SEC IMPLEMENTS KEY STEP FOR DERIVATIVES OVERSIGHT 11 YEARS AFTER DODD-FRANK
RICK STEVES, 11 May 2021
The U.S. Securities and Exchange Commission (SEC) has approved the DTCC Data Repository (U.S.) application to operate as a registered security-based swap data repository (SBSDR).
This is a key step in completing the implementation of derivatives oversight in the U.S., which was set out in Title VII of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank). Dodd-Frank divided the regulatory oversight of derivatives between the SEC for security-based swaps (SBS; those that reference single security or loan or a credit default swap that references a narrow-based index) and the Commodity Futures Trading Commission for all other swaps. Continue reading “Article: SEC IMPLEMENTS KEY STEP FOR DERIVATIVES OVERSIGHT 11 YEARS AFTER DODD-FRANK”
Mass. Regulator Wants Robinhood Barred From State
Chris Villani, 15 April 2021
Massachusetts’ top securities regulator said Thursday he wants Robinhood LLC barred from doing business in the Bay State, citing the stock trader’s “cavalier” approach to enticing inexperienced investors into risky bets.
Massachusetts Secretary of the Commonwealth William Galvin is seeking to amend an administrative complaint he filed against the California-based company in December, saying the original fine and change of practices he was seeking was no longer sufficient. That was the first enforcement action brought under the state’s new fiduciary rule, which is stricter than regulations imposed by the U.S. Securities and Exchange Commission. Continue reading “Article: Mass. Regulator Wants Robinhood Barred From State”
Archegos Exposes SEC Blind Spots, Dithering on Market Oversight
Robert Schmidt and Benjamin Bainx, 10 April 2021
The U.S. Securities and Exchange Commission was supposed to be able to spot a whale like Bill Hwang by now. As the financial world knows, it didn’t. Will the agency be able to catch the next one?
The collapse of Hwang’s Archegos Capital Management represents one of the most spectacular failures of risk-management and oversight in recent memory. For the SEC, it caps a decade of foot-dragging on protections that were meant to avert, or at least minimize, just such a blowup. Continue reading “Article: Archegos Exposes SEC Blind Spots, Dithering on Market Oversight”
The Legal and Economic Implications from Recent UK Spoofing Cases.
Yan Cao, Marlene Haas, Greg Leonard, 23 March 2021
The UK Financial Conduct Authority (“FCA”) has in recent years intensified its efforts in securities and commodities markets to detect and pursue the type of disruptive trading behaviour called “spoofing.” This emphasis coincides with a similarly increasing focus by the US Commodity Futures Trading Commission (“CFTC”) and the US Department of Justice (“DOJ”) on spoofing cases in the US. Spoofing may take different forms, but usually involves the placing of non-bona fide orders, often of large quantity, on one side of the market while trying to execute a bona fide order on the other side of the market. Once the bona fide order has been executed, the trader cancels the non-bona fide orders quickly. To date, more than 40 enforcement actions targeting spoofing have been filed against individuals and companies by US regulators and more than 5 have been filed by UK regulators. In February 2019, Julia Hoggett, the FCA’s Director of Market Oversight, delivered a speech about the FCA’s commitment to tackling market abuse, calling compliance with such rules “critical to the integrity and health of our financial markets.” Continue reading “Article: The Legal and Economic Implications from Recent UK Spoofing Cases”
‘Spoofing’: The SEC Calls It Manipulation, But Will Court Agree?
Michael A. Asaro, 17 July 2017
In recent years, the U.S. Securities and Exchange Commission (SEC), Commodity Futures Trading Commission, and the Department of Justice have pursued an increasing number of cases involving a relatively new form of alleged market manipulation known as “spoofing.” See, e.g., U.S. v. Coscia, No. 14-cr-00551 (N.D. Ill.); In re Panther Energy Trading, CFTC Docket No. 13-26 (2013); CFTC v. Nav Sarao Futures, No. 15-cv-03398 (N.D. Ill.); In re Hold Brothers On-Line Investment Services, Exchange Act Release No. 67924 (SEC Sept. 25, 2012); SEC v. Lek Secs., No. 17-cv-1789 (S.D.N.Y.). Continue reading “Article: ‘Spoofing’: The SEC Calls It Manipulation, But Will Court Agree?”
United States: Open-Market Manipulation Under SEC Rule 10b-5 And Its Analogues: Inappropriate Distinctions, Judicial Disagreement And Case Study: FERC’s Anti- Manipulation Rule
Maxwell K. Multer, 01 September 2011
Regulators have addressed market manipulation with Rule 10b-5 since its promulgation under the Securities Exchange Act in 1942. While Section 9 of the Securities Exchange Act addresses manipulation of securities prices, it requires the specific intent “for the purpose of inducing the purchase or sale of such security by others”1 or “for the purpose of creating a false or misleading appearance [of market activity] . . ..”2 It is likely for that reason that prosecutors rarely use Section 9, choosing instead to bring manipulation proceedings under Rule 10b-5.3 But as the tools available for accomplishing market manipulation have evolved, the judicially narrowed contours of Rule 10b-5 may be such that certain new schemes escape liability. With modern advances in trade execution, market platforms and derivatives, it is now possible to accomplish a profitable market manipulation without engaging in any overtly fraudulent or illegal behavior.
Several courts have elected to distinguish between these alleged schemes and schemes which do include illegal behavior, employing a higher level of scrutiny and requiring proof of additional elements in the former situation. Manipulative schemes are referred to as “open market manipulations” when the alleged scheme is accomplished solely through the use of facially legitimate open market transactions. That is, where the manipulator has not engaged in any conduct that is inherently or otherwise illegal, such as fictitious transactions, wash sales or by disseminating false reporting. The transactions are seemingly legitimate, but for their manipulative intent and effect in combination. Continue reading “Article: United States: Open-Market Manipulation Under SEC Rule 10b-5 And Its Analogues: Inappropriate Distinctions, Judicial Disagreement And Case Study: FERC’s Anti- Manipulation Rule”