Federal prosecutors have filed charges against former JPMorgan employees Javier Martin-Artajo and Julien Grout for allegedly acting to conceal losses in a credit derivatives trading portfolio. Prosecutors allege that, in March 2012, Martin-Artajo specifically instructed Grout and head trader, Bruno Iksil, not to report losses unless they were tied to some identifiable market event in order to avoid their being attributed to market volatility. See: SEC Complaint. See also: SEC Press Release; DOJ Press Release.

The Cayman Islands government announced on August 13 that it had concluded negotiations with the United States on a Model 1 intergovernmental agreement ("IGA") and on a new tax information exchange agreement ("TIEA"). Both governments initialed the agreements, which they indicated will be officially signed as soon as possible. The texts of the IGA and the TIEA will be released only after the agreements are signed. The Model 1 IGA provides that Cayman Islands financial institutions will report information, with respect to financial accounts and entities substantially owned directly or

The SEC Division of Investment Management has issued a guidance update on certain disclosure and compliance matters relevant to SEC-registered investment companies ("RICs") that trade commodity interests. The SEC staff's guidance was issued more or less in conjunction with the CFTC's new rules regulating RICs that invest in commodity interests (as covered in a separate news story). The guidance is intended to assist those funds in preparing disclosure filings and in their consideration of compliance issues. The guidance update covered the following areas: Disclosure of Derivatives and

SIFMA, the Futures Industry Association ("FIA"), and the Financial Services Roundtable ("FSR") have submitted comments to the CFTC on the Exemptive Order and the Interpretive Guidance and Policy Statement regarding the regulation of swaps having some cross-border element. The comments address (i) the lack of an appropriate time period to comply, including certain requirements being effective immediately, making it impossible to comply, (ii) the complexity of the guidance and (iii) the lack of clarity in the guidance. Lofchie Comment: The numerous problems pointed out by the comment letter

CFTC Commissioner Scott O'Malia released a dissenting statement regarding the request by the CFTC Division of Enforcement ("DOE") for the authority to authorize an investigation without the approval of the Commission. Commissioner O'Malia stated that he supports a robust investigation procedure, but objected to waving the Commission's power to authorize an investigation in a post-Dodd-Frank environment. The Commissioner stated his concern that, if the power of investigation is delegated to DOE staff, the Commission will be unaware of the full ramifications of the new untested laws. Furthermore