As the Securities and Exchange Commission continues to increase its examinations of private equity firms brought about by new regulations under the Dodd-Frank Act of 2010, more information is becoming available regarding the general parameters of these exams. In late January, Bruce Karpati, Chief of the SEC Enforcement Division's Asset Management Unit gave remarks at a private equity conference and touched on matters including the SEC's perspective on private equity enforcement actions and certain industry practices in which the SEC has taken an interest. A transcript of Mr. Karpati's comments can be found here. In addition, on March 6, the Wall Street Journal's private equity blog commented on the SEC's examination of private equity firms . This article notes that the current examination phase by the SEC is expected to take about two years, as they look into roughly 4,000 registered private fund advisers. It also notes that the SEC's examination requests can be extensive, and describes specific documents that have been requested in certain examinations. Winston & Strawn LLP will continue to monitor events related to SEC examinations of private equity firms.

• Audit Committees.

CFO.com discussed audit committees and the steps the Center for Audit Quality is taking to improve audit committees' relationships with shareholders.

• Building Trust.

Citing the collapse of Enron and Lehman Brothers, the Economist's Schumpeter asked whether faith in corporations can ever be restored. Schumpeter discusses the solution proposed by Colin Mayer, of Oxford University's Saïd Business School, in his book "Firm Commitment," which suggests the use of corporate trusts as a means of building "long-termism" into a company's fabric. Fortune columnist Eleanor Bloxham questioned society's acceptance of corporate layoffs. Layoffs create job insecurity and harm employee morale, but more importantly, they signal management failure and the board's failure to hire the right management.

• Bank Boards.

The American Banker recently discussed the Federal Reserve Board's new expectations for the boards of directors of large financial institutions, both domestic and those foreign banks with U.S. assets. The role of boards as active participants in the governance of their firms is emphasized, along with the importance of knowing and understanding the regulatory risks the bank faces.

• Federal Reserve Publishes Stress Test Results.

On March 7th, the Federal Reserve Board published summary results from its latest round of stress testing. The largest bank holding companies have continued to improve their ability to withstand an extremely adverse hypothetical economic scenario and, collectively, are in a much stronger capital position than before the financial crisis. Federal Reserve Board Press Release. Reuters noted that all but one bank, Ally Financial, passed. Summary.

• OCC Bulletin on Short-Term Collective Investment Funds.

On March 5th, the OCC issued a Bulletin on its October 9, 2012 final rule that revised the requirements imposed on national banks and federal branches of foreign banks that offer short-term collective investment funds.

• OCC Workshops.

The OCC announced it will hold a workshop in Lisle, Illinois on April 8-10, 2013 for directors of national community banks and federal savings associations. "Mastering the Basics: A Director's Challenge" is a workshop designed exclusively for directors of institutions supervised by the OCC and provides practical information on the fundamental requirements of board participation. On April 16-17, 2013, the OCC will host two director workshops in Philadelphia, Pennsylvania: "Risk Assessment for Directors" and "Credit Risk: A Director's Focus." The risk assessment workshop focuses on the OCC's approach to risk-based supervision and ways directors can effectively measure, monitor, identify, and control risks. The credit risk workshop focuses on the loan portfolio and the roles of the board and management, as well as current industry trends and news.

• Federal Reserve Board Publishes Debit Card Data.

On March 5th, the Federal Reserve Board published summary information on the volume and value, interchange fee revenue, certain debit card issuer costs, and fraud losses related to debit card transactions in 2011. The report is the second in a series to be published every two years pursuant to Section 920 of the Electronic Fund Transfer Act. Federal Reserve Board Press Release.

• FinCEN Notice on E-Filing Mandate.

On March 7th, the Financial Crimes Enforcement Network issued a reminder regarding the need to file most Bank Secrecy Act reports electronically through the BSA E-Filing System by April 1, 2013. Failure to do so may result in civil penalties. FinCEN Notice.

• Treasury Designations of those Tied to N. Korea's Nuclear Proliferation.

On March 7th, the Treasury Department announced the designation of Mun Cho'ng-Ch'o'l, a Tanchon Commercial Bank representative who served in Beijing, China; and Yo'n Cho'ng-Nam and Ko Ch'o'l-Chae, both based in Dalian, China, and representatives of Korea Mining Development Corporation, pursuant to Executive Order 13382, which targets proliferators of weapons of mass destruction and their supporters. Treasury Department Press Release.

