• The "Big Bang" Turns 25.

On October 27th, Reuters noted the 25th anniversary of the "Big Bang," the day that the London Stock Exchange began computerized trading, an event celebrated by some as marking London's entrance as a global financial center, and criticized by others as leading to "too big to fail." Big Bang.

• The Nomination of Thomas Hoenig to the FDIC.

On October 27th, the New York Times' Economix blog discussed the nomination of Thomas Hoenig to be Chairman of the FDIC and how his confirmation could affect the agency's regulatory agenda. Hoenig Nomination.

• The Dodd-Frank Act's Jobs Effect.

On October 27th, Reuters analyzed an unintended consequence of the Dodd-Frank Act: job creation. Job Creation.

• Rajat Gupta Indicted on Insider Trading Charges.

On October 26th, Rajat Gupta, the former managing director of McKinsey & Co. and a former director of Goldman Sachs and Proctor & Gamble, surrendered to the FBI on charges that he passed non-public insider information to Raj Rajaratnam concerning, among other things, Berkshire Hathaway's $5 billion investment in Goldman Sachs. The SEC has filed related civil charges against Gupta and Rajaratnam. SEC v. Gupta, Lit.Rel.No. 22140. See also SEC Press Release; Business Week; Los Angeles Times. On October 27th, Bloomberg analyzed the evidence that may be used to prosecute Gupta, noting that the government will be relying on the more traditional tools used in insider trading prosecutions and less on the wiretaps employed in Rajaratnam's trial. Evidence.

• The Other Kind of Security.

On October 26th, Reuters reported that the National Security Agency is assisting U.S. financial institutions in detecting and preventing cyber-intrusions. NSA.

• Labor Department Issues New Exemption for ERISA Advice.

On October 24th, the Department of Labor's Employee Benefits Security Administration issued a new final rule implementing a prohibited transaction exemption for investment advice provided to defined contribution plan (such as 401(k) plan) participants under the Employee Retirement Income Security Act ("ERISA") and the Internal Revenue Code. As a general rule, fiduciary investment advisers may not recommend plan investment options if the adviser receives additional fees from the investment providers. To qualify for the exemption in the new final rule, investment advice must be given through the use of a computer model that is certified as unbiased by an independent expert or through an adviser compensated on a "level-fee" basis (in other words, not compensated on the basis of the investment options selected). Other conditions also must be met, including the disclosure of the adviser's fees and an annual audit of the arrangement for compliance with the regulation. This new rule is separate from and does not affect the Labor Department's proposed rule on the definition of fiduciary investment advice, which the department recently announced it will re-propose. Labor Department Press Release.

• SEC Issues No-Action Letter Regarding DOL 401(k) Participant Disclosure Requirements.

On October 28th, Investment News reported that the SEC has sent a no-action letter to the Labor Department advising that disclosures meeting the Labor Department's 401(k) participant disclosure rules will comply with the SEC's advertising rules. 401(k) plan sponsors and their advisers had expressed concern that the DOL disclosure rules, particularly the manner in which performance is required to be reported, would be in conflict with SEC advertising rules. The 401(k) participant disclosures are required to be made by May 31, 2012. No-Action.

• Raj Rajaratnam.

On October 23rd, The Daily Beast posted an interview and profile of Raj Rajaratnam, who was recently sentenced to 11 years in prison for insider trading. The article provides insight into the prosecution's real target and Rajaratnam's decision to contest the charges. Interview. On October 24th, Bloomberg reported that the FBI and the office of the Manhattan U.S. Attorney dispute many of the assertions made by Rajaratnam. Response.

• Former Federal Board Chairman Paul Volcker and What Remains to be Done.

On October 22nd, the New York Times summarized former Federal Reserve Board Chairman Paul Volcker's speech before the G20. Volcker highlighted the concerns raised by the prominent role money market mutual funds play in the commercial paper markets, particularly their recent lending to European banks. He further opined that residential mortgage markets should be weaned from the federal government. Volcker Remarks.

• Crowdfunding Bill Moves Forward.

