets during the crisis and creating the Troubled Asset Relief Program (TARP).
Truth in Lending Act (TILA)
Law designed to promote the informed use of consumer credit by requiring disclosures about its terms and cost. It impacts corporate finance by standardizing the way terms of credit are presented, which can affect businesses that extend credit to consumers.
Volcker Rule
Part of the Dodd-Frank Act that restricts United States banks from making certain kinds of speculative investments that do not benefit their customers. It impacts corporate finance by limiting the ways banks can invest, potentially affecting their profit structures and risk profiles.
Anti-Money Laundering (AML) laws
Set of regulations, laws, and procedures designed to prevent criminals from disguising illegally obtained funds as legitimate income. These laws impact corporate finance by necessitating robust compliance programs, thus affecting operational costs and procedures for financial institutions.
USA PATRIOT Act
Law that among other measures enhances law enforcement's ability to detect and prevent terrorism. The impact on corporate finance includes stricter due diligence processes and the requirement to establish anti-money laundering programs, influencing financial institutions' administrative costs and regulatory compliance.
Glass-Steagall Act
Enacted during the Great Depression, this act separated commercial banking from investment banking. It impacted corporate finance by limiting commercial banks' securities activities and affiliations with securities firms, thus affecting the landscape of financial services until its repeal by the GLBA.
Regulation Fair Disclosure (Reg FD)
SEC rule aimed at preventing selective disclosure by public companies to market professionals and certain shareholders. It impacts corporate finance by requiring that all material information be disclosed publicly, thus affecting investor relations and communication strategies.
Federal Reserve Regulations
The Federal Reserve oversees U.S. monetary policy and financial system stability, issuing regulations such as Regulation D, Regulation E, and Regulation T. These impact corporate finance by affecting reserve requirements, electronic funds transfers, and credit extended to securities investors, respectively.
Regulation D
An SEC regulation that provides exemptions from the registration requirements, allowing companies to raise capital through the sale of equity or debt securities without having to register with the SEC. It impacts corporate finance by facilitating capital raising for smaller companies with less regulatory burden.
Electronic Fund Transfer Act (EFTA)
Regulation governing electronic fund transfer (EFT) processes. It impacts corporate finance by setting terms for transactions made through electronic systems, which can affect businesses' payment processing systems and consumer transactions.
Regulation E
An extension of the Electronic Fund Transfer Act, establishing the rights, liabilities, and responsibilities of participants in electronic transfer systems. Its impact on corporate finance includes influencing how electronic payments are handled and the compliance measures financial institutions must adopt.
Regulation T
This Federal Reserve regulation governs the extension of credit by securities brokers and dealers to customers for the purchase of securities. It impacts corporate finance by determining how much credit customers can use to buy securities, which influences market liquidity and leverage.
Know Your Customer (KYC) regulations
Regulatory requirements that compel financial institutions to conduct thorough due diligence on their customers. This impacts corporate finance by requiring companies to verify the identity, suitability and risks involved with maintaining a business relationship, influencing cost and compliance efforts.
Insider Trading laws
Laws and regulations that prohibit the trading of a public company's stock or other securities by individuals with access to non-public, material information about the company. These laws impact corporate finance by imposing integrity and fairness within financial markets.
Market Abuse Regulation (MAR)
An EU regulation that aims to increase market integrity and investor protection by prohibiting insider dealing, unlawful disclosure of inside information, and market manipulation. It impacts corporate finance by establishing a framework for fair and transparent markets across the EU.
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