A giant data project at the center of the regulatory response to the 2010 “flash crash” that sent the Dow plummeting nearly 1,000 points is years behind schedule and mired in red tape. The Consolidated Audit Trail, or CAT, originally was conceived as a way to enable regulators to monitor stock and options orders in real time and zero in on manipulators quickly. After the flash crash—which occurred May 6, 2010, and saw some big stocks lose nearly all their value before markets rebounded—the CAT was seen as a crucial step in protecting the markets from future swings. Yet the 10 organizations overseeing the process, including Nasdaq OMX Group Inc. and Intercontinental Exchange Inc., which operates the New York Stock Exchange, still haven’t chosen a firm to build and run it, and a final plan hasn’t been approved by the Securities and Exchange Commission. More in the Wall Street Journal [...]
As part of its popular whistleblower program, the Securities and Exchange Commission promises to move swiftly on useful information about potential wrongdoing. But the agency isn’t as speedy when it comes to paying off its tipsters. Of the 297 whistleblowers who have applied for awards since 2011, about 247—or roughly 83%—haven’t received a decision from the SEC, according to data obtained by The Wall Street Journal in response to a public-records request. Some of the award claims have been delayed more than two years. More in the Wall Street Journal [...]
The Securities and Exchange Commission is failing to adequately oversee the Financial Industry Regulatory Authority, the Government Accountability Office said Thursday. In its report, “Securities Regulation: SEC Can Further Enhance Its Oversight of FINRA,” Congress’ investigative arm states that while the securities regulator has taken some actions since GAO suggested in 2012 that the agency beef up its oversight of the self-regulator, the SEC has yet to develop “specific performance goals and measures, with corresponding targets to monitor its progress toward the goal of enhancing” FINRA oversight. More on ThinkAdvisor [...]
The Securities and Exchange Commission is investigating whether Bank of America Corp. broke rules designed to safeguard client accounts, potentially putting retail-brokerage funds at risk in order to generate more profits, according to people familiar with the inquiry. For at least three years, the bank used large, complex trades and loans to save tens of millions of dollars a year in funding costs and to free up billions of dollars in cash and securities for trading that Bank of America otherwise would have needed to keep off-limits, these people said. More in the Wall Street Journal [...]
A panel of investor advocates said on Thursday they were developing a proposal for U.S. securities regulators that will make it easier for retail investors to conduct online background checks of financial professionals before hiring them. The Securities and Exchange Commission’s Investor Advisory Committee discussed the recommendation amid concerns about elderly investors who are often prime targets for fraudsters. It plans to vote on its recommendation in July. More on Reuters [...]
WASHINGTON—A top Securities and Exchange Commission official who made headlines for criticizing the private-equity industry last year is planning to leave the commission. The SEC announced Tuesday that Andrew Bowden will step down from his post as head of the SEC’s Office of Compliance, Inspections and Examinations at the end of April, to return to the private sector. More in the Wall Street Journal [...]
Given the many billions of dollars financial companies have paid in regulatory and legal settlements related to the mortgage crisis, how much money has actually found its way into the pockets of investors harmed by their actions? Less than you may think. To start with, little of the cash generated in most of the Justice Department settlements went to investors. Much of this money went into Treasury coffers or to various states while troubled borrowers were promised loan modifications and other relief as part of the deals. More in the New York Times [...]
In what is being called a landmark ruling for whistleblowers, the Securities and Exchange Commission announced Wednesday that one of the nation’s largest government contractors used confidentiality agreements that had the potential to intimidate and “muzzle” workers from reporting allegations of fraud. The ruling involving Kellogg Brown & Root, also known as KBR, sends a powerful signal to corporations that the improper use of confidentiality agreements will result in civil fines and possible criminal penalties, according to legal experts. The announcement is being hailed as a major victory for whistleblowers, shielding them from signing overly restrictive confidentiality agreements that threaten them with lawsuits and termination for reporting allegations of fraud. More in the Washington Post [...]
Nearly three years after Congress promised to open a spigot of new financing to startups, securities regulators are finally ready to allow one of two anticipated new fundraising methods to go live. In a meeting Wednesday, the Securities and Exchange Commission will vote on rules detailing what’s being called “Regulation A+,” a new equity selling path that’s been widely described as an ” IPO Lite.” Details aren’t yet certain pending the vote, but observers expect the rules to allow young companies a way to raise $50 million from regular people — and to allow those stakes to be traded freely — without having to navigate the patchwork of state securities laws or formally registering with the SEC. This is separate from the more revolutionary Title III of the JOBS Act, a section that would allow startups at all ages to advertise equity investment deals of almost any size. More in New York Business Journal [...]
For decades, the Securities and Exchange Commission has allowed companies and individuals to make settlements without admitting any wrongdoing. Even a company committing an egregious sin that cost investors millions of dollars could walk away from the proceedings without ever acknowledging its role. But in mid-2013 the agency declared that it was doing an about-face. “Heightened accountability or acceptance of responsibility through the defendant’s admission of misconduct may be appropriate, even if it does not allow us to achieve a prompt resolution,” Andrew Ceresney, the S.E.C.’s head of enforcement, said in a June 2013 email to his lieutenants. More in the New York Times [...]