Insights from Winston & Strawn 

Since the federal election, much has been written on what the results may mean for reform of bank regulation.

Many have suggested that we will see reform of parts of the Dodd-Frank Act. While a candidate, President-elect Trump criticized those parts of the Dodd-Frank Act that may limit bank lending and those parts that may be too complicated. Secretary of Treasury-designate Steve Mnuchin has expressed similar views. However, banking reform was not a top priority for candidate Trump, and some say that, therefore, he is likely to defer to House Financial Services Committee Chairman Jeb Hensarling (R-TX) on these matters.Since the federal election, much has been written on what the results may mean for reform of bank regulation.

It has also been suggested that President-elect Trump’s priorities regarding health care, immigration, and infrastructure, rather than banking reform, will dominate the first half of next year, with banking reform possibly being taken up later in the year.

In this Congress, Chairman Hensarling has introduced a 512-page Financial CHOICE Act (the “FCA”), and it may be expected that moving that legislation will be the Chairman’s top priority next year. That bill would not replace the Dodd-Frank Act, but it would repeal parts of it.

Title II of Dodd-Frank provides for orderly liquidation of systemically significant non-bank financial firms; the FCA would repeal that Title and simply rely on the Bankruptcy Code.

The Dodd-Frank Act, of course, established the Consumer Financial Protection Bureau (the “CFPB”) with a single director who can only be removed for cause and a budget not subject to Congressional appropriations. The FCA would replace that single-director structure with a five-member bipartisan commission structure. It also would place all banking agencies (including the non-monetary policy operations of the Federal Reserve Board), including the CFPB, under the appropriations process.

Dodd-Frank also established the Financial Stability Oversight Council (“FSOC”) to, among other things, designate non-bank financial companies as “systemically important financial institutions” (“SIFIs”) to be subjected to enhanced prudential regulation by the Federal Reserve Board. The FCA would repeal that authority.

The FCA also would repeal the Durbin Amendment in the Dodd-Frank Act which required the Federal Reserve Board to fix interchange fees that banks charge merchants on debit cards.

It also would prevent the CFPB from adopting its proposed arbitration rule prohibiting arbitration clauses in consumer finance contracts if such clauses limit participation in class actions.

The bill also would relax regulatory requirements for any bank with a ten percent leverage ratio if it was rated by its regulator as a CAMELS 1 or 2. (CAMELS stands for Capital, Asset Quality, Management, Earnings, Liquidity, and Sensitivity to market risk.)

The FCA was reported out of the House Financial Services Committee earlier this year on essentially a party-line vote. (Only one Republican voted with the Democrats against reporting the bill out of committee.)

Chairman Hensarling has also stated that he may introduce FCA 2.0 soon, which may be even more ambitious than the FCA.

Senate passage of the FCA may be difficult, as 60 favorable votes are needed to overcome a filibuster, and the Republicans will only have 52 votes next year. It has been suggested that some Democratic Senators among the 23 Democratic Senators up for re-election in 2018, particularly those in so-called “red states,” may be agreeable to supporting the FCA. However, some have also suggested that any modification of the CFPB’s structure might preclude Democratic support for the bill in the Senate.

Dodd-Frank also subjects all bank holding companies with total consolidated assets of $50 billion or more, which includes many regional firms, to enhanced prudential standards similar to those imposed on SIFIs. On December 1, the House of Representatives, by a 254-161 vote, passed a bill (H. R. 6392) that would eliminate that $50 billion threshold and substitute therefor tests of complexity and interconnectedness. It is conceivable that a similar measure could be added to the FCA when the Senate considers the FCA.

One part of the Dodd-Frank Act that may be limited is the Volcker Rule, which bars all banks and their affiliates from engaging in proprietary trading of securities and also prohibits their sponsoring or owning interests in hedge funds and private equity funds. (These practices had nothing to do with causing the financial crisis.) It has been suggested that applying that complicated statute and its even more complex implementing regulations to small banks serves no useful purpose, but escalates their compliance expense. The FCA would repeal the Volcker Rule.

