Mercatus Scholar and former congressional staffer Hester Peirce published an article discussing a recent report by the U.S. Government Accountability Office ("GAO") on SEC information security controls. The GAO report identified a number of specific security weaknesses at the SEC. Lofchie Comment: One significant theme of Ms. Peirce's paper is that the SEC tends to be harder on private companies than it is on itself. Click here to view the commentary by Hester Peirce. See : GAO Report. Related news: GAO Report: SEC Needs to Improve Controls over Financial Systems and Data (April 17, 2014).

FINRA published in the Federal Register a proposed rule change to adopt FINRA Rule 2081 to prohibit member firms and associated persons from conditioning or seeking to condition the settlement of a dispute with a customer on, or to otherwise compensate the customer for, the customer's agreement to consent to, or not to oppose, the firm's or associated person's request to expunge such customer dispute information from the Central Registration Depository ("CRD"). Comments on the proposed rule should be submitted by May 14, 2014. Lofchie Comment: To a great extent, this rule proposal raises the

The MSRB announced the topics for discussion at its April 30 - May 2 Board of Directors Meeting. The matters to be discussed include the following: Duties of Municipal Advisors: the Board will review comments received on draft Rule G-42; Municipal Advisor Political Contributions: the Board will address a possible regulation on political contributions made by municipal advisors; Best Execution: the Board will review comments received on MSRB draft Rule G-18 ("Execution of Transactions"); Dealer Professional Qualifications: The Board will review qualification exams and continuing education

On April 22, 2014, a three-judge panel for the Second Circuit Court of Appeals heard oral arguments in United States v. Newman. The issue on appeal is whether, in order to convict a downstream tippee of insider trading, the government must prove that the recipient of material, nonpublic information knew that the insider who leaked the information received a personal benefit for doing so. In light of the tendency of the SEC and Department of Justice to bring charges against the downstream recipients of inside information, the Court's ruling could have significant consequences for the future of

The SEC Division of Corporation Finance updated its Compliance and Disclosure Interpretations ("C&DIs"). Specifically, the Division added: Question 110.01, to discuss communications made in reliance on Securities Act Rule 134 ("Communications Not Deemed a Prospectus"); Question 164.02, to discuss electronic communications relying on the exemption in Rule 165 ("Offers Made in Connection with a Business Combination Transaction"); and Question 232.15, to discuss free writing prospectuses distributed in reliance on Rule 433 ("Conditions to Permissible Post-Filing Free Writing Prospectuses"). See