• Profile of a Point Man.

On May 18th, the Washington Post profiled Federal Reserve Board (the "Board") Governor Daniel Tarullo, the Board's point man for the implementation of the Dodd-Frank Wall Street Reform and Consumer Protection Act (the "Dodd-Frank Act"). Point Man.

• Capital Call.

On May 17th, Reuters reported Fitch Ratings believes the world's 29 global systemically important financial institutions will need a combined $566 billion to meet Basel III capital standards. Capital Call.

• SEC Suggests Derivatives Accounting Changes.

On May 16th, On Wall Street discussed the Securities and Exchange Commission's (the "SEC") request that the Financial Accounting Standards Board (the "FASB") consider making changes to derivatives accounting. Derivatives Accounting.

• The JOBS Act's Risks.

On May 15th, CFO.com reported some lawyers are encouraging emerging companies filing registration statements to disclose the risks associated with issuing shares in accordance with the Jumpstart Our Business Startups Act (the "JOBS Act"). Unintended Consequences.

• A Peak for FDIC Lawsuits.

On May 13th, Bloomberg reported the Federal Deposit Insurance Corporation's (the "FDIC") lawsuits against the officers and directors of failed banks will likely peak at the end of this year and the beginning of next. FDIC Enforcement.

• FDIC Publishes Latest Consumer Newsletter.

On May 18th, the FDIC published its current issue of its consumer newsletter. The issue includes tips for buying a certificate of deposit, paying for higher education, and financing the purchase of a car. FDIC Press Release.

• Rescinded OTS Documents.

On May 17th, the Office of the Comptroller of the Currency (the "OCC") published a list of Office of Thrift Supervision documents being rescinded. OCC Bulletin.

• Comptroller Curry Discusses Risk.

On May 16th, Comptroller of the Currency Thomas J. Curry discussed operational risks facing national banks and federal savings associations. Curry Remarks.

• Stress Testing Guidance.

On May 14th, the Board, OCC and FDIC issued final supervisory guidance regarding stress-testing practices at banking organizations with total consolidated assets of more than $10 billion. The guidance highlights the importance of stress testing at banking organizations as an ongoing risk management practice that supports a banking organization's forward-looking assessment of its risks and better equips it to address a range of adverse outcomes. The guidance outlines general principles for a satisfactory stress testing framework and describes various stress testing approaches and how stress testing should be used at various levels within an organization. The guidance also discusses the importance of stress testing in capital and liquidity planning and the importance of strong internal governance and controls as part of an effective stress-testing framework. Separately, the Board, OCC and FDIC issued a statement clarifying that community banks are not required or expected to conduct the types of stress testing required of larger organizations. See also OCC Bulletin.

• President Signs Executive Order Regarding Yemen.

On May 16th, the President signed an Executive Order entitled "Blocking Property of Persons Threatening the Peace, Security, or Stability of Yemen," which provides the Treasury Department with the authority to target, in consultation with the State Department, individuals and entities that pose a threat to Yemen's peace, security, or stability. Treasury Department Press Release.

• Designations.

On May 15th, the Treasury Department's Office of Foreign Asset Control ("OFAC") designated Chhota Shakeel and Ibrahim "Tiger" Memon as Specially Designated Narcotics Traffickers for their roles as part of a criminal organization run by Dawood Ibrahim, known as "D Company." Treasury Department May 15 Press Release. On May 17th, OFAC designated Bakht Gul, a Haqqani Network communications official for acting for or on behalf of Badruddin Haqqani, and Abdul Baqi Bari, a Taliban financier, for providing financial support for, and or financial services to, the Taliban. Treasury Department May 17 Press Release. As a result of these actions, U.S. persons are prohibited from conducting financial or commercial transactions with the designees and any assets they may have under U.S. jurisdiction are frozen.

• May SAR Activity Review Published.

On May 14th, the Financial Crimes Enforcement Network published the May edition of the SAR Activity Review.

• CFTC Adopts Pre-Enactment and Transition Swap Recordkeeping and Reporting Rules.

On May 18th, the Commodity Futures Trading Commission (the "CFTC") adopted new final rules establishing swap data recordkeeping and reporting requirements for pre-enactment swaps (swaps executed prior to the passage of the Dodd-Frank Act) and transition swaps (swaps entered into between the law's enactment date and the applicable compliance date for swap data recordkeeping and reporting). The new rules are effective 60 days after publication in the Federal Register, which is expected during the week of May 21. CFTC Press Release.

• CFTC Approves CME Group's Extended Trading Day Proposal.

On May 18th, MarketWatch reported the CFTC has approved CME Group's proposed 21-hour trading day for grain futures. The longer day will begin at 6:00 PM (ET) on May 20, 2012. Longer Day.

• CFTC May Increase Aggregate Position Limit Threshold.

On May 17th, Bloomberg reported the CFTC may relax its rules for the aggregation of speculative position limits, raising the threshold to 50 percent from the current 10 percent. The agency's rule is the subject of a lawsuit brought by the Securities Industry and Financial Markets Association and the International Swaps and Derivatives Association. Position Limits.

