SEC – Money Market Fund Reform – Amendments to Form PF

The Securities and Exchange Commission (‘‘Commission’’ or ‘‘SEC’’) is proposing two alternatives for amending rules that govern money market mutual funds (or ‘‘money market funds’’) under the Investment Company Act of 1940. The two alternatives are designed to address money market funds’ susceptibility to heavy redemptions, improve their ability to manage and mitigate potential contagion from such redemptions, and increase the transparency of their risks, while preserving, as much as possible, the benefits of money market funds. The first alternative proposal would require money market funds to sell and redeem shares based on the current market- based value of the securities in their underlying portfolios, rounded to the fourth decimal place (e.g., $1.0000), i.e., transact at a ‘‘floating’’ net asset value per share (‘‘NAV’’). The second alternative proposal would require money market funds to impose a liquidity fee (unless the fund’s board determines that it is not in the best interest of the fund) if a fund’s liquidity levels fell below a specified threshold and would permit the funds to suspend redemptions temporarily, i.e., to ‘‘gate’’ the fund under the same circumstances. Under this proposal, we could adopt either alternative by itself or a combination of the two alternatives. The SEC also is proposing additional amendments that are designed to make money market funds more resilient by increasing the diversification of their portfolios, enhancing their stress testing, and increasing transparency by requiring money market funds to provide additional information to the SEC and to investors. The proposal also includes amendments requiring investment advisers to certain unregistered liquidity funds, which can resemble money market funds, to provide additional information about those funds to the SEC.

See Rule Here


SEC – Amendments to Regulation D, Form D and Rule 156


The Securities and Exchange Commission, which today in separate releases amended Rule 506 of Regulation D, Form D and Rule 144A under the Securities Act of 1933 to implement Section 201(a) of the Jumpstart Our Business Startups Act and Section 926 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, is publishing for comment a number of proposed amendments to Regulation D, Form D and Rule 156 under the Securities Act. These proposed amendments are intended to enhance the Commission’s ability to evaluate the development of market practices in Rule 506 offerings and to address concerns that may arise in connection with permitting issuers to engage in general solicitation and general advertising under new paragraph (c) of Rule 506. Specifically, the proposed amendments to Regulation D would require the filing of a Form D in Rule 506(c) offerings before the issuer engages in general solicitation; require the filing of a closing amendment to Form D after the termination of any Rule 506 offering; require written general solicitation materials used in Rule 506(c) offerings to include certain legends and other disclosures; require the submission, on a temporary basis, of written general solicitation materials used in Rule 506(c) offerings to the Commission; and disqualify an issuer from relying on Rule 506 for one year for future offerings if the issuer, or any predecessor or affiliate of the issuer, did not comply, within the last five years, with Form D filing requirements in a Rule 506 offering. The proposed amendments to Form D would require an issuer to include additional information about offerings conducted in reliance on Regulation D. Finally, the proposed amendments to Rule 156 would extend the antifraud guidance contained in the rule to the sales literature of private funds.

See Regulation Here

Default Judgement Against Christopher Smithers


The U.S. Commodity Futures Trading Commission (CFTC) today announced that Judge Kenneth A. Marra of the U.S. District Court for the Southern District of Florida entered an Order of default judgment and permanent injunction against Christopher Smithers of Jupiter, Florida. The Order requires Smithers to pay a $590,940 civil monetary penalty and $196,980 in restitution, imposes permanent trading and registration bans against Smithers, and prohibits Smithers from violating the Commodity Exchange Act (CEA) and CFTC regulations, as charged.

See the Complaint here

FINRA – Trade Reporting Notice


FINRA addresses several trade reporting issues in connection with reporting transactions in TRACE-eligible securities to the Trade Reporting and Compliance Engine (TRACE) system. This Notice addresses the following topics:

  • split-volume reporting;
  • reporting investment adviser-directed transactions;
  • reporting Securities Act Regulation S transactions;
  • transfers establishing the underwriting syndicate;
  • firm commitments prior to final pricing;
  • transfers facilitating settlement; and
  • reporting collateralized mortgage obligations.

See Full Notice Here

Insider Trading Charges – Green Mountain Coffee Employee

From the SEC Webstie:  “The Securities and Exchange Commission today announced insider trading charges against a former systems administrator at Vermont-based Green Mountain Coffee Roasters who repeatedly obtained quarterly earnings data and traded in advance of its public release.  The SEC also charged his friend who illegally traded along with him.”

See the Complaint Here




The July Job Market Report – Causing a Stir

Yesterday the Job Markets’ Report came out as it does every Friday.  As you can imagine Wall Street eagerly awaited the numbers. On my way to the office, Bloomberg Radio announced that the futures markets were up with the expectation of better than expected numbers.

The numbers were good, not terribly good, but good nonetheless.  unemployment fell from 7.6% in 2008, to 7.4% yesterday.  The best it’s been since the crisis.  A very slow recovery by all stretches of the imagination.   So let’s look at the numbers?  Are people really finding jobs?  According to a Wall Street Journal:

The unemployment rate fell to 7.4% from 7.6%, but about half the fall was due to people dropping out of the labor market rather than getting jobs.

and it looks like the other half were jobs gained in industries that historically pay lower wages and rely on mostly part-time workers.  The gains were mostly felt in the retail and food industries.

The Fed has announced that it will begin slow down the bond purchase once the unemployment levels reach the 7%.  With the numbers on Friday, it appears we may reach it soon.  The hope is that the Fed, who has stated that it will look at other issues in addition to the unemployment rate, will consider a very slow scaling down and instead of $20 billion they will consider a lesser amount.

For now Wall Street has been able to hold on to its gains.  What will happen with the July numbers?

SEC – Cross Border Proposal for Security Based Swap Activity

On May 1, 2013, the SEC proposed new regulations for Security Based Activity.  According to the SEC Website:

The proposal explains which regulatory requirements apply when a transaction occurs partially within and partially outside the U.S. The proposed rules also set forth when security-based swap dealers, major security-based swap participants, and other entities — such as clearing agencies, execution facilities, and data repositories — must register with the SEC.

As we all know this regulation is part of Title VII of the Dodd Frank Act which was enacted in 2010.

Comments on the proposal are due on 90 days after publication in the Federal Register which has not yet happened.  I will keep you posted as to when that happens.  For now, here is a summary of the proposal from the SEC Site and here is the actual proposal.