The Commodity Futures Trading Commission (the CFTC) has proposed to extend its earlier exemptive order that provides temporary relief from certain swap-related provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act) that would otherwise have taken effect on July 16 (the Order). Specifically, the Order provided relief with respect to (1) self-effectuating provisions of the Dodd-Frank Act that referenced terms requiring further definition, and (2) self-effectuating provisions of the Dodd-Frank Act that repealed existing statutory safe harbors for over-the-counter derivatives transactions.

The Order originally included an outside “sunset” date of December 31, after which the relief granted by the Order would expire. Under the proposed amendment, the latest “sunset” date for the Order would be extended until July 16, 2012.

The proposed amendment may be found here.
 

On October 17, Financial Industry Regulatory Authority filed with the Securities and Exchange Commission a proposed rule change to adopt NASD Rule 2320 (Best Execution and Interpositioning) and Interpretive Material (IM) 2320 (Interpretive Guidance with Respect to Best Execution Requirements) as FINRA Rule 5310 in the consolidated FINRA rulebook. Like NASD Rule 2320 (commonly known as the “Best Execution Rule”), FINRA Rule 5310 would require a member, in any transaction for or with a customer or a customer of another broker-dealer, to “use reasonable diligence to ascertain the best market for the subject security and buy or sell in such market so that the resultant price to the customer is as favorable as possible under prevailing market conditions.” FINRA Rule 5310 is based largely on NASD Rule 2320. In addition, IM-2320 will be adopted as Supplementary Material to Rule 5310; however, it is important to note that the Supplementary Material contains the following significant changes:

Continue Reading FINRA Proposed Rule Regarding Best Execution and Interpositioning

The plaintiff, a corporation seeking to recover outstanding debts incurred by TCI Trans Commodities A.G. (TCI Switzerland), a bankrupt Swiss entity, sued Trans Commodities, Inc. (TCINY), a New York corporation, to collect the debt. The plaintiff alleged that TCINY and TCI Switzerland were so intertwined or interrelated as to be “alter egos” or a “single entity,” and thus TCINY was liable for TCI Switzerland’s debt to the plaintiff.

Continue Reading Pennsylvania District Court Holds Swiss Corporation is Not Alter Ego of US Corporation

Plaintiff-investors commenced a class action suit alleging a violation of the Securities and Exchange Act of 1934 on behalf of all persons who purchased shares of defendant NVIDIA’s stock during a 9-month period. The plaintiff alleged that NVIDIA and its employees had misrepresented or omitted material facts related to manufacturing defects in its computer processors, and that they were damaged when the NVIDIA stock price dropped once the extent of the defects became known. The U.S District Court for the Northern District of California dismissed the plaintiffs’ action because the complaint failed sufficiently to plead scienter as required for securities fraud.

Continue Reading California District Court Dismisses Securities Fraud Class Action Suit

The Board of Governors of the Federal Reserve System (the Board) on October 17 announced the approval of a final rule to implement the resolution plan requirement in the Dodd-Frank Wall Street Reform and Consumer Protection Act (the Dodd-Frank Act). The final rule requires bank holding companies with assets of $50 billion or more and nonbank financial firms designated by the Financial Stability Oversight Council (the Council) for supervision by the Board to annually submit resolution plans to the Board and the Federal Deposit Insurance Corporation (the FDIC).

Continue Reading Federal Reserve Approves Final Rule for “Living Wills”

Authored by Michelle Griswold.

On October 11, the Public Company Accounting Oversight Board (PCAOB) requested public comment on several proposed amendments to PCAOB standards designed to increase transparency of public company audits.

Continue Reading PCAOB Solicits Comments on Proposed Amendments to Improve Audit Transparency

On October 13 the Division of Corporation Finance of the Securities and Exchange Commission issued disclosure guidance to assist registrants “in assessing what, if any, disclosures should be provided about cybersecurity matters in light of each registrant’s specific facts and circumstances.”

Continue Reading SEC’s Division of Corporation Finance Issues Cybersecurity Disclosure Guidance

Authored by Avi Badash.

The Financial Industry Regulatory Authority, Inc. has issued Regulatory Notice 11-46 requiring member firms to submit electronically to FINRA their annual audit reports. This requirement is effective beginning on November 8, for all audit reports filed by member firms with a fiscal year end on or after September 30, 2011. Member firms will be required to submit their annual audit report in electronic form in PDF format via FINRA’s Firm Gateway. The Regulatory Notice discusses the details of the electronic submission process, which will replace the current submission of the annual audit reports in hard copy form to FINRA. The Regulatory Notice acknowledges that firms must continue to file annual audit reports in hard copy form with the Securities and Exchange Commission.

Click here to read Regulatory Notice 11-46.
 

The U.S. Court of Appeals for the Third Circuit held last week that a brokerage firm’s sale of an account holder’s securities for failure to meet margins calls was proper, notwithstanding the account holder’s claims that his contract with the firm was a forgery.

Continue Reading Brokerage Firm’s Sale of Account Holder’s Securities Not a Securities Violation