Compliance Regulations and Guidance Affecting your Industry

The US Federal Reserve Board’s Regulation P or Privacy of Consumer Financial Information (12 CFR 216) regulates the use of nonpublic personal information about consumers by financial institutions.

The Securities Act of 1933 is a federal legislation that regulates the offer and sale of securities. It was enacted after the stock market crash of 1929 and the ensuing Great Depression.

The SEC formulated its final rule for whistleblowers as required by the Dodd-Frank Act in May. The rule gives the definition of a whistleblower and requirements in order to be eligible for an award.

The International Financial Reporting Standards or IFRS are a set of financial reporting standards, interpretations and framework issued by the International Accounting Standards Board (IASB). The accounting standards that comprise part of the IFRS are known as the International Accounting Standards (IAS) that were issued by the board of the International Accounting Standards Committee (IASC).

IFRS 7 sets out the requirements for disclosures in financial instruments.

The International Financial Reporting Standards or IFRS are a set of financial reporting standards, interpretations and framework issued by the International Accounting Standards Board (IASB). The accounting standards that comprise part of the IFRS are known as the International Accounting Standards (IAS) that were issued by the board of the International Accounting Standards Committee (IASC).

IAS 8 sets out the requirements for accounting policies, changes in accounting estimates and errors.

The International Financial Reporting Standards or IFRS are a set of financial reporting standards, interpretations and framework issued by the International Accounting Standards Board (IASB). The accounting standards that comprise part of the IFRS are known as the International Accounting Standards (IAS) that were issued by the board of the International Accounting Standards Committee (IASC).

IAS 7 sets out the requirements for statement of cash flows.

The International Financial Reporting Standards or IFRS are a set of financial reporting standards, interpretations and framework issued by the International Accounting Standards Board (IASB). The accounting standards that comprise part of the IFRS are known as the International Accounting Standards (IAS) that were issued by the board of the International Accounting Standards Committee (IASC).

IAS 1 sets out the requirements for presenting financial statements.

The Foreign Corrupt Practices Act (FCPA) of 1977 was created to implement stricter regulations against bribery. The act also includes requirements for transparency in accountancy under the SEC Act.

Securities Act, the Exchange Act primarily regulates transactions of securities in the secondary market - that is, sales that take place after a security is initially offered by a company (the issuer).  These transactions often take place between parties other than the issuer, such as trades that retail investors execute through brokerage firms.  The Exchange Act operates somewhat differently from the Securities Act.  To protect investors, Congress crafted a mandatory disclosure process that is designed to force companies to make public information that investors would find pertinent to making investment decision.  In addition, the Exchange Act provides for direct regulation of the markets on which securities are sold (the securities (stock) exchanges) and the participants in those markets (industry associations, brokers, and issuers).

The Trust Indenture Act of 1939 was passed for the protection of bond investors. In the event that a bond issuer becomes insolvent, the appointed trustee may be given the right to seize the bond issuer's assets and sell them in order to recoup the bondholders' investments.

This  law passed in 1939 that prohibits bond issues valued at over $5 million from being offered for sale without a formal written agreement (an indenture), signed by both the bond issuer and the bondholder, that fully discloses the particulars of the bond issue. The act also requires that a trustee be appointed for all bond issues, so that the rights of bondholders are not compromised.

The Securities and Exchange Commission (“Commission”) is proposing new Rule 613 under Section 11A(a)(3)(B) of the Securities Exchange Act of 1934 (“Exchange Act”) that would require national securities exchanges and national securities associations (“self-regulatory organizations” or “SROs”) to act jointly in developing a national market system (“NMS”) plan to develop, implement, and maintain a consolidated order tracking system, or consolidated audit trail, with respect to the trading of NMS securities.