Candidate Trump also urged reinstatement of the Glass-Steagall Act in some form. (That statute separated commercial banking and investment banking until 1999.) His transition website, however, does not mention Glass-Steagall.

It has also been suggested that the roles of FNMA and FHLMC need to change. Secretary-designate Mnuchin has characterized changing the federal government’s conservatorship of FNMA and FHLMC as a “top 10” priority. Indeed, when the Dodd-Frank Act was moving through Congress seven years ago, GSE reform was to be next on the agenda. Any effort to reform the GSEs can be expected to be extraordinarily complex, controversial, and time-consuming.

A federal statute, the Congressional Review Act (“CRA”), allows Congress to repeal major regulations within a certain timeframe, and that may be a tool by which a new Administration reduces regulatory costs. Recent use of that Act has been met with President Obama’s veto, but a President Trump may be more receptive to attempted Congressional CRA resolutions of disapproval of major regulations. A sitting President may have little desire to undo the President’s own Administration’s rules, but, as a practical matter, the CRA may be used within 60 legislative days of an outgoing Administration’s promulgation and delivery of a rule to Congress.

One major rule that was adopted last year, for which CRA review may now be too late, was the Treasury Department’s Financial Crimes Enforcement Network’s (“FinCEN”) customer due diligence requirements for financial institutions which FinCEN estimated would impose a reporting burden of 7,041,289 hours per year; some estimate that compliance with that rule alone will cost the financial services industry $2.5 billion per year. Compliance with the Securities and Exchange Commission’s (“SEC”) rule requiring disclosure of payments by extraction issuers is estimated to cost $1.29 billion. That rule was struck down by the courts, but the SEC finalized another version, and that rule appears to have been adopted recently enough for CRA review. If the CFPB adopts its proposed arbitration rule mentioned above, that rule would be subject to CRA review.

President Trump will have the opportunity to completely change the leadership of the banking agencies. The term of Comptroller of the Currency Curry is up next April, and the terms of the Chairman and Vice Chairman of the FDIC are up next November. Federal Reserve Board Chair Yellen’s term expires in February 2018, and CFPB Director Cordray’s term expires in July 2018. There also has been debate as to whether President Trump may terminate Richard Cordray’s directorship of the CFPB at will even before the decision in the recent PHH case becomes final.

Finally, there also has been debate as to whether the election results may change the CFPB’s focus, causing its enforcement efforts to be more based on clear-cut rule violations than subjective charges of unfair or abusive practices and whether CFPB enforcement efforts may become less aggressive, that we may see less regulation by enforcement. If so, it is possible that states, such as an active New York, will move in to fill any perceived void.

Interesting times.

Feature: Efforts to Restrict Use of Non-GAAP Financial Measures

At last week’s American Institute of CPAs conference, officials from the Securities and Exchange Commission (“SEC”) and the Center for Audit Quality (“CAQ”) discussed the effort to restrict the use of accounting methods that do not comply with Generally Accepted Accounting Principles (“GAAP”), or non-GAAP financial measures.  SEC Chief Accountant Wesley Bricker stated that good practices in the area of non-GAAP reporting starts with preparers. He noted that “[g]ood reporting practices also place a premium on audit committee member understanding of the company’s non-GAAP policies, procedures and controls.”

CAQ executive director Cindy Fornelli added that “[t]he discussion around non-GAAP is sometimes framed as whether non-GAAP measures are either good or bad … [t]he reality, of course, is more nuanced. Much depends on how these measures are used.” The CAQ recently released a publication, Questions on Non-GAAP Measures, a Tool for Audit Committees, which is a tool that can be used by audit committees to look into whether those measures are accurate, appropriate, and useful to investors. This tool, which also reviews the auditor’s role as to non-GAAP information, divides a set of questions into three categories: transparency, consistency and comparability (also see the CAQ’s newly released report, Non-GAAP Financial Measures: Continuing the Conversation, which calls for a more wide-ranging dialogue throughout the financial industry about the preparation, presentation and use of non-GAAP measures). Citing the CAQ’s newest report, Fornelli stated that, “[l]ike our non-GAAP tool, this publication presents a set of questions – not just for audit committees but also for other key players: from investors to investment bankers, from securities lawyers to standard setters.”

