The new rule is consistent with the SEC's permitting general selling efforts in private placements, provided that the buyers are all determined to be accredited investors. By this action, the SEC is focusing less on process and more on the end result; ultimately, the test will be whether the disclosure is good.

It is a fundamental law of financial regulation that any regulation applied to equity securities eventually must be applied to all other asset classes. The only variable is the extent of the delay. This is not to say, as Commissioner Roisman observes, that the application of the equity rules is fundamentally good or bad in any particular situation - only that it is inevitable, at least on a big-picture level.

In the case of government securities, broker-dealers in those instruments…

Whether the baggage handler lost money on behalf of his clients was not noted in the enforcement release. Perhaps he made money on behalf of his clients. Perhaps he beat the market. The SEC's Order does not suggest that he stole from his clients. There might be a movie in this.

While the SEC's rulemaking largely sticks very closely to the existing broker-dealer framework, the SEC did make a good faith effort to tailor the application of its requirements to the scope of its authority. For example, the SEC did not impose heavy new financial reporting requirements on bank SBSDs, which makes sense as the SEC does not regulate the capital of these entities. Likewise, the SEC did not apply WORM record retention requirements as to the entities that will be newly…