• SEC Report on Credit Raters Finds "Failures."

On September 30th, Reuters reported that all ten credit ratings agencies examined have been found to have "apparent failures" by SEC staff. The annual report, required by last year's Dodd-Frank Act, has added to the recent pressure on the ratings agencies. The SEC has demanded remediation plans from each of the agencies within 30 days and is continuing its investigation. Apparent Failures.

• CFPB Nominee to Get a Vote as Political Tensions Continue.

On September 29th, Reuters reported that the Senate Banking Committee is scheduled to vote next week on whether to recommend confirmation of Richard Cordray as the head of the Consumer Financial Protection Bureau. The vote is expected to occur on October 6th. Confirmation.

• Senate to Focus Next on Currency Manipulation.

On September 27th, the Washington Post reported on Senate Majority Leader Harry Reid's statement that while the Senate does intend to get to work on passing President Obama's recently unveiled American Jobs Act, their priority lies with debating a new bill that would punish China and other nations accused of currency manipulation. Currency Wars.

• The True Cost of Net Neutrality.

On September 26th, Forbes explained how, with such a large part of our economy based on the internet, new rules to ensure net neutrality have put the cost and benefits of regulation front and center. Larry Downes compiles an impressive overview of the expected effects of the FCC's new regulation. The rule, published on September 23rd, will take effect November 20th. Net Neutrality.

• Default Averted as Senate Agrees on Extension.

On September 26th, the New York Times reported that the Senate passed a last-minute spending bill that funds the federal government through the fiscal year, preventing a default on October 1st. The bill had been back in forth in Congress due to disagreements over the amount of funding for FEMA disaster relief. Extension.

• Fed Approves Two New Foreign Bank Offices.

On September 27th, the Federal Reserve Board announced the approval of separate applications by The Bank of Fukuoka, Ltd., Fukuoka, Japan, and by Banca Popolare di Vicenza S.C.p.A., Vicenza, Italy, to establish representative offices of their banks in New York, New York.

• Monetary Policy and Job Creation.

On September 26th, Federal Reserve Governor Sarah Bloom Raskin presented an address at the University of Maryland Smith School of Business Distinguished Speaker Series focusing on the lack of recovery in the U.S. labor market and the Fed's past and future actions to try to improve the labor market. Raskin Remarks.

• Mortgage Delinquencies Rose During Second Quarter of 2011.

According to a report released by the OCC on September 29th, the performance of first-lien mortgages serviced by large national banks and federal savings associations declined slightly during the second quarter of 2011 - primarily due to early stage delinquencies. The quarterly OCC Mortgage Metrics Report showed that 88 percent of the 32.7 million loans in the portfolio were current and performing at the end of the second quarter, down from 88.6 percent at the end of the first quarter, but up from 87.3 percent a year earlier. OCC Press Release.

• Treasury Continues Efforts Targeting Terrorist Organizations Operating in Afghanistan and Pakistan.

On September 29th, Treasury announced the designations of five individuals for providing financial, material or technological support, or acting for or on behalf of the most dangerous terrorist organizations operating in Afghanistan and Pakistan. The individuals designated are: Hajji Faizullah Khan Noorzai, Hajji Malik Noorzai, Abdur Rehman, Abdul Aziz Abbasin, and Fazal Rahim. Identifying information, including an alias list, is provided in the Treasury Press Release.

• Treasury Sanctions Lashkar-e Tayyiba Leaders and Founders.

On September 28th, Treasury announced the designation of two Lashkar-e Tayyiba (LET) leaders and founding members, Zafar Iqbal and Hafiz Abdul Salam Bhuttavi, pursuant to Executive Order 13224. LET is a Pakistan-based terrorist group with links to the al-Qa'ida network and its former leader Usama bin Laden. As a result of today's action, U.S. persons are generally prohibited from engaging in transactions with Zafar Iqbal and Hafiz Abdul Salam Bhuttavi and any assets they may have in the U.S. are frozen. Treasury Press Release.

• Small Business Lending Fund Provides More Than $4 Billion to 332 Community Banks Across the Nation.

On September 28th, Treasury announced that an additional 141 community banks across the country have received more than $1.6 billion as part of the seventh and final wave of funding provided through the Small Business Lending Fund (SBLF). This brings the total funding for the program to more than $4 billion going to 332 banks across the country. Treasury Press Release.

