SEC proposes rules connected to security-based swaps transactions

Securities Agency Rule-Making & Guidance Swaps SEC

On December 15, the SEC announced that the Commission voted to propose three rules under the Exchange Act “to prevent fraud, manipulation and deception in connection with security-based swaps, to prevent undue influence over the chief compliance officer of security-based swap dealers and major security-based swap participants, and to require any person with a large security-based swap position to publicly report certain information related to the position.” According to the proposed rules, Rule 9j-1 would be “designed to prevent fraud, manipulation, and deception in connection with effecting transactions in, or inducing or attempting to induce the purchase or sale of, any security-based swap.” Rule 15Fh-4(c) “would make it unlawful for any officer, director, supervised person, or employee of a security-based swap dealer or major security-based swap participant, or any person acting under such person’s direction, to directly or indirectly take any action to coerce, manipulate, mislead, or fraudulently influence the security-based swap dealer’s or major security-based swap participant’s CCO in the performance of their duties under the Federal securities laws or the rules and regulations thereunder.” Rule 10B-1 would require any individual “with a security-based swap position that exceeds a certain threshold to promptly file with the Commission a schedule disclosing among other things: (1) the applicable security-based swap position; (2) positions in any security or loan underlying the security-based swap position; and (3) any other instrument relating to the underlying security or loan, or group or index of securities or loans.” Additionally, Rule 10B-1 “includes different reporting thresholds for security-based swaps tied to debt securities and security-based swaps tied to equity securities.” Comments are due 45 days after publication in the Federal Register.