• Madoff Investigation.

On February 23rd, Reuters reported that the SIPC trustee in the ongoing investigation into Bernard Madoff's Ponzi scheme has filed a clawback claim against David Becker, the SEC's outgoing general counsel. Becker and his brothers were the executors of their mother's estate, which had an account with Madoff. The account was liquidated in 2005. Clawback Suit. On February 24th, Bloomberg reported that Congressmen have asked the SEC to provide information concerning Becker's role in any SEC examination of Madoff. Letter.

• Proposed Bills Would End Programs For Troubled Homeowners.

On February 24th, Reuters reported that the House Financial Services Committee will likely pass four bills that would end the Obama Administration's efforts to assist troubled homeowners. However, the bills are unlikely to pass the Senate. Legislation.

• Consumer Group Urges Greater Fee Flexibility For Banks.

On February 23rd, Reuters summarized the comments the Consumer Federation of America submitted in response to the Federal Reserve Board's proposed limits on debit card swipe fees. The consumer group urged the Board to consider a more flexible approach that would allow banks to be reimbursed for legitimate expenses. Comments.

• Federal Reserve Bank President Thinks Biggest Firms Should Be Broken Up.

On February 23rd, Bloomberg reported that Kansas City Federal Reserve Bank President Thomas Hoenig believes that financial institutions posing a threat to the financial system should be broken up. Hoenig Remarks.

• Proposal Would Require Additional 401(k) Disclosure.

On February 18th, CFO.com reported that a proposed bill would require 401(k) sponsors to disclose an "annuity equivalent," the monthly amount that a participant would receive upon the plan's normal retirement age if they used their account balance to buy an annuity. Annuity Equivalent.

• "Trade At" Rule Criticized.

On February 18th, Bloomberg reported on the criticism leveled at the "trade at" proposal contained in the report prepared by the Joint CFTC-SEC Advisory Committee on Emerging Regulatory Issues concerning the "flash crash" of May 6, 2010. The critics note that price improvement for retail investors may result in higher execution costs. Criticism.

• FDIC Amends Large Bank Assessment Regulations.

On February 25th, the FDIC published amendments to its regulations to implement revisions made by the Dodd-Frank Act. The amendments modify the definition of an institution's deposit insurance assessment base; change the assessment rate adjustments; revise the deposit insurance assessment rate schedules in light of the new assessment base and altered adjustments; implement the Dodd-Frank Act's dividend provisions; revise the large insured depository institution assessment system to better differentiate for risk and large institution failures that the FDIC may incur; and make technical and other changes to the FDIC's assessment rules. The amendments are effective April 1, 2011. 76 FR 10672.

• FDIC Publishes Winter Issue of Consumer News.

On February 24th, the FDIC published its Winter 2010/2011 issue of the FDIC Consumer News. The issue features tips for streamlining money management, strategies for getting a small business loan, a warning about new financial frauds on the Internet, an explanation of the unlimited FDIC insurance coverage for noninterest-bearing transaction accounts, options for boosting college savings, and ideas for positioning personal finances for changing interest rates. FDIC Press Release.

• OCC Issues Consumer Advisory Concerning Foreclosure Scams.

On February 24th, the OCC issued a consumer advisory describing common foreclosure scams, suggesting ways homeowners can avoid those scams, and outlining new federal rules to protect homeowners from such schemes. The advisory also lists 10 warning signs homeowners can use to identify foreclosure scams. OCC Consumer Advisory.

• Federal Reserve Board Home Mortgage Escrow Rules.

