By James Hamilton, J.D., LL.M., Principal Analyst, CCH Federal Securities Law Reporter; and CCH Derivatives Regulation Law Reporter.
Senators Ted Kaufman and Johnny Isakson said that the partial action taken by the SEC will neither provide investors with the same protections as the uptick rule nor address the enforcement issues surrounding the current naked short selling rule. The SEC voted 3-2 to require short sellers, if a company’s shares fall 10 percent in one day, to exceed the prevailing bid for the remainder of the trading day and the following day in short sales of that security.
While encouraged that the SEC took some action to protect investors from manipulative short selling, adding that the circuit-breaker/bid test rule is a step forward, the senators said it will be of limited use, helping only in the worst-case scenarios that could occur during a terrorist attack or financial crisis. The uptick rule worked for 70 years as a systemic check on predatory bear raids; they emphasized, and this approach will not provide investors with the same protections as an always-on bid test.
Continue reading "Senators Say SEC Action Falls Short of Solving Naked Short Selling Concern " »
By Gregg D. Killoren, J.D., CCH State Banking Law Reporter, Bank Digest and Individual Retirement Plans Guide.
The Federal Deposit Insurance Corp. will be issuing an Advance Notice of Proposed Rulemaking (ANPR) that asks for comment on whether employee compensation structures that increase a depository institution's risk should be considered in setting the institution's deposit insurance assessment. According to FDIC Chairman Sheila Bair, “A broad consensus of academic studies agrees that poorly designed compensation structures can misalign incentives and induce risk taking.” This can increase risk for the deposit insurance fund and increase losses in the financial system, Bair said. According to the FDIC's notice, the agency is not attempting to impose compensation limits. Instead, it is looking at how to incorporate into the deposit insurance assessment rates the effects of compensation programs that increase risks to the Deposit Insurance Fund.
Continue reading "Comments on Incorporating Employee Compensation Into the Risk Assessments" »