• A general partner, managing member, or board of directors of a commodity pool that properly delegates its rights and responsibilities to a registered CPO may avoid registration as a CPO, if certain conditions are met;

• Wholly-owned subsidiaries of commodity pools trading in derivatives are themselves commodity pools;

• The notional value for uncleared swaps is the amount reported by the reporting counterparty as the notional amount of the swap under Part 45 of the CFTC's regulations;

• Until the CFTC adopts revised guidance, CPOs of funds-of-funds relying on the de minimis exemptions under Rule 4.13(a)(3) or Rule 4.5 may continue to rely on the guidance set forth in former Appendix A to Part 4 of the CFTC's regulations;

• Private funds currently relying on the Rule 4.13(a)(4) exemption that expect to register and rely on the Rule 4.7 exemption will not be required to reaffirm that all existing fund investors are "qualified eligible persons;" and

• CFTC staff does not anticipate releasing additional guidance concerning Forms CPO-PQR and CTA-PR this year; as a result, CFTC staff "believes that entities are entitled to make reasonable assumptions consistent with a good faith effort in executing their compliance obligations" in the filings until further guidance is released.

• Airing the Laundry.

On August 24th, Bloomberg reported that HSBC may settle U.S. money laundering charges as early as next month. Bloomberg also discussed the other banks under investigation. Money Laundering.

• Toothless Clawbacks.

On August 23rd, CFO.com discussed a recent survey which found that banks have not been clawing back executive compensation despite regulatory requirements that the industry adopt such practices. Toothless Clawbacks.

• Only Sophisticated Palates Need Apply.

On August 22nd, the Telegraph reported that the U.K.'s Financial Services Authority has signaled its intention to limit the marketing of certain types of investments, including investments in fine wines, to sophisticated investors. FSA Crackdown. See also, FSA Press Release.

• The Volcker Rule.

On August 21st, Reuters reported that the rules implementing the Volcker rule will be published by year's end. Volcker Rule.

• Leading the Way.

On August 21st, the Washington Post discussed how state regulators have frequently led the way in uncovering misdeeds and mismanagement in the financial industry. Leaders.

• Perfect Record.

On August 21st, DealBook noted that the Manhattan U.S. Attorney's Office has won every insider trading trial it has brought since 2009. Perfect Record.

• Regulating the Regulator's Regulator.

On August 21st, the Washington Post discussed the Office of Information and Regulatory Affairs, which reviews "significant" agency rulemakings. The Regulators.

• Restoring Trust.

On August 21st, DealBook presented a three-point plan for restoring trust in the financial markets suggested by James E. Oliff, a member of the board of FFastFill and of the CME Group, and Neal L. Wolkoff, the former chairman and CEO of the American Stock Exchange, COO of the New York Mercantile Exchange and chief executive of ELX Futures. Restoring Trust.

• Top Investor Threats.

On August 21st, the North American Securities Administrators Association published its list of top threats to investors. First on the list is crowdfunding. Top Threats.

• Securitizers Want Exemption from CPO Rule.

On August 17th, Business Week reported that the American Securitization Forum has asked the CFTC to exempt securitizers from having to register as commodity pool operators. Under new rules implementing the Dodd-Frank Act, asset-backed securities may be considered commodity pools. Exemption.

• OCC Publishes List of Rescinded Documents.

On August 24th, the Office of the Comptroller of the Currency ("OCC"), as part of its ongoing effort to develop an integrated supervisory policy platform for national banks and federal savings associations, published a list of rescinded additional documents. See also OCC Bulletin.

• OCC Bulletin on Hard-to-Value Assets.

On August 23rd, the OCC issued a bulletin on its new booklet which provides guidance to examiners and bankers on assessing the management of unique and hard-to-value assets.

• OCC Newsletter Discusses Bank Financing of Healthy-Food Initiatives.

On August 23rd, the OCC published the latest edition of its Community Developments Investments electronic newsletter, entitled "Bank Financing of Healthy-Food Initiatives." The newsletter describes how national banks and federal savings associations can and are helping to finance projects that bring fresh produce and healthy food choices to underserved low-income neighborhoods. OCC Press Release.

• Temporary General License Issued for Iranian Earthquake Assistance.

On August 21st, the Treasury Department's Office of Foreign Assets Control announced the issuance of a temporary general license to ease financial transactions related to earthquake relief in Iran. Treasury Department Press Release.

• CFPB Adopts Safe Harbor for Regulation E.

On August 20th, the Consumer Financial Protection Bureau published amendments to Regulation E, which implements the Electronic Fund Transfer Act, and the official interpretation to the regulation. The amendments modify a final rule published in February 2012, implementing section 1073 of the Dodd-Frank Act regarding remittance transfers. The amendments adopt a safe harbor with respect to the phrase "normal course of business" in the definition of "remittance transfer provider," which determines whether a person is covered by the rule. The amendments also revise several aspects of the February 2012 final rule regarding remittance transfers that are scheduled before the date of transfer, including preauthorized remittance transfers. The amendments are effective February 7, 2013. 77 FR 50244.