• SEC Votes to Propose Regulation SCI.

On March 7th, the SEC unanimously voted to propose new rules that would require certain market participants to have comprehensive policies and procedures in place with respect to their technological systems. The SEC's proposed Regulation SCI would replace the current voluntary compliance program with enforceable rules designed to better insulate the markets from vulnerabilities posed by systems technology issues. Self-regulatory organizations, certain alternative trading systems, plan processors, and certain exempt clearing agencies would be required to carefully design, develop, test, maintain, and surveil systems that are integral to their operations. The proposed rules would require them to ensure their core technology meets certain standards, conduct business continuity testing, and provide certain notifications in the event of systems disruptions and other events. SEC Press Release.

• SEC Seeks Data on Harmonizing Fiduciary Duty Standard.

On March 1st, the SEC requested data and other information to assist in its consideration of whether to make new rules about the standards of conduct and regulatory obligations for broker-dealers and investment advisers. The SEC seeks information about the benefits and costs of the current standards of conduct for broker-dealers and investment advisers when providing advice to retail customers, as well as alternative approaches to the standards of conduct. While the SEC is particularly interested in receiving empirical and quantitative data and other information, all interested parties are encouraged to submit comments, including qualitative and descriptive analysis of the benefits and costs of potential approaches and guidance. Comments should be submitted on or before July 5, 2013. SEC Press Release; SEC Release No. 34-69013.

• Taxing Issue.

On March 7th, Bloomberg reported that SEC and IRS staffs have met to discuss the tax implications of floating net asset values for money market funds. Taxing Issue.

• Congressmen Question SEC Priorities.

On March 7th, The Hill reported four Congressmen have written the SEC to question the Commission's decision to spend its limited resources on writing a "discretionary" rule requiring political spending disclosure when the agency has failed to fully implement the JOBS Act. Questions.

• Private Equity Examinations.

On March 6th, the Wall Street Journal's private equity blog commented on the SEC's examination of private equity firms, noting the agency's extensive examination requests. Private Examinations.

• Inadvertent Production.

On March 6th, Forbes columnist Bill Singer discussed the SEC Enforcement Division's inadvertent production of potentially privileged internal staff email in an administrative proceeding, the administrative law judge's response, and the questions the inadvertent production raises. Questionable Production.

• Prospective Enforcement Director Profiled.

On March 6th, DealBook profiled Andrew J. Ceresney, who is considered a top contender to succeed Robert Khuzami as the Director of the Enforcement Division. DealBook notes his close ties with Mary Jo White, who has been nominated to chair the SEC, as well as his connections with the financial services industry. Profile.

• FBI Joins SEC in Quantitative Analysis.

On March 5th, the Financial Times reported that the FBI has joined the SEC's Quantitative Analytics Unit in investigating whether certain high-frequency, algorithmic, and off-exchange transactions violate the securities laws. Quantitative Analysis.

• Risk Alert and Investor Bulletin Issued Concerning Customer Custody Requirements.

On March 4th, the SEC issued a Risk Alert and Investor Bulletin on compliance with its custody rule for investment. The Office of Compliance Inspections and Examinations alert comes after a review of recent examinations found significant custody-related deficiencies in about one-third of the firms examined. Deficiencies included the adviser's failure to recognize it had custody; failure to meet the custody rule's surprise examination requirements; and failure to satisfy the custody rule's qualified custodian requirements. In addition, for advisers to audited pooled investment vehicles, the examinations found that some failed to meet requirements to engage an independent accountant and demonstrate that financial statements were distributed to all fund investors. Recent findings of custody deficiencies have resulted in a range of actions, including remedial measures by advisers, such as drafting, amending or enhancing their written compliance procedures, policies or processes, changing their business practices, or devoting more resources or attention to custody issues. OCIE's National Exam Program also has made referrals to the Division of Enforcement. SEC Press Release.

• CFTC LEI Guidance.

On March 7th, the CFTC provided guidance to the Utility designated by the CFTC to issue legal entity identifiers concerning CFTC compliant identifiers ("CICIs") on the maintenance of CICIs issued through assisted registration. CFTC Press Release.

• CFTC Approves CME Swaps Reporting Rule.