• Division of Corporation Finance Provides Guidance on Submitting JOBS Act Registration Statements.

On May 11th, the SEC's Division of Corporation Finance provided guidance on how emerging companies can submit confidential draft registration statements or foreign private issuer non-public draft registration statements using the SEC's secure e-mail system. Submitted draft registration statements must be in a text searchable PDF format. The secure e-mail system will be used until the SEC is able to receive the registration statements via EDGAR. See also Division Statement.

• Investor Advisory Committee to Meet.

The SEC's Investor Advisory Committee, established pursuant to Section 911 of the Dodd-Frank Act, will hold a public meeting on June 12, 2012. The agenda for the meeting includes initial remarks by Commissioners, introduction of the Committee members, consideration of the Committee's charter and bylaws, discussion of administrative issues, selection of Committee officers, and discussion of issues for potential consideration by the Committee and division of responsibilities. Written statements may be submitted on or before June 1, 2012. Meeting Notice.

• House Committee Hearings on Federal Civil Settlement Policy.

On May 17th, the House Financial Services Committee held hearings on agency policies for settling civil enforcement matters. Representatives from the FDIC, the Board, OCC, and SEC testified. See Hearing Website (with links to archived webcast and witness prepared statements). Robert Khuzami, SEC Enforcement Director, summarized the SEC's policy and defended its practices of accepting "neither admit nor deny" consent judgments. Khuzami Remarks. Reuters reported that many members of the House committee questioned suggestions that the "neither admit nor deny" policy be changed to one which required some form of an admission. Settled Policy. On May 18th, the Washington Post noted that the hearings provided a unique role reversal opportunity, with Republicans supporting the SEC and Democrats decrying it. Role Reversal.

• Commissioners Question MSRB Interpretive Notice.

On May 14th, SEC Commissioners Troy A. Paredes and Daniel M. Gallagher issued a statement dissenting from the agency's decision to approve the Municipal Securities Rulemaking Board's (the "MSRB") interpretive notice concerning the application of MSRB Rule G-17. Under the interpretive notice, underwriters of municipal securities will be required to disclose to their state and local government clients, risks about complex financial transactions, potential conflicts of interest, and compensation received from third-party providers of derivatives and investments, among other new requirements. MSRB Press Release. See also MSRB Notice 2012-25 (SEC Approves Interpretive Notice on the Duties of Underwriters to State and Local Government Issuers); SEC Release No. 34-66927 (SEC order approving the MSRB's new requirements). The dissenting Commissioners, however, question whether the benefits associated with the new interpretive notice outweigh its costs. Commissioner Statement.

• Three Commissioners Oppose Money Market Proposal.

On May 11th, SEC Commissioners Luis A. Aguilar, Troy A. Paredes, and Daniel M. Gallagher issued a statement opposing the recommendations of the International Organization of Securities Commission ("IOSCO") concerning money market fund risks and reform options. Among other things, the IOSCO recommends such reforms as a floating net asset value and capital and redemption restrictions.

• OCIE Deputy Director Discusses Hedge Fund Advisers.

On May 11th, Norm Champ, SEC Deputy Director, Office of Compliance Inspections and Examinations, discussed the provisions of the Dodd-Frank Act applicable to private fund advisers, specifically hedge fund advisers, and what the Commission staff and the National Examination Program have been doing to prepare for these new registrants. He highlighted key requirements under the Advisers Act and discussed considerations for newly registered hedge fund advisers. Champ specifically focused on fees, conflicts of interest, and risk management. Champ Remarks.

• SEC Approves Limited Exemption from Contra-Party Identity Requirement.

On May 11th, the SEC approved BOX Options Exchange's request for a limited exemption from the requirements of Rule 10b-10 (a)(2)(i)(A) under the Securities Exchange Act of 1934, as amended, on behalf of its Options Participants that execute trades as agent for their customers on BOX Market, an options trading facility of the Exchange ("BOX"). BOX will operate a fully automated electronic book ("BOX Book") for orders to buy or sell securities with a continuous, automated matching function which will provide for strict price-time priority execution. The BOX Book and the Exchange Rules provide for post trade anonymity through settlement for trades executed on BOX. The limited exemption grants the Exchange, on behalf of its Options Participants, a limited exemption from the Contra-Party Identity Requirement of Rule 10b-10(a)(2)(i)(A). SEC Release No. 34-66976.

• Proposed Modification of the One-Pot Cross-Margining Program is Approved.

On May 15th, the SEC approved the Fixed Income Clearing Corporation's ("FICC") proposed modification to certain rules of the Government Securities Division in order to expand FICC's existing one-pot cross-margining program with New York Portfolio Clearing, LLC to include eligible positions held by GSD Netting Members and NYPC Clearing Members for certain "market professionals." SEC Release No. 34-66989.

• FINRA's Mortgage-Bond Transparency Proposal Meets Opposition.