On February 23rd, the Federal Reserve Board issued a final rule and requested public comment on a second rule revising the escrow account requirements for certain home mortgage loans. The revisions to the regulation implementing the Truth in Lending Act (TILA) are being made in accordance with the Dodd-Frank Act. The final rule implements a provision of the Dodd-Frank Act that increases the annual percentage rate (APR) threshold used to determine whether a mortgage lender is required to establish an escrow account for property taxes and insurance for first-lien, "jumbo" mortgage loans. A first-lien mortgage is considered a higher-priced mortgage loan if its APR is 1.5 percentage points or more above the current average prime offer rate. Under the new final rule, the escrow requirement will apply to first-lien jumbo loans only if the loan's APR is 2.5 percentage points or more above the average prime offer rate. The APR threshold for non-jumbo loans remains unchanged. The final rule is effective for covered loans for which the creditor receives an application on or after April 1, 2011. The proposed rule would expand the minimum period for mandatory escrow accounts for first-lien, higher-priced mortgage loans from one to five years, and longer under certain circumstances. The proposal also would implement new disclosure requirements contained in the Dodd-Frank Act. Comments on the proposed rule should be submitted within 60 days after publication in the Federal Register, which is expected during the week of February 28. Federal Reserve Board Press Release.

• FDIC Releases Quarterly Banking Profile.

On February 23rd, the FDIC released the Fourth Quarter 2010 Quarterly Banking Profile. Insured commercial banks and savings institutions reported an aggregate profit of $21.7 billion in the quarter, a $23.5 billion improvement from the $1.8 billion net loss that the industry reported in the fourth quarter of 2009. Reductions in provisions for loan losses were responsible for most of the year-over-year improvement in earnings, and asset-quality trends showed further improvement. FDIC Press Release.

• Agencies Publish AML Manual In Spanish.

On February 23rd, the Federal Financial Institutions Examination Council released its 2010 Bank Secrecy Act/Anti-Money Laundering Examination Manual in Spanish. AML Manual (Spanish Translation).

• FDIC Advisory Committee on Economic Inclusion.

The FDIC's Advisory Committee on Economic Inclusion will meet on March 2, 2011, to discuss principles for low- and moderate-income mortgage lending, and supporting financial education. FDIC Press Release.

• FDIC Symposium On Escalating Farmland Values.

On March 10, 2011, the FDIC will host a half-day symposium to discuss issues associated with escalating farmland values. FDIC Press Release.

• FinCEN Issues New Final Rule On FBAR Responsibilities.

On February 24th, the Financial Crimes Enforcement Network published amendments to the implementing regulations regarding the Report of Foreign Bank and Financial Accounts (FBAR). The FBAR form is used to report a financial interest in, or signature or other authority over, one or more financial accounts in foreign countries. No report is required if the aggregate value of the accounts does not exceed $10,000. Several comments on the proposed regulations had urged FinCEN to provide an exception from the filing obligation for employee benefit plans. FinCEN declined to do so but did provide certain helpful clarifications for sponsors of employee benefit plans. The amendments are effective March 28, 2011. FinCEN Press Release.

• FinCEN Issues Advisory Regarding Libya.

On February 24th, the Financial Crimes Enforcement Network issued an Advisory to U.S. financial institutions to take reasonable risk-based steps with respect to the potential increased movement of assets that may be related to the situation in Libya. FinCEN reminded U.S. financial institutions of the requirement to apply enhanced scrutiny for private banking accounts held by or on behalf of senior foreign political figures and to monitor transactions that could represent misappropriated or diverted state assets, proceeds of bribery or other illegal payments, or other public corruption proceeds. Financial institutions were advised to be aware of the possible impact that the events in Libya may have on patterns of financial activity when assessing risks related to particular customers and transactions.

• Designations.

On February 23rd, the Treasury Department designated two Iranian officials, Abbas Jafari Dolatabadi, Tehran Prosecutor General, and Mohammed Reza Naqdi, commander of the IRGC's Basij Forces, as responsible for or complicit in serious human rights abuses in Iran since the disputed June 2009 presidential election. Iranian Designations. The Treasury Department also designated Colombian national Jorge Milton Cifuentes Villa (a.k.a. Elkin de Jesus Lopez Salazar) and more than 70 individuals and entities in Cifuentes Villa's drug trafficking and money laundering organization as Specially Designated Narcotics Traffickers. Narcotics Designations.

• FinCEN Issues Advisory On Elder Financial Exploitation.

