Interim Final Rule

Exemptions for Securities-Based Swaps Are Extended.

On February 5th, the SEC amended the expiration dates in its interim final rules that provide exemptions under the Securities Act of 1933, the Securities Exchange Act of 1934, and the Trust Indenture Act of 1939 for those security-based swaps that prior to July 16, 2011, were security-based swap agreements and are defined as "securities" under the Securities Act and the Exchange Act as of July 16, 2011, due to the provisions of Title VII of the Dodd-Frank Act. Under the amendments, the expiration dates in the interim final rules will be extended to February 11, 2017. The interim final rules exempt offers and sales of security-based swap agreements from all but the anti-fraud provisions of the securities laws provided certain conditions are met. SEC Release No. 33-9545. See also SEC Release No. 34-71485 (order extending temporary Securities Exchange Act exemptions in connection with the revision of the definition of "security" to encompass security-based swaps).


Small Entity Compliance Guide on Credit Rating References.

On February 4th, the SEC issued a small entity compliance guide concerning the December 27, 2013, amendments to Rule 5b-3 and Forms N-1A, N-2, and N-3 under the Investment Company Act of 1940 that: (1) replace the reference to credit ratings in Rule 5b-3 with an alternative standard designed to retain a similar degree of credit quality to that in current Rule 5b-3; and (2) eliminate in the Forms the required use of nationally recognized statistical rating organizations credit ratings when a fund chooses to depict its portfolio holdings by credit quality. The amendments are effective July 7, 2014.

Other Developments

Variable Annuities.

The SEC's Office of Investor Education and Advocacy published an Investor Bulletin on variable annuities.

Opposition to Wider Stock Spreads.

On February 7th, Business Week discussed the growing opposition to proposals that would require the testing of wider price spreads for shares of smaller companies. Wider Opposition.

Commissioner Stein Discusses Market Structure.

On February 6th, SEC Commissioner Kara Stein discussed capital markets structure. She believes that firms with direct access to the markets and execution venues should be required to have detailed procedures for testing their systems. Stein also called for a comprehensive review of market infrastructure, with a focus on points of failure, like the securities information processor, and the need for a consolidated audit trail. Stein Remarks.

Regulating Crowdfunding.

On February 5th Entrepreneur reviewed the comments submitted to the SEC in response to its crowdfunding rule proposalEntrepreneur noted the concern many voiced over the regulatory responsibilities which would be borne by the crowdfunding portals. Regulatory Burden.

Draft Strategic Plan.

On February 3rd, the SEC published for comment its draft strategic plan for fiscal years 2014 to 2018. Comments should be submitted on or before March 10, 2014. SEC Press Release. Compliance Weeksummarized the draft plan's reach while Bond Buyer specifically discussed its plans for the municipal bond industry.