On Wednesday September 19th, the Securities and Exchange Commission will meet to consider final rules to implement the exemptions from the definition of "broker" under the Securities Exchange Act of 1934 applicable to banks and U.S. branches and agencies of foreign banks. These rules, which will be known as Regulation R, will require joint action by the Federal Reserve Board and have been in the works in one form or another since the enactment of the Gramm-Leach-Bliley Act in November 1999. But just as the seasons will shift this week from Summer to Autumn, the inevitable end to the broad exemption available to banks will also come to a close and the season of "push out" will become a reality.

• Credit Rating Agencies.

On September 13th, CFO.com reported on how the recent shortage of liquidity in the financial markets may affect the SEC's efforts to implement new regulations for the Credit Rating Agency Reform Act. Implementation. The capital markets subcommittee of the House Financial Services Committee will hold hearings on September 27, 2007 concerning the manner in which credit rating agencies valued the credit quality of mortgage-backed securities and collateralized debt obligations. Hearings. On September 12th, Reuters reported that the European Union's internal markets commissioner has asked the Committee of European Securities Regulators to provide an interim report by the end of the year on how credit rating agencies compile their ratings, the quality of those ratings and any potential conflicts of interest the agencies face. Credit Raters.

• Three Banks Join OPUS-5.

On September 13th, the New York Times reported that Bank of America, Credit Suisse Group and UBS will join OPUS-5, a platform for trading unregistered securities. OPUS-5.

• Classification of Interest Rate Swap Terminations.

On September 12th, CFO.com reported on a study conducted by Charles Mulford and Eugene Comiskey, professors of accounting at the Georgia Institute of Technology. The study concludes that cash received or paid from swap terminations should be classified as operating cash flow. Classification.

• FTC Warns of Potentially Deceptive Ads.

On September 12th, the Washington Post reported that the Federal Trade Commission has sent approximately 200 letters to lenders, mortgage brokers and media outlets warning that their mortgage advertisements may be potentially deceptive because the ads fail to fully disclose the terms of the loans. Letters.

• Basel Committee Considering Additional Capital Charges.

On September 10th, Reuters reported that the Basel Committee on Banking Supervision may impose new capital charges in an effort to avoid future credit crunches. Basel Committee.

• CFTC Announces Participants at Hearing on Regulated Exchanges and Exempt Commercial Markets.

On September 13th, the CFTC announced the names of those expected to testify at the September 18, 2007 hearing concerning the oversight of trading on regulated futures exchanges and exempt commercial markets. CFTC Release No. 5382-07.

• Global Markets Advisory Committee Announces Public Meeting.

On September 13th, the CFTC announced that its Global Markets Advisory Committee will conduct a public meeting on October 2, 2007. The purpose of the meeting is to discuss global markets related issues in the financial services and commodity markets. 72 FR 52357.

• SEC Open Meeting.

The SEC will hold an Open Meeting on September 19th and is scheduled to consider the following financial services industry topics:

• Whether to adopt, jointly with the Federal Reserve Board, new rules under the Securities Exchange Act of 1934 to implement the Gramm-Leach-Bliley Act bank exceptions to the definition of "broker." The Commission will also consider whether to adopt additional related rules and rule amendments, including rules exempting banks from the definition of "dealer" under the Exchange Act.

• Whether to adopt, on an interim final basis, a temporary rule that would provide investment advisers who also are registered broker-dealers an alternative means of compliance with the principal trading restrictions of Section 206(3) of the Investment Advisers Act.

• Whether to propose an interpretive rule under the Investment Advisers Act that would clarify the application of the Advisers Act to certain activities of broker-dealers.

• SEC Seniors Summit.

On September 10th, the SEC held its Seniors Summit at which it, with FINRA and the North American Securities Administrators Association, released a joint report concerning "free lunch" investment seminars. Thirteen percent of the 110 seminars studied were referred for further enforcement action. The report recommends that financial services firms review their supervisory practices and take steps to supervise sales seminars more closely. SEC Press Release. At the Summit, FINRA announced the initiation of two new regulatory sweeps intended to ensure that securities firms use appropriate sales practices in their dealings with seniors and individuals nearing retirement. The first sweep examines whether brokers are using "professional designations" to mislead or defraud investors. In the second, FINRA is examining early retirement seminars designed to entice older workers to liquidate their retirement funds and invest them with a specific firm or representative. FINRA is currently conducting two other regulatory sweeps - one examining the sale of collateralized mortgage obligations targeted at seniors; and a second focused on the sale of life settlements. FINRA has also issued a comprehensive Regulatory Notice to the industry that informs firms and brokers about their obligation under securities rules when selling products to seniors. FINRA Press Release. See also, below.

