Securities Law Prof Blog

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

A Member of the Law Professor Blogs Network

Friday, September 12, 2014

SEC Announces the Creation of the Office of Risk Assessment

The SEC has announced the creation of the Office of Risk Assessment within its Division of Economic and Risk Analysis.  The press release in part states:

Since its creation in 2009, DERA has collaborated with market experts throughout the SEC to develop risk assessment tools. One example, the Aberrational Performance Inquiry, launched in 2009 to proactively identify atypical hedge fund performance, led to eight enforcement actions and is one of the tools used by the Division of Enforcement to assess private funds. Similarly, DERA developed a broker-dealer risk assessment tool that helps SEC examiners allocate resources by assessing a broker-dealer’s comparative riskiness relative to its peer group. It also is working closely with the Enforcement Division’s Financial Reporting and Audit Task Force and the Division of Corporation Finance on developing a tool to assist in identifying financial reporting irregularities that may indicate financial fraud and help assess corporate issuer risk.

“The Office of Risk Assessment will build on the existing expertise of DERA’s staff, which includes economists, accountants, analysts, and attorneys, to provide sophisticated assessments of market risks. The establishment of this new office reflects the Commission’s ongoing focus on deploying data-driven analytics to assist in routing scarce resources to areas of the greatest risks to the market,” said DERA Deputy Director Scott W. Bauguess, who oversees the division’s risk assessment activities.

Initial staffing of the new Office of Risk Assessment will be drawn from across DERA and the division will seek a new assistant director to head the office. The office will continue to develop and use predictive analytics to support supervisory, surveillance, and investigative programs involving corporate issuers, broker-dealers, investment advisers, exchanges, and trading platforms. In addition, the office will support the SEC’s ongoing work related to the Financial Stability Oversight Council.

September 12, 2014 | Permalink | Comments (0) | TrackBack (0)

This Week in Securities Litigation

Wednesday, September 10, 2014

Testimony on “Wall Street Reform: Assessing and Enhancing the Financial Regulatory System”

On Sept. 9, 2014, Chair Mary Jo White testified before the United States Senate Committee on Banking, Housing, and Urban Affairs.  The testimony addressed a wide variety of issues, including credit ratings, asset-backed securities, municipal securities, private fund adviser registration and reporting, over-the-counter derivatives, clearing agencies, the Volcker Rule, corporate governance and executive compensation, broker-dealer audit requirements, the whistleblower program, investment advisers and broker-dealers’ standards of conduct, specialized disclosure provisions, exempt offerings, the Office of Minority and Women Inclusion, consumer data protection, and SEC resources.

September 10, 2014 | Permalink | Comments (0) | TrackBack (0)

NASAA Survey Finds Investment Advisers Report Few Cybersecurity Breaches

Details available here.

September 10, 2014 | Permalink | Comments (0) | TrackBack (0)

Sunday, September 7, 2014

New in Print

The following law review articles relating to securities regulation are now available in paper format:

Todd Barnet, The Door Is Still Ajar:  Analysis and Shortcomings of the CFTC's Final Rule on Mandated Clearing of Certain Derivatives, 12 DePaul Bus. & Com. L.J. 147 (2014).

Sahil Chaudry, The Impact of the JOBS Act on Independent Film Finance, 12 DePaul Bus. & Com. L.J. 215 (2014).

Jerry Ellig & Hester Peirce, SEC Regulatory Analysis: "A Long Way to Go and a Short Time to Get There", 8 Brook. J. Corp. Fin. & Com. L. 361 (2014).

Peter R. Flynn, Note, Admission of Wrongdoing:  Increasing Public Accountability in SEC Settlements, 8 Brook. J. Corp. Fin. & Com. L. 538 (2014). 

Kristen J. Kenley, Can We keep this Dirty Money?:  Ponzi Scheme Transfers and the Fourth Circuit's Vague But Workable Standard in In re Derivium Capital, LLC., 92 N.C. L. Rev. 1370 (2014).

Alexandros Seretakis, Hedge Fund Activism Coming to Europe:  Lessons from the American Experience, 8 Brook. J. Corp. Fin. & Com. L. 438 (2014).

Richard Squire, Clearinghouses as Liquidity Partitioning, 99 Cornell L. Rev. 857 (2014).

Matthew P. Thomas, Comment, MLSMK Investment Co.:  Civil RICO Liability after the Private Securities Litigation Reform Act and Central Bank, 12 DePaul Bus. & Com. L.J. 235 (2014).

