• Fed Gives Banks Two Years to Implement Volcker Rule.

On April 19th, the Federal Reserve Board clarified that banks will get the full two-year period provided by the Dodd-Frank Act to comply with the Volcker Rule. The joint release with the OCC, FDIC, SEC and CFTC makes clear that the banks won't be held accountable for compliance with a not-yet-final rule. Bloomberg discussed the history of the controversial rule and opinions of various stakeholders. Dealbook provided a primer on what the banks can expect going forward, as well as the effects already realized.

• International Regulators Issue Reports on Financial Market Infrastructure.

On April 16th, the SEC announced that the Committee on Payment and Settlement Systems ("CPSS") and the Technical Committee of the International Organization of Securities Commissions ("IOSCO") have published the final report on the Principles for Financial Market Infrastructures. The report updates, harmonizes, and strengthens the risk management and related standards applicable to financial market infrastructures ("FMIs"), including systemically important payment systems, central securities depositories, securities settlement systems, central counterparties, and trade repositories. CPSS and IOSCO also released for comment the Disclosure Framework for Financial Market Infrastructures ("Disclosure Framework") and the Assessment Methodology for the Principles for FMIs and the Responsibilities of Authorities ("Assessment Methodology"). The Disclosure Framework outlines basic information that FMIs should disclose to increase transparency of their governance, risk management, and operations in order to inform participants, authorities, and the public and to facilitate comparisons across FMIs. The Assessment Methodology provides guidance for assessing and monitoring observance of the principles. It is primarily intended for external assessors at the international level. It also provides a baseline for national authorities to assess FMIs under their oversight or supervision. Comments on either the Disclosure Framework of the Assessment Methodology should be submitted on or before June 15, 2012. SEC Press Release.

• Is Your Spider Sense Tingling?

If so, it could be because 2011 saw an all-time high in reported financial fraud. According to The Daily Caller, 2011 brought the highest recorded level of reported financial crime, including allegations of money laundering, consumer loan fraud, debit card fraud, mortgage fraud, and casino fraud. Fraud.

• Federal Reserve Confirms Two-Year Extension on Compliance with Volcker Rule.

On April 19th, the Federal Reserve Board announced its approval of a statement clarifying that an entity covered by section 619 of the Dodd-Frank Wall Street Reform and Consumer Protection Act, or the so-called Volcker Rule, has the full two-year period provided by the statute to fully conform its activities and investments. The Board's conformance rule provides entities covered by section 619 of the Dodd-Frank Act a period of two years after the statutory effective date, which would be until July 21, 2014, to fully conform their activities and investments to the requirements of section 619 of the Dodd-Frank Act and any implementing rules adopted in final under that section. The FRB, the OCC, the FDIC, the SEC, and the CFTC plan to administer their oversight of banking entities under their respective jurisdictions in accordance with the FRB's conformance rule. Joint Press Release.

• FDIC Advisory Committee to Discuss Model Safe Accounts Pilot Program Results and Consider Mobile Financial Services Opportunities.

The Federal Deposit Insurance Corporation (FDIC) Advisory Committee on Economic Inclusion (ComE-IN) announced a public meeting on Thursday, April 26, 2012, to discuss the results of its Model Safe Accounts Pilot program; opportunities for banks offering mobile financial services to meet the needs of unbanked and underbanked consumers; and differences in consumer protections for debit, credit, and prepaid cards. FDIC Press Release.

• Thomas M. Hoenig and Jeremiah O. Norton Join FDIC Board.

Thomas M. Hoenig and Jeremiah O. Norton were sworn in on April 16th as members of the Board of Directors of the Federal Deposit Insurance Corporation (FDIC). Prior to joining the FDIC's board, Mr. Hoenig was the president of the Federal Reserve Bank of Kansas City and a member of the Federal Reserve System's Federal Open Market Committee. Jeremiah O. Norton joins the Board after serving as an executive director at J.P. Morgan Securities in New York. He was in government for a number of years before that, most recently as the deputy assistant secretary for financial institutions policy at the U.S. Treasury Department. FDIC Press Release.

• FDIC Issues Guidance on CFPB Bulletin 2012-02 - Compensation to Lenders Under Regulation Z.

The FDIC has issued guidance for FDIC-supervised financial institutions that engage in mortgage loan origination, including supervisory expectations. Financial Institution Letter.

• Short-Term Investment Funds - Notice of Proposed Rulemaking.

