CFTC in Action: Agency Adopts Rules on SIDCOs, Reissues Relief for Contemporaneous Swaps Documentation Requirements, & Its Chair Gensler Praises Swaps Markets

CFTC Adopts Systemically Important Designated Clearing Organization Rules
The US Commodity Futures Trading Commission has adopted its final rules regarding systemically important designated clearing organizations. The new SIDCO rules line up CFTC regulations to with the Principles for Financial Market Infrastructures set up by the International Organization of Securities Commissions and the Bank for International Settlements.

Per the rules, SIDCOs can remain Qualifying Central Counterparties (QCCPs) for international bank capital standard purposes. The rules come with substantive requirements having to do with financial resources, governance, system safeguards, special default rules and procedures for shortfalls or losses that are not covered, disclosure requirements, risk management, efficiency, and recovery and wind-down procedures. The rules also tackle the procedures through which derivatives clearing organizations besides SIDCOs can choose to become subject to additional standards so they can also be considered QCCPs.

Relief on Contemporaneous Swaps Documentation Requirements is Reissued
In other CFTC news, the agency’s Division of Swap Dealer and Intermediary Oversight says that it is extending the no-action relief that it issued earlier this year to swap dealers (SDs) and major swap participants (MSPs). The earlier relief gave certain exemptions to CFTC rules that were put into place in February 2012 and established business conduct standards for MSPs and SDs in their counterparty dealings.

Now, with this latest no-action letter, relief has been issued again along with modifications, including obligatory CFTC registration of swap execution facilities and additional staff guidance regarding CFTC straight-through-processing requirements. Also included are modifications that acknowledge the required immediate and efficient processing of swaps all the way through to clearing. Meantime, conditions that require an agreement between and MSP or SD and its counterparty before swaps can be executed have been removed.

CFTC Chair Speaks at Swaps Execution Facility Conference
At the recent Swaps Execution Facility Conference, CFTC Chair Gary Gensler said that now, for the first time, all swaps market participants are able to compete on a level playing field. He noted that prior to 2012 there was no transparency in the swaps market and that this played a role in the 2008 financial crisis. Gensler credits the Dodd-Frank Act and the significant compliance dates that are now in effect.

He spoke about how real-time clearing now exists and that there are 18 temporarily registered swaps execution facilities that offer impartial market access. Gensler also talked about how his agency’s staff just put out guidance reminding SEFs about their duty to make sure that all market participants can fully engage on order books or request-for-quote systems while addressing questions that market participants had wanted the CFTC to answer.

Additionally, the CFTC chief talked about how he believed that by February a trade execution requirement for a significant chunk of the interest rate and credit index swaps markets would be in place. Gensler also spoke about how in addition to a finalized block rule for swaps there should also be one for futures.

The Resolution Law Group is a securities fraud law firm that represents institutional investors and high net worth individuals seeking to recoup their financial losses.

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The Resolution Law Group: CFTC Votes to Restrict Commodities Trader’ Position Sizes in the Market

In a 3-to-11 vote, the Commodity Futures Trading Commission chose to favor restricting the size of any traders’ footprint in the commodities market. This is the CFTC’s second vote on a proposal over “position limit” rules. A rule that it proposed two years ago was turned down by the United States District Court for the District of Columbia after two Wall Street trade organizations sued claiming that the rule would cause prices to become erratic.

The proposal is related to the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The CFTC already has rules to limit market speculation but before they were just applicable during the last days before a futures contract delivery and only to specific agricultural commodities.

Now, the agency’s new rules are proposing to set up limitations that are more broad so that they include derivative contracts for 28 kinds of commodities futures contracts, and not just agricultural contracts but also metal and energy ones and regardless of when the delivery date would be. Exemptions for traders with genuine hedging needs would be allowed, as it will be for firm-held positions involving banks with nearly 50% ownership. To avail of exemptions, trading firms would have to prove that they are not in control of an affiliate. Aside from that, just non-consolidated firms will get exemptions.

