The SEC brought charges against Edward S. Steffelin, the GSC employee who was in charge of the team responsible for selecting the portfolio for Squared. Steffelin permitted Magnetar to select and short collateral and reviewed and edited the term sheet and pitch book before those materials were provided to investors. The SEC’s complaint charges Steffelin with violations of Sections 17(a)(2) and (3) of the Securities Act and Section 206(2) of the Investment Advisers Act of 1940. Steffelin agreed to waive and release the Commission from all claims. View release in full here (links externally to

The CFTC is holding an open meeting on Thursday, November 29, 2012, at 11:00 a.m., to consider Clearing Requirement Determination under CEA Section 2(h). Click here for more information on the meeting.

The CFTC Division of Clearing and Risk issued a no-action letter under CFTC Rule 1.25 (Investment of Customer Funds). In the letter, the Division confirmed that it did not object to the FCM's entering into repurchase and reverse repurchase transactions (collectively, "repos") under CFTC Rule 1.25 where the counterparty to the repo is an SEC-registered clearing agency. Cross-Reference(s): CFTC Rule 1.25(d)(2) [Investment of Customer Funds] Lofchie Comment: Essentially, the no-action corrects what I assume was an inadvertent omission in Rule 1.25, which is the omission of registered clearing

The CFTC announced the filing and simultaneous settlement of charges against a registered FCM for failing to maintain sufficient funds in its customer segregation account for a period of three days, for failing to provide the CFTC timely notice of its under-segregation, and for related supervisory failures. The Order imposes a $700,000 civil monetary penalty and a cease and desist order on the firm, and requires the firm to undertake certain improvements to its internal controls to prevent future under-segregation violations and notification failures. View Order in full here (links externally

The SEC sanctioned two investment advisory firms for impeding examinations conducted by SEC staff. First, the investigation found that Evens Barthelemy and his New York-based firm Barthelemy Group LLC, misled SEC examiners by inflating the firm’s claimed assets under management (AUM) tenfold in an apparent attempt to show that the firm was eligible for SEC registration. Second, the SEC found that Seth Richard Freeman and his San Francisco-area firm, EM Capital, delayed nearly 18 months in producing books and records related to the firm’s mutual fund advisory business. Both firms agreed to