• Second Quarter Mortgage Loan Fraud Suspicious Activity Persists.

On September 28th, FinCEN reported in its Second Quarter 2011 Analysis of mortgage loan fraud suspicious activity reports (MLF SARs) that financial institutions filed 29,558 MLF SARs in the second quarter of 2011 up from 15,727 MLF SARs reported in the same quarter of 2010. FinCEN News Release.

• Extraordinary Market Volatility.

On September 27th, the SEC filed a notice designating a longer period for action on the proposed Plan to Address Extraordinary Market Volatility (the "Plan") filed by NYSE Euronext, on behalf of New York Stock Exchange LLC, NYSE Amex LLC, and NYSE Arca, Inc., and the following parties to the proposed National Market System Plan: BATS Exchange, Inc., BATS Y-Exchange, Inc., Chicago Board Options Exchange, Incorporated, Chicago Stock Exchange, Inc., EDGA Exchange, Inc., EDGX Exchange, Inc., Financial Industry Regulatory Authority, Inc., NASDAQ OMX BX, Inc., NASDAQ OMX PHLX LLC, the Nasdaq Stock Market LLC, and National Stock Exchange, Inc. November 28, 2011, is now the date by which the SEC must approve the proposed Plan, with such changes or subject to such conditions as the SEC may deem necessary or appropriate, if it finds that such plan or amendment is necessary or appropriate in the public interest. SEC Release No. 34-65410.

• FINRA Revises the Examination Programs.

On September 29th, FINRA announced that it has revised the General Securities Representative (Series 7); United Kingdom Securities Representative (Series 17); Canada Securities Representative (Series 37); and Canada Securities Representative (Series 38) examination programs. The changes are intended to address changes to the laws, rules and regulations covered by the examinations, are reflected in the content outlines on FINRA's website and will appear in examinations starting on November 7, 2011. Regulatory Notice 11-45.

• FINRA Proposes Amendments to Customer Account Statement Rules.

On September 29th, FINRA requested comment on proposed amendments to NASD Rule 2340 (Customer Account Statements) to address how firms report the per share estimated values of unlisted Direct Participation Programs ("DPPs") and unlisted Real Estate Investment Trusts ("REITs") on customer account statements. The amendments would (i) limit the time period that the offering price may be used as the basis for a per share estimated value to the period provided under Rule 415(a)(5) of the Securities Act of 1933 (the "Initial Offering Period"); (ii) require firms to deduct organization and offering expenses from per share estimated values during the Initial Offering Period; (iii) prohibit a firm from using a per share estimated value, from any source, if it knows or has reason to know that the value is unreliable, based on publicly available information or nonpublic information that has come to the firm's attention; and (iv) allow a firm to omit a per share estimated value on a customer account statement if the most recent annual report of the DPP or REIT does not contain a value that complies with the disclosure requirements of NASD Rule 2340.2. The comment period expires November 12, 2011. Regulatory Notice 11-44.

• Trade Reporting Obligations Relating to Customer Sales of Low-Value OTC Equity Securities.

On September 23rd, FINRA issued a Trade Reporting Notice to remind firms that sales of low-value OTC equity securities positions from customer accounts (often deemed by the customer and firm to be "worthless") are subject to FINRA trade reporting rules and must be reported to FINRA for publication purposes. FINRA Trade Reporting Notice.

• Trade Reporting Transactions in OTC Equity Securities and Restricted Equity Securities.

On September 23rd, FINRA issued a Trade Reporting Notice to remind firms that over-the-counter (OTC) trades in OTC Equity Securities and trades in Restricted Equity Securities under Securities Act Rule 144A must be reported to FINRA in accordance with FINRA trade reporting rules. If a firm executes a trade in a security for which there is no valid OTC symbol, the firm must obtain a symbol so that it can fulfill its trade reporting obligations. FINRA Trade Reporting Notice.

• MSRB Withdraws Multiple Proposed Rule Changes.

On September 26th, the SEC issued five notices of withdrawal of proposed rule changes relating to municipal advisors, filed by the Municipal Securities Rulemaking Board. SEC Release Nos. 34-65394; 34-65395; 34-65396; 34-65397; 34-65398.