The CFTC’s rules would restrict a trader’s maximum size in derivatives to 25% of the deliverable supply of the commodity that has been estimated. It also will bring back conditional limits, which let traders hold five times more than the limit in cash-settled contracts as long as they don’t have a position in physical-settled contracts. The rule will also modify details about what is considered hedging, which, per Dodd-Frank, is exempt from position limits. Additionally, the rule won’t let there be an exemption for derivative contracts that traders entered into in order to make good rent paid for empty storage facilities.

The rule is now subject to public comment. After 60 days, commissions will vote on a final rule.

The Resolution Law Group handles securities fraud cases for institutional investors and individual investors. Contact our commodities trading fraud lawyers today.

The Resolution Law Group: SEC May Propose New Swaps Margins & Title VII Rules

At a Securities Industry and Financial Markets Association conference last month, the Securities and Exchange Commission’s Division of Trading and Markets acting director John Ramsay said that the regulator will likely consider reworking a 2012 proposal that would establish margin requirements on specific swap trades now that international financial supervisors have established new margin requirements. It was The International Organization of Securities Commissions and the Basel Committee on Banking Supervision that issued the document setting up a final framework for margin requirements related to non-centrally cleared derivatives.

Ramsey said that in the wake of this document, the proposed rules that the SEC might withdraw are the ones that affect margin requirements as they pertain to certain swaps. The structure set up by the Basel-IOSCO document partially puts into place specific margin requirements on financial firms and the systematically integral non-financial entities that take part in non-centrally cleared derivatives transactions.

The regulator’s earlier proposal would have established margin requirements for security-based swap dealers and major swap participants while upping the minimum net capital requirements for brokerage firms allowed to implement the alternative internal model-based method to compute net capital. Now, however, said Ramsey, the agency could propose a new rule to make sure there is comment on a “full range of initiatives,” including the ones addressed in the Basel-IOSCO document.

Ramsay also spoke about a likely rulemaking sequence the SEC could use to put into place sections of the Dodd-Frank Wall Street Reform and Consumer Protection Act’s Title VII, which was in part responsible for introducing swaps market regulation. He stated that the agency could assess Title VII rules that were finalized or proposed by the Commodity Futures Trading Commission to identify possible differences between CFTC rules and SEC rules. However, said Ramsey, even though the SEC is concerned that registrants might feel burdened from having to deal with two compliance regimes, this did not mean the agency would only issue rules that are in complete alignment with CFTC rules.

If you feel you are the victim of Securities Fraud, please do not hesitate to email or call the The Resolution Law Group (203) 542-7275 for a confidential, no obligation consultation.

 

The Resolution Law Group: Lawmakers Address Securities Bills Regarding Audit Rotation Requirements, Dodd-Frank, M & A Business Broker Registration, & Senior Fraud

New Bill Pushes to Modify Registration of Certain Brokers Involved in Mergers & Acquisitions
A newly introduced bill in the US House of Representatives is seeking simplified registration with the Securities and Exchange Commission for brokers that facilitate acquisition and mergers for private companies with yearly earnings below $25 million and annual gross revenues of under $250 million. Currently, these brokers have to register as broker-dealers with the SEC and seek FINRA membership, but many of them don’t know about these requirements. The bill would exempt these broker-dealers from

Having to become a FINRA member, which means they would not be subject to regulation under the SRO. HR 2274 would amend 1934 Securities Exchange Acts Section 15(b). It seeks to lower regulator expenses of sellers and buyers of privately held companies that are smaller and need professional business brokerage services.

Lawmakers Move Forward Bills that Tackle Dodd-Frank Act
Meantime, the House Financial Services Committee has voted to move three bills dealing with Dodd-Frank Wall Street Reform and Consumer Protection Act mandates and another bill that would prohibit the Public Company Accounting Oversight Board from making public companies rotate auditors. Committee Chairman Jeb Ensnarling (R-Texas) said that while Dodd-Frank is supposed to push for “Wall Street reform,” it is now clear that several provisions are proving too expensive for thousands of public companies that didn’t play any part in the economic crisis.

