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Entries tagged “Dodd-Frank”

Dodd-Frank 30 Day Countdown: Day 8

Insight Robin Powers Robin Powers · July 08, 2011

SEC and CFTC Differ in their Approach to Temporary Relief

Title VII of the Dodd-Frank Act gives authority to the Securities Exchange Commission (SEC) to regulate security-based swaps, while the Commodities Futures Trading Commission (CFTC) will generally be responsible for swaps markets.  Both the SEC and CFTC have recently announced temporary relief will be available for some of the provisions under Title VII that are scheduled to go into effect July 16, 2011, though the agencies are not working in unison to create a comprehensive relief order for market participants.

The CFTC has categorized their relief order into four sections, ranging from those provisions that will automatically go into effect July 16, to those that cannot go into effect until express rule-making comes from the CFTC. The CTFC Order will expire December 31, 2011, absent further action from the CFTC.

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Dodd-Frank 30 Day Countdown: Day 9

Insight Robin Powers Robin Powers · July 07, 2011

Firms Oppose FDIC Claw Back Provision

On Wednesday (July 6, 2011), the Federal Deposit Insurance Corp. (FDIC) voted on a rule allowing the government to recover payments from both senior executives and directors who the FDIC determines to be “substantially responsible” for a financial firm’s failure. This rule, known as the “claw back provision,” is one of a many rules that the FDIC is responsible for drafting and implementing with respect to its new “post Dodd-Frank” liquidation powers.  Dodd-Frank positioned the FDIC as supervisor over these firms and gave the FDIC authority to dismantle any large “too big to fail” institution before the need for government bailouts arises.

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Dodd-Frank 30 Day Countdown: Day 10

Insight Robin Powers Robin Powers · July 06, 2011

Dodd-Frank’s Impact on Private Equity Firms - Limited Private Fund Exemption

For hedge funds and private equity firms, anxiety over the new regulations brought by Dodd-Frank pivots on Title VII and a simple dilemma: new paperwork to be done and no one to do it. However, there is a loophole.

Dodd-Frank expands the requirements on US hedge funds and private equity firms to report directly to the Securities Exchange Commission (SEC). While over 3,000 private-fund advisors are already registered with the SEC, regulators anticipate that approximately 1,000 funds with be added to the SEC’s registry, nearly half of which will include large hedge funds and big private equity firms.   Dodd-Frank not only extends the requirement on who must report, it also increases the amount of information that must be provided to regulators. Among the many additions, larger funds will now be mandated to report their total borrowings, the net asset value of every private fund, as well as monthly and quarterly performance.

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Dodd-Frank 30 Day Countdown: Day 11

Insight Robin Powers Robin Powers · July 05, 2011

Will SEC, CFTC Budget Cuts Impede Dodd-Frank?

It was not shocking to hear that both the SEC and the CFTC would have to extend their rulemaking deadlines, as their newly found responsibilities stemming from Dodd-Frank are certainly burdensome. It would have been nearly impossible for both agencies to cooperatively define key terms relating to the OTC derivatives market on top of creating hundreds of new rules in such a short time. Though the SEC and CFTC have both granted themselves extensions, many involved in the financial markets remain skeptical that either agency can accomplish their goals in time to meet even the extended deadline.

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Dodd-Frank 30 Day Countdown: Day 12

Insight Robin Powers Robin Powers · July 04, 2011

Fireworks over Dodd-Frank

As the United States celebrates her birthday amidst the financial reform that is Dodd-Frank, many people both at home and abroad are unhappy with the legislation and its potential repercussions.





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Dodd-Frank 30 Day Countdown: Day 13

Insight Robin Powers Robin Powers · July 03, 2011

SEC Re-defines Family Office

With the enactment of Dodd-Frank comes the end of the exemption historically granted to family offices under the Investment Advisers Act of 1940.  In the past, investors with fewer than 15 clients could take advantage of the Act’s “private adviser exemption.”  But with Dodd-Frank eliminating this exclusion, family offices are no longer immune from registering with the SEC. 