• Rule Changes Regarding CDO Contract Multiplier Are Immediately Effective.

On September 10th, the SEC granted immediate effectiveness to CBOE's proposed rule change pertaining to the applicable contract multiplier for Credit Default Options. Comments should be submitted no later than October 9, 2007. SEC Release No. 34-56380.

• CBOE Proposes the Trading of Delayed Start Options.

On September 10th, the SEC provided notice of CBOE's filing of a proposal to introduce a new type of option called the Delayed Start Option (DSO) Series, which will have all of the characteristics of index options except that, until a predetermined date, there will be no set exercise price. CBOE proposes to be able to list a DSO on any security index option that is already approved for trading on the Exchange. Comments should be submitted no later than October 9, 2007. SEC Release No. 34-56378.

• Temporary Program Allowing Voluntary Remittance of Accumulated Funds.

On September 12th, the Financial Industry Regulatory Authority (FINRA) announced that the SEC has approved new interpretive material allowing FINRA to establish a temporary program allowing member firms to remit to FINRA funds previously collected, but not remitted, in connection with assessments used by NASD to pay SEC Section 31 fees (accumulated funds). Firms may, on a one-time only, voluntary basis, remit all or part of historically accumulated funds that are in surplus of the assessment under FINRA By-Laws. This Program is effective December 11, 2007 and will automatically sunset on June 11, 2008. FINRA also reminded firms passing FINRA transaction fees to customers that they are not permitted to call such fees "Section 31 Fees" or "SEC Fees." FINRA Notice 07-44.

• Regulatory Notice Regarding Seniors.

On September 10th, FINRA issued a Regulatory Notice informing firms and brokers about their obligation under securities rules when selling products to seniors. The Notice also highlights best practices in the area. FINRA Notice 07-43.

• Accelerated Approval Granted to Rule Governing Sales Practices of Deferred Annuities.

On September 7th, the SEC granted accelerated approval to FINRA's proposed requirements relating to recommendations, principal review and approval, supervision, and training tailored specifically to transactions in deferred variable annuities. Comments should be submitted on or before October 4, 2007. Federal Register Notice. The Commission also issued an exemptive order allowing FINRA members to hold customer funds for no more than seven business days while completing the required principal review under the new rule without becoming fully subject to Exchange Act Rule 15c3-3 and being required to maintain higher levels of net capital in accordance with Rule 15c3-1. SEC Release No. 34-56376. See also SEC Press Release.

• ICMA Presents Bond Market Transparency Initiative.

On September 13th, the International Capital Market Association announced its market-led initiative on bond market transparency for retail investors. The proposal takes the form of a voluntary industry standard of good practice on bond market transparency. ICMA Press Release.

• Issuer Alerts on Changes to Listing Requirements.

On September 12th, the NASDAQ Stock Market released two Issuer Alerts regarding changes to its listing requirements. NASDAQ Issuer Alert 2007-006A applies to domestic companies and provides that listed companies may satisfy the annual report distribution requirement by posting the report on their websites. The Issuer Alert also advises that the requirement for approval of related party transactions by an independent committee has been eliminated. NASDAQ Issuer Alert 2007-006B applies to listed foreign private issuers and provides that listed companies may satisfy the annual report distribution requirement by posting the report on their websites. The Issuer Alert further advises that a foreign private issuer may choose whether to disclose practices that do not conform with NASDAQ's corporate governance requirements on its website or in its SEC filings and advises that the requirement for approval of related party transactions by an independent committee has been eliminated.

• Amendments to ACATS and ACATS Fund/SERV Processing Proposed.

On September 7th, the SEC provided notice that the National Securities Clearing Corporation filed a proposal to amend its rules and procedures regarding the Automated Customer Account Transfer Service and ACATS Fund/SERV Processing. Comments should be submitted on or before October 4, 2007. SEC Release No. 34-56372.

• SEC Approves Changes to Odd-Lot Pricing.

On September 13th, NYSE Regulation issued Information Memo 07-92 advising that the SEC has approved amendments to Exchange Rule 124 (Odd-Lot Orders) modifying the way in which Exchange systems price and execute odd-lot orders. NYSE Regulation Information Memo 07-92.

• NYSE Removes Price Parameters Based on the Quotation Spread.

