• The Anti-Bankers' Banker.

On November 18th, the Los Angeles Times reported on Amalgamated Bank, the labor union-owned bank where Occupy Wall Street has opened an account. OWS' Banker.

• Commercial Mortgage Backed Security Spawns New Verb.

On November 17th, New York Times columnist Floyd Norris noted the creation of a new verb: to be Boscoved, defined as suffering more than a 100 percent loss on a loan, a phenomena which recently occurred with respect to a commercial mortgage backed security involving regional department store chain Boscov's. Boscoved.

• Volcker Rule Comments.

On November 16th, Reuters reported that 17 House Democrats criticized the proposed rules implementing the "Volcker Rule," the Dodd-Frank Act's prohibition against proprietary trading by FDIC-insured banks, firms with access to the Federal Reserve's discount window, and systemically important firms. The members of Congress believe that loopholes in the proposal undermine the rule's purpose. Democrats. Bloomberg published the comments of Frank Keating, President of the American Bankers Association. Keating noted that the proposed rule would make it difficult for banks to invest in start-ups and to participate in local business development funds. Investments.

• Fannie Mae and Freddie Mac Minimizing Put-Back Risk for HARP Participants.

On November 15th, Reuters reported that Fannie Mae and Freddie Mac will not enforce the underwriting representations and warranties made by lenders participating in the Home Affordable Refinance Program. Put-Back Risk.

• Fright Simulator.

On November 12th, The Economist discussed what happened when it simulated the collapse of a systemically important financial institution and its "resolution" under the Dodd-Frank Rules. Simulation.

• Congresses Raises FHA Limits.

On November 17th, Bloomberg reported that the House and Senate have passed a bill raising the size of mortgages that can be backed by the Federal Housing Administration to $729,750. Limits.

• Bill Would Require Shell Companies to Disclose Information.

On November 17th, Reuters reported that a new bill has been introduced in the House that would require shell companies and limited liability partnerships to provide names and contact information. Shell Companies.

• House Subcommittee Passes Bills.

On November 15th, the House Capital Markets Subcommittee:

• Passed H.R. 2586, the "Swap Execution Facility Clarification Act," which would prohibit the CFTC and SEC from requiring that a security-based swap execution facility have certain functionalities.

• Passed H.R. 2779, which would exempt inter-affiliate swaps from certain regulatory requirements established by the Dodd-Frank Act.

• Passed H.R. 3045, the "Retirement Income Protection Act of 2011," which would allow pension plans to use swaps.

• Passed H.R. 1838, which would repeal a provision of the Dodd-Frank Act prohibiting a Federal bailout of swap dealers or participants.

• Passed H.R. 2308, the "SEC Regulatory Accountability Act," which would require the SEC, before promulgating a regulation or issuing any order, to: (i) identify the nature and significance of the problem that the proposed regulation is designed to address in order to assess whether any new regulation is warranted; (ii) use the Office of the Chief Economist to assess the costs and benefits of the intended regulation and adopt it only on a determination that its benefits justify the costs; and (iii) ensure that any regulation is accessible, consistent, written in plain language, and easy to understand.

• Congressional Ethics.

On November 14th, the Los Angeles Times put recent reports by CBS and Newsweek concerning alleged insider trading by members of Congress in perspective, noting that Congressional stock trading has never been considered a pecuniary interest because each member only has a limited ability to influence any given vote. The real ethical issues are broader than stock trades. Congressional Ethics. On November 17th, Reuters reported that the House Financial Services Committee will hold hearings on December 6, 2011, on the Stop Trading on Congressional Knowledge (STOCK) Act of 2011, which would prohibit members of Congress, their staffs and members of the executive branch from engaging in insider trading. Hearing.

• Agencies Issue Supervisory Statement Concerning Supervisory and Enforcement Responsibilities.

On November 17th, the Federal Reserve Board, Consumer Financial Protection Bureau, FDIC, National Credit Union Administration, and OCC issued a supervisory statement explaining how the total assets of an insured bank, thrift or credit union will be measured for purposes of determining supervisory and enforcement responsibilities under the Dodd-Frank Act. The supervisory statement addresses two key matters: the measure to be used to determine asset size and the schedule for making such determinations. Joint Press Release.

• OCC Issues Cost of Funds Reports.

On November 15th, the OCC issued the monthly Cost of Funds reports (current and historical), which provide information about funding costs, as of September 30, 2011, for institutions formerly regulated by the Office of Thrift Supervision (OTS). OCC Press Release.

• OCC Bulletin on the Volcker Rule.

On November 14th, the OCC issued a Bulletin on the Dodd-Frank Act's provisions prohibiting proprietary trading by FDIC-institutions and financial firms with access to the Federal Reserve Board's discount window.

• OCC Alerts.

The OCC issued alerts regarding a fraudulent bank "comfort letter" purportedly issued by PNC Bank; a masquerading website which installs malware; and counterfeit cashier's checks purportedly issued by Metropolitan National Bank.