• CFPB Proposes New Mortgage Rules.

On August 17th, the Consumer Financial Protection Bureau published for comment proposed rules meant to bring greater accountability to the mortgage loan origination market. The Dodd-Frank Act places certain restrictions on the points and fees offered with most mortgages and the qualification and compensation of loan originators. Among other things, the proposal would allow lenders to continue to offer loans with lower interest payments if upfront points and fees are paid. In addition to regulating upfront points and fees, the CFPB proposes changes to existing rules governing mortgage loan originators' qualifications and compensation. Comments should be submitted on or before October 16, 2012. CFPB Press Release.

• CFTC Approves CPO and CTA Conforming Amendments.

On August 23rd, the CFTC approved final conforming amendments to Part 4 of its regulations, which govern the operations and activities of CPO and CTAs. The Dodd-Frank Act broadened the CPO and CTA definitions in the Commodity Exchange Act to include swap-related activity. The final amendments conform Part 4 to these changes by requiring CPOs and CTAs to include information on swap intermediaries and activities under the disclosure, reporting and recordkeeping requirements of Part 4. CFTC Press Release.

• CFTC Exempts Certain Electric Power Transmission Transactions.

On August 21st, the CFTC approved a proposed order that would exempt certain specified transactions of Regional Transmission Organizations ("RTOs") and Independent System Operators ("ISOs") from certain provisions of the Commodity Exchange Act and CFTC regulations. The order is in response to a petition from certain RTOs and ISOs that are subject to regulation by either the Federal Energy Regulatory Commission ("FERC") or the Public Utility Commission of Texas ("PUCT"). The proposed order would exempt the purchase or sale of specifically defined "financial transmission rights," "energy transactions," "forward capacity transactions," and "reserve or regulation transactions" that are offered or sold in a market administered by one of the petitioning RTOs or ISOs pursuant to a protocol that has been approved or permitted to take effect by FERC or PUCT. The proposed order also would exempt persons offering, entering into, or rendering advice or other services with respect to those transactions. Comments should be submitted within 30 days after publication in the Federal Register, which is expected during the week of August 27. CFTC Press Release.

• CFTC Launches Website for Interim Compliant Identifiers.

On August 21st, the CFTC launched a website for market participants to register for CFTC Interim Compliant Identifiers ("CICI"). CICIs are interim legal entity identifiers ("LEI"), which will be used by registered entities and swap counterparties in complying with the CFTC's swap data reporting regulations. On July 24, 2012, the CFTC designated DTCC-SWIFT as the provider of CICIs. Market participants who are required to obtain a CICI to comply with the CFTC's swap data reporting regulations can now do so through the new CICI website. CFTC Press Release. See also Forbes.

• SEC Adopts Conflict Minerals Rules.

On August 22nd, the SEC adopted new rules implementing the Dodd-Frank Act's conflict minerals disclosure requirements. The rules require companies to publicly disclose their use of conflict minerals that originated in the Democratic Republic of the Congo or an adjoining country. SEC Press Release. See also Paredes Dissent; Gallagher Dissent. On August 23rd, the Huffington Post reported large retailers will likely be exempted from significant aspects of the new rules. Exemptions. On August 24th, Corporate Counsel discussed the process in-house lawyers should take when evaluating whether the rule applies to their company. Applicability.

• SEC Adopts Resource Extractor Disclosure Rules.

On August 22nd, the SEC adopted new rules implementing the Dodd-Frank Act's provision requiring resource extraction issuers to disclose certain payments made to the U.S. government or foreign governments. The Dodd-Frank Act directed the SEC to issue rules requiring companies engaged in the development of oil, natural gas, or minerals to disclose the payment information annually by filing a new form with the SEC called Form SD. A resource extraction issuer is required to comply with the new rules for fiscal years ending after September 30, 2013. The form must be filed with the SEC no later than 150 days after the end of the firm's fiscal year. SEC Press Release. See also Gallagher Dissent. The Globe and Mail discussed the competitive disadvantage U.S.-listed firms may face as a result of the rule. Disadvantaged. On August 23rd, The Hill noted the questions the rules face before they become effective. Hurdles include legal challenges to the rules' cost-benefit analysis and changes in SEC leadership which may result in different interpretations of the rules. Challenges.

• Open Meeting.