Bricker proposed that audit committee members should try to “understand management’s judgments in the design, preparation, and presentation of non-GAAP measures and how those measures might differ from approaches followed by other companies.” He opined that such discussions will necessitate “an understanding of the company’s business model and how it is managed.” Bricker gave the example of how it is vital to note that businesses function in tentative environments. He stated that if “non-GAAP adjustments replace that business reality with smooth earnings over time, accelerate unearned revenues, or defer incurred expenses, those adjustments and disclosures should be evaluated closely under the [May 2016 Compliance and Disclosure Interpretations (“C&DIs”) from the SEC on non-GAAP measures].”

Michael Maloney, the chief accountant in the SEC’s Division of Enforcement, added that his team is also ”looking closely” at the issue to see if enforcement actions are necessary when metrics that deceive investors develop into fraud. Mark Kronforst, the chief accountant in the SEC’s Division of Corporation Finance, further added that “[t]hings had gotten pretty bad … [w]e’re still cleaning up but there are a lot more comment letters to come.” Kronforst stated that the SEC issued the new reporting guidelines in an attempt to “crack down” on the worst offenders. According to MarketWatch, investors have criticized the use of non-GAAP measures as potentially confusing and misleading and something that forces them to dig deep into earnings statements to get a true picture of a company’s financials. Most companies say they use non-GAAP metrics as a different way to tell a story about their results that numbers prepared according to the accounting standards are incapable of doing. That is particularly the case when companies use the non-standard numbers to redirect investors away from poor results. Kronforst noted that no amount of disclosure can cure a misleading metric.

After issuing the May guidance, the SEC gave companies a chance to make changes on their own before it began sending comment letters to companies that did not respond to the guidance in a satisfactory manner – Kronforst said that has turned out to be “a pretty good model” that the SEC should consider employing in other areas, adding that “I think we’ve used an even hand here.”

Banking Agency Developments

Federal Reserve

Federal Reserve Board Announces Approval of Technical Amendments to Rule That Identifies GSIBs and Requires Additional Amounts of Risk-Based Capital

On December 9th, the Board announced the approval of technical amendments to its rule that identifies global systemically important bank holding companies (“GSIBs”) and requires those firms to hold additional amounts of risk-based capital to avoid restrictions on capital distributions and discretionary bonus payments. The changes would not materially alter the underlying rule approved by the Board in July 2015. The Board also invited comment on an interim final rule that extends the initial implementation of certain reporting requirements related to the GSIB surcharge rule. The adjusted timeline applies to firms that have $50 billion or more in total consolidated assets and are not currently identified as GSIBs. The reporting requirements are being harmonized with similar reporting requirements from other rules.

Board Invites Comment on Proposal to Fully Accept its Rating System for Bank Holding Companies to Savings and Loan Holding Companies

On December 9th, the Board announced that it is inviting comment on a proposal to fully apply the Board’s existing rating system for bank holding companies to savings and loan holding companies.

Securities and Exchange Commission

Guidance

Corporation Finance Issues New C&DIs on Disclosures by Foreign Private Issuers

On December 8th, the SEC’s Division of Corporation Finance published new C&DIs on Securities Exchange Act Form 20-F. The new C&DIs address questions regarding the registration of securities in the form of American depository receipts; the use of Form 20-F for reporting obligations connected with guaranteed securities issued by a parent foreign private issuer; the deadline for filing Form 20-F; the omission of certain information from a Form 20-F annual report by a wholly-owned subsidiary of a foreign private issuer; and the incorporation by reference into Form 20-F of information previously filed with the SEC.  C&DIs 110.03-110.07.