On March 6th, the CFTC approved the Chicago Mercantile Exchange's proposed adoption of new Chapter 10 and new Rule 1001. The new rule provides: "For all swaps cleared by the Clearing House, and resulting positions, the Clearing House shall report creation and continuation data to CME's swap data repository for purposes of complying with applicable CFTC rules governing the regulatory reporting of swaps. Upon the request of a counterparty to a swap cleared at the Clearing House, the Clearing House shall provide the same creation and continuation data to a swap data repository selected by the counterparty as the Clearing House provided to CME's swap data repository under the preceding sentence." CFTC Press Release (with links to related documents).

• Future Leadership.

On March 5th, the Wall Street Journal reported CFTC Chairman Gary Gensler may leave the agency as early as this summer, despite being asked by President Obama to serve another term. Future.

• Consumer Financial Protection Bureau

March 18, 2013 – Disclosure of Records and Information. 78 FR 11483.

• National Credit Union Administration

April 1, 2013 - Chartering and Field of Membership Manual for Federal Credit Unions. 78 FR 13460.

March 29, 2013 - Investment and Deposit Activities. 78 FR 13212.

• Securities and Exchange Commission

March 25, 2013 - Lost Securityholders and Unresponsive Payees. 78 FR 4768.

• Consolidated Audit Trail Interest.

On March 6th, Reuters reported 31 firms indicated interest in submitting proposals to build a consolidated audit trail system capable of collecting and identifying every order, cancellation, modification and trade executed for all exchange-listed equities and options across all U.S. markets. CAT Interest.

• Amendments Regarding Complex Orders Proposed.

On March 4th, the SEC provided notice of BOX Options Exchange's filing of a proposed rule change that would amend the rules related to trading Complex Orders on BOX Market, the options trading facility of the Exchange. In particular, the Exchange proposes rules to facilitate interaction on a continuous and real-time basis among orders on BOX, consisting of Complex Orders on the Complex Order Book and interest on the BOX Book. The proposed rule change generally sets forth rules to facilitate and permit (i) Complex Orders to trade with interest on the BOX Book and (ii) the combination of a Complex Order and an order on one of its component single option series trading on the BOX Book (each a "Leg") to trade with orders on the other component Leg on the BOX Book. Comments should be submitted within 21 days after publication in the Federal Register, which is expected during the week of March 11. SEC Release No. 34-69027.

• Limit Up/Limit Down Plan to Begin in April.

On March 6th, the Financial Industry Regulatory Authority announced that Phase I of the joint industry Regulation NMS Plan to Address Extraordinary Market Volatility will be implemented on April 8, 2013. The Notice provides an overview of the plan and a set of frequently asked questions providing additional guidance. FINRA Regulatory Notice 13-12.

• FINRA Waives Certain Membership Fees.

On March 6th, the Financial Industry Regulatory Authority announced that effective immediately, FINRA will waive the requisite continuing membership application ("CMA") fee where FINRA determines that a CMA is proposing less significant changes that do not require substantial staff review. Also effective immediately, FINRA will refund the application fee (less a $500 processing fee) if an applicant withdraws a new membership application or CMA within 30 days after filing the application with FINRA. FINRA Regulatory Notice 13-11.

• SIFMA Comments on FINRA Bonuses Proposal.

On March 6th, AdvisorOne summarized the Securities Industry and Financial Market Association's submission to the Financial Industry Regulatory Authority concerning the disclosure of broker recruitment packages. SIFMA supported the disclosure of recruitment bonuses when they present a conflict of interest. Recruitment Bonuses.

• ABS TRACE Reporting Requirement Approved.

On March 5th, the SEC approved the Financial Industry Regulatory Authority's proposal to require members to report to TRACE the "factor" in limited instances involving asset-backed security transactions. SEC Release No. 34-69037.

• SEC Approves FINRA Supplemental Schedule.

On March 4th, the Financial Industry Regulatory Authority announced the SEC has approved a FINRA proposal, made under FINRA Rule 4524 (Supplemental FOCUS Information), which requires carrying or clearing firms to file a supplemental FOCUS schedule for derivatives and other off-balance sheet items. The initial disclosure of information as of June 30, 2013, must be filed with FINRA on or before July 31, 2013. FINRA Regulatory Notice 13-10.

• ISDA Preparing Amendments.

On March 5th, Bloomberg discussed the International Swaps and Derivatives Association's plans to amend its rules addressing sovereign debt defaults and mergers. Amendments.

• Amendment to Attestation Requirement Proposed.