On October 28th, Reuters reported that amendments to H.R. 2930, the Entrepreneur Access to Capital Act, will require issuers seeking crowdfunding to notify the SEC, which will in turn notify state regulators, of new offerings. Registration of the offering still would not be required. The bill now moves to the full House for consideration. Crowdfunding. See also Washington Post (discussing crowdfunding).

• House Committee Passes Two Bills Aimed at Helping Small Firms.

On October 26th, the House Financial Services Committee passed H.R. 2167, the Private Company Flexibility and Growth Act, which would increase the total assets threshold from $1 million to $10 million, and the class of equity security holders of record threshold from 500-750 to 1,000 persons before companies would be required to register with the SEC. The Committee also passed H.R. 1965, which would, among other things, make it easier for a bank to remain private, and make crowdfunding easier.

• Reserve Requirement of Depository Institutions.

On October 26th, the Federal Reserve Board announced the annual indexing of the reserve requirement exemption amount and of the low reserve tranche for 2012. These amounts are used in the calculation of reserve requirements of depository institutions. The Board also announced the annual indexing of the nonexempt deposit cutoff level and the reduced reporting limit that will be used to determine deposit reporting panels effective 2012. Federal Reserve Board Press Release.

• OCC Revises Electronic Fund Transfer Act Provisions in the Comptroller's Handbook.

On October 21st, the OCC issued a new booklet entitled "Electronic Fund Transfer Act-Regulation E" in the Comptroller's Handbook. The booklet updates examination procedures and incorporates recent changes that the Federal Reserve Board made to Regulation E regarding overdraft services, gift cards, and electronic signatures. OCC Bulletin.

• Treasury Department Targets Sinaloa Drug Cartel.

On October 27th, the Treasury Department's Office of Foreign Assets Control announced the designation of a key Sinaloa Cartel lieutenant, Martin Guadencio Avendano Ojeda, his two brothers and two companies located in Mexico. As a result of the action, U.S. persons are prohibited from engaging in transactions with the designees and any assets that they may have under U.S. jurisdiction are frozen. Treasury Department Press Release.

• Unblocking Notice.

On October 25th, the Treasury Department's Office of Foreign Assets Control published a notice unblocking the assets of Luis Carlos Gamboa Morales, Maria Victoria Osorio Cadavid, and Abdala Saieh Jassir. 76 FR 66132.

• Position Limits.

On October 27th, the CFTC published the adopting release and text of new final rules governing position limits for futures and swaps. The new rules set limits on speculative positions in 28 core physical commodity contracts and their "economically equivalent" futures, options, and swaps (collectively "Referenced Contracts"). The establishment of speculative limits on Referenced Contracts will occur in two phases. Spot-month limits will be effective sixty days after the term "swap" is defined under the Dodd-Frank Act. For the nine "legacy" agricultural Referenced Contracts that currently are subject to CFTC-administered limits, the new non-spot-month limits will go into effect sixty days after the term "swap" is further defined under the Dodd-Frank Act. For all other Referenced Contracts, the limits will be made effective by order after the CFTC has received one year of open interest data on physical commodity cleared and uncleared swaps under the swaps large trader reporting rule.

• CFTC Allows Taiwan Futures Exchange's Futures Contract.

On October 25th, the CFTC's Office of General Counsel announced that it issued a no-action letter on October 24, 2011, permitting the offer and sale in the United States of the Taiwan Futures Exchange's futures contract based on the GTEX. The GTEX is a broad-based, free-float, market-capitalization-weighted composite index of highly capitalized and actively traded stocks listed on the board of the GreTai Securities Market, a non-profit organization modeled after the NASDAQ. The GTEX index provides a performance benchmark for the Taiwanese over-the-counter securities market. As of September 12, 2011, the total adjusted market capitalization of the GTEX was approximately US $52 billion. CFTC Press Release.

• SEC Adopts Private Fund Risk Reporting.