New C&DIs Address Questions Regarding the Foreign Private Issuer Definition

On December 8th, the Division of Corporation Finance issued new C&DIs on the foreign private issuer definition in Securities Exchange Act Rule 3b-4(c). Among other things, the new C&DIs answer questions concerning how to apply the definition in instances where an issuer has multiple classes of voting stock with different voting rights, how to calculate the majority of executive officers or directors, and how to determine whether the majority of the directors are U.S. citizens in cases where the issuer has two boards.  C&DIs 110.02-110.08.

New Guidance on Successor Issuer Reporting Obligations and Primary Trading Definition under Exchange Act Rules 12g-3 and 12h-6

On December 8th, the Division of Corporation Finance published new C&DIs on Exchange Act Rules 12g-3 and Rule 12h-6. New C&DI 150.02 addresses the filings that a non-reporting foreign private issuer should make when it succeeds to the reporting obligation of an issuer under Exchange Act Rule 12g-3. New C&DI 155.01 clarifies that an issuer can consider all securities trading markets in countries that are part of the European Union as a single foreign jurisdiction for purposes of applying the primary trading market definition under Rule 12h-6(f)(5).

Corporation Finance Issues New C&DIs on Qualified Institutional Buyer Definition under Rule 144A

On December 8th, the Division of Corporation Finance issued new C&DIs on the private resales of securities to institutions under Securities Act Rule 144A. The new C&DIs address, among other things, the kinds of securities an entity may include when calculating whether it meets the $100 million threshold under Rule 144A(a)(1)(i). C&DIs 138.05-138.10.

New C&DIs Address Questions on Definition of Foreign Private Issuer under Rule 405

On December 8th, the Division of Corporation Finance published new C&DIs on the foreign private issuer definition in Securities Act Rule 405. C&DIs 203.17-203.23.

New C&DI on the U.S. Person Definition under Rule 902 of Regulation S

In a new C&DI on Securities Act Rule 902 issued on December 8th, the Division of Corporation Finance explained the factors that should be applied to determine the status of an individual as a “natural person resident in the United States” for purposes of the U.S. person definition under Rule 902(k)(1)(i). New C&DI 276.01.

Corporation Finance Offers New Guidance on Rule 903 of Regulation S

On December 8th, the Division of Corporation Finance published new C&DIs on Rule 903 of Regulation S that address questions regarding the application of the rule to an offering of securities in more than one country that is part of the European Union, the Category 3 safe harbor, and the electronic submission of required certifications and agreements under Regulation S. C&DIs 277.02-277.06.

New C&DIs on F-Series Forms and Guaranteed Securities

On December 8th, the Division of Corporation Finance published two new C&DIs on Securities Act F-Series Forms that answer questions regarding the use of F-series registration statements and Form 20-F for reporting obligations connected with guaranteed securities issued by a parent foreign private issuer. C&DI 102.03 and C&DI 102.04.

Speeches and Statements 

White Calls Weakening of Financial Reforms a “Grave Mistake.”

In remarks at the SEC’s Investor Advisory Committee meeting on December 8th, SEC Chair Mary Jo White provided an overview of recent SEC rulemaking activities related to the asset management industry, universal proxy cards, and the Disclosure Effectiveness Initiative. While explaining the importance of the Committee’s work in 2017 and beyond, White cautioned that “it would be a grave mistake to weaken, let alone dismantle,” the financial reforms put in place following the financial crisis.

Chief Accountant Discusses IFRS, Revenue Recognition Disclosures in Conference Remarks

In remarks at the 2016 AICPA Conference on Current SEC and PCAOB Developments on December 5th, SEC Chief Accountant Wesley R. Bricker signaled his support for a proposal that would allow domestic issuers to supplement their GAAP financial statements with information based on International Financial Reporting Standards (“IFRS”).  Bricker also indicated that staff in the Office of the Chief Accountant will review 2016 and 2017 filings for increased disclosures about the significance of the impact of the new revenue recognition standard.

