By Yin Wilczek

A public interest group—Citizens for Responsibility and Ethics in Washington—Sept. 27 sued the Securities and Exchange Commission over allegations that the agency destroyed documents relating to preliminary inquiries (Citizens for Responsibility and Ethics in Washington v. SEC, D.D.C., No. 11-cv-01732, 9/27/11).

The lawsuit, filed in the U.S. District Court for the District of Columbia, also names SEC Chairman Mary Schapiro as a defendant. It asserted that the commission’s alleged actions were “arbitrary, capricious, and contrary” to the Federal Records Act.

“Pursuant to SEC policy, records related to thousands of preliminary inquiries were knowingly and routinely destroyed, and the unauthorized and illegal destruction of enforcement related records has continued to the present,” the complaint said. “This action also challenges the failure of SEC Chairman Mary L. Schapiro to take enforcement action to ensure adequate preservation of all SEC federal records, and the failure of the SEC and Chairman Schapiro to take any actions to restore any of the unlawfully destroyed records.”

SEC spokesman John Nester did not immediately respond to a request for comment…

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By Donald N. Lamson and Hilary Allen

By now it is a commonplace that the Dodd-Frank Wall Street Reform and Consumer Protection Act requires dozens of agency and interagency implementing rulemakings. Less understood is how difficult it was to design a viable process for two widely respected agencies, the Securities and Exchange Commission (“SEC”) and the Commodity Futures Trading Commission (“CFTC”), to engage in joint rulemakings to implement Title VII, which governs the regulation of derivatives. Was the process difficult because the CFTC and SEC are so different in their regulatory approaches, or is the job expected of them so daunting that extensive ground rules are essential to the task? A review of the alternatives that Congress considered and rejected can help a curious reader appreciate how Congress expects the SEC and the CFTC to share the responsibility for the regulation of a huge, previously unregulated market in financial instruments.

Introduction

As Congress determined to regulate the swaps markets, it needed to resolve two competing policy goals: a desire for efficient, i.e., consistent regulation of the swaps markets, and respect for the differing natures of those markets and their constituent products. The trade-off gives rise to a related question: should there be one regulator of U.S. financial markets, or is there room for two regulators, the CFTC and the SEC?

A merger of the two agencies had intellectual appeal; the regulation of markets internationally often is entrusted to a single regulator. ⁴ This approach recognizes the similarities between products and markets and reduces the opportunity for regulatory arbitrage. At the same time, the presence of two agencies can effectively recognize the differences inherent in multiple products and markets. Because the idea of a formal agency merger lacked sufficient political appeal, a compromise was struck; a de facto merger of regulatory principles and mechanics through joint rulemaking came closest to achieving increased efficiency in regulation, while simultaneously preserving the status quo…

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No division or office at the agency regularly reviews the periodic reports submitted on a quarterly…

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The U.S. District Court for the District of Columbia Aug. 16 declined to sign off on Citigroup Inc.’s (C) preliminary agreement to pay $75 million to settle Securities and Exchange Commission charges over subprime disclosures in the summer of 2007 pending receipt of details on the underlying enforcement action (SEC v. Citigroup Inc., D.D.C., 10-cv-1277, 8/16/10)…

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United States and international financial markets are experiencing tumult not seen since the 1930s. Current gyrations in U.S. securities markets have focused attention on numerous regulatory issues, including the power of the United States Securities and Exchange Commission (“Commission”) to intervene in U.S. securities markets in times of extreme market stress. Beginning in 2008, the Commission took a number of actions designed to alleviate market stress, consistent with the Commission’s statutory authority under the Securities Exchange Act of 1934 (the “Exchange Act”). While the fears of financial calamity have seemingly receded, the recent “flash crash” and other unsettling developments such as the Greek debt crisis and accompanying Eurodollar uncertainty reveal market instability that may require Commission action in the future. If any such actions became necessary, the Commission would be able to utilize its emergency order authority, as it did in the summer and fall of 2008…

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The Securities and Exchange Commission Aug. 11 published a final rule preserving its delegation of authority to the director of the Division of the Enforcement to issue formal orders of investigation designating staff to…

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Four senators Aug. 5 introduced a bipartisan bill to eliminate a provision under the recently enacted financial regulatory reform law that they believe allows the Securities and Exchange Commission to keep certain records from financial institutions out of public view…

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The Securities and Exchange Commission announced June 4 that within a week, its staff expects to present recommendations on a proposal by national securities exchanges and the Financial Industry Regulatory Authority to halt trading in…

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The Securities and Exchange Commission announced June 4 that within a week, its staff expects to present recommendations on a proposal by…

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After nearly three weeks of debate on the floor, the Senate May 20 passed, by a vote of 59 to 39, an historic bill that would achieve the most expansive overhaul of securities regulation since the Great Depression, particularly for hedge fund advisers and credit…

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