Securities and Exchange Commission

SEC Obtains Emergency Order Halting Alleged Diamond-Related ICO Scheme Targeting Hundreds of Investors

 

On May 21, the Securities and Exchange Commission (SEC) announced that it obtained a court order halting an ongoing $30 million Ponzi Scheme. The SEC complaint charged a cryptocurrency business and its principal with using investor funds to run a Ponzi Scheme. Release.

SEC Announces the Formation and First Members of Fixed Income Market Structure Advisory Committee

 

On November 9, 2017, the Securities and Exchange Commission (“SEC“) announced the formation and first members of its Fixed Income Market Structure Advisory Committee.

According to the announcement, the committee, whose initial focus will be on the corporate bond and municipal securities markets, will provide advice to the Commission on the efficiency and resiliency of these markets and will identify opportunities for regulation.

The entire announcement can be found here.

SEC Announces Measures to Facilitate Cross-Border Implementation of the European Union’s MiFID II’s Research Provisions

 

On October 26, 2017, the Securities and Exchange Commission (“SEC”) announced that, “following consultation with European authorities, and in response to concerns that investors could lose access to valuable research, the staff of the U.S. Securities and Exchange Commission issued three related no-action letters. These letters are designed to provide market participants with greater certainty regarding their U.S. regulated activities as they engage in efforts to comply with the European Union’s (EU) Markets in Financial Instruments Directive (MiFID II) in advance of the Jan. 3, 2018, implementation date.”

According to the SEC, the no-action relief “provides a path for market participants to comply with the research requirements of MiFID II in a manner that is consistent with the U.S. federal securities laws. More specifically, and subject to various terms and conditions: (1) broker-dealers, on a temporary basis, may receive research payments from money managers in hard dollars or from advisory clients’ research payment accounts; (2) money managers may continue to aggregate orders for mutual funds and other clients; and (3) money managers may continue to rely on an existing safe harbor when paying broker-dealers for research and brokerage.”

The Press Release announcing these developments can be found here.

SEC Adopts Rules to Modernize Information Reported by Funds, Require Liquidity Risk Management Programs, and Permit Swing Pricing

 

On October 13, 2016, the Securities and Exchange Commission adopted rules to implement modern reporting and disclosure requirements for registered investment companies and open‑end funds. Press Release.

FINRA and SEC Announce Tick Size Pilot Program

 

On October 3, 2016, the Financial Industry Regulatory Authority (“FINRA”) and the Securities and Exchange Commission (“SEC”)’s Office of Investor Education and Advocacy issued an Investor Alert announcing a new National Market System (NMS) Plan that will implement a Tick Size Pilot Program (the “Pilot”) that will widen the minimum quoting and trading increment – sometimes called the “tick size” – for some small capitalization stocks. The goal of the Pilot is to study the effect of tick size on liquidity and trading of small capitalization stocks.

The Pilot has been implemented pursuant to the Jumpstart Our Business Startups Act which, among other things, directed the SEC to conduct a study and report to Congress on how decimalization affected the number of initial public offerings, and the liquidity and trading of securities of smaller capitalization companies.

Under the Pilot, the tick size will be widened from a penny ($0.01) to a nickel ($0.05) for specified securities listed on national securities exchanges (“Pilot Securities”). For some Pilot Securities, only quoting will need to occur in $0.05 increments, while for others, both quoting and trading generally will need to occur in increments of a nickel.

The Pilot will include a specified subset of the exchange-listed stocks of companies that have $3 billion or less in market capitalization, an average daily trading volume of one million shares or less and a volume-weighted average price of at least $2.00 for every trading day. There will be a control group of approximately 1,400 securities and three test groups, each with approximately 400 securities selected by a stratified sampling.

The Plot will run for a two-year period that will commence on October 3, 2016.

The data collected from the Pilot will be used by the SEC, national securities exchanges and FINRA to assess whether wider tick sizes enhance the market quality of these stocks for the benefit of issuers and investors—such as less volatility and increased liquidity.

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SEC Adopts Rules for Enhanced Regulatory Framework for Securities Clearing Agencies

On September 28, 2016 the Securities and Exchange Commission (“SEC”) voted to adopt new rules to establish “enhanced standards for the operation and governance of securities clearing agencies that are deemed systematically important or that are involved in complex transactions, such as security-based swaps.” In addition, the SEC has proposed to apply these new standards to additional categories of securities clearing agencies, including all SEC-registered central counterparties. The rules will become effective sixty days after their publication in the Federal Register. Press release.

SEC Adopts Amendments Providing Authorities Access to Data Obtained by Security-Based Swap Data Repositories

 

On August 29, 2016, the Securities and Exchange Commission amended a rule designed to provide access for regulators to data in the security-based swap market.  The amendments were enacted to make the sharing of information more secure and efficient. Press release,

SEC Adopts Rules to Enhance Information Reported by Investment Advisers

 

On August 25, 2016, the Securities and Exchange Commission adopted amendments to rules and forms designed to improve disclosures provided by investment advisers to investors and the Securities and Exchange Commission. Press release.

SEC Seeks Public Comment on Disclosure Requirements Relating to Management, Security Holders and Corporate Governance Matters

 

On August 25, 2016, the Securities and Exchange Commission requested “public comment on disclosure requirements in Subpart 400 of Regulation S-K, including those relating to management, certain security holders, and corporate governance matters.” Press release.