SEC Open Meeting, November 3, 2010
|Final Rule Issue||Effective Date||Compliance Date|
|November 15, 2010||June 30, 2011||November 30, 2011|
|Proposal Date||Comment Deadline||Reopened Comment Period Deadline|
|November 8, 2010||December 23, 2010||July 22, 2013|
|Comment Deadline||Final Rule Issue||Effective Date|
|December 17, 2010||June 13, 2011||August 12, 2011|
The U.S. Securities and Exchange Commission (SEC) public meeting focused on the issuance of proposed rules under the Dodd-Frank Wall Street Reform and Consumer Protection Act concerning:
- Rule 15c3-5, Risk Management Controls for Brokers or Dealers with Market Access, under the Securities Exchange Act of 1934;
- a new rule under Dodd-Frank to prohibit fraud, manipulation, and deception in connection with security-based swaps; and
- rules and forms to implement Section 21F of the Exchange Act, also known as "Securities Whistleblower Incentives and Protection."
Topics of Discussion
- Rules that "effectively prohibit all markets from displaying marketable flash orders, generally require that information about an investor's interest in buying or selling a stock be made publicly available, instead of just to a select group operating within a dark pool, help identify and provide information on certain large traders, promote fair and efficient access to listed options markets, and require the establishment of a consolidated audit trail system that would enable regulators to track information related to trading orders received and executed across the securities markets.
- A rule that "would ensure that market conduct in connection with the offer, purchase or sale of any security-based swap is subject to the same general anti-fraud provisions that apply to all securities. And it also would explicitly reach misconduct in connection with ongoing payments and deliveries under a security-based swap."
- Whistleblower regulation that "reflects the consideration of a number of potentially competing interests, and balances the need to encourage whistleblowers to come forward without promoting unintended consequences."
Risk Management Controls for Brokers or Dealers with Market Access
Prohibition Against Fraud, Manipulation, and Deception in Connection with Security-Based Swaps
Proposed Rules for Implementing the Whistleblower Provisions of Secton 21F of the Securities Exchange Act of 1934
Commissioner Luis A. Aguilar, whose statements include:
- Support for the proposed rule concerning strengthened equity market structure and the protection of investors.
- A note that the antifraud rule is the first to specifically address security-based swaps.
- Support for the whistleblower regulation, along with the following questions:
- Should we instead exclude any wrongdoer from being eligible to receive an award categorically or in particular circumstances?
- Should an individual's level of culpability be considered as a factor in determining whether the person is eligible for an award?
- Are there other ways in which we should limit the payment of awards to culpable individuals?
Chairman Mary L. Schapiro, whose statements include:
- A summary of the three proposals.
- The market structure proposal "recognizes the important gatekeeper role that broker-dealers play in our securities market, by prohibiting broker dealers from offering customers naked access."
- "In addition to offers, purchases and sales of security-based swaps, the proposed antifraud rule would also explicitly apply to the cash flows, payments, deliveries, and other ongoing obligations and rights that are specific to security-based swaps."
- An explanation that the purpose of the proposed whistleblower regulation is to outline the scope of the entire whistleblower programs and to define specific procedure for award applications and the SEC's final decisions on claims.
Commissioner Troy A. Paredes, whose statements include:
- Support for the whistleblower proposal, but concern that the rules may not help preserve in-house company compliance programs and that the SEC will be overwhelmed by claims.
Commissioner Elisse B. Walter, whose statements include:
- Support for the antifraud proposal, which would provide "a solid framework upon which the security-based swap markets can flourish."
- Seconding the importance of preserving in-house company compliance programs within the proposed whistleblower regulation.
Commissioner Kathleen L. Casey, whose statements include:
- Explaining that if the quality of claims received through the whistleblower procedure is high, the SEC can be confident that it has set up a solid program.
- A series of further questions concerning the goals of the whistleblower program.