On February 22nd, the Financial Crimes Enforcement Network released an advisory to help financial institutions spot and report on activities involving elder financial exploitation. Advisory to Financial Institutions on Filing Suspicious Activity Reports Regarding Elder Financial Exploitation contains red flags that abuse may be occurring and specifically asks financial institutions to include the term "Elder Financial Exploitation" on filings of suspicious activity reports. FinCEN Press Release.

• FinCEN Releases Outreach Report On Depository Institutions With Assets Under $5 Billion.

On February 22nd, the Financial Crimes Enforcement Network issued a report, Outreach to Depository Institutions with Assets Under $5 Billion, containing the findings of its Outreach Initiative to smaller depository institutions. The report's findings are based on information gathered from FinCEN's individual visits and town hall style meetings with more than 70 depository institutions, including credit unions and community banks. FinCEN Press Release.

• CFTC Votes To Propose Dodd-Frank Rules.

On February 24th, the CFTC voted to propose three rules as part of its implementation of the Dodd-Frank Act. Two of the proposed rules would amend existing CFTC rules to conform them to the Dodd-Frank Act.

• The first proposal reflects the new definition for commodity pool contained in the Dodd-Frank Act and accordingly revises the definitions of commodity pool operator and commodity trading advisor. Fact Sheet on Proposed CPO and CTA Conforming Amendments; Q&A on Proposed CPO and CTA Conforming Amendments.

• The second proposal reflects the Dodd-Frank Act's changes regarding intermediaries. The Act removed the market category "Derivatives Transaction Execution Facility", and added the market category "Swap Execution Facility". The proposed rule would therefore remove all references to Derivatives Transaction Execution Facility, and selectively add references to Swap Execution Facility, Swap Dealer, and Major Swap Participant where appropriate. Also, the proposal would exempt an Associated Person of a Swap Dealer or Major Swap Participant from registering as a Swap Dealer or Major Swap Participant. Fact Sheet on Proposed Rule on Registration of Intermediaries; Q&A on Proposed Rule on Registration of Intermediaries.

• The third proposal sets forth the required time frame for a swap dealer, major swap participant, futures commission merchant, swap execution facility, and designated contract market to submit contracts, agreements, or transactions to a derivatives clearing organization for clearing. Fact Sheet on Proposed Rule Regarding Requirements for Processing, Clearing, and Transfer of Customer Positions; Q&A on Proposed Rule Regarding Requirements for Processing, Clearing, and Transfer of Customer Positions.

• CFTC Votes To Propose Interpretive Guidance.

On February 24th, the CFTC voted to publish for comment a proposed interpretive order on the types of trading, practices, and conduct that constitute violations of the three statutory disruptive practices set forth in the Dodd-Frank Act. Fact Sheet on Interpretive Guidance; Q&A on Interpretive Guidance. CFTC Commissioner Jill E. Sommers, dissenting from the vote, believes that the proposed guidance makes the already vague statutory language more vague. Sommers Remarks.

• Proposed Block Trade Limit Is Criticized.

On February 23, Bloomberg summarized the comments submitted to the CFTC in response to its proposed block trading rules. The rules require 85 percent of all transactions in a listed contract to occur on a centralized market. Only 15 percent could be conducted off-exchange as block trades. Both exchanges and participants feared that many contracts would be unable to meet the 85 percent threshold and would therefore be conducted on the OTC market. Block Trades.

• Whether to propose regulations with respect to incentive-based compensation practices at certain financial institutions, in accordance with the Dodd-Frank Act;

• Whether to propose rules for the operation and governance of clearing agencies, in accordance with the Dodd-Frank Act;

• Whether to reopen the comment period for Regulation MC, proposed in accordance with the Dodd-Frank Act to mitigate conflicts of interest at security-based swap clearing agencies, security-based swap execution facilities, and national security exchanges that post or make available for trading security-based swaps; and

• Whether to propose a new rule and rule and form amendments, under the Securities Act of 1933 and the Investment Company Act of 1940, relating to references to credit ratings, which would be made in accordance with Section 939A of the Dodd-Frank Act.