HR 1105 would allow for greater flow of public capital while no longer requiring 98% of private equity funds to have to pay the expense of registering with the SEC. The second bill, HR 1135 would repeal the Dodd-Frank requirement that public companies have to reveal the median income of everyone that works for them (except for the CEO’s), the CEO’s salary, and the ratio for both. HR 2374 would make the SEC promulgate a rule unifying broker-dealers and advisers under a uniform fiduciary standard before the US Labor Department amends its rules about the term “fiduciary.” Meantime, HR 1564 would prevent the PCAOB from making companies rotate auditors or require that specific auditors perform the audits.

New Bill Would Mean Tougher Penalties for Senior Fraud Perpetrators
In the US Senate, Sen. Robert P. Casey Jr. (D-Pa.) has introduced S. 1185, which would amend the 1933 Securities Act, the 1940 Investment Company Act, the 1934 Securities Exchange Act, and the 1940 Investment Advisers Act. If passed into law, the SEC would be paid get up to another $50,000 penalty for violations of these acts that implicate seniors in the 62 and over age group. As Casey pointed out, seniors are represented disproportionately in all fraud cases. He said that it is necessary to make the consequences harsh to discourage financial scammers. S. 1185 also tells the US Sentencing Commission to look at and modify its guidelines to make sure that appropriate punishment is meted out for violations of criminal securities law.

If you suspect that you are the victim of Securities Fraud, do not hesitate to email or call please contact The Resolution Law Group at (203) 542-7275 for a confidential, no obligation consultation.

Lender Litigation, Unlawful Foreclosure, Tarp Money, Mortgage Backed Securities, Derivitives Lawsuits, Insider Trading Lawsuit, SEC Settlements, Ponzi Scheme Lawsuits, Intentional Misrepresentation, Securitized Mortgage, Class Action Securities Lawsuit, Robo-Signing Lawsuit, Lost Equity Litigation, Mortgage Lender Fraud, FINRA Fraud Lawsuit, Suing Banks, Fraudulent Misrepresentation, Short Sale Fraud, Fraudulent Business Practices, Mortgage Litigation, Complex Tort Litigation, Injunctive Relief, MERS Fraud

The Resolution Law Group: Lawmakers Address Securities Bills Regarding Audit Rotation Requirements, Dodd-Frank, M & A Business Broker Registration, & Senior Fraud

New Bill Pushes to Modify Registration of Certain Brokers Involved in Mergers & Acquisitions
A newly introduced bill in the US House of Representatives is seeking simplified registration with the Securities and Exchange Commission for brokers that facilitate acquisition and mergers for private companies with yearly earnings below $25 million and annual gross revenues of under $250 million. Currently, these brokers have to register as broker-dealers with the SEC and seek FINRA membership, but many of them don’t know about these requirements. The bill would exempt these broker-dealers from

Having to become a FINRA member, which means they would not be subject to regulation under the SRO. HR 2274 would amend 1934 Securities Exchange Acts Section 15(b). It seeks to lower regulator expenses of sellers and buyers of privately held companies that are smaller and need professional business brokerage services.

Lawmakers Move Forward Bills that Tackle Dodd-Frank Act
Meantime, the House Financial Services Committee has voted to move three bills dealing with Dodd-Frank Wall Street Reform and Consumer Protection Act mandates and another bill that would prohibit the Public Company Accounting Oversight Board from making public companies rotate auditors. Committee Chairman Jeb Ensnarling (R-Texas) said that while Dodd-Frank is supposed to push for “Wall Street reform,” it is now clear that several provisions are proving too expensive for thousands of public companies that didn’t play any part in the economic crisis.