On September 13th, NYSE Regulation issued Information Memo 07-91 advising that the Exchange has amended the conditions in Exchange Rule 104(e) that govern the ability of the specialists to provide price improvement to an order pursuant to Exchange Rule 104(b)(i)(H). Specialists may now provide price improvement to an order without regard to minimum trade price parameters based on the quotation spread. NYSE Regulation Information Memo 07-91.

• NYSE Amends the One and Two Point Rule.

On September 13th, NYSE Regulation issued Information Memo 07-90 advising that NYSE Rule 79A.30, the so-called "one and two point" rule has been amended effective July 24, 2007. The amendment removes the requirement to obtain Floor Official approval for one and two point sales in most instances, while preserving the requirement that, if such trades are initiated by a specialist in connection with certain manual transactions when the NYSE market is "slow," or when it is "fast" and such trades are initiated by the specialist reaching across the market. NYSE Regulation Information Memo 07-90.

• Immediate Effectiveness Granted to Rule Change Regarding Specialists.

On September 6th, the SEC granted immediate effectiveness to New York Stock Exchange's amendment of Exchange Rule 104(e) to modify the conditions that govern the ability of the specialists to provide price improvement pursuant to NYSE Rule 104(b)(i)(H). Comments should be submitted on or before October 3, 2007. SEC Release No. 34-56370.

• Court Rules on IPO Antitrust Lawsuit.

On September 11th, the Second Circuit reversed and remanded the district court's denial of class certification. Plaintiffs alleged that IPO underwriters violated the Sherman Act by agreeing to charge all corporations conducting mid-size IPOs a fee equal to 7% of the proceeds of the offering. The Second Circuit held that although the plaintiffs did not fall within the definition of the class as set forth by the complaint, plaintiffs, as assignees of class members bringing the class action lawsuit are not automatically excluded from acting as class representatives. The Court also addressed whether the proposed class qualified for class treatment by meeting the requirement of predominance. In this case, the antitrust injury element raised both factual questions related to whether the plaintiff suffered harm and legal questions related to whether that harm is of the type the antitrust laws were intended to prevent. The Second Circuit held that the legal questions are common to the class. On remand, the district court should decide whether the factual questions are also common to the class. Cordes & Co. v. A.G. Edwards & Sons, Inc.

• Short Selling in Connection with a Public Offering - Effective October 9, 2007.

On August 6th, the SEC adopted an amendment to Rule 105 of Regulation M, replacing the prohibition against covering short sales with securities received in a public offering if the short sales occur within five business days before pricing, with an outright prohibition against purchasing shares in a public offering if the purchaser sold the securities short during the five-day pre-pricing period. SEC Release No. 34-56206. Published in the Federal Register August 10, 2007. Federal Register pp. 45093-45107.

• Amendments to Regulation SHO - Effective October 15, 2007.

On August 7th, the SEC adopted an amendment to Regulation SHO under the Securities Exchange Act of 1934 eliminating the grandfather provision of the mandatory close-out requirement for "threshold securities" (securities with a significant street-wide fail to deliver position). In addition, the SEC is increasing from 13 to 35 consecutive settlement days the mandatory close-out period for fails-to-deliver in threshold securities sold pursuant to Securities Act Rule 144 and making technical amendments to the exception for unwinding index arbitrage positions. SEC Release No. 34-56212. Published in the Federal Register August 14, 2007. Federal Register pp. 45543-45557.

Financial Services partner Ed Johnsen was quoted in a September 14, 2007, Compliance Reporter article titled "Foreign Securities Set to Escape Three Quote Rule." Mr. Johnsen told Compliance Reporter that the new exemption for certain foreign securities solves a long-standing issue and will make it easier for brokers and traders to comply with best execution requirements.

On September 17th, the New York Law Journal published an article by Financial Services partner Ed Johnsen titled "Short Sale Regulation: A Summer of Change."

On September 25th, Michael A. Mancusi will give a presentation regarding the legal and compliance issues associated with "banking the unbanked" at the America's Community Bankers 2007 Bank Compliance Conference and Marketplace. Event Information.

On October 15th, Michael A. Mancusi will participate in the Illinois Bankers Association Symposium on Banking the Latino Market. Event Information.

Winston & Strawn LLP is a sponsor of the ABA/ABA Money Laundering Enforcement Conference in Washington, DC from October 21st to 23rd. Event Information.

The Securities/M &A and Financial Services practices of Winston & Strawn issued a briefing on "Recent Developments in Debt Financing."

Financial Services partner Marla Kreindler will be speaking at three upcoming conferences this fall. They include the PSCA Conference in September, the P&I Conference in October and the ISBA Conference in October. Conference Information.