The SEC announced that three former supervisory employees of a penalized company named in an enforcement action have agreed to settle charges stemming from the unregistered sales of billions of shares of penny stocks on behalf of a single customer. The SEC's orders found that the previous employees failed to make the requisite inquiry into the facts behind the sales despite prominent red flags associated with the sales. Associate Director of the SEC Division of Enforcement Scott W. Friestad stated that "these actions show the SEC's resolve in holding responsible individuals, including senior

Following an extended comment period, the SEC approved FINRA Rule 2241 governing equity research, and FINRA Rule 2242 governing debt research. New FINRA Rule 2241 incorporates NASD Rule 2711 ("Research Analysts and Research Reports") into the FINRA Rulebook with significant modifications, and amends NASD Rule 1050 ("Registration of Research Analysts") to create an exception from the research analyst qualification requirement. While FINRA's new equity research rules builds on the existing framework of NASD Rule 2711, the new Rule contains an over-arching requirement to adopt policies and

FINRA filed a proposed rule change with the SEC that would update cross-references to reflect the adoption of new consolidated rules regarding payments to unregistered persons. Se e: FINRA-Proposed Rule on Adopting Consolidated FINRA Rulebook.

CFTC Chair Timothy G. Massad offered a brief history of the reforms implemented in the derivatives markets and set out future priorities for the CFTC. He delivered his remarks in a keynote address before the District of Columbia Bar Association. Chair Massad recommended additional steps to be taken in the Dodd-Frank implementation process, including: (i) increasing clearinghouse resiliency; (ii) enhancing swap dealer oversight; (iii) reviewing possibilities for the swap dealer de minimis threshold ( i.e., should it stay at $8 billion notional, as it is set currently, or decline to $3 billion

The Office of Financial Research ("OFR") issued a brief concerning how "different shocks can result in banks engaging in transactions to maintain compliance with regulatory ratios and what the potential implications of such transactions could be on other banks through delegating."The potential shocks on bank regulatory ratios addressed in the OFR brief included credit, funding, liquidity, and collateral shocks. The OFR recommended to U.S. banking supervisors to improve supervisory stress tests by: (i) heightening prudential standards to strengthen the ability of the banking system to withstand