When times are difficult, when countries are tempted with protectionism and the erection of new boundaries, the European ideal appears to be more demanding than ever for politicians of all sides. François Hollande will only have little time to convince Angela Merkel that his views on the topic are compatible with Germany's objectives.

• Congressman Wants Special Prosecutor for MF Global.

On May 3rd, Reuters reported that Representative Michael Grimm is circulating a letter calling for the appointment of a special prosecutor to oversee the investigation of MF Global's collapse. Special Prosecutor.

• ETFs are Making some Brokers Think.

On May 2nd, Reuters noted that recent regulatory interest in complex exchange-traded funds has led some brokerages to reconsider what obligations they owe their customers. ETFs.

• Pilgrim's Progress.

On May 2nd, the New York Times' DealBook reported that federal regulators are making progress in their efforts to implement the Volcker Rule, the Dodd-Frank Act's prohibition against proprietary trading. Progress.

• Quality versus Quantity.

On May 1st, Bloomberg reported that the Consumer Financial Protection Bureau is nearing completion of its qualified mortgage rule, a regulation that discourages banks from making sub-prime loans by providing them with safe harbor protections for making qualified loans. Divisions within the banking industry on the strictures of the qualifications, however, have yet to be completely surmounted. Qualified Mortgages.

• The Foreign Corrupt Practices Act.

On April 30th, the New York Times' DealBook discussed recent developments concerning the Foreign Corrupt Practices Act, including its enforcement and efforts to amend the law. FCPA.

• Help Wanted.

On April 28th, Reuters reported that the Justice Department's financial crisis task force is set to hire an additional 15 people along with the previously announced 50. Of the 15 new positions, 10 will be assistant U.S. Attorneys and five will be financial analysts. Help Wanted.

• Keeping Occupied.

On April 27th, the Washington Post updated the activities of Occupy Wall Street's regulatory-minded focus groups: Occupy the SEC, Occupy Bank, and the Alternative Banking Group. Occupy.

• FFIEC Upgrades IT Handbook.

On May 3rd, the Federal Financial Institutions Examination Council ("FFIEC") announced it has recently upgraded the functions and features of the InfoBase for the FFIEC Information Technology Examination Handbook ("IT Handbook"). The new architecture provides the FFIEC member agencies with new capabilities, including the ability to make updates on a more frequent basis. This new architecture will enable the agencies to respond to changes in technology and the risk environment on an as-needed basis rather than waiting for the next revision of a particular booklet or booklets. Included in the recent upgrade is a "What's New" function on the InfoBase home page that may be used to monitor recent changes and, going forward, to access a historical listing of all changes. FFIEC Press Release.

• Federal Reserve Board Governor Discusses Regulatory Concerns.

On May 2nd, Reuters summarized comments made by Federal Reserve Board Governor Daniel Tarullo. Besides calling for reforms to money market funds and the tri-party repo market, Tarullo said that Basel III capital requirements and the final rules implementing the Dodd-Frank Act's prohibition against proprietary trading should be released next year. Tarullo Comments. View the text of Tarullo's remarks here.

• OCC to Hold Bank Directors' Workshop in Cleveland.

The OCC will host a workshop for directors of nationally chartered community banks and federal savings associations in Cleveland, Ohio June 25-27, 2012. The workshop provides practical information that expands bank directors' skills and understanding of issues facing their banks. Entitled, "A Director's Challenge: Mastering the Basics," the workshop is geared primarily to directors of national community banks and federal savings associations with assets of less than $5 billion who would like to review the fundamental requirements of their position. OCC Press Release.

• Federal Reserve Board Publishes Debit Card Interchange Fee Information.

On May 1st, the Federal Reserve Board published comparative information on the average debit card interchange fees that each payment card network charges acquirers (and indirectly merchants) and provides to debit card issuers. Federal Reserve Board Press Release.

• FDIC Issues New Rule on Mutual Insurance Holding Companies.

On April 30th, the FDIC issued a final rule that treats a mutual insurance holding company as an insurance company for purposes of Section 203(e) of the Dodd-Frank Act. The new rule clarifies that the liquidation and rehabilitation of a covered financial company that is a mutual insurance holding company will be conducted in the same manner as an insurance company. The new rule harmonizes the treatment of mutual insurance holding companies under Section 203(e) of the Dodd-Frank Act with the treatment of such companies under state insurance company insolvency laws. The new rule is effective May 30, 2012.