• Technical Amendments Regarding the Bank Secrecy Act.

On February 23rd, the SEC adopted technical amendments to Rule 17a-8 under the Securities Exchange Act of 1934 to update a reference in the rule to the implementing regulations of the Currency and Foreign Transactions Reporting Act of 1970, commonly referred to as the Bank Secrecy Act (BSA). The BSA's implementing regulations are promulgated and administered by the Financial Crimes Enforcement Network (FinCEN). The reference to the BSA's implementing regulations in Rule 17a-8 is being updated in response to FinCEN's reorganization of those regulations into a new chapter of the Code of Federal Regulations. The amendments are effective March 1, 2011. SEC Release No. 34-63949.

• New Electronic System for Submitting and Processing Company-Related Actions for Non-Exchange Listed Securities Under Rule 6490.

On February 22nd, FINRA announced that, beginning March 14, 2011, issuers, American Depositary Receipt depositary banks, and other parties that provide notice of company-related actions to FINRA under Rule 6490, must use a new electronic system to provide such notice to FINRA. The new electronic Company-Related Action Forms will be available on March 14, 2011, via www.finra.org/upc/forms. FINRA Regulatory Notice 11-09.

• SEC Approves New and Amended Rules Regarding Association With Disqualified Persons.

On February 18th, the SEC approved proposed FINRA Rule 1113 (Restrictions Pertaining to New Member Applications) and proposed amendments to the FINRA Rule 9520 Series (Eligibility Proceedings). The new rule and amendments further restrict association by new member applicants and certain members with disqualified persons. SEC Release No. 34-63933.

• NYSE Regulation Information Memos On Regulation SHO.

On February 25th, NYSE Regulation advised members of recent amendments to NYSE Rule 1600 governing the New York Block Exchange. Rule 1600 has been amended, effective February 28, 2011, to add provisions on short sales in order to implement the provisions of Rule 201 of Regulation SHO (Rule 201), which, if triggered, imposes a restriction on the prices at which securities may be sold short. NYSE Regulation Information Memo 11-07. Rules 201 and 200(g) of Regulation SHO are currently scheduled to become effective on February 28, 2011, and members must have adequate written compliance and supervisory policies and procedures related to these new requirements in place by that time. In connection with the amended requirements of Regulation SHO, the Exchange has also amended Rules 440B and 123C, effective February 28, 2011. NYSE Regulation Information Memo 11-06.

• DOL Extends Effective Date for ERISA Fee Disclosure Regulations to January 1, 2012.

Service providers to employee benefit plans now have until January 1, 2012, to prepare for compliance with the Department of Labor's new fee disclosure requirements. Under the DOL's interim-final rule published on July 16, 2010, certain service providers to employee benefit plans will be required to disclose information regarding direct and indirect fees for plan services and potential conflicts of interest related to the provision of those services to plan fiduciaries for review, in order to maintain prohibited transaction relief under Section 408(b)(2) of ERISA. The DOL extended the effective date for the rule, July 16, 2011, to January 1, 2012 to allow service providers additional time to implement compliance efforts following the DOL's publication of the final rule, expected in advance of July 16, 2011. DOL Press Release.

• The Fair Debt Collection Practices Act's Venue Provision.

On February 23rd, the U.S. Court of Appeals for the Second Circuit held that a debt collector can violate the venue provisions of the Federal Debt Collection Practices Act by suing a consumer in a court that lacks power to hear the action, because the consumer does not reside in that city or a town contiguous thereto. Such a suit is therefore not brought in the "judicial district or similar legal entity" in which the consumer resides, as required by the FDCPA. Hess v. Cohen & Slamowitz LLP.

• Lehman Cannot Modify Terms Of Sale.

On February 22nd, the Bankruptcy Court overseeing the liquidation of Lehman Brothers' broker-dealer business denied motions seeking to modify the order approving the sale of the business to Barclays Capital. The Court noted the extraordinary circumstances surrounding the sale, the affirmance of that sale order, and movants' failure to challenge the order for one year. The court held that even if the evidence presented here were known in 2008, the result would have been the same, i.e., the sale would have been approved. No unfairness, deliberate withholding of information or willful misconduct was found. In re Lehman Brothers Holdings Inc.