• operate with a primary objective of a stable net asset value (NAV) of $1.00 per participating interest;

• have a dollar-weighted average portfolio maturity of 60 days (revised down from 90 days);

• have a dollar-weighted average portfolio life maturity of 120 days;

• adopt (1) portfolio and issuer qualitative standards and concentration restrictions and (2) standards to address contingency funding needs;

• adopt shadow pricing procedures--one that reflects the value of a fund's assets at amortized cost and another that reflects the market value of the fund's assets--and calculate the difference at least on a weekly basis;

• adopt procedures for stress testing the STIF's ability to maintain a stable NAV and report adverse stress testing results to the managing bank's senior risk management;

• provide a monthly disclosure to STIF plan participants and the OCC;

• adopt procedures that require a bank that administers a STIF to notify the OCC prior to or within one business day after the occurrence of one or more of six specific events;

• use mark-to-market value accounting, instead of amortized cost accounting, if the market value of the portfolio falls below a NAV of $0.995 per participating interest; and

• adopt procedures to take certain actions if a bank suspends or limits withdrawals and initiates liquidation of the STIF as a result of redemptions.

• SAFE Act Examination Procedures.

On April 16th, the OCC announced issuance of interagency OCC Bulletin 2012-11 covering the examination procedures for the Secure and Fair Enforcement for Mortgage Licensing Act of 2008 (SAFE Act).

• In India, Geithner Asks Finance Minister for Reassurance.

On April 20th, Secretary Geithner asked India Finance Minister Pranab Mukherjee about proposed Indian tax measures that might affect foreign investment in India. Some U.S. trade groups are concerned that proposed changes may harm investors. Taxes.

• Geithner Warns Lawmakers Not to Roll Back Dodd-Frank.

On April 17th, Treasury Secretary Timothy Geithner sent a letter to House Financial Services Committee Chairman Spencer Bachus and Ranking Member Barney Frank warning against proposed legislation that would significantly weaken and repeal vital Wall Street reforms. Letter.

• CFTC Provides Financial Reporting Guidance to Futures Commission Merchants.

On April 18th, the Commodity Futures Trading Commission's ("CFTC") Division of Swap Dealer and Intermediary Oversight issued a letter providing guidance to registered futures commission merchants ("FCMs"). The letter is intended to assist FCMs in understanding the requirements for preparing and filing financial statements with particular focus on amended financial filings. CFTC Press Release.

• SEC Adopts Rule Defining Swaps-Related Terms.

On April 18th, the SEC unanimously adopted a new final rule to define terms related to the over-the-counter swaps market. The rules were written jointly with the CFTC to implement portions of the Dodd-Frank Wall Street Reform and Consumer Protection Act. The rules include definitions for the terms "security-based swap dealer," "major security-based swap participant," "substantial position," "hedging or mitigating commercial risk," "substantial counterparty exposure," "financial entity," and "highly leveraged." SEC Press Release; Aguilar Speech; Paredes Speech; Schapiro Speech; Gallagher Speech; Walter Speech.

• Annual Report of Office of Minority and Women Inclusion.

On April 18th, the SEC released the annual report of its Office of Minority and Women Inclusion, responsible for the agency's "diversity in management, employment, and business activities." According to the report, in FY 2011 the SEC paid contractors $228 million. Of this amount, $38.38 million (16.8%) went to minority-owned businesses and $15.69 million (6.9%) to women-owned businesses, representing an increase in both categories over the two prior periods. At the end of FY 2011, the SEC reported 3,826 employees, including 1,204 minority employees (31.5%) and 1,839 female employees (48.1%). The report was required by section 342 of the Dodd-Frank Act. Special Study.

• Chairman Schapiro Testifies on Economic Analysis in SEC Rulemaking.

On April 17th, SEC Chairman Mary L. Schapiro testified before the Subcommittee on TARP, Financial Services and Bailouts of Public and Private Programs, House Oversight and Government Reform Committee, regarding the SEC's rulemaking process, its procedures for economic analysis, and recent improvements including new guidance and increased involvement of economists. Testimony. On April 16th, Reuters offered details and insight into the staff-circulated guidance memo regarding the procedure changes. Rulemaking.

• Corporation Finance Guidance on Title I of the JOBS Act.

On April 16th, the SEC's Division of Corporation Finance provided guidance on the general applicability of Title I of the JOBS Act. Title I provides scaled disclosure provisions for emerging growth companies, including, among other things, two years of audited financial statements in the Securities Act registration statement for an initial public offering of common equity securities, the smaller reporting company version of Item 402 of Regulation S-K, and no requirement for Sarbanes-Oxley Act Section 404(b) auditor attestations of internal control over financial reporting. Title I also enables emerging growth companies to use test-the-waters communications with QIBs and institutional accredited investors and liberalizes the use of research reports on emerging growth companies. JOBS Act FAQs.

