SEC Proposes Broad Anti-Fraud Rule for Security-Based Swaps
The SEC has proposed a new anti-fraud rule covering all transactions in, and relating to, securities-based swaps. The Dodd-Frank Act granted regulatory authority to the SEC to regulate security-based swaps. In addition to prohibiting fraud in offers, purchases, and sales of security-based swaps, the rule would also apply to “the cash flows, payments, deliveries, and other ongoing obligations and rights that are specific to security-based swaps.”
OUR TAKE: This proposed anti-fraud rule reaches every element of a swap including the underlying payments and deliveries. Once again, the SEC has used its new regulatory power under Dodd-Frank to expand its regulatory reach as far as possible. Although an anti-fraud rule is a fairly potent law enforcement tool, we expect specific substantive rulemaking for security-based swaps to follow. Also, we expect the CFTC will follow the SEC’s templates when regulating other swaps.
Posted by Todd Cipperman at 11/5/2010 6:10 AM 
Categories: Compliance and Operations
Tags: swaps anti-fraud sec rule
Categories: Compliance and Operations
Tags: swaps anti-fraud sec rule
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