On October 26th, the SEC voted unanimously to adopt a new rule requiring certain advisers to hedge funds and other private funds to report information for use by the Financial Stability Oversight Council ("FSOC") in monitoring risks to the U.S. financial system. The rule, which implements Sections 404 and 406 of the Dodd-Frank Act, requires SEC-registered investment advisers with at least $150 million in private fund assets under management to periodically file a new reporting form (Form PF). The CFTC is expected to vote on jointly adopting these reporting requirements within the next week. There will be a two-stage phase-in period for compliance with Form PF filing requirements. Most private fund advisers will be required to begin filing Form PF following the end of their first fiscal year or fiscal quarter, as applicable, to end on or after December 15, 2012. However, certain advisers, those with at least $5 billion in assets under management attributable to hedge funds, private funds, liquidity funds, or registered money market funds, must begin filing Form PF following the end of their first fiscal year or fiscal quarter, as applicable, to end on or after June 15, 2012. SEC Press Release. The Washington Post reported that comments submitted to the SEC on the proposed rule indicate that opponents of the rule may be preparing to challenge them. Groundwork. However, Commissioner Luis A. Aguilar noted that when compared to the proposed rule, the adopted rule applies to fewer firms, requires less frequent filing, and gives firms more time to file. Aguilar Open Meeting Remarks. Chairman Mary Schapiro commented that the data collection form will require substantially less information from advisers managing large private equity funds than that required from advisers to large hedge fund and liquidity funds. Schapiro Open Meeting Remarks.

• Filing Fees for Exempt Reporting Advisers and Private Fund Advisers.

On October 24th, the SEC issued an order approving filing fees for exempt reporting advisers filing Form ADV with the SEC and private fund advisers filing Form PF. The fee for exempt reporting advisers applies beginning October 28, 2011. The fees for private fund advisers would apply starting with the effective date of Rule 204(b)-1 under the Investment Advisers Act of 1940. SEC Release No. IA-3305.

• Advisory Committee on Small and Emerging Companies to Meet.

On October 31, 2011, the SEC Advisory Committee on Small and Emerging Companies will hold an Open Meeting. Meeting Notice. View the agenda here. See also SEC Press Release.

• Financial Reporting Series Meeting.

The SEC will hold the inaugural roundtable discussion of the Financial Reporting Series on November 8, 2011. A majority of the Commissioners may attend. SEC Meeting Notice. See also SEC Release No. 34-65602.

• The SEC's Inspector General.

On October 27th, Bloomberg reported on the controversy surrounding SEC Inspector General H. David Kotz. Detractors claim that his practices are negatively affecting the staff. Supporters assert that his zealous investigations are necessary. Inspector General.

• SEC Addressing Message Traffic.

On October 23rd, Investment News reported that the SEC is calling on exchanges to take steps to stem the flow of message traffic, including orders, that is overwhelming traders and may actually reduce liquidity, not improve it. Traffic Control.

• SEC Approves Auction Rules.

On October 25th, the SEC granted accelerated approval to BATS Exchange's proposed rules to govern auctions conducted by BATS for BATS-listed securities. SEC Release No. 34-65619.

• FINRA Provides Guidance on Advertising Regulation Issues.

On October 27th, FINRA provided guidance to firms on issues related to the application of NASD Rule 2210 (Communications with the Public) and the filing of communications for review with FINRA's Advertising Regulation Department. FINRA Regulatory Notice 11-49.

• FICC Proposes Fails Charges for Agency Debt Securities Transactions.

On October 26th, the SEC provided notice of the Fixed Income Clearing Corporation's proposal to expand the applicability of the fails charge to Agency debt securities transactions. Specifically, transactions in debentures issued by Fannie Mae, Freddie Mac, and the Federal Home Loan Banks would be subject to the charge. The proposed fails charge for Agencies will be the same as that currently in place for Treasuries and is equal to the greater of: (a) 0 percent and (b) 3 percent per annum minus the federal funds target rate. The charge will accrue each calendar day that a fail is outstanding. Comments should be submitted within 21 days after publication in the Federal Register, which is expected during the week of October 31. SEC Release No. 34-65632.

• New Order Type Proposed.

