In a speech before the ALI CLE 2014 Conference on Life Insurance Company Products, SEC Division of Investment Management (the "Division") Director Norm Champ discussed a number of issues being addressed currently by the Division, paying particular attention to variable products and the use of derivatives by mutual funds. Mr. Champ began by discussing market changes in the variable products space. In particular, he indicated concerns over the suitability and disclosure of new features in variable annuities and the use of derivatives to hedge risks associated with living benefits. More generally

The Government Accountability Office ("GAO") issued a report detailing the results of its audits of the financial statements of the SEC and its Investor Protection Fund ("IPF") for fiscal years 2013 and 2014. The report found, among other things, that: the SEC and IPF's financial statements were presented fairly and in accordance with U.S. generally accepted accounting principles; the SEC maintained effective internal control over financial reporting for the SEC and IPF as of September 30, 2014; and the GAO found no reportable noncompliance in fiscal year 2014 with provisions of applicable

FINRA and the MSRB issued separate Regulatory Notices requesting comments on companion rule proposals that would require firms to disclose additional information on customer confirmations for transactions in fixed income securities. Although the proposals are similar, FINRA and the MSRB seek input on factors that are unique to the corporate and municipal bond markets, respectively. Although they differ in terms of details, the proposals have similar broad policy aims. Both proposals would require firms to disclose, in confirmations for "retail-size" transactions with customers, the price of

FINRA issued a Regulatory Notice requesting comments on two proposals intended to increase transparency in the equity markets. The first proposal would amend the Order Audit Trail System ("OATS") rules to require member firms to identify nonmember broker-dealers when reporting orders received from such entities. FINRA says that such disclosures would, among other things, allow it to (i) "more readily detect potentially violative trading activity" by such nonmembers and (ii) more effectively determine whether members are complying with regulatory obligations, including Exchange Act Rule 15c3-5

SEC Commissioner Kara M. Stein delivered remarks at the "Live from the SEC" Conference, discussing the global perspective of capital formation, crowdfunding, and the Global Legal Entity Identifier ("LEI") initiative. Commissioner Stein explained that capital formation opportunities come in all "shapes and sizes" and encouraged the SEC to "construct a sensible and well-integrated path in which each step provides strong footing for the next." She stated her concern that the "patchwork quilt" of rules and exemptions has become overly complex and exposes investors to a range of risks. Commissioner