On August 29, 2012, the SEC will hold an open meeting to consider whether to propose rules to eliminate the prohibition against general solicitation and general advertising in securities offerings conducted pursuant to Rule 506 of Regulation D and Rule 144A under the Securities Act of 1933, as mandated by Section 201(a) of the Jumpstart Our Business Startups Act. The proposal was originally scheduled for consideration on August 22, 2012. Open Meeting Notice.

• Majority of Commissioners Reject Money Market Reforms.

On August 22nd, SEC Chairman Mary L. Schapiro announced that three of the SEC's five Commissioners do not support the publication of a money market mutual fund proposal which she spearheaded. As a result, no vote on the proposal will occur. Schapiro urges other regulatory agencies to act instead. Schapiro Statement. Commissioner Luis A. Aguilar issued his own statement explaining his concerns with the proposal championed by Schapiro. Aguilar suggests that a concept release on the broader cash management industry be issued so that pooled vehicles that are not currently subject to regulatory oversight be considered along with money market mutual funds. Aguilar Statement. On August 24th, Bloomberg summarized the steps other federal regulators could take with respect to money market funds. The Federal Reserve, for example, could limit bank borrowing from money market funds and banks which own money market funds could be required to hold more capital. Other Possibilities. Reuters discussed the steps the Financial Stability Oversight Council could take, and the likelihood that such steps will be taken. FSOC.

• Evolving Views.

On August 22nd, Compliance Week discussed the view of the SEC's Division of Corporation Finance concerning pro forma adjustments. Pro Forma.

• SEC Issues First Whistleblower Award.

On August 21st, the SEC announced the first award under its Dodd-Frank Act whistleblower authority. The $50,000 award represents 30 percent of the amount collected in an SEC enforcement action against the perpetrators of a fraudulent scheme, the maximum percentage payout allowed by the whistleblower law. The award recipient, who does not wish to be identified, provided documents and other significant information that allowed the SEC's investigation to move at an accelerated pace and prevent the fraud from ensnaring additional victims. The whistleblower's assistance led to a court ordering more than $1 million in sanctions, of which approximately $150,000 has been collected thus far. The court is considering whether to issue a final judgment against other defendants in the matter. Any increase in the sanctions ordered and collected will increase payments to the whistleblower. The SEC did not approve a claim from a second individual seeking an award in this matter because the information provided did not lead to or significantly contribute to the SEC's enforcement action, as required for an award. SEC Press Release (with links to award determinations).

• Longer Period Designated to Consider Route Peg Order.

On August 16th, the SEC designated October 3, 2012 as the date by which it will approve, disapprove, or institute disapproval proceedings for EDGX Exchange's proposal for a Route Peg Order. SEC Release Nos. 34-67676 and 34-67677.

• FINRA Announces New Late Disclosure Fee Procedures.

On August 17th, the Financial Industry Regulatory Authority announced that effective August 13, 2012, FINRA has implemented new procedures regarding application of the late disclosure fee for the reporting of judgment/lien events on Forms U4. Under the new procedures, FINRA is requesting that member firms provide the date the registered person learned of the judgment/lien on Form U4 when reporting such events; the late disclosure fee will be assessed based on that date. FINRA Information Notice.

• MSRB Proposes Enhanced Price Transparency for Large Trades.

On August 24th, the Municipal Securities Rulemaking Board submitted to the SEC a proposal that would more rapidly disseminate trade size information for municipal securities transactions valued between $1 million and $5 million. MSRB Press Release.

• MSRB Report Finds Increased Use of Disclosure Website.

On August 22nd, the Municipal Securities Rulemaking Board published a report summarizing the type and number of continuing disclosure documents for municipal securities submitted by issuers of municipal securities to the MSRB's municipal securities website. The report shows fairly steady increases in most types of continuing disclosures submitted to the MSRB by municipal bond issuers and obligated persons. MSRB Press Release.

• Nasdaq's Proposed Settlement.

On August 23rd, Forbes summarized the comments Citigroup submitted to the SEC in response to Nasdaq's proposal for settling claims stemming from Facebook's IPO. While Citigroup was highly critical of Nasdaq's proposal, at least one commenter, a hedge fund, supports it. Comments. The Financial Times reported Citigroup may sue Nasdaq. The Financial Times also noted that UBS opposes Nasdaq's proposal while Knight Capital supports it. Responses.

• Listing of Options on Treasuries Is Proposed.

On August 17th, the SEC provided notice of NASDAQ OMX PHLX's ("Exchange") filing of a proposal which would allow the Exchange to list options on Treasury securities. Comments should be submitted on or before September 13, 2012. SEC Release No. 34-67683.

• Five Millisecond Delay in Execution Is Proposed.

On August 17th, the SEC provided notice of NASDAQ OMX PHLX's filing of a proposed rule change to modify Exchange Rule 3307 to institute a five millisecond delay in the execution time of marketable orders on NASDAQ OMX PSX. Comments should be submitted on or before September 13, 2012. SEC Release No. 34-67680.