As part of its rulemaking responsibilities, the SEC recently voted on a definition of “family office” in order to help investment advisers determine if they fall under the SEC’s jurisdiction. According to the SEC, “‘family offices’ are entities established by wealthy families to manage their wealth and provide other services to family members, such as tax and estate planning services.”  Any family office that provides advice solely to family members not more than 10 generations removed from a common ancestor (as well as spouses, key employees, charities and trusts),  is owned and controlled by family members, and does not hold itself out to the public as an investment adviser, is exempt from registering under the Investment Adviser’s Act. 

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Dodd-Frank 30 Day Countdown: Day 14

Insight Robin Powers Robin Powers · July 02, 2011

SEC Finalizes Whistleblowing Rules

With all the Securities and Exchange Commission (SEC) has on its plate, one may wonder why the whistleblower provisions of the Dodd-Frank Act were one of the first to be finalized. These provisions will become effective August 12, 2011.

The whistleblower provisions are perhaps the most interesting aspect of the Dodd-Frank legislation.  Under the new rules, if a whistleblower is aware of a violation of a securities law, and reports original information to the SEC prior to any information requests by the agency, and the information provided results in monetary sanctions over $1 million, the whistleblower is rewarded. 

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Dodd-Frank 30 Day Countdown: Day 15

Insight Robin Powers Robin Powers · July 01, 2011

Definition of “Commodity Pool” Expanded July 16

The CFTC is proposing to grant temporary relief from certain provisions of Dodd-Frank that will delay the requirement that a person register as a commodity trading advisor (“CTA”), for those persons whose  advice regarding commodity interests involves swaps, or commodity pool operator (“CPO”), for those persons who operate collective investment vehicles whose commodity interest investments include swaps.

Prior to Dodd-Frank, a “commodity pool” was defined as a fund in which a group of investors would combine their resources in order to trade futures and commodities. The expanded definition under Dodd-Frank (set to come into effect automatically on July 16), will encompass any investment vehicle that trades non-security based swaps. This means that after July 16, any pooled investment vehicle that invests in commodities derivatives, interest rate derivates, and most currency derivatives (just to name a few), will be considered a “commodity pool.”

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Dodd-Frank 30 Day Countdown: Day 16

Insight Robin Powers Robin Powers · June 30, 2011

Brazil and Argentina lead South America in Derivatives Regulation

In the midst of the sweeping global financial reform, U.S. regulators could look to Brazil for some guidance on the derivatives market. The Brazilian monetary authorities regulate and supervise the financial sector tightly and have always adopted a very restrictive approach in the derivatives market.   Brazil has operated under strict regulation since 1994 when OTC derivatives were first required to be registered with trade repositories. The country has one central clearing house in which all listed derivatives, as well as some OTC derivatives, are cleared. All OTC derivatives that have not been cleared through the clearing house must be reported to a local data repository so that swaps may be monitored by regulators for excessive market risk. After the global financial crisis of 2007, Brazil undertook additional prudential initiatives to monitor and control the risks assumed by Brazilian participants in derivatives transactions.

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Dodd-Frank 30 Day Countdown: Day 17

Insight Robin Powers Robin Powers · June 29, 2011

Smaller Funds May Have Trouble Finding Clearing Member

Though uncertainty may seem to be the one definite aspect of the regulations outlined in Title VII of the Dodd-Frank Act, experts warn that hedge funds should proactively select and secure a clearing member to handle their OTC derivative transactions. Many of the larger funds have reportedly made such arrangements, but smaller hedge funds may be procrastinating in order to conserve legal and operations budgets.  As a result, clearing members, currently inundated with their own regulatory implementation projects, may not have the capacity to make these smaller funds a priority.  These funds may find themselves unable to trade when the full force of Dodd-Frank comes in effect.

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