• CFPB Requests Comments Regarding the Student Loan Market.

On November 16th, the Consumer Financial Protection Bureau ("CFPB") requested comments from students, schools, industry, and other stakeholders on the private student loan market. The CFPB published a Notice and Request for Information to collect data on a series of issues affecting private student loans from origination to servicing to collection. Comments should be submitted within 60 days after publication in the Federal Register, which is expected during the week of November 21st. CFPB Press Release.

• FinCEN Advisories.

On November 15th, the Financial Crimes Enforcement Network ("FinCEN") issued two advisories regarding the money laundering and financing of terrorism risks associated with jurisdictions identified by the Financial Action Task Force on October 28, 2011, as having strategic deficiencies in their anti-money laundering and counter-terrorist financing regimes. FIN-2011-A014 discusses the risks posed by Algeria; Angola; Antigua and Barbuda; Argentina; Bangladesh; Brunei Darussalam; Cambodia; Ecuador; Ghana; Honduras; Kyrgyzstan; Indonesia; Mongolia; Morocco; Namibia; Nepal; Nicaragua; Pakistan; Paraguay; Philippines; Sudan; Tajikistan; Tanzania; Thailand; Trinidad and Tobago; Turkmenistan Venezuela; Vietnam; Yemen; and Zimbabwe; and the substantial improvements in Ukraine. FIN-2011-A015 discusses countermeasures related to Iran and the Democratic People's Republic of Korea; and enhanced due diligence regarding Cuba; Bolivia; Ethiopia; Kenya; Myanmar; Nigeria; Sao Tome and Principe; Sri Lanka; Syria; and Turkey.

• FinCEN Developing AML Program for Investment Advisers.

On November 15th, FinCEN Director James H. Freis Jr. discussed his agency's recent anti-money laundering and counter-terrorist financing ("AML/CFT") efforts. Among other things, FinCEN is working with the SEC to develop an AML and suspicious activity reporting program for investment advisers. Freis Remarks.

• Commissioner O'Malia Calls for Greater Supervision over Customer Accounts.

On November 16th, CFTC Commissioner Scott O'Malia urged futures commission merchants ("FCMs") to engage third-parties to verify that the FCMs have properly segregated customer funds. He also believes that FCMs should report their segregation balances on a daily basis and that the CFTC and self-regulatory organizations should conduct random spot checks to verify those reports. O'Malia further urged greater disclosure of FCM risk profiles. O'Malia Statement.

• No-Action Relief Granted with Respect to Reporting NGX Swap Positions.

On November 16th, the Division of Market Oversight issued a letter granting no-action relief to the Natural Gas Exchange Inc. ("NGX") and its clearing members in connection with the reporting requirements of new part 20 of the Commission's regulations. Pursuant to the relief, NGX can itself submit the information required of its clearing members for all cleared positions, in fulfillment of the clearing members' reporting requirements with respect to cleared positions under regulations 20.4 and 20.5(a). In addition, pursuant to this relief certain NGX clearing members will not be required to report their uncleared positions. CFTC Letter No. 11-08.

• Order Extending Temporary Conditional Exemption for NRSROs from Securities and Exchange Act Rule 17g-5(a)(3).

On November 16th, the SEC extended to December 2, 2012, its conditional exemption providing that nationally recognized statistical rating organizations ("NRSROs") are not required to comply with Securities and Exchange Act Rule 17g-5(a)(3) with respect to credit ratings of certain structured finance products, where the issuer of the structured finance product is a non-U.S. person, the NRSRO has a reasonable basis to conclude that the structured finance product will be offered and sold upon issuance, and that any arranger linked to the structured finance product will effect transactions of the structured finance product after issuance only in transactions that occur outside the U.S. SEC Release No. 34-65765.

• Office of the Ethics Counsel.

On November 14th, the SEC amended its rules to reflect that its Office of the Ethics Counsel is now a stand-alone Office and that the head of the Office, the Ethics Counsel, reports directly to the SEC Chairman. The new reporting line is effective November 18, 2011. SEC Release No. 34-65742.

• SEC's Forum on Small Business Capital Formation.

On November 18th, the Wall Street Journal summarized the comments made at the SEC's forum on small business capital formation. Forum.

• Inspector General Clears Enforcement Director of Allegations.

On November 18th, NASDAQ reported that the SEC Inspector General has found that SEC Enforcement Division Director Robert Khuzami did not act inappropriately when he refrained from authorizing the prosecution of former Citigroup executives in 2010. Exoneration.

• SEC Directors Testify on the SEC's Management and Structural Reform.

On November 16th, five Directors of the SEC's Divisions and Offices, along with the SEC's Chief Economist, testified before a Senate banking subcommittee. In their prepared statement, the Directors focused on the resource gap between what the agency needs to fulfill its Congressional mandate, and what it has actually received in appropriations. Prepared Statement.

• Inspector General Reports on Enforcement Division's Document Destruction Policy.

