If the Federal Reserve actually adopts a proposal along the lines outlined in Governor Tarullo’s speech, it could have profound negative implications not only for the operations of foreign banks in the United States, but also for U.S. banking organizations doing business outside the United States. It would likely contribute and add fuel to the growing trend towards regionalization of global banking, thereby complicating and increasing the cost of providing cross-border banking services. This memorandum explores these implications as well as certain key issues and questions that remain open.

The 120-page Guide includes an extensive discussion of the FCPA and other statutes used in corruption investigations, provides helpful examples and hypotheticals, and discusses the government’s “Guiding Principles on Enforcement.” The Guide represents the government’s response to requests from Congress, the defense bar, members of the business community, and the Organisation for Economic Co-operation and Development (OECD) for additional clarity on the FCPA, and has been anticipated since November 8, 2011, when Assistant Attorney General Lanny A. Breuer announced that such guidance would be issued.

As expected, the Guide thoroughly consolidates and recites existing case law and resolutions and provides new examples of cases in which the DOJ or SEC previously issued declinations. While the Guide may be helpful to many, those expecting something groundbreaking may be disappointed, as the Guide does not provide any new substantive interpretations. Nor does it address many of the nuanced questions with which many companies grapple.

• a binding shareholder vote on the company’s policy regarding compensation (including “exit payments”) of directors, including executive directors;
• continuing the annual advisory shareholder vote on how the company’s pay policy was implemented in the previous year;
• enhanced compensation disclosure, including disclosure of a “single figure” for the total pay that directors receive for the previous year; and
• consultation by the Financial Reporting Council regarding proposed changes to the U.K. Corporate Governance Code.

To introduce the measures, the U.K. government intends to bring forward amendments to the Enterprise and Regulatory Reform Bill, which is currently before Parliament. At the same time, the U.K. government intends to publish revised, simplified regulations mandating the disclosure of director pay. These regulations would be subject to public comment prior to becoming law. The U.K. government intends to enact these measures by October 2013.

Although the changes to Form 20-F itself are relatively minor this year, the continuing economic and financial crisis will require financial institutions in particular, as well as other foreign private issuers, to consider carefully the continuing consequences of the crisis when preparing their annual reports on Form 20-F. Disclosures in a number of areas of the Form 20-F will be impacted and will be the focus of SEC scrutiny. In that regard the SEC has issued disclosure guidance recently relating to exposure to European sovereign debt which will need to be taken into account when preparing this year's Form 20-F.