Securities Law Prof Blog

Editor: Eric C. Chaffee
Univ. of Toledo College of Law

Tuesday, February 5, 2008

FINRA Sets Up Screening Process for Enforcement Actions

The securities industry has long accused regulators of "rulemaking by enforcement."  FINRA enforcement chief Susan Merrill says it won't happen in her shop.  In addition, FINRA has instituted a screening process to review and approve enforcement staff's cases before they go forward.  The goal is to identify important enforcement actions and achieve consistency among enforcement staff around the country.  WSJ, Brokerage Regulators Set Up Panel To Screen Big and Top-Priority Cases.

February 5, 2008 in News Stories | Permalink | Comments (0) | TrackBack (0)

Moody's Considers New Rankings for Mortgage-Backed Securities

Moody's announced it is considering a new ratings system for mortgage-backed securities, so that investors can distinguish them from traditional debt instruments that Moody's ranks according to a three-letter (A, B, C) system.  In addition, it may add a "warning label" to alert investors to the risk posed by mortgage-backed securities.  WSJ, Moody's Weighs Warning Labels For Its Ratings.

February 5, 2008 in News Stories | Permalink | Comments (0) | TrackBack (0)

Actively-Managed ETFs Receive Preliminary SEC Approval

The SEC will soon approve actively-managed ETFs (Exchange-Traded Funds) -- mutual funds whose shares trade like stock.  Currently, all ETFs track an index.  The industry has sought this move for some time, but the SEC has had several concerns, including whether frequent trading in ETF shares would lead to increased portfolio turnover and, in turn, higher expenses for the fund, and how frequently the ETFs would disclose their holdings.  WSJ, Actively Traded ETFs: A Step Closer to Reality.

February 5, 2008 in News Stories | Permalink | Comments (0) | TrackBack (0)

Monday, February 4, 2008

U.S. Authorities Investigate Sales of Societe Generale Stock

Both the SEC and the DOJ are reportedly investigating wrongdoing at the beleagered French bank, Societe Generale.  The investigation apparently is looking into sales of Societe General stock by American investor Robert A. Day and two foundations associated with him that took place in the weeks before the bank disclosed its trading losses caused by rogue trader Mr. Kerviel and its large write-downs in loan-related products.  A spokesperson for Mr. Day, who remains a substantial shareholder, said the sales complied with the law and that Mr. Day would cooperate in the investigation. WSJ, U.S. Opens SocGen Probes; French Report Faults Bank.

February 4, 2008 in News Stories | Permalink | Comments (0) | TrackBack (0)

SEC Budget Request Remains Constant with Last Year's Budget

The SEC posted on its website its FY 2009 Congressional Justification for its budget.  Its  FY 2009 budget request totals $913 million, a $7 million (.8%) increase over the agency's FY 2008 budget.  The FY 2009 budget request funds 3409 permanent FTE, a reduction of 94 FTE from the FY 2008 level.  In the breakdown of the budget request according to programs, the SEC identifies Enforcement as receiving 35% of the funding and 32% of FTE.

February 4, 2008 in SEC Action | Permalink | Comments (0) | TrackBack (0)

January's IPO Count Down

January was a slow month for IPOs, with only five that raised a total of $892 million.  This compares with ten in January 2007 that raised a total of $2.25 billion.  These numbers exclude REITs and "blank check" offerings.  There were seven "blank check" offerings this January that raised a total of $2.5 billion.  WSJ, IPOs Slow on Broader Worries.

February 4, 2008 in News Stories | Permalink | Comments (0) | TrackBack (0)

Sunday, February 3, 2008

O'Hare on Corporate Monitors

The Use of the Corporate Monitor in SEC Enforcement Actions, by JENNIFER O'HARE, Villanova University School of Law, was recently posted on SSRN.  Here is the abstract:

This paper addresses the SEC's recent use of the corporate monitor as ancillary relief in its enforcement actions. The corporate monitor represents the latest example of the SEC seeking to shift its enforcement responsibilities to the public companies it regulates. Focusing on the role played by the corporate monitor imposed by the SEC in its enforcement action brought against WorldCom, this paper considers some of the dangers posed by the use of the corporate monitor, such as the whether the appointment of a corporate monitor constitutes impermissible overreaching by the SEC. The paper recognizes that the corporate monitor can be an effective weapon against securities fraud, but cautions that, given the dangers inherent in its use, the SEC should seek a corporate monitor only in rare cases and publish guidance explaining when it will seek this remedy. Moreover, courts should develop clear standards limiting their judicial discretion to order this extraordinary ancillary remedy.

February 3, 2008 in Law Review Articles | Permalink | Comments (0) | TrackBack (0)