FSOC The Financial Stability Oversight Council published a report on steps that should be taken to implement § 619 of the Dodd-Frank Act, also known as the Volcker Rule. The section generally prohibits banking entities from engaging in proprietary trading and from investing in or sponsoring hedge funds and private equity funds. Among the report's recommendations to regulatory agencies are (1) requiring banking entities to sell or wind down impermissible trading desks; (2) requiring strong compliance and supervisory programs at banks to address concerns relating to the Volcker Rule; (3)

SEC Release (Enforcement) The SEC announced settled administrative actions against BNY Mellon and its institutional order desk manager, relating to the firm's failure to meet its duty of best execution to certain customers when it executed orders at "stale or inferior prices" in favor of orders entered by certain hedge fund customers. The release alleges a scheme in which the institutional order manager would use the "validated cross window" at a "Regional Exchange" to execute "not-held" orders of certain customers in a way that deprived them of best execution and benefited the hedge fund

SEC No-Action Letter In a letter to SIFMA, the SEC Division of Market Regulation extended, with modifications, relief previously granted under Exchange Act Rule 17a-8 for broker-dealers to rely upon registered investment advisers to perform some or all of its Customer Identification Program obligations. Among other things, the new letter allows a broker-dealer to rely on an adviser when such reliance is "reasonable under the circumstances." The letter specifies that reasonable reliance requires a BD to undertake "appropriate due diligence" commensurate with the adviser's anti-money laundering

SEC Release The SEC voted to propose Rule 15Fi-1 under the Exchange Act to require security-based swap dealers and major security-based swap participants to provide counterparties with a trade acknowledgment detailing information specific to the transaction. Among other things, the new rule specifies (1) when a counterparty must be provided with a trade acknowledgment; (2) written policies and procedures that must be in place and designed to obtain verification of the terms outlined in the trade acknowledgment; (3) which entity is responsible for providing a trade acknowledgment; (4) the

News Article According to a report from Bloomberg, the SEC is currently debating whether to make recommendations to Congress in its reports (due next week) on the regulation of brokers and advisers. The report also notes that the SEC is considering recommending that Congress enact legislation authorizing the SEC to designate a self-regulatory organization for investment advisers, and notes that SEC Chairman Mary Schapiro has recused herself from this question, due to her previous status as head of FINRA. Date January 14, 2011