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HedgeCo.net (West Palm Beach) – The SEC announced several actions protecting against short sales and make more short sale information available to the public.
”Today’s actions demonstrate the Commission’s determination to address short selling abuses while at the same time increasing public disclosure of short selling activities that affect our markets” said SEC Chairman Mary Schapiro.
First, the Commission made permanent a rule, that seeks to reduce the potential for abusive ”naked” short selling in the securities market. The new rule, Rule 204, requires broker-dealers to promptly purchase or borrow securities to deliver on a short sale. The temporary rule, approved by the SEC in the fall of 2008, was set to expire on July 31.
Second, the Commission and its staff are working together with several self-regulatory organizations (SRO) to make short sale volume and transaction data available through the SRO Web sites. This effort will result in an increase over the amount of information presently required by another temporary rule, known as Temporary 10a-3T. That rule, which will expire on August 1, applies only to certain institutional money managers and does not require public disclosure.
Apart from these measures, the Commission is continuing to actively consider proposals on a short sale price test and circuit breaker restrictions.
Third, the Commission intends to hold a public roundtable on September 30 to discuss securities lending, pre-borrowing, and possible additional short sale disclosures. The roundtable will consider, among other topics, the potential impact of a program requiring short sellers to pre-borrow their securities, possibly on a pilot basis, and adding a short sale indicator to the tapes to which transactions are reported for exchange-listed securities.
Short selling often can play an important role, the SEC said, in the market for a variety of reasons, including contributing to efficient price discovery, mitigating market bubbles, increasing market liquidity, promoting capital formation, facilitating hedging and other risk management activities, and importantly, limiting upward market manipulations. There are, however, circumstances in which short selling can be used as a tool to manipulate the market.
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istockAnalyst.com – The Securities and Exchange Commission unanimously endorsed the proposal amid widening investigations of so-called pay-to-play donations by private equity and hedge fund executives who jockey for lucrative fees to manage some of the more than $2.2 trillion in assets held by public pension funds.
"The selection of investment advisers to manage public plans should be based on merit and the best interests of the plans and their beneficiaries, not the payment of kickbacks or political favors," SEC Chair Mary Schapiro says.
Florida Times-Union – CSX Corp.’s proxy fight with two hedge funds ended in September with four nominees from The Children’s Investment Fund Management LLP and 3G Capital Partners Ltd. winning election to CSX’s board.
But even though the fight is long over, it continues to be in the news.
Last week, Securities and Exchange Commission Chairwoman Mary Schapiro told a U.S. Senate subcommittee that the commission is considering new disclosure rules on equity swap arrangements. According to a Bloomberg News story, the SEC’s examination of equity swaps is a direct result of CSX’s battle with TCI and 3G.
West Palm Beach (HedgeCo.net) – SEC Chairman Mary Schapiro, speaking at the IOSCO 2009 Conference, said today that in light of the current economic crisis and in an attempt to restore confidence to investors, the US is currently examining how to best shape the future role that regulators as well as credit rating firms will play in the securities market.
“We need to constantly keep pace with the financial products and with the risks of how the products are packaged and sold,” she said. “Now is the time for securities regulators to prove ourselves and the capital markets around the world can flourish if we succeed.”
In her remarks, Schapiro listed the principles that should guide the decisions made by worldwide securities regulators, including protection of investors, ensuring that markets are always fair, efficient and transparent and protection of systemic risk. She also noted that corporations must address the issue of executive pay and said that the elimination of excessive compensation to executives will ultimately lead to long-term corporate health.
Schapiro’s remarks came as part of a panel discussion focused on improving the role of securities regulators in a changing global financial system. The panel was moderated by Mr. Hans Hoogervorst, Chairman, Authority for the Financial Markets, Netherlands and included Mr. Janichi Maruyama, Deputy Commissioner for International Affairs, Financial Services Agency , Japan; Prof. John C. Coffee, Adolf A. Berle Professor of Law, Columbia University Law School and Mr. William J. Brodsky, Chairman, World Federation of Exchanges; Chairman and CEO, Chicago Board Options Exchange.
The conference was hosted in Tel Aviv by the Israel Securities Authority (ISA) and the Tel Aviv Stock Exchange (TASE).
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West Palm Beach (HedgeCo.net) – The organizing committee of The International Organization of Securities Commissions (IOSCO) is to host more than 500 of the leading securities regulators and economic experts from more than 65 countries at this year’s conference in Tel Aviv, Israel, June 8-11.
"We are honored to host the world’s leading regulatory experts, from Albania to Zambia, in Israel for this important event," said Spokeswoman Yael Almog. "Israel ’s sophisticated local market regulation and high levels of investor protection make it a great setting for this historical event. We believe that IOSCO 2009 will not only help restore strength in the world’s regulatory system, but more importantly, it will foster renewed confidence among the international investment community."
Conference participants include SEC Chairwoman Mary Schapiro, Goldman Sachs CEO Lloyd Blankfein, S&P President Deven Sharma and UK FSA Chairman Lord Adair Turner and Mario Draghi, Governor of Banca d’talia and Chairman of the Financial Stability Forum.
The conference provides the opportunity, IOSCO said, for regulators from both emerging and developed markets to address the global effects of the financial crisis on the financial and securities system and the stability of the world economy. In addition, it will emphasize the role emerging markets will play in the global recovery process and will outline the need and importance for new partnerships between developed and developing markets.
The conference will be hosted by the Israel Securities Authority (ISA) and the Tel Aviv Stock Exchange (TASE).
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West Palm Beach (HedgeCo.net) – The SEC has proposed rule amendments to substantially increase protections for investors who entrust their money to investment advisers, hedge funds and FoHF’s.