Ruoke Yang, When is BitCoin a Security under U.S. Securities Law?, 18 J. Tech. L. & Pol'y 99 (2013).

September 7, 2014 | Permalink | Comments (0) | TrackBack (0)

Friday, September 5, 2014

This Week in Securities Litigation

Tracey L. McNeil Named as SEC’s First Ombudsman

Tracey L. McNeil has been named the SEC's first ombudsman.  The press release states in part:

The Securities and Exchange Commission today announced that Tracey L. McNeil has been selected as the first ombudsman for the agency. . . .

In her new role, Ms. McNeil will report to Rick Fleming, the first head of the SEC’s Office of the Investor Advocate. The Dodd-Frank Act called for the creation of the office and requires the Investor Advocate to appoint an ombudsman who will act as a liaison in resolving problems that retail investors may have with the Commission or self-regulatory organizations. The ombudsman also will establish safeguards to maintain the confidentiality of communications with investors.

September 5, 2014 | Permalink | Comments (0) | TrackBack (0)

Tuesday, September 2, 2014

New in Print

The following law review articles relating to securities regulation are now available in paper format:

Bob Bernstein, The CFTC's Attempt to Impose Speculative Position Limits on Off-Exchange Swap Contracts Likely to Face Continued Legal Challenge,  30 Touro L. Rev. 561 (2014).

Jennifer G. Chawla, Comment, Criminal Accountability and Wall Street Executives: Why the Criminal Provisions of the Dodd-Frank Act Fall Short, 44 Seton Hall L. Rev. 937 (2014).

Lee D. Cooper, Note, Value-Add: An Empirical Study of Idiosyncratic Value in the 2013 Biotech IPO Market, 2014 Colum. Bus. L. Rev. 512-547.

Stanislav Dolgopolov, High-Frequency Trading, Order Types, and the Evolution of the Securities Market Structure: One Whistleblower's Consequences for Securities Regulation, 2014 U. Ill. J.L. Tech. & Pol'y 145.

Jeffrey N. Gordon &Christopher M. Gandia, Money Market Funds Run Risk: Will Floating Net Asset Value Fix the Problem?, 2014 Colum. Bus. L. Rev. 313.

Alexandra Leavy, Note, Necessity is the Mother of Invention: A Renewed Call to Engage the SEC on Social Disclosure, 2014 Colum. Bus. L. Rev. 463. 

Sung Hui Kim, Insider Trading as Private Corruption, 61 UCLA L. Rev. 928 (2014).

Sherief Morsy, Note, The JOBS Act and Crowdfunding: How Narrowing the Secondary Market Handicaps Fraud Plaintiffs, 79 Brook. L. Rev. 1373 (2014).

Stephen O'Connor, Note, The Securities Act of 1933: A Jurisdictional Puzzle, 79 Brook. L. Rev. 1233 (2014).

Spencer P. Patton,  Note, Archangel Problems: The SEC and Corporate Liability, 92 Tex. L. Rev. 1717 (2014).

John H. Runne, Note, The Confluence of Sullivan v. Harnisch & Dodd-Frank: Adapting New York's Common Law to Fill a Compliance Hole,  79 Brook. L. Rev. 1265 (2014).

Alyssa Wanser, Comment, The Facebook Status that Sparked an SEC Investigation: Regulation Fair Disclosure and the Growth of Social media, 30 Touro L. Rev. 723 (2014).

September 2, 2014 | Permalink | Comments (0) | TrackBack (0)

Sunday, August 31, 2014

This Week in Securities Litigation

SEC Adopts Asset-Backed Securities Reform Rules

The SEC has adopted asset-backed securities reform rules.  The press release in part states the following:

The Securities and Exchange Commission today adopted revisions to rules governing the disclosure, reporting, and offering process for asset-backed securities (ABS) to enhance transparency, better protect investors, and facilitate capital formation in the securitization market.

The new rules, among other things, require loan-level disclosure for certain assets, such as residential and commercial mortgages and automobile loans. The rules also provide more time for investors to review and consider a securitization offering, revise the eligibility criteria for using an expedited offering process known as “shelf offerings,” and make important revisions to reporting requirements.