• Executive Order Targets Sanctions Evaders.

On May 1st, the Treasury Department announced that the President has signed an Executive Order "Prohibiting Certain Transactions with and Suspending Entry into the United States of Foreign Sanctions Evaders with Respect to Iran and Syria." The Executive Order targets foreign individuals and entities that have violated, attempted to violate, conspired to violate, or caused a violation of U.S. sanctions against Iran or Syria, or that have facilitated deceptive transactions for persons subject to U.S. sanctions concerning Syria or Iran. The authority authorizes the Treasury Department to publicly identify foreign individuals and entities that have engaged in evasive and deceptive activities, and generally bars access to the U.S. financial and commercial systems. Treasury Department Press Release.

• FinCEN Signs Information Sharing Agreements.

On May 1st, the Financial Crimes Enforcement Network announced that it has signed a Memorandum of Understanding that will allow FinCEN and the Louisiana insurance regulator to share important information. FinCEN May 1 Press Release. On May 2nd, FinCEN announced the signing of a similar information sharing agreement with the California Insurance Commissioner. FinCEN May 2 Press Release.

• Head of CFPB's Diversity Office Named.

On April 30th, the Consumer Financial Protection Bureau announced that Stuart Ishimaru will lead the newly established Office of Minority and Women Inclusion, which will work to promote diversity at the CFPB and at the financial institutions it regulates. CFPB Press Release.

• Unblocking Notices.

On April 30th, the Treasury Department's Office of Foreign Asset Control published the names of nine individuals and three entities whose property and interests in property have been unblocked pursuant to Executive Order 12978 of October 21, 1995, "Blocking Assets and Prohibiting Transactions With Significant Narcotics Traffickers." 77 FR 25536.

• FinCEN to Hold Webinar on New Reporting Requirements.

The Financial Crimes Enforcement Network will hold an informational Webinar on May 8, 2012, to discuss the updated technical specifications for FinCEN's new Currency Transaction Report ("CTR") and Suspicious Activity Report ("SAR") as well as the recently released specifications for FinCEN's new Designation of Exempt Person ("DOEP") report. This Webinar is intended specifically for the information technology professionals who will be responsible for integrating the technical specifications for these new FinCEN reports into batch filing processes. FinCEN Press Release.

• CFTC Proposes Guidance Exempting Foreign Regulators from Indemnifying Swap Data Repositories.

On May 1st, the CFTC issued a Proposed Interpretative Statement regarding the confidentiality and indemnification provisions in the Dodd-Frank Act. The proposal generally exempts foreign regulators from the indemnification and confidentiality provision in the Dodd-Frank Act, and ensures that foreign regulators have access to data in Swap Data Repositories ("SDR"). This exemption only applies to data that is required to be reported and if the SDR is recognized by the country's law and regulation. Comments should be submitted within 30 days after publication in the Federal Register, which is expected during the week of May 7. CFTC Press Release.

• CFTC Open Meeting.

The CFTC will hold an open meeting on May 10, 2012 to consider a final rule on "Core Principles and Other Requirements for Designated Contract Markets" and a "Proposed Order Amending the Effective Date for Swap Regulation." CFTC Press Release. On May 3rd, Bloomberg reported the CFTC has delayed consideration of whether to adopt a final rule that would require central clearing of 85 percent of a derivatives contract's trading. Delay.

• SEC Reopens Comment Period for Proposed Broker-Dealer Amendments.

On May 3rd, the SEC re-proposed amendments to its net capital, customer protection, books and records, and notification rules for broker-dealers. Amendments had been originally proposed in 2007 but were never adopted. Given the passage of time and intervening events, additional comment was deemed appropriate. Comments should be submitted within 30 days after publication in the Federal Register, which is expected during the week of May 7. SEC Press Release. View the proposing release and amendments here.

• JOBS Act Guidance.

On May 3rd, the SEC's Division of Corporation Finance issued additional guidance regarding the JOBS Act. Guidance.

• Note on CDI 202.01 is Updated.

On May 3rd the SEC's Division of Corporation Finance updated its compliance and disclosure interpretation for the Trust Indenture Act. Note on CDI 202.01.