The SEC is seeking public comment on the proposed measures, which are intended to ensure that investment advisers who have “custody” of clients’ funds and securities are handling those assets properly, investment law firm, Pillsbury Winthrop Shaw Pittman LLP, said.
“These new safeguards are designed to decrease the likelihood that an investment adviser could misappropriate a client’s assets and go undetected,” SEC Chairman Mary Schapiro said, “That’s because an independent public accountant will be looking over their shoulder on at least an annual basis.”
The additional safeguards proposed by the SEC include a yearly “surprise exam” of investment advisers performed by an independent public accountant to verify client assets. In addition, when an adviser or an affiliate directly holds client assets, a custody control review would have to be conducted by a PCAOB-registered and inspected accountant.
The SEC’s proposed rule amendments, if adopted, would promote independent custody and enable independent public accountants to act as third-party monitors.
Public comments on today’s proposed rule amendments must be received by the Commission within 60 days after their publication in the Federal Register. The full text of the proposed rule amendments will be posted to the SEC Web site soon, the law firm said.
Alex Akesson
Editor for HedgeCo.Net Email: alex@hedgeco.net
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Guardian Unlimited – The U.S. Securities and Exchange Commission needs authority to require hedge fund advisers to register with the agency plus the power to examine funds’ books, the agency’s chairman said on Tuesday.
U.S. lawmakers are working to give the SEC the power to require hedge fund managers to register with the agency after a federal court overturned the SEC’s previous effort to oversee the $1.3 trillion industry.
Speaking at the Reuters Global Financial Regulation Summit in Washington, SEC Chairman Mary Schapiro said registration without any further authority "would not be sufficient."
Reuters – U.S. securities regulators have about 150 active hedge fund investigations and more than 50 probes involving credit default swaps and other derivatives, Securities and Exchange Commission Chairman Mary Schapiro said on Monday.
The SEC also has about two dozen active municipal securities investigations, possibly involving arbitrage-driven fraud, public corruption and price transparency, Schapiro told a conference of business journalists in Denver.
New York (HedgeCo.Net) – President Obama met with Federal Reserve Chairman Ben Bernanke and Treasury Secretary Timothy Geithner on Friday, after which he told reporters there are “glimmers of hope across the economy.”
The meeting, which was also attended by Sheila Bair from the Federal Deposit Insurance Corp. and Mary Schapiro, head of the Securities and Exchange Commission, focused on topics like home-owner refinancing, stabilizing the banks, increasing jobs, and the new “stress tests” being administered to companies by the government.
The test are being conducted on the 19 largest U.S. banks to see whether they would hold up or crumble amidst worsening economic conditions. The results are expected to be released the end of this month. Banks that do not fare so well may get additional taxpayer funded assistance.
“We have always been very cautious about prognosticating, and that’s not going to change,” the President told reporters after the meeting.
Obama pointed to several reasons why he felt the economy is showing signs of hope, mainly the nearly $800 billion stimulus package plus an increase in loans to small business owners and more options of homeowner refinancing. He added that the administration will be unveiling additional programs over the next several weeks, though he didn’t get into details.
“We’re starting to see progress, and if we stick with it, if we don’t flinch in the face of difficulties, then I feel absolutely convinced that we’re going to get this economy back on track.”
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
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New York (HedgeCo.Net) – SEC Commissioner Luis Aguilar said his agency should be given the authority to regulate hedge funds after urging Congress “to close the glaring loopholes in securities regulation.”
Aguilar, one of the agency’s five commissioners, is among many who are calling for greater oversight in an industry that has been ravaged by turmoil and most recently, fraud.
The SEC has been accused of lax regulation after a tumultuous year where many financial institutions imploded. That belief was further fueled after the string of recent fraud cases involving intricate Ponzi schemes, incling the Bernard Madoff scandal that swindled billions out of investors. Even since his infamous arrest, there have been a handful of cases that have surfaced, leaving a wake of angry investors with their fingers pointed to the SEC.
Mary Schapiro, who Barack Obama appointed as head of the SEC, has come out in favor of a mandatory registration by hedge funds, although she has not vocalized any wrong doing by the agency in recent months.
“Currently, the SEC is prohibited from exerting jurisdiction over particular financial instruments that seem to fall squarely within the agency’s mission,” Aguilar said, while stating his belief that the merging of the SEC with the Commodity Futures Trading Commission would remedy the situation of who regulates what.
Julie Scuderi Senior Editor for HedgeCo.Net Email: julie@hedgeco.net
New York (HedgeCo.Net) – Mary Schapiro, who most recently was the CEO for the Financial Industry Regulatory Authority, is now the head of the Securities and Exchange Commission. The Senate approved Schapiro yesterday, a month after being nominated President Barack Obama.
Schapiro takes over the SEC at a crucial time, when the agency along with former head Christopher Cox received an abundance of bad press over lax regulation in a faltering economy.
In a year where hedge funds have taken a beating and some of the world’s most reputable financial institutions have come crumbling down, all eyes are on the SEC as to how and why they could not prevent or foresee disaster.
Even as more light is shed on the Bernard Madoff debacle after losses amounting to over $50 billion, questions still arise as to how the agency could have missed the pink elephant in the room. Schapiro, who has taken flak for clearing Madoff from fraud, says that the broker dealer watchdog did not have the jurisdiction to investigate his investment advisory business.
Many are suprised at the appointment of Schapiro simply because she has been a staple in government regulation agencies since the Reagan era. Some argue that this will not provide the "change" we need, especially since Schapiro was at the center of an agency that many feel is corrupt, or at the least, too forgiving.