• "Cash Mark-to-Market" Performance Bonds.

On April 16th, the SEC provided notice and accelerated approval of a proposed rule change filed by Chicago Mercantile Exchange Inc. to facilitate changing its methodology for calculation of the "cash mark-to-market" performance bonds for cleared OTC FX Swaps from SPAN to HVaR. Comments should be submitted on or before May 11, 2012. SEC Release 34-66813.

• Amendments for Post-Trade Transparency for Agency Pass-Through Mortgage-Backed Securities Proposed.

On April 13th, the SEC provided notice of the Financial Industry Regulatory Authority's filing of proposed amendments to the FINRA Rule 6700 Series and Trade Reporting and Compliance Engine ("TRACE") dissemination protocols regarding the reporting and dissemination of transactions in TRACE-Eligible Securities that are: (1) Agency Pass-Through Mortgage-Backed Securities traded in Specified Pool Transactions and (2) Asset-Backed Securities backed by loans guaranteed as to principal and interest by the Small Business Administration and traded either in Specified Pool Transactions or to be announced. Comments should be submitted on or before May 10, 2012. SEC Release No. 34-66804.

• Electronic Submission Process for SEC Regulation M.

On April 13th, NYSE Euronext announced that FINRA is implementing a new electronic submission process that New York Stock Exchange and NYSE Amex members will be required to use to submit certain notifications related to distributions that are subject to SEC Regulation M. NYSE Euronext Information Memo 12-11. See also FINRA Regulatory Notice 12-19.

• Minimum Quotation Size Requirements.

On April 17th, the SEC provided notice of FINRA's filing of Amendment No. 1 to its proposed rule change to amend FINRA Rule 6433 (Minimum Quotation Size Requirements for OTC Equity Securities). Comments should be submitted on or before May 7, 2012. SEC Release 34-66819.

• Initial Margin Requirement.

On April 18th, the SEC approved a proposed rule change filed by ICE Clear Credit LLC to provide that one hundred percent of the initial margin requirement for client-related positions cleared in a clearing participant's customer account origin may be satisfied by a clearing participant utilizing US Treasuries. SEC Release 34-66825. 77 FR 24546.

• Options Contracts.

International Securities Exchange, LLC filed a proposed rule change to list and trade option contracts overlying 10 shares of a security. SEC Release 34-66827. 77 FR 24547.

• Supplemental Liquidity Providers.

On April 17th, the SEC provided notice of a proposed rule change filed by NYSE Amex LLC amending NYSE Amex Equities Rule 107B to add a class of Supplemental Liquidity Providers that are registered as Market Makers at the exchange. SEC Release 34-66820 and Exhibit 5.

• Minimum Bid Price.

On April 18th, the SEC approved a proposed rule change, as modified by Amendment No. 1 thereto, submitted by The NASDAQ Stock Market LLC, to adopt an alternative to the $4 per share initial listing bid price requirement for the Nasdaq Capital Market of either $2 closing price per share or $3 closing price per share, if certain other listing requirements are met. SEC Release 34-66830. 77 FR 24549.

• No Private Right of Action Under HAMP.

In a published opinion on April 19th, the 11th Circuit held that the federal Home Affordable Modification Program (HAMP) does not provide for a private right of action, upholding the lower court's dismissal for failure to state a claim. Miller v. Chase Home Finance.

• Motion to Dismiss Securities Fraud Case is Denied.

On April 13th, the Middle District of Florida denied the defendants' motion to dismiss unsophisticated investors' Section 10(b) securities fraud lawsuit. Although Circuit law generally prohibits plaintiffs from claiming justifiable reliance when written statements (here, various offering documents), contradict alleged oral representations, that presumption can be overcome. Hemenway v. Bartoletta.

• Investment Adviser Performance Compensation - Effective May 22, 2012.

The SEC is adopting amendments to the rule under the Investment Advisers Act of 1940, as amended that permits investment advisers to charge performance-based compensation to "qualified clients." The amendments revise the dollar amount thresholds of the rule's tests that are used to determine whether an individual or company is a qualified client. These rule amendments codify revisions that the SEC recently issued by order that adjust the dollar amount thresholds to account for the effects of inflation. 77 FR 10358.

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