• SEC Examining Pension Fund Accounting.

On May 3rd, the Wall Street Journal reported that the SEC is examining the pension accounting of firms which have recently adopted mark-to-market methods. Pension Accounting.

• JOBS Act Commenters Want Broader View.

On May 3rd, The New York Times' DealBook reported that financial industry representatives, like the Securities Industry and Financial Markets Association, seek a broad interpretation of the JOBS Act. Comments.

• OCIE Director Discusses Private Funds.

On May 2nd, Carlo V. di Florio, SEC Director, Office of Compliance Inspections and Examinations, discussed private funds. Based on the profile of the approximately 4000 private funds which have recently registered with the SEC, the Commission is preparing an examination program of the new registrants. After inspecting the highest risk areas of a significant percentage of new registrants, OCIE will publish a series of "after-action" reports on the broad issues, risks and themes identified. di Florio Remarks.

• Missing the Forest.

On May 2nd, the New York Times' DealBook criticized the SEC's decision to institute enforcement proceedings against Egan-Jones for alleged misrepresentations in its application to become a ratings agency and for record-keeping and conflict of interest violations. See SEC Press Release. DealBook contends that while going after Egan-Jones, a small organization which committed minor infractions, the SEC is allowing the large ratings agencies to engage in more egregious activities. The Big Picture.

• Report on Administrative Proceedings.

On April 30th, the SEC issued its Report on Administrative Proceedings for the Period October 1, 2011, through March 31, 2012. The report provides summary statistical information on the Commission's administrative proceedings caseload. SEC Release No. 34-66885.

• SEC Grants Accelerated Approval to Proposed FCM Reporting Requirements.

On April 26th, the SEC granted accelerated approval to the Chicago Mercantile Exchange's proposed imposition of additional reporting requirements for futures commission merchant ("FCM") members pursuant to CME Rule 970.D. The new reporting requirements will require all FCM clearing members to file daily, segregated, secured 30.7 and "sequestered" (or customer cleared swaps) statements, as applicable, on a daily basis. The proposed effective date for this new requirement is May 1, 2012. SEC Release No. 34-66867.

• Changes to Post-Payable Adjustment Practices are Proposed.

On May 1st, the SEC provided notice of The Depository Trust Company's filing of a proposed rule change to DTC's post-payable adjustment practices. Historically, DTC has accommodated issuers and/or their agents ("Paying Agents") by facilitating the collection and the reallocation of certain misapplied, misdirected, or miscalculated principal and income payments. Under current practices, DTC will process requests for these types of post-payable adjustments up to one year after the initial payment is made. Under the proposal, effective November 1, 2012, DTC will no longer accommodate Paying Agent requests to process these types of post-payable adjustments beyond 60 calendar days after the initial payment date. This change in practice will allocate assignment of accountability appropriately and will mitigate the risk associated with the reallocation of such principal and income payments. Comments should be submitted within 21 days after publication in the Federal Register, which is expected during the week of May 7. SEC Release No. 34-66894.

• FINRA Announces New Electronic Filing System for Public Offerings.

On April 30th, the Financial Industry Regulatory Authority ("FINRA") announced that it will introduce a new public offering filing system for public offerings that are required to be filed under FINRA Rules 5110, 5121 and 2310 (Corporate Financing Rules). The new system will replace COBRADesk, which has been operational since 1999 and will be retired on June 20, 2012. The new filing system will be available June 4, 2012. FINRA Regulatory Notice 12-22.

• Proposed Amendments to Short Position Reporting Rule Receives Accelerated Approval.

On April 27th, the SEC granted accelerated approval to FINRA's proposed amendment of FINRA Rule 4560, which requires each FINRA member to maintain a record of total short positions in all customer and proprietary firm accounts in all equity securities (other than Restricted Equity Securities as defined in Rule 6420) and regularly report such information to FINRA. The Rule generally provides that the short positions to be recorded and reported are those resulting from "short sales" as that term is defined in Rule 200(a) of Regulation SHO. FINRA has proposed to amend the Rule to codify interpretive guidance previously issued by the Intermarket Surveillance Group that instructed members to report "gross" short positions existing in each proprietary and customer account (rather than net positions across accounts); clarify that members' short interest reports must reflect only those short positions that have settled or reached settlement date by the close of the reporting settlement date designated by FINRA; clarify that members must reflect company-related actions in their short-interest reports adjusted as of the ex-date of the corporate action (and if no ex-date is declared by a self-regulatory organization, then the payment date); and delete certain existing exceptions to the Rule. Comments should be submitted on or before May 24, 2012. SEC Release. No 34-66872.