Other Developments

SEC Will Consider PCAOB Budget at Open Meeting

The SEC will hold an Open Meeting on December 14, 2016, to consider whether to approve the Public Company Accounting Oversight Board’s (“PCAOB”) 2017 budget and related annual accounting support fee. SEC Meeting Notice.

SEC Announces $900,000 Whistleblower Award

The SEC awarded over $900,000 to a whistleblower who provided information that enabled the SEC to bring multiple enforcement actions against wrongdoers, according to an announcement by the agency on December 9th.

Small and Emerging Companies Advisory Committee Issues Draft Recommendation on Disclosure of Board Diversity

On December 7th, the SEC published the draft recommendation of its Advisory Committee on Small and Emerging Companies regarding the disclosure of board diversity. The Committee recommended that the SEC amend Item 407(c)(2) of Regulation S-K to require issuers to describe, in addition to their policy with respect to diversity, the extent to which their boards are diverse. The required description should include each board member’s race, gender, and ethnicity.

SEC Awards $3.5 Million to Whistleblower

On December 5th, the SEC issued an order approving an award of approximately $3.5 million to a whistleblower who provided information that led to a successful SEC enforcement action. SEC Press Release.

Staff Announcements

On December 8th, the SEC announced that Andrew J. Ceresney, Director of the SEC’s Division of Enforcement, will leave the agency by the end of the year.  The SEC announced on December 6th that Division of Corporation Finance Director Keith F. Higgins will leave the agency at the beginning of 2017. On December 2nd, the SEC announced that Mark Flannery, Chief Economist and Director of the SEC’s Division of Economic and Risk Analysis, plans to leave the SEC by the end of December. 

Commodity Futures Trading Commission

CFTC Releases Rule Enforcement Review of ICE Futures U.S.

On December 7th, the U.S. Commodity Futures Trading Commission’s (“CFTC”) Division of Market Oversight (“Division”) announced that it has issued the results of a rule enforcement review of ICE Futures U.S. (“ICE” or “Exchange”). The Division determined that ICE has an adequate trade practice surveillance program, subject to three recommendations and one deficiency.   

Position Limits Rule Reproposed

On December 5th, the CFTC announced that it voted unanimously to repropose regulations implementing limits on speculative futures and swaps positions as called for in the Dodd-Frank Act. In a separate vote, the CFTC approved final aggregation regulations, a key component of the CFTC’s existing position limits regime. The reproposal will be open for public comment for 60 days after publication in the Federal Register. Federal Register: Position Limits for Derivatives. Federal Register: Aggregation of Positions Final Rule. Statements Regarding Proposed Rule on Position Limits for Derivatives: Chairman MassadCommissioner BowenCommissioner Giancarlo.

CFTC Unanimously Approves Proposed Rules Establishing Swap Dealer and Major Swap Participant Capital Requirements

On December 2nd, the CFTC announced that it unanimously approved proposed rules establishing swap dealer (“SDs”) and major swap participant (“MSPs”) minimum capital requirements. The proposed rules generally allow for the application of alternative approaches based on existing U.S. bank regulators’ capital requirements or the CFTC’s future commission merchant and the SEC’s broker-dealer net liquid asset capital requirements. The proposal also provides that SDs mainly engaged in non-financial activities and MSPs may elect minimum capital requirements based on the tangible net worth of the entities. Also, subject to approval, SDs can use internal models for purposes of computing their regulatory capital. The rules would further require certain SDs and MSPs to satisfy defined liquidity requirements. In addition, the rules propose recordkeeping, reporting and notification requirements for SDs and MSPs relative to their respective capital requirements. The proposal would also allow the CFTC to issue capital comparability determinations to foreign jurisdictions or foreign SDs under a program of substituted compliance. The comment period for this proposal will be open for 90 days following the publication in the Federal Register. Fact Sheet. Q&A. Chairman Massad Statement. Commissioner Giancarlo Statement.