• SEC Backdating Case Barred By The Statute Of Limitations.

On February 15th, the U.S. District Court for the Northern District of Texas granted summary judgment dismissing most of the SEC's stock option backdating lawsuit against former executives of Microtune Inc. The court found that the SEC's claims were barred by the general civil penalties statute of limitations, 28 U.S.C. Sec. 2462, and that the SEC did not meet the requirements of the fraudulent concealment doctrine. The court also found that, with the exception of disgorgement for 'in-the-money' profits from the exercise of backdated stock options, the SEC's claims for relief are penalties for the purposes of Sec. 2462. SEC v. Microtune, Inc.

• Issuer Review of Assets in Offerings of Asset-Backed Securities - Effective March 28th, 2011.

The SEC is adopting new requirements in order to implement Section 945 of the Dodd-Frank Act. Specifically, the SEC is adopting a new rule under the Securities Act of 1933 to require any issuer registering the offer and sale of an asset-backed security ("ABS") to perform a review of the assets underlying the ABS. Also being adopted are amendments to Item 1111 of Regulation AB that will require an ABS issuer to disclose the nature of its review of the assets and the findings and conclusions of the issuer's review of the assets. ABS Rules.

• Disclosure for Asset-Backed Securities Required by Section 943 of the Dodd-Frank Act - Effective March 28th, 2011.

Pursuant to Section 943 of the Dodd-Frank Act, the SEC is adopting new rules related to representations and warranties in asset-backed securities offerings. The final rules require securitizers of asset-backed securities to disclose fulfilled and unfulfilled repurchase requests. The final rules also require nationally recognized statistical rating organizations to include information regarding the representations, warranties and enforcement mechanisms available to investors in an asset-backed securities offering in any report accompanying a credit rating issued in connection with such offering, including a preliminary credit rating. ABS Disclosures.

• Shareholder Approval of Executive Compensation and Golden Parachute Compensation - Effective April 4th, 2011.

On January 25th, 2011, the SEC adopted a rule to implement the provisions of the Dodd-Frank Act relating to shareholder approval of executive compensation and "golden parachute" compensation arrangements. Section 951 of the Dodd-Frank Act amends the Securities Exchange Act of 1934 by adding Section 14A, which requires companies to conduct a separate shareholder advisory vote to approve the compensation of executives, as disclosed pursuant to Item 402 of Regulation S-K or any successor to Item 402. Section 14A also requires companies to conduct a separate shareholder advisory vote to determine how often an issuer will conduct a shareholder advisory vote on executive compensation. In addition, Section 14A requires companies soliciting votes to approve merger or acquisition transactions to provide disclosure of certain "golden parachute" compensation arrangements and, in certain circumstances, to conduct a separate shareholder advisory vote to approve the golden parachute compensation arrangements. Executive Compensation and Golden Parachute Rules.

• MSRB Proposes New Rules and Interpretive Guidance on Municipal Advisors and Underwriters.

The Municipal Securities Rulemaking Board has proposed for comment a new rule, Rule G-36, concerning the fiduciary duty of municipal advisors and proposed interpretive guidance regarding the application of MSRB Rule G-17, which concerns "fair dealing," to municipal advisors and underwriters. Briefing.

• China Issued Rules for National Security Review of M&As by Foreign Investors.

On February 12, the State Council General Office issued a circular on "the Establishment of a Mechanism for National Security Review of Foreign Mergers and Acquisitions of Domestic Enterprises," which takes effect 30 days after the issuance of the circular. Briefing.

• Winston Sponsors 2011 UNC School of Law Banking Institute.

Winston & Strawn will sponsor the 2011 UNC School of Law Banking Institute, to be held March 31-April 1, 2011, in Charlotte. This program will provide continuing education on cutting-edge issues related to banking law. Event.

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