• SEC Designates Longer Period to Consider Trading of a Certain Index Option.

On May 1st, the SEC designated June 20, 2012 as the day by which it will either approve or disapprove, or institute proceedings to determine whether to disapprove, the International Securities Exchange's proposed addition of an index option product for trading on the exchange. SEC Release No. 34-66889.

• Subscription Fees Approved.

On April 26th, the SEC approved the Municipal Securities Rulemaking Board's proposed establishment of a subscription to historical information and documents submitted to the MSRB's Short-Term Obligation Rate Transparency System, SEC Release No. 34-66865, and to the Electronic Municipal Market Access System, SEC Release No. 34-66866.

• SEC Institutes Disapproval Proceedings for Proposed Complex Order Fee Amendment.

On April 30th, the SEC temporarily suspended and instituted proceedings to determine whether to approve or disapprove NASDAQ OMX PHLX's proposal amending Complex Order fees and rebates for adding and removing liquidity in its Select Symbols. Comments should be submitted on or before May 25, 2012. Rebuttal comments should be submitted on or before June 8, 2012. SEC Release No. 34-66884.

• NYSE Euronext Reminds of Changes to FCM Reporting.

On April 30th, NYSE Euronext advised members that the Financial Industry Regulatory Authority is implementing a change to the Futures Commission Merchants ("FCMs") reporting process. While the content and requirements of member organization's FCM reporting obligations will not change, FINRA is establishing a new process for member organizations to review and confirm their FCM reporting obligations. NYSE Euronext Information Memo 12-13.

• Robo-Signing Lawsuit Reinstated.

On May 3rd, the Fourth Circuit reinstated the homeowners' Truth in Lending Act ("TILA") and state consumer law claims asserted against the bank holding plaintiffs' mortgage. The Court holds that TILA's three-year statute of limitation does not require borrowers to file a claim for rescission to invoke that right. TILA rescission claims are timely if the consumer notifies the creditor within three years. Gilbert v. Residential Funding LLC.

• Eleventh Circuit Reinstates SEC's Auction-Rate Securities Case.

On May 2nd, the Eleventh Circuit vacated and remanded the district court's entry of summary judgment dismissing the SEC's enforcement action against Morgan Keegan. The SEC alleges that Morgan Keegan's brokers and marketing materials misrepresented the risks associated with auction-rate securities. The trial court entered summary judgment, holding that the alleged misrepresentations and omissions were not material. Reversing, the Eleventh Circuit holds that the materiality test requires the court to consider all the information available, including private communications between defendant's brokers and investors. And here, although Morgan Keegan produced adequate written disclosures, there is no evidence that Morgan Keegan directly gave customers these written disclosures and the disclosures' distribution was weak or non-effective. SEC v. Morgan Keegan & Company, Inc.

• Re-Registration of Securities Moots De-Registration of Securities.

On May 2nd, the Seventh Circuit dismissed as moot an issuer's petition seeking review of the SEC's revocation of its securities registration for failure to file periodic reports. Petitioner's filing of a new registration statement, which became effective, mooted the de-registration. The SEC did not block the new registration; it simply issued a 12-page comment letter. Although that letter was cited by the Financial Industry Regulatory Authority when it declined a broker's request to begin trading the new securities, FINRA's activities are not at issue here. Tara Gold Resources Corp. v. SEC.

• FDCPA Claims are Reinstated.

On April 30th, the Sixth Circuit addressed liability under the Fair Debt Collection Practices Act. It held that an entity that did not originate the debt in question (a mortgage) but acquired it and attempts to collect on it, is either a creditor or a debt collector depending on the default status of the debt at the time it was acquired. The same is true of a loan servicer, which can either stand in the shoes of a creditor or become a debt collector, depending on whether the debt was assigned for servicing before the default or alleged default occurred. Bridge v. Ocwen Federal Bank.

• 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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