The Commission preliminarily believes that with today’s electronic, interconnected markets, there is a heightened need for regulators to have efficient access to a more robust and effective cross-market order and execution tracking system. Currently, many of the national securities exchanges and the Financial Industry Regulatory Authority, Inc. (“FINRA”) have audit trail rules and systems to track information relating to orders received and executed, or otherwise handled, in their respective markets. While the information gathered from these audit trail systems aids the SRO and Commission staff in their regulatory responsibility to surveil for compliance with SRO rules and the federal securities laws and regulations, the Commission preliminarily believes that existing audit trails are limited in their scope and effectiveness in varying ways. In addition, while the SRO and Commission staff also currently receive information about orders or trades through the electronic bluesheet (“EBS”) system, Rule 17a-25 under the Exchange Act,1 or from equity cleared reports, the information is limited, to varying degrees, in detail and scope.

A consolidated audit trail would significantly aid in SRO efforts to detect and deter fraudulent and manipulative acts and practices in the marketplace, and generally to regulate their markets and members. In addition, such an audit trail would benefit the Commission in its market analysis efforts, such as investigating and preparing market reconstructions and understanding causes of unusual market activity. Further, timely pursuit of potential violations can be important in seeking to freeze and recover any profits received from illegal activity.

DATES: Comments should be received on or before August 9, 2010.

 

The Securities and Exchange Commission (“Commission”) is amending its rules to delegate authority to the Director of the Division of Enforcement (“Division”) to submit witness immunity order requests to the Department of Justice for witnesses who have provided or have the potential to provide substantial assistance in the Commission’s investigations and related enforcement actions. This delegation is intended to conserve Commission resources, enhance the Division’s ability to detect violations of the federal securities laws, increase the effectiveness and efficiency of the Division’s investigations, and improve the success of the Commission’s enforcement actions.

Effective Date: January 19, 2010.

We are amending rules under the Securities Exchange Act of 1934 and the Securities Act of 1933 to clarify and provide additional flexibility regarding the format of the Notice of Internet Availability of Proxy Materials that is sent to shareholders and to permit issuers and other soliciting persons to better communicate with shareholders by including explanatory materials regarding the reasons for the use of the notice and access proxy rules and the process of receiving and reviewing proxy materials and voting pursuant to the notice and access proxy rules. The amendments also revise the timeframe for delivering a Notice to shareholders when a soliciting person other than the issuer relies on the notice and access proxy rules and permit mutual funds to accompany the Notice with a summary prospectus.

Effective Date: March 29, 2010.

 

The Securities and Exchange Commission (“Commission” or “SEC”) is adopting amendments to certain rules that govern money market funds under the Investment Company Act of 1940. The amendments will tighten the risk-limiting conditions of rule 2a-7 by, among other things, requiring funds to maintain a portion of their portfolios in instruments that can be readily converted to cash, reducing the maximum weighted average maturity of portfolio holdings, and improving the quality of portfolio securities; require money market funds to report their portfolio holdings monthly to the Commission; and permit a money market fund that has “broken the buck” (i.e., re-priced its securities below $1.00 per share), or is at imminent risk of breaking the buck, to suspend redemptions to allow for the orderly liquidation of fund assets. The amendments are designed to make money market funds more resilient to certain short-term market risks, and to provide greater protections for investors in a money market fund that is unable to maintain a stable net asset value per share.

Dates: The rules, rule amendments, and form are effective May 5, 2010. The expiration date for 17 CFR 270.30b1-6T is extended from September 17, 2010 to December 1, 2010. Compliance dates are discussed in Section III of the Supplementary Information.

 

We are making technical corrections to amendments to our disclosure rules adopted in Release No. 33-9089 (December 16, 2009), which was published in the Federal Register on December 23, 2009 (74 FR 68334). Specifically, we are correcting Forms 10-Q and 10-K to retain the current numbering of the items appearing in each form to avoid confusion that might otherwise arise from references to the current numbering in professional literature. In addition, we are making three corrections to Form 8-K. We are correcting Form 8-K to add an instruction, which was inadvertently excluded, that corresponds to an instruction contained in Forms 10-Q and 10-K that allows certain wholly-owned subsidiaries to omit the disclosure of shareholder voting results. We also are correcting Form 8-K to amend the regulatory text to make it consistent with the discussion of the amendments to that form contained in Release No. 33-9089.