• Municipal Securities Representatives.

On September 26th, the SEC issued a notice of filing of a proposed rule change by the Municipal Securities Rulemaking Board consisting of proposed amendments regarding professional qualifications and information concerning associated persons. Comments should be submitted on or before October 21, 2011. SEC Release No. 34-65393.

• Nasdaq Options Services.

On September 26th, the SEC approved a proposed rule change submitted by NASDAQ OMX PHLX LLC requesting permanent approval of the pilot program permitting NASDAQ OMX PHLX to receive certain inbound routes by Nasdaq Options Services, LLC. SEC Release No. 34-65399.

• NASDAQ Options Market.

On September 27th, the SEC granted approval of a proposal by The NASDAQ Stock Market LLC to establish an Acceptable Trade Range for quotes and orders entered on The NASDAQ Options Market. SEC Release No. 34-65405.

• Automated Customer Account Transfer Service.

On September 26th, the SEC issued a notice of - and granted accelerated approval to - National Securities Clearing Corporation's proposed rule change that would amend NSCC's rules relating to an adjustment to the settlement timing of partial transfers of mutual fund assets through NSCC's Automated Customer Account Transfer Service. Comments should be submitted on or before October 21, 2011. SEC Release No. 34-65401.

• Russell Equity ETF.

On September 26th, the SEC approved a proposed rule change submitted by NYSE Arca, Inc. to reflect a change to the benchmark index applicable to the Russell Equity ETF. SEC Release No. 34-65400.

• Beal Entity Found to be a Sham Partnership.

A limited liability company for buying Chinese nonperforming loans was set up to provide tax benefits through paper losses for its key member, Andrew Beal. The LLC was set up as a partnership for tax purposes. Paper losses of $200 million on the loans were claimed by Beal as a deduction. The IRS found the entity to be a sham partnership, formed for the purpose of tax avoidance, and so disallowed the deduction and imposed penalties. The district court upheld the IRS determination, but disallowed the imposition of penalties. On September 30th, the Fifth Circuit affirmed. Southgate Master Fund, LLC v. USA.

• Large Trader Reporting - Effective October 3, 2011.

The SEC has adopted new Rule 13h-1 and Form 13H under Section 13(h) of the Securities Exchange Act of 1934 to assist the SEC in both identifying and obtaining trading information on market participants that conduct a substantial amount of trading activity, in the U.S. securities markets. Among other things, Rule 13h-1 will require a "large trader," defined as a person whose transactions in NMS securities equal or exceed 2 million shares or $20 million during any calendar day, or 20 million shares or $200 million during any calendar month, to identify itself to the SEC and make certain disclosures to the SEC on Form 13H. Large traders are required to file their initial Form 13H no later than December 1, 2011. Broker-dealers are required to begin complying with the new rule's recordkeeping, reporting, and monitoring requirements no later than April 30, 2012. 76 FR 46960. See the Winston and Strawn Briefing on the new requirements.

• Privacy Act of 1974: Implementation and Amendment of Exemptions - Effective October 17, 2011.

The SEC has adopted a rule to amend its Privacy Act regulations to exempt portions of three new systems of records and to make technical amendments to its current inventory of exempted systems of records. Specifically, application of the exemptions to the three new systems of records is necessary to protect information compiled for law enforcement purposes. 76 FR 57636.

• Winston & Strawn Sponsors TMA's 2011 Annual Convention.

Winston & Strawn will sponsor the 2011 Turnaround Management Association (TMA) Annual Convention, to be held October 25-27, 2011 in San Diego. Twitter co-founder Biz Stone is the keynote speaker. Event.

• Winston & Strawn Sponsors 16th Annual LSTA Conference.

Winston & Strawn is sponsoring the 16th Annual Loan Syndications and Trading Association's (LSTA) Conference to be held on November 2, 2011 in New York. Event.

• New York Bankruptcy Court and Colorado District Court Disagree on the Application of Section 552 to a Lender's Security Interest in Proceeds of FCC License.

A New York bankruptcy court recently considered the effects of Bankruptcy Code section 552 on a lender's security interest in the proceeds of an FCC broadcast license and held that a prepetition security interest extended to proceeds received from a post-petition transfer of the debtors' FCC license. Briefing.

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