New Final Rules
EDGAR Manual updated. The SEC published revisions to the Electronic Data Gathering, Analysis, and Retrieval System Filer Manual and related rules. The revisions introduce new submission form types MA, MA-A, MA/A, MA-I, MA-I/A, and MA-W to support Registration of Municipal Advisors; updates to submission form types 8-K, 8-K/A, 10-K, 10-K/A, 10-KT, 10-KT/A, 10-D, 10-D/A, POS AM, 424B1, 424B2, 424B3, 424B4, 424B5, 424B7, and 424B8; and minor updates to Form 13F validations. (3/4/2014) SEC Release No. 33-9554.
Rules for “covered clearing agencies” proposed. The SEC published a proposal for the oversight of clearing agencies that are deemed to be systemically important or that are involved in complex transactions, such as security-based swaps. These “covered clearing agencies” would be subject to additional requirements concerning financial risk management, operations, governance, and disclosures. Comments should be submitted within 60 days after publication in the Federal Register, which is expected shortly. (3/12/2014) SEC press release.
Well-known seasoned issuers. The Division of Corporation Finance released revisions to its statement regarding well-known seasoned issuer waivers. (3/12/2014) Revised statement.
Municipal securities enforcement initiative. The SEC’s Division of Enforcement has initiated a program to encourage municipal securities issuers and underwriters to self-report certain securities violations. Under the initiative, the Enforcement Division will recommend standardized, favorable settlement terms to those municipal issuers and underwriters who self-report inaccuracies regarding their prior compliance with continuing disclosure obligations. Those wishing to use this program must complete and submit the appropriate documents by September 10, 2014. (3/10/2014) SEC press release.
Broker-dealer financial responsibility. The Division of Trading and Markets issued guidance concerning the SEC’s amendments to the broker-dealer financial responsibility rules. (3/6/2014) Staff guidance.
Selected Enforcement Actions
Audit committee chair among those charged with accounting fraud. The SEC filed partially settled accounting fraud charges against an animal feed company and its top executives for repeatedly reporting fake revenues from their China operations in order to meet financial targets and prop up the stock price. The SEC alleged that four executives in China orchestrated the scheme at AgFeed Industries Inc., which was based in China and publicly traded in the US before merging with a US company. The SEC also charged a company executive and a company director in the US with scheming to avoid or delay disclosure of the accounting fraud once they learned about it in 2011 while engaged in efforts to raise capital for expansion and acquisitions. (3/11/2014) SEC press release.
Unsocial network. The SEC announced that it has obtained an emergency court order to stop a fraudulent pyramid scheme by companies masquerading as legitimate international investment firms. The SEC alleges that Fleet Mutual Wealth Limited and MWF Financial have been exploiting investors through website and social media accounts on Facebook and Twitter, falsely promising returns of 2 to 3 percent per week for investors who open accounts with the firm. (3/5/2014) SEC press release.
Regional compliance outreach programs. The SEC and the Financial Industry Regulatory Authority announced the opening of registration for the regional compliance outreach programs for broker-dealers that will take place in Denver, Los Angeles, Chicago, Miami, Philadelphia, and New York, beginning April 30, 2014. The programs will provide professionals at broker-dealers with a forum for discussions with regulators about risk management, regulatory issues, and compliance practices. (3/18/2014) SEC press release.
ICI speakers discuss market risk. Investment News summarized remarks made at the Investment Company Institute’s annual meeting. Investment News quoted Norm Champ, Director of the SEC’s Division of Investment Management, as saying that the SEC is “undertaking an initiative to develop a recommendation that would modernize and streamline the information that funds are reporting to the commission to give us more timely and useful information about fund operations and portfolio holdings.” ICI President Paul Schott Stevens said that the SEC’s efforts to improve its market risk monitoring may help forestall intervention by the Financial Stability Oversight Commission. (3/17/2014) Remarks.
Commissioner Piwowar discusses cross-border issues. SEC Commissioner Michael Piwowar explained his thinking regarding international financial regulatory issues, paying particular attention to cross-border derivatives transactions. (3/6/2014) Piwowar speech.