HR 1105 would allow for greater flow of public capital while no longer requiring 98% of private equity funds to have to pay the expense of registering with the SEC. The second bill, HR 1135 would repeal the Dodd-Frank requirement that public companies have to reveal the median income of everyone that works for them (except for the CEO’s), the CEO’s salary, and the ratio for both. HR 2374 would make the SEC promulgate a rule unifying broker-dealers and advisers under a uniform fiduciary standard before the US Labor Department amends its rules about the term “fiduciary.” Meantime, HR 1564 would prevent the PCAOB from making companies rotate auditors or require that specific auditors perform the audits.

New Bill Would Mean Tougher Penalties for Senior Fraud Perpetrators
In the US Senate, Sen. Robert P. Casey Jr. (D-Pa.) has introduced S. 1185, which would amend the 1933 Securities Act, the 1940 Investment Company Act, the 1934 Securities Exchange Act, and the 1940 Investment Advisers Act. If passed into law, the SEC would be paid get up to another $50,000 penalty for violations of these acts that implicate seniors in the 62 and over age group. As Casey pointed out, seniors are represented disproportionately in all fraud cases. He said that it is necessary to make the consequences harsh to discourage financial scammers. S. 1185 also tells the US Sentencing Commission to look at and modify its guidelines to make sure that appropriate punishment is meted out for violations of criminal securities law.

If you are the victim of institutional investor fraud, do not hesitate to contact The Resolution Law Group right away to ask for your free case evaluation. http://www.TheResolutionLawGroup.com

Lender Litigation, Unlawful Foreclosure, Tarp Money, Mortgage Backed Securities, Derivitives Lawsuits, Insider Trading Lawsuit, SEC Settlements, Ponzi Scheme Lawsuits, Intentional Misrepresentation, Securitized Mortgage, Class Action Securities Lawsuit, Robo-Signing Lawsuit, Lost Equity Litigation, Mortgage Lender Fraud, FINRA Fraud Lawsuit, Suing Banks, Fraudulent Misrepresentation, Short Sale Fraud, Fraudulent Business Practices, Mortgage Litigation, Complex Tort Litigation, Injunctive Relief, MERS Fraud

 

The Resolution Law Group: Former SEC Commissioner Wants SEC Shareholder Proposal Process Revamped

Ex-Securities and Exchange Commissioner Paul Atkins wants the agency to rework its shareholder proposal rule, including the process that the staff employs to determine when issuers can leave the proposals out of their proxy materials. Atkins pointed to the recent increase in shareholder proposals that are pressing companies to reveal their political spending even though the majority of shareholders oppose such resolutions. He spoke against special interest groups using these proposals to push their agendas.

Atkins made his comments during an interview with BNA. Referring to the no-action process that lets SEC staff figure out the major issues that end up on issuers’ proxies for shareholders to vote on, he said that this action was very subjective and doesn’t have much transparency, actual due process, or accountability.

Under the SEC’s 1934 Securities Exchange Act Rule 14a-8, its shareholder proposal rule, the procedures that eligible investors can have their proposals included in the proxy materials of a company are laid out. The rule also lets issuers leave out proposals in certain, limited situations. (Still, issuers have to tell the SEC Division of Corporation of Finance why the proposal is being left out) and the staff can then grant no-action relief.

Just a couple of years ago, the Commission was reviewing the US proxy voting system’s inner workings. On July 14, 2010, the regulator put out a concept release seeking public comment on the transparency, accuracy, and efficiency of the voting process. (Recommendations that the shareholder proposal process be modified have been making their way through the SEC on numerous occasions in the last three decades.)

Still, supporters of the shareholder proposal process stand by it, believing that it is a key communication channel between shareholders and corporations. Also, considering all the changes coming down under the JOBS Act and the Dodd-Frank Act, they don’t think that now is the time to tinker with it.

