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Special Report: How Wall Street Captured Washington's Effort to Rein in Banks

By Charles Levinson
April 9, 2015, Reuters

In the aftermath of the 2008 financial crisis, Keith Higgins was certain: Banks weren’t to blame.

Higgins, a top attorney at prominent law firm Ropes & Gray LLP, was chairman of an American Bar Association committee on securities regulation. As such, he lobbied strenuously against a rule U.S. regulators were drafting that would require banks to disclose a lot more about asset-backed securities like those that had just torpedoed the economy.

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SEC Names OCIE Acting Director

April 10, 2015, Automated Trader

The Securities and Exchange Commission has announced that Marc Wyatt will serve as Acting Director of the agency's Office of Compliance Inspections and Examinations (OCIE). He succeeds Andrew Bowden, who announced that he will be leaving the SEC to rejoin the private sector at the end of April.

Mr. Wyatt has served as the Deputy Director of OCIE since October 2014, where he has led the Technology Controls Program and served as a member of the office's Operating and Executive Committees. He also is the national co-coordinator of OCIE's Private Fund Specialized Working Group and recently participated in the creation of its Private Fund Examination Unit, whose attorneys, accountants, and examiners specialize in examinations of advisers to private funds. Mr. Wyatt joined the SEC in December 2012 as a senior specialized examiner focused on examinations of advisers to hedge funds and private equity funds.

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SEC Shifts Focus to Ratings Firms, Fund Valuations As Crisis-Era Cases Fade

By Aruna Viswanatha
March 18, 2015, The Wall Street Journal

As U.S. securities regulators turn their attention away from the financial crisis, they’re looking more closely at credit rating firms and fund valuation issues, the top enforcer at the Securities and Exchange Commission will tell lawmakers on Thursday.

In a sign the pipeline for crisis-era cases has largely run dry, the SEC renamed the unit that brought many of its cases for shoddy mortgage securities that allegedly fueled the 2008 financial crisis.

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CFTC Enforcement Chief to Revive Use of In-House Courts

By Sarah N. Lynch
March 12, 2015, Reuters

The U.S. derivatives regulator's enforcement director said on Thursday that his division planned to revive the use of in-house administrative courts, after more than a decade of bringing contested cases only to federal courts.

"We are going to start to do that very soon," said Aitan Goelman, the enforcement chief of the Commodity Futures Trading Commission, in remarks at Georgetown Law's Corporate Counsel Institute. He added that the move would help the agency, which has a very constrained budget.

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As ‘Spoof’ Trading Persists, Regulators Clamp Down

By Bradley Hope
February 22, 2015, The Wall Street Journal

One June morning in 2012, a college dropout whom securities traders call “The Russian” logged on to his computer and began trading Brent-crude futures on a London exchange from his skyscraper office here.

Over six hours, Igor Oystacher ’s computer sent roughly 23,000 commands, including thousands of buy and sell orders, according to correspondence from the exchange to his clearing firm reviewed by The Wall Street Journal. But he canceled many of those orders milliseconds after placing them, the documents show, in what the exchange alleges was part of a trading practice designed to trick other investors into buying and selling at artificially high or low prices.

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New SEC Swaps Rules Could Impact Dealers

By Tom Groenfeldt
February 21, 2015, Forbes

The SEC has reopened its possessed rule governing the use of collateral held by security-based swap dealers (SBSDs) — a proposal which would effectively ban rehypothecation — the use of the collateral by dealers as a source of funding.

In a comment to the SEC, Citadel, a major hedge fund in Chicago, said  “In the bi-Iateral market cash and securities collateral posted by the buyside to dealer counterparties is taken into dealer working capital or otherwise available to the dealer for rehypothecation in support of dealer activities; isolation of this collateral from the dealer balance sheet protects it from dealer insolvency, but eliminates a significant source of low-cost dealer financing.”

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SEC Scrutinizing Bank Efforts to Comply with Capital Rules

By Jody Shenn
February 18, 2015, Bloomberg

The Securities and Exchange Commission is scrutinizing banks’ efforts to appear safer to regulators and shareholders.

The agency is looking for improper behavior related to how banks value complicated assets and to transactions they use to shift risks to other entities, said Michael Osnato, head of the complex financial instruments group in the SEC’s enforcement division.

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DTCC Nears Filing for Tri-Party Repo CCP

February 16, 2015, The Trade

Within the next few weeks, the Depository Trust and Clearing Corporation’s (DTCC) subsidiary Fixed Income Clearing Corporation (FICC) intends to officially file a rule with the US Securities and Exchange Commission (SEC) and Federal Reserve to provide central clearing for the institutional tri-party repo market.

Currently, FICC provides central clearing for dealers in tri-party repo, but now, the firm plans to extend the service to registered investment funds in order to “to help to prevent another squeeze in tri-party funding such as the one observed in 2008,” says Murray Pozmanter, managing director and head of Clearing Agency Services at the DTCC, who spoke with Global Custodian recently to discuss the details of the proposal. Much of the operations would be the same though, and the current tri-party repo custodians would continue to serve as the custody banks, just with FICC as a counterparty.

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SEC Officials Blast Agency Over Clerical Error on Swaps Rulemaking

By Sarah N. Lynch
February 11, 2015, Reuters

U.S. securities regulators failed to consider a comment letter from a key derivatives trade group before adopting new swaps data reporting rules last month, prompting criticism on Wednesday from the agency's two top Republicans.

The failure to review the letter was due to an inadvertent clerical error, but in a joint statement, Securities and Exchange Commission Republican members Daniel Gallagher and Michael Piwowar said they felt the mistake warranted the need to re-open the rule for public comment.

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Obama Seeks More Money for Agencies Enforcing Dodd-Frank Rules

By Silla Brush and Dave Michaels
February 2, 2015, Bloomberg

President Barack Obama is making a renewed push to boost funding for Wall Street’s top cops after regulators said budget constraints were keeping them from enforcing rules put in place after the financial crisis.

The funding requests for fiscal 2016, released by the White House Monday as part of a broad spending proposal for the federal government, would raise the Securities and Exchange Commission’s budget 15 percent to $1.7 billion. The Commodity Futures Trading Commission, the main U.S. regulator of the $700 trillion global swaps market, would get a 29 percent increase to $322 million.

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