August 31, 2014 | Permalink | Comments (0) | TrackBack (0)

SEC Announces Pilot Plan to Assess Stock Market Tick Size Impact for Smaller Companies

The SEC has announced a pilot plan to assess stock market tick size impact for smaller companies.  The press release in part states the following:

The Securities and Exchange Commission today announced that the national securities exchanges and the Financial Industry Regulatory Authority (FINRA) filed a proposal to establish a national market system plan to implement a targeted 12-month pilot program that will widen minimum quoting and trading increments (tick sizes) for certain stocks with smaller capitalization.  The Commission plans to use the pilot program to assess whether such changes would enhance market quality for smaller capitalization stocks for the benefit of investors and issuers.

August 31, 2014 | Permalink | Comments (0) | TrackBack (0)

SEC Names James Schnurr As Chief Accountant

Details available here.

August 31, 2014 | Permalink | Comments (0) | TrackBack (0)

Exploring Koehler's Scholarship on the FCPA

Mike Koehler of the FCPA Professor Blog has posted a useful and interesting reading list of his scholarship on the Foreign Corrupt Practices Act.  Although this is obvious, he is one of the leading experts on corruption and his scholarship is well worth reading.

August 31, 2014 | Permalink | Comments (0) | TrackBack (0)

Chief Information Officer Thomas Bayer to Leave SEC

Details available here.

August 31, 2014 | Permalink | Comments (0) | TrackBack (0)

SEC Announces Municipal Advisor Exam Initiative

Details available here.

August 31, 2014 | Permalink | Comments (0) | TrackBack (0)

Monday, August 18, 2014

Chu on Credit Ratings

Chenghuan Sean Chu has posted Empirical Analysis of Credit Ratings Inflation as a Game of Incomplete Information on SSRN with the following abstract:

This paper models competition among credit rating agencies as an auction. Equilibrium ratings give a distorted representation of agencies' true assessment of quality, because the agencies choose their ratings strategically. I quantify the distortion in ratings for individual commercial mortgage-backed securities, and find the extent of distortion to be an important predictor of the securities' ex post performance. I also find that the distortion magnitudes decreased after the recent financial crisis. Through counterfactual simulations, I determine the marginal impact of additional rating agencies on distortions, and I identify the impact of proposed disclosure requirements.


August 18, 2014 | Permalink | Comments (0) | TrackBack (0)

Rapp on the Office of Market Intelligence

Geoffrey Christopher Rapp  has posted Intelligence Design: An Analysis of the SEC's New Office of Market Intelligence and its Goal of Using Big Data to Improve Securities Enforcement on SSRN with the following abstract:

This contribution to the University of Cincinnati's spring 2013 symposium on “Addressing the Challenges of Protecting the Public: Enforcement Practices and Policies in the Post-Financial Crisis Era,” discusses the SEC's creation of a new Office of Market Intelligence in January, 2010. OMI was created in the aftermath of the Madoff scandal and charged with using advanced techniques to detect securities fraud and to process tips and complaints, including those arising from the Dodd-Frank whistleblower bounty reward program. While it may be too soon to judge the success of the new Office, useful comparisons to other federal intelligence activities (such as in the national security context) and to the business tool of "Market Intelligence" can be drawn.

August 18, 2014 | Permalink | Comments (0) | TrackBack (0)

NASAA Annual Conference to Focus on Meeting Tomorrow’s Challenges Today

Details available here.

August 18, 2014 | Permalink | Comments (0) | TrackBack (0)

Saturday, August 16, 2014

This Week in Securities Litigation

New in Print

The following law review articles relating to securities regulation are now available in paper format:

Jesse M. Fried, Insider Trading Via the Corporation, 162 U. Pa. L. Rev. 801 (2014).

Christian Johnson, Regulatory Arbitrage, Extraterritorial Jurisdiction, and Dodd-Frank:  The Implications of US Global OTC Derivative Regulation, 14 Nev. L.J. 542 (2014).

Neel Rane, Comment, Twenty Years of Shareholder Proposals after Cracker Barrel:  An Effective Tool for Implementing LGBT Employment Protections, 162 U. Pa. L. Rev. 929 (2014).

John Jr. Robinson, Note, Water Securities:  Rights to Use, Used as Collateral, 2013 Utah L. Rev. 1725.

Asking the Audience for Help: Crowdfunding as a Means of Control, Benette Zively, Moderator; David Marlett, Steven Bradford, Jolie Goodnight, Panelists, 15 Tex. Rev. Ent. & Sports L. 87-121 (2013).

August 16, 2014 | Permalink | Comments (0) | TrackBack (0)