Corporate & Financial Weekly Digest

Corporate & Financial Weekly Digest

SEC Committee to Focus on the Order Protection Rule at Upcoming Meeting

Posted in Broker-Dealer

On April 17, the Securities and Exchange Commission announced that its Equity Market Structure Advisory Committee (Committee) will hold its first meeting on May 13. The Committee, which was created earlier this year to formally solicit advice and recommendations related to equity market structure issues, will focus on Rule 611 of Regulation National Market System at the meeting. Among other things, Rule 611, known as the order protection rule, requires a trading center, which includes national securities exchanges, exchange specialists, alternative trading systems, over-the-counter market makers and block positioners, to establish, maintain and enforce written policies and procedures that are reasonably designed to prevent trade-throughs—the execution of trades at prices that are inferior to displayed and immediately accessible quotations at other trading centers—or, if relying on one of the rule’s defined exceptions, that are reasonably designed to ensure compliance with such exception.

Interested persons may submit comments on the Committee’s agenda prior to the meeting.

The SEC’s announcement is available here.

CFTC Issues No-Action Relief to SEFs and DCMs in Connection with Swaps with Operational or Clerical Errors

Posted in CFTC, Dodd-Frank Developments

On April 22, the Commodity Futures Trading Commission’s Division of Market Oversight and Division of Clearing and Risk (Divisions) issued CFTC Letter No. 15-24 to provide no-action relief to enable swap execution facilities (SEFs) and designated contract markets (DCMs) to correct operational or clerical errors for swaps that have been submitted for clearing. Continue Reading

CFTC Issues No-Action Relief for SEF Confirmation and Recordkeeping Requirements and Confirmation Data Reporting Requirements

Posted in CFTC, Dodd-Frank Developments

On August 14, 2014, the Commodity Futures Trading Commission’s Division of Market Oversight (DMO) granted no-action relief to swap execution facilities (SEFs) from the confirmation and recordkeeping requirements set forth in CFTC Regulations 37.6(b), 37.1000, 37.1001, and 45.2. On April 22, DMO extended and expanded the relief to additionally include confirmation data reporting requirements set forth in CFTC Regulation 45.3(a). Continue Reading

CFTC Provides Guidance on Calculating Projected Operating Costs by SEFs

Posted in CFTC, Dodd-Frank Developments

On April 23, the Commodity Futures Trading Commission’s Division of Market Oversight (DMO) provided guidance to swap execution facilities (SEFs) regarding the calculation of projected operating costs and expenses for purposes of the financial resource requirements under SEF Core Principle 13 and CFTC Regulation 37.1303. SEF Core Principle 13 requires each SEF to have “adequate financial, operational, and managerial resources to discharge each responsibility” and further provides that the “financial resources of a SEF shall be considered to be adequate if the value of the financial resources exceeds the total amount that would enable the SEF to cover the operating costs of the SEF for a one-year period, as calculated on a rolling basis.” Regulation 37.1303 requires a SEF to make a reasonable calculation every fiscal quarter of its projected operating costs over a 12-month period in order to determine the amount needed to meet the financial resources requirements. Continue Reading

ESMA Issues Call for Evidence on Virtual Currency

Posted in Banking, Derivatives, Digital Assets and Virtual Currencies, EU Developments, Financial Markets, Private Investment Funds

On April 22, the European Securities and Markets Authority (ESMA) issued a call for information (Call for Evidence) on virtual currency. Unlike recent studies performed by the European Banking Authority and HM Treasury, ESMA is not calling for comment on virtual currencies as a payment technology or alternative form of money. In particular, ESMA is requesting information on three topics: 1) virtual currency investment products; 2) virtual currency based assets, securities and asset transfers; and 3) the application of distributed ledger technology to securities and investments. The Call for Evidence states that ESMA has been monitoring and analyzing virtual currency investment over the last six months to understand the developments in the market, the risk and benefits for investors, and the impact on market integrity and financial stability. Continue Reading

Judge Declines to Dismiss Spoofing Charges Against High Frequency Trader

Posted in Litigation

On April 16, the US District Court for the Northern District of Illinois denied a motion to dismiss “spoofing” charges against Michael Coscia, a high-frequency commodities futures trader, finding that the indictment was sufficient because it alleged that Coscia placed orders with an intent to cancel them. Coscia is charged with six counts of “spoofing” under the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and six counts of commodities fraud under the 2009 Fraud Enforcement and Recovery Act. Continue Reading

SEC Grants Compliance Officer $1.4 to $1.6 Million Whistleblower Award

Posted in Litigation

On April 22, the Securities and Exchange Commission announced that it is awarding a compliance officer between $1.4 million and $1.6 million for voluntarily providing the SEC with information that contributed to a successful enforcement action. According to the SEC, the compliance officer reported the misconduct after “responsible management at the entity became aware of potentially impending harm to investors and failed to take steps to prevent it.” Under Section 21F(b)(1) of the Securities Exchange Act of 1934, a whistleblower must provide the SEC with original information, which may be derived through independent knowledge or independent analysis. When the whistleblower is an employee whose principal duties involve compliance or internal audit responsibilities, the information generally will not be considered “original,” absent an exception. The SEC determined that an exception applied here because the compliance officer “had a reasonable basis to believe that disclosure of the information…[was] necessary to prevent the relevant entity from engaging in conduct that [was] likely to cause substantial injury to the financial interest or property of the entity or investors.” Continue Reading

DOL Proposes to Revise Definition of “Fiduciary” Under ERISA

Posted in Executive Compensation and ERISA

On April 20, the US Department of Labor (DOL) published a proposal to revise portions of the definition of a “fiduciary” under the Employee Retirement Income Security Act of 1974, as amended (ERISA) in the Federal Register. Following is a summary of the proposed new rules. Please note that parts of the proposal are very detailed, and that this is only a summary. Continue Reading

FCA Publishes New Procedures and Forms for Disclosure of Material Changes by Non-UK Managers Marketing in the United Kingdom

Posted in UK Developments

On April 21, the Financial Conduct Authority (FCA) updated its webpage of guidance on the United Kingdom’s national private placement regime (NPPR) for the marketing of non-EU funds in the United Kingdom by non-UK managers under the Alternative Investment Fund Managers Directive. Continue Reading

European Council Approves Strengthened EU Anti-Money Laundering Rules

Posted in EU Developments

On April 20, the European Council of Ministers adopted its version of new rules aimed at preventing money laundering and terrorist financing in the form of a draft new European Union Directive and Regulation (Draft Rules). The Draft Rules, once implemented into EU law, will strengthen EU rules against money laundering and ensure consistency with the approach followed at the international level.

With the European Council of Ministers having adopted its version of the Draft Rules, this will now mean that the European Parliament, with which agreement was reached on December 16, 2014, can adopt the Draft Rules at its forthcoming meeting. Once adopted by both the European Council of Ministers and the European Parliament, all that would then be required is for the European Commission to publish the Draft Rules in their final format and then the Regulation will be binding EU law and EU countries would have to amend their national anti-money laundering rules in line with the new directive. Continue Reading