Troubled financial institutions, some with substantial broker-dealer operations, played a prominent role in the 2008 financial crisis. In an effort to protect the financial system from serious threats posed by significant nonbank financial companies in financial distress, Congress enacted Title II of the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank Act) to provide for an orderly liquidation of such entities under the supervision of federal authorities. Federal regulators have proposed rules that would implement the provisions of Title II in regard to the resolution of a large broker-dealer. Most notably, the proposed rules address how a “bridge broker or dealer” could be used in connection with the liquidation of a “covered broker or dealer.”
Read more here: SEC and FDIC Propose Dodd-Frank Broker-Dealer Resolution Rules
The Office of Compliance Inspections and Examinations (OCIE) of the U.S. Securities and Exchange Commission (SEC) on January 11, 2016 announced its examination priorities for this year, which “address issues across a variety of financial institutions, including investment advisers, investment companies, broker-dealers, transfer agents, [and] clearing agencies.” The priorities, as in 2015, focus on the following: protecting retail investors and investors saving for retirement; assessing market-wide risks; and using data analytics to identify elevated risk profiles and signal potential illegal activity.
In a separate letter, OCIE identified its priorities for the national securities exchanges.
Read more here: SEC 2016 Examination Priorities Focus on Retail Investors, Market-wide Risks and Data Analytics
On Dec. 11, 2015, the Securities and Exchange Commission (the “SEC”) issued a release proposing the adoption of new Rule 18f-4 under the Investment Company Act of 1940 (the “1940 Act”). The proposed rule, if adopted as proposed, will establish new limitations on the use of derivatives by registered investment companies and business development companies (collectively, “regulated funds”). It will also regulate other trading practices of such funds (including short sales of securities) that are deemed to involve the issuance of “senior securities.” Hedge funds and other private investment funds will not be subject to the rule.
Read more here: SEC Proposes Rule Governing the Use of Derivatives and Short Sales