On October 24th, the SEC provided notice of NASDAQ OMX PHLX's proposal to introduce the "Minimum Life Order" for use in the NASDAQ OMX PSX ("PSX") system. PSX was developed to provide an alternative to traditional price-time markets that reward market participants whose systems are quickest to post at a given price. PSX instead allocates execution opportunities based on the size of posted orders. The exchange has devised the Minimum Life Order to further enhance this market model, which is designed to provide market participants with a means to signal that their order will not be cancelled within a given time frame and thereby encourage removers of liquidity to route orders to PSX in the expectation of receiving higher fill rates. Comments should be submitted on or before November 18, 2011. SEC Release No. 34-65610.

• Proposed Co-Location Services Expansion.

On October 26th, the SEC provided notice of NYSE Arca's, NYSE Amex's and the New York Stock Exchange's filing of proposals that would expand the scope of potential "Users" of their co-location services to include any market participant that requests to receive co-location services directly from the exchanges. In addition, the exchanges propose to amend each of their Fee Schedules to establish a fee for Users that host their customers at the exchanges' data centers. Five separate proposals were filed. Comments on each of the proposals should be submitted within 21 days after publication in the Federal Register, which is expected during the week of October 31. SEC Release No. 34-65624 (NYSE Arca proposal for OTP Holders, OTP Firms or Sponsored Participants); SEC Release No. 34-65625 (NYSE Arca proposal for ETP Holders or Sponsored Participants); SEC Release No. 34-65626 (NYSE Amex proposal for ATP Holders); SEC Release No. 34-65627 (NYSE Amex proposal for member organizations); SEC Release No. 34-65629 (NYSE proposal for member organizations).

• OCC Proposes Clarification of Its Use of Defaulting Member's Margin Deposits.

On October 26th, the SEC provided notice of the Options Clearing Corporation's proposal to amend its by-laws and rules to clarify the OCC's authority to use, and the manner in which the OCC may use, a defaulting clearing member's margin deposits and contributions to the clearing fund and all other clearing members' clearing fund contributions to obtain temporary liquidity for purposes of meeting liquidity needs arising from Default Obligations. Comments should be submitted within 21 days after publication in the Federal Register, which is expected during the week of October 31. SEC Release No. 34-65622.

• Plaintiff Stated Claims Against Lender's Lawyers.

On October 28th, the Eleventh Circuit reversed the dismissal of a home owner's Fair Debt Collection Practices Act complaint filed against the lender's foreclosing law firm. When foreclosure proceedings began, the law firm's client did not have the present right to the property. After initiating foreclosure the law firm filed an assignment for the home with a retroactive date preceding foreclosure. However, because plaintiff was not a party to the assignment, it had no retroactive effect against her. Therefore, the client lacked standing to foreclose and the plaintiff stated a claim for the law firm's violation of the Act. Minnifield v. Johnson & Freedman, LLC (Unpublished).

• Antitrust Claims Against Creditors Dismissed.

On October 24th, the United States Court of Appeals for the Third Circuit affirmed the dismissal of a garment retailer's antitrust claims against the factors that provided credit to the retailer. According to the Third Circuit, exchanging information concerning a customer's creditworthiness does not violate the Sherman Act, and plaintiff's allegations of an agreement are conclusory, lack time and place details, and fail to allege parallel behavior. Burtch v. Milberg Factors, Inc.

• Adkins to Speak at ACC-SF's November Program.

Winston & Strawn litigation partner Robb Adkins, based in the firm's San Francisco office, will be speaking at the Association of Corporate Counsel - San Francisco Bay Area's (ACC-SF) November program, to be held November 8-9, in Palo Alto and San Francisco, respectively. On a panel titled "From Enron to Today: How to Navigate the Contradictions and Complications of Sarbanes-Oxley, Dodd-Frank, and a Decade of Corporate Regulation," Mr. Adkins will share his experience as a DOJ prosecutor in the Enron trial involving Ken Lay and Jeff Skilling, and most recently as the top fraud official in the country. 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.

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