Effective Date: February 28, 2010.

 

The Securities and Exchange Commission (“Commission”) is adopting amendments to Regulation SHO under the Securities Exchange Act of 1934 (“Exchange Act”). We are adopting a short sale-related circuit breaker that, if triggered, will impose a restriction on the prices at which securities may be sold short (“short sale price test” or “short sale price test restriction”). Specifically, the Rule requires that a trading center establish, maintain, and enforce written policies and procedures reasonably designed to prevent the execution or display of a short sale order of a covered security at a price that is less than or equal to the current national best bid if the price of that covered security decreases by 10% or more from the covered security’s closing price as determined by the listing market for the covered security as of the end of regular trading hours on the prior day. In addition, the Rule requires that the trading center establish, maintain, and enforce written policies and procedures reasonably designed to impose this short sale price test restriction for the remainder of the day and the following day when a national best bid for the covered security is calculated and disseminated on a current and continuing basis by a plan processor pursuant to an effective national market system plan. We believe it is appropriate at this time to adopt a short sale-related circuit breaker because, when triggered, it will prevent short selling, including potentially manipulative or abusive short selling, from driving down further the price of a security that has already experienced a significant intra-day price decline, and will facilitate the ability of long sellers to sell first upon such a decline. This approach establishes a narrowly-tailored Rule that will target only those securities that are experiencing significant intra-day price declines. We believe that addressing short selling in connection with such declines in individual securities will help address erosion of investor confidence in our markets generally.

In addition, we are amending Regulation SHO to provide that a broker-dealer may mark certain qualifying sell orders “short exempt.” In particular, if the broker-dealer chooses to rely on its own determination that it is submitting the short sale order to the trading center at a price that is above the current national best bid at the time of submission or to rely on an exception specified in the Rule, it must mark the order as “short exempt.” This “short exempt” marking requirement will aid surveillance by self-regulatory organizations (“SROs”) and the Commission for compliance with the provisions of Rule 201 of Regulation SHO.

Effective Date: May 10, 2010

 

The Securities and Exchange Commission (the Commission) is adopting revisions to the Electronic Data Gathering, Analysis, and Retrieval System (EDGAR) Filer Manual to reflect updates to the EDGAR system. Revisions were are being made primarily to support the upgrade of the Mutual Fund Risk/Return Summary Taxonomy, to extend the interactive data/eXtensible Business Reporting Language (“XBRL”) validation requirements to all Exhibit 101 attachments regardless of the taxonomy used, and to make minor updates to the validation and processing of Form D submissions and the amendments of 13F-HR and 13F-NT submission types.

The EDGAR system is scheduled to be upgraded to support this functionality on April 12, 2010. The filer manual is also being revised to address minor changes previously made in EDGAR. The revisions to the Filer Manual reflect changes within Volume II entitled EDGAR Filer

Manual, Volume II: “EDGAR Filing,” Version 14 (April 2010). The updated manual will be incorporated by reference into the Code of Federal Regulations.

Effective Dates: April 8, 2010. The incorporation by reference of certain publications listed in the rule is approved by the Director of the Federal Register as of April 8, 2010.

 

This rule implements the Federal Civil Penalties Inflation Adjustment Act of 1990, as amended by the Debt Collection Improvement Act of 1996. The Commission is adopting a rule adjusting for inflation the maximum amount of civil monetary penalties under the Securities Act of 1933, the Securities Exchange Act of 1934, the Investment Company Act of 1940, the Investment Advisers Act of 1940, and certain penalties under the Sarbanes-Oxley Act of 2002.

Effective Date: This rule is effective March 3, 2009.

We are adopting rule and form amendments that allow applicants for EDGAR access codes using Form ID to submit their authenticating documents by attaching them to their online Form ID applications in Portable Document Format (PDF) as an alternative to submitting the documents by fax.

Effective Date: This rule is effective March 16, 2009