On May 17th, Business Week discussed industry opposition to the Financial Industry Regulatory Authority's ("FINRA") proposal to amend the FINRA Rule 6700 Series and Trade Reporting and Compliance Engine ("TRACE") dissemination protocols for the reporting and dissemination of transactions in TRACE-Eligible Securities that are Agency Pass-Through Mortgage-Backed Securities that are traded to be announced. The Securities Industry and Financial Markets Association fears that the additional disclosures required by the proposal could lead to the revelation of trading strategies. Opposition. See also SIFMA's SEC Comment Letter.

• FINRA Makes BrokerCheck Changes.

On May 16th, FINRA announced it has added features to BrokerCheck to help users more easily access broker-dealer and investment adviser registration information. Several changes implemented by FINRA address recommendations made in a January 2011 study by the SEC. FINRA Press Release.

• FINRA Issues IPO Reminder.

On May 15th, FINRA reminded firms of FINRA Rule 5131(d)(4)'s prohibition on accepting market orders for the purchase of new issues prior to the commencement of trading on the secondary market. FINRA Regulatory Notice 12-24.

• Longer Period Designated for Consideration of Proposal Relating to Brokers.

On May 9th, the SEC designated June 22, 2012 as the date by which it will approve, disapprove, or institute disapproval proceedings regarding the MSRB's proposal concerning Rule G-43, on broker's brokers; proposed amendments to Rule G-8, on books and records; Rule G-9, on record retention; and Rule G-18, on execution of transactions; and a proposed interpretive notice on the duties of dealers that use the services of broker's brokers. SEC Release No. 34-66954.

• New Options Market Proposed.

On May 14th, the SEC provided notice of NASDAQ OMX BX's filing of a proposal to establish a new options market. Comments should be submitted on or before June 8, 2012. SEC Release No. 34-66983.

• Benchmark Orders Proposed.

On May 11th, the SEC provided notice of NASDAQ Stock Market's filing of a proposal to provide enhanced functionality. NASDAQ proposes the establishment of a set of "Benchmark Orders," a new order type for use in trading cash equities. The Benchmark Order will offer members the ability to enter a single order in a single security seeking to match the performance of a selected benchmark over a pre-determined period of time. Comments should be submitted on or before June 7, 2012. SEC Release No. 34-66972.

• Advisory Committee Makes Proxy Distribution Fee Recommendations.

On May 16th, NYSE Euronext announced that the Proxy Fee Advisory Committee ("PFAC") has published its recommendations for changes to the fees paid by public companies to banks and brokers for the distribution of proxy materials to shareholders who hold their stock in "street name." Composed of issuers, broker dealers and investors, the PFAC reviewed the existing proxy distribution fee structure and made recommendations for change. Any changes to these fees are subject to SEC approval. NYSE Euronext Press Release.

• Longer Period Designated for Consideration of DMM Proposal.

On May 14th, the SEC designated July 14, 2012 as the date by which it will approve or disapprove the New York Stock Exchange's and NYSE Amex's proposal codifying the Trading Floor activities that may be performed by Designated Market Makers. SEC Release No. 34-66981.

• ETP Incentive Program Proposed.

On May 11th, the SEC provide notice of NYSE Arca's filing of a proposed pilot program to create a Lead Market Maker Issuer Incentive Program for issuers of certain exchange-traded products listed on NYSE Arca. Comments should be submitted on or before June 7, 2012. SEC Release No. 34-66966.

• Appeal Asks Who is a "Foreign Official."

On May 15th, Corporate Counsel summarized the arguments of two men appealing to the United States Court of Appeals for the Eleventh Circuit their Foreign Corrupt Practices Act convictions. Their challenges ask who is a "foreign official" under the Act. FCPA Appeal.

• Improper Stock Option Backdating Verdict and Order are Affirmed.

On May 15th, the United States Court of Appeals for the Ninth Circuit (the "Ninth Circuit") affirmed a verdict and order requiring a defendant to pay penalties and disgorgement of over $2.1 million. The SEC alleged that the former CFO of Maxim Integrated Products falsely certified his firm's financial statements when it improperly issued backdated stock options. The jury agreed and the trial court imposed an injunction and fine and ordered disgorgement under Section 304 of the Sarbanes-Oxley Act. Affirming, the Ninth Circuit held that the evidentiary rulings were proper, the jury was properly instructed on the defendant's Fifth Amendment invocations and the adverse inference that could be made, the SEC's lawyers did not engage in misconduct, and the Sarbanes-Oxley Act order did not violate defendant's Seventh Amendment right to a jury trial. SEC v. Jasper.

• Investment Adviser Performance Compensation - Effective May 22, 2012.

The SEC is adopting amendments to the rule under the Investment Advisers Act of 1940, as amended that permits investment advisers to charge performance-based compensation to "qualified clients." The amendments revise the dollar-amount thresholds of the rule's tests that are used to determine whether an individual or company is a qualified client. These rule amendments codify revisions that the SEC recently issued by order that adjust the dollar-amount thresholds to account for the effects of inflation. 77 FR 10358.

• Delaware Court Enjoins Takeover Bid Because of Breach of Confidentiality Agreement.

On May 4, 2012, the Delaware Chancery Court held that Martin Marietta Materials' hostile takeover bid for Vulcan Materials violated confidentiality agreements between the parties and accordingly enjoined its bid from proceeding. Briefing.

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