On March 5th, the SEC provided notice of NASDAQ Stock Market's filing of a proposed rule change that would amend the attestation requirement of Rule 4780 to allow a Retail Member Organization to attest that "substantially all" orders submitted to the Retail Price Improvement Program will qualify as "Retail Orders." Comments should be submitted within 21 days after publication in the Federal Register, which is expected during the week of March 11. SEC Release No. 34-69039.

• SD and MSP NFA Registration.

On March 6th, the National Futures Association announced that swap dealers and major swap participants may become NFA members beginning April 1, 2013. The CFTC recently approved amendments to NFA Bylaw 1301(f) allowing NFA to adopt an annual membership dues structure for SDs and MSPs. As of April 1, 2013, NFA will begin invoicing provisionally registered SDs and MSPs for the first quarterly installment of their annual NFA membership dues. NFA Information Memo I-13-06.

• Clearing Fund Contribution Revision Proposed.

On March 4th, the SEC provided notice of the Options Clearing Corporation's filing of a proposed rule change to implement a revised method of calculating clearing members' respective contributions to OCC's clearing fund. Comments should be submitted within 21 days after publication in the Federal Register, which is expected during the week of March 11. SEC Release No. 34-69026.

• Securitization Insurer Loses FIRREA Case.

On March 8th, the D.C. Circuit discussed the difference between contracts "accepted" by the FDIC as conservator of a failed bank, and those "approved" by the FDIC and entitled to administrative priority under the Financial Institutions Reform, Recovery, and Enforcement Act. MBIA claims payments it made to investors in the mortgage securitizations of the failed bank IndyMac are "administrative expenses" entitled to priority under FIRREA. It sued as the third party beneficiary of the Pooling and Servicing Agreements of IndyMac, alleging that the FDIC, as IndyMac's conservator, had "approved" the PSAs and then breached its "put back" obligations under those agreements. Affirming dismissal, the D.C. Circuit holds that Congress distinguished between contracts "accepted," or "not-repudiated," upon transfer and contracts qualified for "administrative expenses" priority because they had been "executed or approved" by the FDIC. The context, where the FDIC steps into the shoes of a failed bank in emergency circumstances, shows in light of other provisions of FIRREA where Congress intended "approved" to have a formality consistent with "executed" and beyond "accept[ance]," and where a narrow meaning is required under the depositor preference scheme. MBIA Insurance Corp. v. FDIC.

• Dismissal of ARS Antitrust Suit Affirmed.

On March 5th, the Second Circuit held that the district court properly dismissed antitrust lawsuits brought by plaintiffs representing the purchasers and issuers of auction-rate securities. Plaintiffs allege that the defendant banks conspired to stop supporting the ARS market, triggering the market's collapse, in an improper "boycott" or "refusal to deal" which violated Section 1 of the Sherman Act. The Court held that plaintiffs pleaded only parallel conduct in a market that was already declining. Plaintiffs' allegations of "common motive" only address the motive to support, not exit, the market and dismissal was therefore proper. Mayor and City Council of Baltimore, Maryland v. Citigroup, Inc.

• Sarbanes-Oxley Whistleblower Standards.

On March 5th, the Second Circuit clarified the pleading and burdens of proof applicable to Sarbanes-Oxley whistleblower suits. First, plaintiff must prove by a preponderance of the evidence that he engaged in a protected activity; the employer knew of the protected activity; the employee suffered an unfavorable personnel action; and the protected activity was a contributing factor in the unfavorable action. Once the employee has established those elements, the employer may rebut this prima facie case with clear and convincing evidence that it would have taken the same adverse action in the absence of any protected activity. Bechtel v. Administrative Review Board.

• SEC's Insider Trading Charges Survive Summary Judgment.

On March 5th, a U.S. District Court denied the motion for summary judgment filed by Mark Cuban, the owner of the Dallas Mavericks, in an SEC enforcement action. The SEC claims Cuban misappropriated inside information concerning Mamma.com's plans for a private-investment-in-public-equity offering. The Court found that genuine issues of material fact exist regarding whether Cuban agreed, at least implicitly, to maintain the confidentiality of that information and to not trade on it. The Court further held that a jury could impute the existence of such an agreement from the parties' conduct and the surrounding circumstances. SEC v. Cuban.

• SEC Subpoena Enforcement Case to Proceed.