• Proposed Amendments Regarding Order Types and Definitions Are Approved.

On August 17th, the SEC approved the New York Stock Exchange's and NYSE MKT's proposal to: (1) amend Rule 13 to establish new order types; (2) amend Rule 115A to delete obsolete text and to clarify and update the description of the allocation of market and limit interest in opening and reopening transactions; (3) amend Rule 123C to include better-priced G orders in the allocation of orders in closing transactions; and (4) make other technical and conforming changes. SEC Release No. 34-67686.

• Co-Location Proposal Approved.

On August 15th, the SEC approved individually proposed amendments to NYSE MKT's, NYSE Amex Options', New York Stock Exchange's, NYSE Arca Options', and NYSE Arca Equities' price lists to provide for additional co-location services and to establish related fees.

• Derivative Lawsuit Against Oracle Moves Forward.

On August 22nd, Bloomberg reported that the Delaware Chancery Court will allow a shareholder derivative suit against the directors of Oracle Corp. to continue. Shareholders allege the directors breached their fiduciary duties when they allowed the company to purchase Pillar Data Systems from Oracle's CEO, Larry Ellison. Derivative Lawsuit.

• SEC Admonished for Lax Fair Funds Oversight.

On August 21st, the U.S. District Court for the Southern District of New York reluctantly approved Garden City Group's ("GCG") application for fees and expenses as the claims administrator for a $25 million SEC Fair Fund. In doing so, the Court admonished the SEC for its lax oversight of GCG. Among other things, the SEC failed to question or detect an undisclosed 15 percent commission GCG paid to itself. Noting that GCG has been appointed (on the SEC's recommendation) to administer other claims, the Court wondered whether GCG is receiving similar undisclosed fees in those matters too. SEC v. Zurich Financial Services.

• Third-Party Subpoenas and Foreign Sovereign Immunity.

On August 20th, the U.S. Court of Appeals for the Second Circuit considered the scope of discovery available to a plaintiff with a valid judgment against a foreign sovereign. The trial court ordered two non-party banks to comply with subpoenas seeking information about Argentina's assets located outside the U.S. Argentina argues that the banks' compliance with the subpoenas would infringe on its sovereign immunity. The Court held that because the trial court ordered discovery only (not the attachment of sovereign property) and because the discovery was directed at the third-party banks, Argentina's sovereign immunity was not affected. NML Capital, Ltd. v. Republic of Argentina.

• Judgments against Ponzi Scheme Net Gainers Are Dischargeable in Bankruptcy.

On August 20th, the U.S. Court of Appeals for the Tenth Circuit reversed a trial court's ruling finding that judgments against Ponzi scheme "net gainers" were non-dischargeable in bankruptcy. The debtors were early investors in what turned out to be a Ponzi scheme and received more money than they invested. When the Ponzi scheme was uncovered, the state State of Oklahoma sued the debtors for unjust enrichment but not for any securities violations. After the State obtained a judgment on the unjust enrichment claim, the debtors declared bankruptcy. The trial court held that the judgments could not be discharged because they fell under the exception in 11 U.S.C. Section 523(a)(19) as judgments for the violation of securities laws. The Tenth Circuit reversed, holding that the judgments were dischargeable in bankruptcy since the debtors were not charged by the State with having violated the securities laws. Oklahoma Department of Securities v. Wilcox.

• Consolidated Audit Trail – Effective October 1, 2012.

The SEC is adopting Rule 613 under the Securities Exchange Act of 1934 to require national securities exchanges and national securities associations to submit a national market system ("NMS") plan to create, implement, and maintain a consolidated order tracking system, or consolidated audit trail, with respect to the trading of NMS securities, that would capture customer and order event information for orders in NMS securities, across all markets, from the time of order inception through routing, cancellation, modification, or execution. 77 FR 45722.

• Robb Adkins to Discuss Risks and Responses to the Financial Crisis.

Winston & Strawn litigation partner Robb Adkins, based in the firm's San Francisco and Los Angeles offices, will speak at the 30th Cambridge International Symposium on Economic Crime on September 4, 2012. The title of this year's Symposium is "Economic Crime — Surviving the Fall — Myths and Realities." It will focus on the particular issues and risks resulting from the financial crisis and include perspectives on how to promote stability and protect the integrity of the institution, business and economy. Event Information.

• Ron Jacobson to Speak at TMA's MidAmerica Regional Conference – September 13, 2012.

Ron Jacobson, finance partner and co-chair of Winston & Strawn's corporate lending and debt capital markets practice groups, will speak at Turnaround Management Association's MidAmerica Regional Conference on September 13, 2012 in Chicago. The theme of the sixth annual conference is "Creating Opportunities in a Slow Growth Period." Event Information.

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