The SEC charged a former $1 billion hedge fund advisory firm and two executives with misrepresenting the safety and liquidity of the investments made by the hedge funds, and charging excessive fees to the funds based on the fraudulently inflated values of the investments. According to the press release, this is the seventh case arising from the SEC's Aberrational Performance Inquiry that uses proprietary risk analytics to identify hedge funds with suspicious returns. (In other words, the SEC looks for funds whose performance is too high to be true or, as in the case of Madoff, too consistent

SEC Commissioner Luis A. Aguilar delivered a speech in which he expressed support for the proposal as seeking to achieve four broad goals. These goals are as set out below: The rules would augment the financial stability of nonbank security-based swap dealers and nonbank major security-based swap participants by setting minimum capital requirements for these entities, and by imposing minimum liquidity requirements on those dealers that calculate net capital using models. The rules seek to prevent the build-up of large, AIG-style, uncollateralized exposures in uncleared security-based swaps by

ICE Futures U.S. announced that, effective October 17, the Exchange is implementing rule amendments which formally establish a new member category for participants with a direct connection to the electronic trading system. Such participants are identified as "Direct Access Members." Such firms do not own any interest in the exchange; however, they are eligible for lower margin requirements. In connection with the codification of Direct Access Members, the Exchange has also defined Clearing Member obligations with respect to such Members and to other customers. View exchange notice here (links

SEC Chief Economist and Director Craig M. Lewis delivered a speech about economic analysis in support of Commission rulemakings. Lewis paid particular attention to the role of economists from the Division of Risk, Strategy, and Financial Innovation ("RSFI"), and the recently issued guidance on economic analysis. In his speech, Lewis provided an overview of the major topics within The Guidance (i.e., a document providing a high-level approach to economic analysis, drawing on concepts from various sources, including guidance issued by the Office of Management and Budget, congressional