SEC News Roundup: Commission to Present Money Market Mutual Fund Reform Proposal, Achieves Record Number of Insider Trading Settlements During FY 2012

Commission to Present Money Funds Reform Proposal
According to SEC Commissioner Daniel Gallagher, staff members are putting together a money market mutual fund reform proposal that will address the problems that occurred in 2008. Another area that will likely be looked at more closely in the proposal would be the floating the net asset value of the funds. Gallagher, who made his comments at a US Chamber of Commerce, said this was important because there are “serious” related issues involving tax, accounting, and operations that need to be tackled.

Meantime, the Financial Stability Oversight Council is looking at three draft money fund reform recommendations that it wants the SEC to deal with, including floating NAVs, a stable NAV that has a capital buffer with a cap of 1% of a fund’s value in addition to delayed redemptions, and a stable NAV along with a 3% capital buffer that could be lowered if applied along with other measures.

It was just in August that then-SEC Chairman Mary Schapiro experienced a huge setback when the commission did not back certain reform measures. Commissioners Gallagher, Troy Paredes, and Luis Aguilar all refused to vote on an SEC proposal until further study of reform initiatives that the SEC had done in 2010 could be fully assessed. The staff’s report came out in December.

Gallagher also expressed dismay that the SEC had not come up with a final rule to get rid of the bar on general solicitation and advertising for certain private placements, which the Jumpstart Our Business Startups Act is mandating. He noted that the Commission has not decided on whether to take part in rulemaking to set up a uniform fiduciary standard for those who give personalized investment advice about securities to retail clients.

SEC Achieves Record Number of Insider Trading Settlements During FY 2012, Says NERA Report
According to a new report provided by the National Economic Research Associates Inc., the Commission settled a record number of insider trading cases during the last fiscal year. These settlements were reached with 118 individuals and eight companies.

Overall for FY 2012, the SEC reached 714 settlements—the most since FY 2007. Also, notes the report, individual settlements reached the highest level of value ($221,000) since the Sarbanes-Oxley Act of 2002, as did the number of settlements made over alleged financial firm-related misappropriations and misrepresentations (208) and those involving trading violations (48). The number of securities settlements with individuals also reached a record high at 537 since 2005. That said, companies’ median settlement values went down to $1 million from $1.4 million during FY 2011.

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Related Web Resources:
SEC to Issue Proposal on Reform Of Money Funds ‘Soon,’ Gallagher Says, Bloomberg/BNA, January 17, 2013

NERA Releases 2012 Fiscal Year-End SEC Settlement Trends Report, Yahoo, January 14, 2013

More Blog Posts:
SEC Whistleblower Office Will Place More Emphasis on Anti-Retaliation Provisions and Publicity This Year, Institutional Investor Securities Blog, January 29, 2013

CFTC Director Says Corporate Compliance Employees Should Have Comprehension of Dodd-Frank Whistleblower Requirements’Anti-Retaliation Provisions, Institutional Investor Securities Blog, June 14, 2012