February 7, 2022
Here's the FACT SHEET: SBS Fraud Manipulation CCO Independence Position Reporting
Why This Matters
The Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (Dodd-Frank) was enacted in part to improve accountability and transparency in the financial system. Consistent with that goal, as the SEC takes action to finalize its Dodd-Frank regime for security-based swaps, these proposed rules would address misconduct in the securitybased swap market, promote compliance with the Federal securities laws by SBS Entities and increase transparency in the security-based swap market.
How This Rule Applies
If finalized, new Rule 9j-1 would prohibit fraudulent, deceptive, or manipulative conduct in connection with all transactions in security-based swaps, including misconduct in connection with the exercise of any right or performance of any obligation under a security-based swap. Proposed new Rule 15Fh-4(c) would prohibit personnel of an SBS Entity from taking any action to coerce, mislead or otherwise interfere with the SBS Entitys CCO. Proposed new Rule 10B-1 would require any person, or group of persons, who owns a security-based swap position that exceeds the threshold amount set by the rule to promptly file with the SEC a statement containing the information required by Schedule 10B on the SECs EDGAR filing system. The filings will be publicly available.
Whats Required Proposed Rule 9j-1 would:
Prohibit a range of misconduct and attempted misconduct in connection with security-based swaps, including misconduct in connection with the exercise of any right or performance of any obligation under a security-based swap
Prohibit manipulation or attempted manipulation of the price or valuation of any security-based swap, or any payment or delivery related thereto
Provide limited safe harbors for certain specified conduct and
Provide that a person cannot escape liability for trading based on possession of material non-public information about a security by purchasing or selling a securitybased swap based on that security and cannot escape liability under the proposed rule by purchasing or selling the underlying security (as opposed to purchasing or selling a security-based swap that is based on that security). Proposed Rule 15Fh-4(c) would prohibit any officer, director, supervised person or employee of an SBS Entity, or any person acting under such persons direction, to take any action to coerce, manipulate, mislead, or fraudulently influence the SBS Entitys CCO in the performance of their duties under the Federal securities laws. Proposed Rule 10B-1 would:
Require any person, or group of persons, with a security-based swap position that exceeds a specified reporting threshold to promptly file a Schedule 10B disclosing certain information related to its position
Provide that any Schedule 10B be filed promptly but in no event later than the end of the first business day following the day of execution of the security-based swap transaction that results in the security-based swap position exceeding threshold
Require reporting persons to file amendments promptly in the event of any material change to a previously filed Schedule 10B. Schedule 10B would require persons to disclose certain information including: the identity of the reporting person and the security-based swap position, as well as the underlying loans or securities and any related loans and securities.