Federal Rules Effective Dates

December 2016 – February 2017

Click here to view table. 

Exchanges and Self-Regulatory Organizations

BATS Global Markets

BZX Proposes Continuous Listing Standards for ETPs

On December 1st, the SEC provided notice of a proposed rule change filed by Bats BZX Exchange, Inc. (“BZX”) to amend the listing rules for exchange-traded products (“ETPs”) to add additional continued listing standards as well as a related amendment entitled “Failure to Meet Listing Standards.” Comments should be submitted on or before December 28, 2016. SEC Release No. 34-79450.     

Chicago Board Options Exchange

CBOE Proposes to Make Permanent Pilot Components of AIM Auction Process

On December 7th, the SEC requested comments on the Chicago Board Options Exchange, Incorporated’s (“CBOE”) proposed amendments to its rules related to the Automated Improvement Mechanism (“AIM”) that would make permanent the components of AIM approved on a pilot basis, which include no minimum size requirement for orders to be eligible for the auction and the premature conclusion of the auction anytime there is a quote lock on CBOE. Comments are due within 21 days of publication in the Federal Register, which is expected the week of December 12, 2016. SEC Release No. 34-79499.   

Depository Trust Company

SEC Approves DTC’s Proposed Changes to Rules on Deposit Chills and Global Locks

On December 6th, the SEC issued an order approving the Depository Trust Company’s (“DTC”) proposal to limit the circumstances in which it would impose Deposit Chills and Global Locks to the occurrence of a Financial Industry Regulatory Authority (“FINRA”) halt, Commission suspension, or if DTC is ordered to impose these restrictions by a court of competent jurisdiction. The rule change will also provide fair procedures to issuers for the issuer to receive notice and an opportunity to challenge the restriction and the standards DTC would apply to determine when to release a restriction. SEC Release No. 34-79488.     

Financial Industry Regulatory Authority

FINRA Reveals Rulemaking Items under Discussion at December Board Meeting

On December 7th, FINRA announced the rulemaking items that will be discussed by its Board of Governors at its upcoming December meeting. Among other things, FINRA’s Board will consider amendments to rules concerning eligibility proceedings to grant FINRA staff discretion to accept certain statutory disqualification applications and to file proposed approvals directly with the SEC, as well as proposed amendments to FINRA’s rules governing simplified arbitration to amend the hearing provisions.

FINRA Offers Guidance on the “As Soon As Practicable” Requirement in Reporting OTC Trades in NMS Stocks

FINRA published a Trade Reporting Notice on December 5th that offers an interpretation of the “as soon as practicable” requirement under FINRA trade reporting rules as it applies to over-the-counter (“OTC”) trades in NMS stocks. FINRA explained that it interprets the “as soon as practicable” requirement under FINRA rules to require that firms release information relating to OTC transactions in NMS stocks to other market participants no sooner than they release such information to a FINRA trade reporting facility for dissemination purposes.

SEC Approves FINRA’s Proposal to Broaden Chairperson Eligibility in Arbitration

On December 2nd, the SEC approved FINRA’s proposed changes to its arbitration rules to allow an attorney arbitrator to qualify for the chairperson roster if he or she completes chairperson training and serves as an arbitrator through award on at least one arbitration. SEC Release No. 34-79455.     

Fixed Income Clearing Corporation

FICC Proposes Changes to Methodology Used in the MBSD VaR Model

On December 7th, the SEC requested comments on the Fixed Income Clearing Corporation’s (“FICC”) proposed rule change that would change the methodology that FICC uses in the Mortgage-Backed Securities Division’s (“MBSD”) value-at-risk (“VaR”) model from one that employs a full revaluation approach to one that would employ a sensitivity approach. Comments should be submitted within 21 days of publication in the Federal Register, which is expected the week of December 12, 2016. SEC Release No. 34-79491.     