On November 14th, the SEC's Office of Inspector General ("OIG") released its report on allegations that the SEC's Enforcement Division had improperly destroyed records relating to Matters Under Inquiry ("MUIs") over the past two decades. The report also addressed allegations that the SEC made misleading statements in an August 27, 2010 response to a July 29, 2010 letter from the National Archives and Records Administration ("NARA") concerning the SEC's potential unauthorized destruction of MUI records. While the OIG did not find evidence that the individuals who were responsible for preparing the response to NARA intentionally made materially false statements in that response, it did find that certain senior Enforcement Division officials should have drafted a response to NARA that was more forthcoming, in light of the information that was available to them at the time. It also recommended that the Division of Enforcement: (i) determine what federal records from closed MUIs are retrievable, and ensure that any such federal records are retained in the same manner that investigative records are retained; (ii) work with the SEC's Office of Records Management Services and NARA to determine which MUI and investigative records are legally required to be retained; (iii) determine if there are additional federal records that, while not legally required to be retained, should be retained; and (iv) review its guidance, including as it relates to automatically generated e-mails, to ensure that all guidance is consistent with the Enforcement Division's federal record retention legal obligations.

• Liquidity Payment Programs.

On November 16th, Bloomberg summarized testimony before a House subcommittee concerning small business development. NYSE Euronext proposes that small issuers be allowed to pay brokers to make a market in their securities. Various exchanges intend to submit proposals to the SEC on liquidity payment programs. Liquidity Payment Programs.

• FINRA and Ontario Securities Commission Sign Cooperation Agreement.

On November 18th, the Financial Industry Regulatory Authority and the Ontario Securities Commission announced that they have entered into a Memorandum of Understanding that will facilitate the exchange of information with respect to regulated entities that operate across the U.S.-Canadian border. Joint Press Release.

• Proposed Interpretive Guidance on the Application of Rule G-17.

On November 15th, the SEC provided notice of the Municipal Securities Rulemaking Board's filing of proposed interpretive guidance addressing how MSRB Rule G-17 applies to dealers in municipal securities. The proposed guidance addresses the duties of underwriters to municipal entity issuers of municipal securities ("issuers"). It would not address the duties of underwriters to obligated persons. The guidance would not apply to selling group members and, unless otherwise specified, the guidance would apply only to negotiated underwritings and not to competitive underwritings. Comments should be submitted within 10 days after publication in the Federal Register, which is expected during the week of November 21st. SEC Release No. 34-65749.

• NYSE and NYSE Amex Propose Codifying Certain Traditional Trading Floor Functions That May Be Performed by DMMs.

On November 10th, the SEC provided notice of individually proposed amendments by NYSE Amex and the New York Stock Exchange to their respective Rules 104 to codify certain traditional Trading Floor functions that may be performed by Designated Market Makers ("DMMs"), to make each exchange's systems available to DMMs and provide DMMs with certain market information, to amend each exchange's rules governing the ability of DMMs to provide market information to Floor brokers, and to make conforming amendments to other rules. Comments should be submitted on or before December 8, 2011.

• Identities of Confidential Informants Not Protected Work Product.

On November 15th, a Federal District Court held that the identity of confidential informants ("CIs") cannot be withheld as attorney work product. Defendants in a securities fraud case moved to compel the plaintiffs to name the CIs whose statements form the basis of plaintiffs' complaint. Granting the motion, the Court held that the CIs' names are not protected as attorney work product. The question of whether any of the CIs' identities should be protected because they may face retaliation will be determined on a case-by-case basis. Plumbers and Pipefitters Local Union No. 630 Pension-Annuity Trust Fund v. Arbitron, Inc.

• Court Affirms the Dismissal of ARS Case.

On November 14th, the U.S. Court of Appeals for the Second Circuit affirmed the dismissal of an auction rate securities ("ARS") fraud case against Merrill Lynch. Purchasers of ARS brought a purported class action against Merrill, alleging a scheme by Merrill to manipulate the ARS market through the practice of support bidding (in which Merrill used its own capital to place bids to prevent auction failures, thereby allegedly affecting price and apparent liquidity). Affirming dismissal, the Court held that Merrill's disclosures on its website and in the prospectus were sufficient and precluded the claim. The SEC had submitted an amicus brief arguing that the disclosures were inadequate. Wilson v. Merrill Lynch & Co.

• SEC Announces Tighter Listing Standards for Companies Seeking to Enter the U.S. Market Through Reverse Mergers.

On November 9, 2011, the U.S. Securities and Exchange Commission approved tougher listing standards for companies using reverse mergers to list on the major U.S. exchanges. Briefing.

• Adkins to Discuss Fraud and Money Laundering in Banking & Finance.

Litigation partner Robb Adkins, based in Winston & Strawn's San Francisco and Los Angeles offices, will present "Fraud and Money Laundering in Banking & Finance" as part of the Knowledge Congress Webcast Series on December 6, 2011. Event.

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