Institutional Investor Securities Fraud
At The Resolution Law Group, our securities lawyers have decades of combined experience in securities law and the securities industry. We represent institutional and individual investors and clients that “opt out” of class actions. Our institutional investment fraud law firm represents corporations, high net worth individuals, partnerships, private foundations, banks, charitable organizations, financial firms, municipalities, large trusts, school districts, retirement plans, and others that have sustained substation losses impacting hundreds, perhaps even thousands of individuals.

The Resolution Law Group seeks to recover damages and losses sustained from negligence, securities fraud, and other illegal and improper actions committed by financial firms and/or their representatives in the investment and sale of financial instruments and the management of investors assets.

If you suspect that you are the victim of securities fraud, do not hesitate to email or call please contact The Resolution Law Group at (203) 542-7275 for a confidential, no obligation consultation. Our securities fraud attorneys are here to help institutional investors recoup losses that are a result of a financial scam or negligence. Your consultation with us is free.

Lender Litigation, Unlawful Foreclosure, Tarp Money, Mortgage Backed Securities, Derivitives Lawsuits, Insider Trading Lawsuit, SEC Settlements, Ponzi Scheme Lawsuits, Intentional Misrepresentation, Securitized Mortgage, Class Action Securities Lawsuit, Robo-Signing Lawsuit, Lost Equity Litigation, Mortgage Lender Fraud, FINRA Fraud Lawsuit, Suing Banks, Fraudulent Misrepresentation, Short Sale Fraud, Fraudulent Business Practices, Mortgage Litigation, Complex Tort Litigation, Injunctive Relief, MERS Fraud

Senate Measure Seeks to Exempt Banks for Having to Register with the SEC As Municipal Advisors & House Bill Looks to Enhance Public Pension Plans’ Disclosures

Many banks are reportedly greeting bipartisan Senate bill S. 710 with satisfaction, as it would exempt them from provisions of the Dodd-Frank Wall Street Reform and Consumer Protection Act related to regulating municipal advisers. The bill was introduced by US Senators Patrick Toomey (R-Pa) and Mark Warner (D-VA) last month.

The Dodd-Frank Act established municipal advisers as a new class of regulated individuals that advise local and state governments about financial matters, such as the use of derivatives and bond issuances. Per the law’s Section 975, municipal advisers must register with the Securities and Exchange Commission and the Municipal Securities Rulemaking Board. Critics, however, have called the SEC’s proposed definition of what constitutes a municipal adviser as too broad.

The senators’ legislation makes it clear that banks and those that work for them are not municipal advisers unless they actually take part in municipal adviser activities. It is similar to HR 797, which was proposed by US Representatives Gwen Moore (D-Wis.) and Steve Stivers (R-Ohio) earlier this year.

In other securities law news, three Republican lawmakers have unveiled a bill that would make public pension plans reveal more information or risk the tax status of bonds that were put out by municipalities and states. Per HR 1628, certain municipality issued-bonds would no longer have tax-exempt status if retirement plans did not abide by disclosure requirements.

The measure, by Representatives Paul Ryan (R-Wis.), Darrell Issa (R-Calif.), and Devin Nunes (R-Calif.), seeks to address worries related to local and state pension plans, including the concern that some public pension plans may be determining liabilities and debt with “unreasonably high discount rates,” perhaps even distorting the asset values to hide debt. The three men believe that these “accounting gimmicks” has resulted in unfunded liabilities being under-reported by trillions of dollars.

The proposed legislation would also modify the Internal Revenue Code so that plans would have to report not just their financial information but also what assumptions and methods they used to make their calculations. Plans would also have to apply a uniform accounting standard to make disclosures. Disclosed data would be made available online by the Secretary of the Treasury. Meantime, the federal government would not be able to rescue plans that couldn’t fulfill their obligations.

Securities Fraud
If you, your family, friends, neighbors or associates have been subjected to Securities Fraud, please contact The Resolution Law Group at (203) 542-7275 for a confidential, no obligation consultation.