International Swaps and Derivatives Association

ISDA Publishes Guidance Note on Standardization of the ISDA Variation Margin CSA

On December 5th, the International Swaps and Derivatives Association (“ISDA”) issued a guidance note on the standardization of the ISDA Variation Margin Credit Support Annex (“CSA”). The note recommends the adoption of more standardized variation margin terms by market participants through creation of a new CSA or through more standardized amendments to existing CSAs. ISDA Press Release.  

Miami International Securities Exchange

MIAX Proposes Changes to Its Price Improvement Mechanism

On December 7th, the SEC requested comments on Miami International Securities Exchange LLC’s (“MIAX”) proposal to amend its rules on the MIAX Price Improvement Mechanism (“PRIME”) and PRIME Solicitation Mechanism that would make permanent a pilot program that allows orders of less than 50 contracts or 500 mini-option contracts to initiate a PRIME Auction. The proposal would also include a new rule to provide that Agency Orders with a size of less than 50 contracts received at a time when the National Best Bid and Offer (“NBBO”) has a bid/ask differential of $0.01 would be rejected by the automated trading system used by MIAX. Comments should be submitted within 21 days of publication in the Federal Register, which is expected the week of December 12, 2016. SEC Release No. 34-79500.     

NYSE

NYSE Announces Modifications to Certain Electronic Blue Sheet Data Elements

In an Information Memo published on December 8th, the New York Stock Exchange LLC (“NYSE”) notified members that NYSE and other U.S. Intermarket Surveillance Group Members have modified certain equity and option data elements for Electronic Blue Sheets (“EBS”). The equity and option modifications will become effective on December 30, 2016.

Judicial Developments

While Administrative Proceeding Is Pending, a Federal Court Does Not Have Jurisdiction over Challenge to SEC’s Administrative Process (not precedential)

The SEC brought an administrative proceeding against plaintiffs alleging securities law violations. During the pendency of the proceeding, plaintiffs filed an action in district court contending that the SEC violated their Equal Protection Clause rights by not prosecuting the alleged violations in district court. On December 2nd, the Second Circuit affirmed the district court’s dismissal of plaintiffs’ action, citing its earlier finding that a federal court did not have jurisdiction over private equity magnate Lynn Tilton’s challenge to the SEC’s administrative process while a case was pending against her. Chau v. Securities and Exchange Commission.

Industry News

Under Trump, CFTC Will Move on From Dodd-Frank

On December 9th, Reuters reported that the CFTC will move on from reforms commenced after the 2007-2009 financial crisis to a new focus on U.S. competitiveness and the potential for shocks to the global $710 trillion swaps markets. J. Christopher Giancarlo, a Republican who is in line to at least temporarily run the CFTC once Trump is inaugurated in January, has noted that the U.S. derivatives regulator should look beyond mandates from the 2010 Dodd-Frank Wall Street reform law to current trends in financial markets including cyber threats, liquidity risk, market concentration and de-globalization.     

SEC’s Top Enforcer Ceresney to Leave Agency

On December 8th, DealBook reported that Andrew J. Ceresney, the director of the Securities and Exchange Commission’s (“SEC”) enforcement division, plans to leave the regulator by the end of the year. This follows SEC Chair Mary Jo White’s announcement that she will also leave the agency. Under Ms. White and Mr. Ceresney, the SEC aggressively pursued cases instead of allowing companies to settle without admitting or denying wrongdoing. The departures of Ms. White and Mr. Ceresney come as President-elect Trump prepares to populate his incoming administration, which is expected to ease many of the regulations that emerged under President Obama’s time in office. Among other things, Mr. Trump has promised to roll back the Dodd-Frank regulatory overhaul that tightened supervision of the financial system, which would be at odds with how the SEC has approached enforcement under Ms. White and Mr. Ceresney.