The CFTC is adopting final regulations to implement the exception to the clearing requirement available to swap counterparties meeting certain conditions under Section 2(h)(7) of the Commodity Exchange Act, as amended by the Dodd-Frank Act. (There is attached the Federal Register version of the rule.) Firms that are implementing Title VII compliance procedures should update them to take account of the final version of the clearing exception. Effective Date: September 17, 2012 (Note that the effective date will not be meaningful but will depend on when other rules and requirements come into

The CFTC announced today that LMC Asset Management violated new Forex registration procedures stemming from the Dodd Frank Act. The result of the violation was a cease and desist order of all trading activity until a $140,000 civil penalty is paid. LMC exercised discretionary trading authority over accounts of individuals that were not eligible contract participants. View press release in full here(links externally to CFTC website).

An SEC investigation found brothers Jeffery A. Wolfson and Robert A. Wolfson made illegal naked short sales from July 2006 to July 2007. SEC rules require short sellers to locate shares to borrow before selling them short, and they must purchase securities to close out their failures to deliver by a specified date, both of which the brothers failed to do. The brothers have settled, without admitting or denying the findings, agreeing to pay $14.5 million, which includes the $9.5 million in profits from the naked short sales and additional fines and penalties. For a discussion of short selling

SIFMA released a legal memo addressing the legal problems of using eminent domain to acquire mortgage loans. The proposal to use eminent domain for this purpose is under consideration by the County of San Bernardino in California. View release in full here(links externally to SIFMA website).

A special SRO Committee has proposed additional requirements to the SRO rules and regulatory practices designed to strengthen safeguards for customer segregated and secured funds held at FCMs. The additional requirements would begin the process of confirming the balances of customer segregated bank accounts for all FCMs using a web-based electronic confirmation process and will develop rules to require all FCMs to provide their DSRO with direct online access to confirm segregated and secured funds balances at banks which hold the funds.