On March 4th, a federal magistrate judge ruled that the SEC could proceed with its subpoena enforcement action against Deloitte Touche Tohmatsu. The agency seeks documents related to the auditor's work for a China-based company. The action was stayed while the SEC negotiated with Chinese regulators concerning the production of documents, but those negotiations failed. Since then, the SEC instituted an industry-wide enforcement action concerning the auditing of Chinese companies. Finding that the instant action is sufficiently different from the broader matter, the Court allows the subpoena action to move forward. SEC v. Deloitte Touche Tohmatsu CPA LTD.

• Senate Committee Holds AML Hearings.

On March 7th, Reuters summarized the testimony before the Senate Banking Committee concerning anti-money laundering enforcement. See Hearing Webpage (with links to archived webcast and prepared remarks). Representatives from the OCC and the Financial Crimes Enforcement Network, among others, promised aggressive enforcement against institutions and individuals. Senator Elizabeth Warren pointedly asked whether regulators would consider rescinding the banking licenses of firms which violated the Bank Secrecy Act. AML Hearings.

• ERISA Swaps.

On March 7th, Pension Risk Matters blogged about the Department of Labor's recently issued advisory opinion concerning the use of swaps by ERISA plans. ERISA Swaps.

• ERISA Lawsuit.

On March 7th, Reuters reported a putative class action lawsuit has been filed against Fidelity Investments for alleged ERISA violations. The complaint claims Fidelity improperly uses overnight interest earned in retirement fund accounts to pay administrative expenses. ERISA Lawsuit.

• Lawyers Become Bankers.

On March 7th, Bloomberg noted the effects "sequestration" will have on the judicial system: courthouses keeping bankers' hours. Budget cuts will force courts to close at 5:00 pm, which may prove especially difficult for firms in bankruptcy seeking late-night court approvals. Civil cases are also likely to be affected and delayed. Sequestration.

• Are Life Insurers SIFIs?

On March 7th, the Washington Post questioned whether the Financial Stability Oversight Council should designate life insurers as systemically important financial institutions. The Post used the appearance of MetLife's CEO, Steve Kandarian, in Washington, D.C. as the backdrop for its report. SIFIs.

• Swap Push-Out Repeal.

On March 6th, Bloomberg reported a bipartisan group of Senators and Congressmen will introduce in their respective houses legislation repealing the so-called "swaps push-out" provision of the Dodd-Frank Act, which prohibits banks insured by the FDIC or with access to the Federal Reserve's discount window from engaging in swap trading activities. Repeal.

• NASAA's Legislative Agenda.

On March 5th, Investment News summarized the North American Securities Administrators Association's legislative agenda. High on state securities regulators' list is a bill that would prohibit brokerages from requiring their customers to sign class-action waivers and pre-dispute arbitration agreements. Other agenda items include strengthening investor protection measures weakened, in NASAA's opinion, by the JOBS Act. Agenda. Bloomberg reported NASAA is also seeking a Congressional investigation into high-frequency trading. Investigation.

• Return to Byzantium.

On March 5th, Washington Monthly discussed federal efforts to write the rules implementing the Dodd-Frank Act, calling the process Byzantine. Rulemaking.

• FHFA Plans Securitization Platform.

On March 4th, the Federal Housing Finance Agency announced it intends to build a new securitization infrastructure, including a common securitization platform, for Fannie Mae and Freddie Mac. FHFA Press Release. See also Bloomberg (platform will be designed to survive independently of Fannie Mae and Freddie Mac).

• Tax-Exempt Bonds.

On March 4th, the New York Times discussed the costs and benefits of qualified private activity bonds, federal tax-exempt bonds issued by private firms. Private Offerings.

• Case Note: Recent UK Financial Services Litigation.

The Financial Services Authority v Sinaloa Gold plc and others and Barclays Bank plc [2013] UKSC 11. Case Note.

• Dodd-Frank Title VII — Cleared Swaps and ERISA Plans.

In a move that diminishes many of the legal uncertainties concerning the continued availability of swaps to ERISA plans in the Dodd-Frank world, the Department of Labor recently issued an advisory opinion that addresses the applicability of the ERISA fiduciary and prohibited transaction rules to "cleared swaps" entered into by ERISA plans. Briefing.

• Antitrust and Competition—The EU Weekly Briefing, Vol. 1, Issue 18.

Antitrust and Competition — The EU Weekly Briefing is designed to provide timely updates on recent European Union competition law by including a short description of, and links to, recent developments. EU Weekly Briefing.

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