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from Financial Regulatory Forum:

SEC faces challenges before fast-trading reforms can go on the books

By Emmanuel Olaoye, Compliance Complete

The Securities and Exchange Commission has rolled out its intentions to regulate high-frequency trading, making stricter regulation in some form a strong possibility, but the agency faces more work and some challenging obstacles before it can put new rules in the books.

SEC Chair Mary Jo White in a speech last week outlined her goals for regulating high-frequency trading (HFT), at a time when political interest over the fairness and risks of the practice has surged in the wake of a best-selling book by financial writer Michael Lewis.

White‘s intentions for regulating high-frequency trading, which has taken a dominant role in U.S. equity markets, include registration requirements for proprietary fast-traders. Under such rules, firms registering as broker dealers would have to meet net capital requirements and establish adequate risk management controls.

The agency is also working on a rule to restrict disruptive trading rule. The rule would apply to proprietary traders in "short time periods when liquidity is most vulnerable and the risk of price disruption caused by aggressive short-term trading strategies is highest."

from Breakingviews:

James Hoffa: Let sun shine on corporate donations

By James Hoffa
The author is a Reuters Breakingviews guest columnist. The opinions expressed are his own.

Companies increasingly are playing an outsized role in U.S. elections. In many cases, they donate money to advocate controversial policies that could antagonize their customers and undermine their businesses. Because so many of these contributions are not disclosed, however, shareholders are left in the dark and unable to evaluate potential conflicts or risks.

from Bethany McLean:

Is Steve Cohen the real target in this trial?

The fate of Mathew Martoma, the former SAC Capital portfolio manager charged with the biggest insider trade in history -- more than $275 million in profits and avoided losses, says the government -- is now in the hands of a 12-person jury, which began deliberations in a Manhattan courthouse Tuesday afternoon.

But whatever the verdict for Martoma, the trial has been bad news for someone else: Martoma’s former boss, SAC head Steve Cohen. Given the slow, but relentless, nature of the government’s actions against Cohen, it might be worth remembering the old adage: It ain’t over til it’s over.

from The Great Debate:

Steven Cohen: The Gilded Age revisited

There he is in all his tarnished glory: Steven A. Cohen, arguably the most famous, and infamous, hedge fund manager in the United States. Maybe the world.

He lives in a 35,000-square foot Greenwich, Connecticut, mansion with an indoor skating rink, golf course and everything an exclusive school might offer. His New York City duplex in Bloomberg Tower is for sale at $115 million. He’s staying in a $23.4 million Greenwich Village maisonette, while his $38.8 million 8,250 square-foot house nearby is being renovated. Last summer he bought an East Hampton beach house for $60 million. He has another place there -- 10 bedrooms and a spa -- but it isn’t close enough to the water.

from Breakingviews:

Big U.S. bank fines far more art than science

By Reynolds Holding
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

The biggest U.S. bank fines involve far more art than science. In theory there are defined, if loose, legal criteria for penalties. But enormous settlements – like the possible $13 billion bite out of JPMorgan – can seem pulled from thin air. While courts occasionally run the rule over the numbers, regulators’ zeal and public outrage outweigh the logic.

from Stories I’d like to see:

Football’s costs, SEC v. Cohen and the Whale’s tale

The NFL’s looming court tests

As the 2013 National Football League season begins, it’s time for an update on the liability suits the league is facing from what the website Deadspin reported last April were “more than 4,000 former players” who claim to have suffered on-the-job brain damage. The same Deadspin report noted that helmet-maker Riddell is also a defendant in the suits and that in April a Colorado high school student won a $3.1 million judgment against Ridell after he was brain damaged and partially paralyzed following a concussion suffered in a 2008 practice drill.

In June of 2012, Forbes ran a story headlined, “NFL Faces Tobacco-Like Damages Reaching Billions Of Dollars In Concussion Litigation,” and in December, the New York Times reported another wrinkle -- that the NFL and its teams are fighting in court with 32 different insurance companies over whether their policies cover the league’s and the teams’ liability and legal costs.

from Breakingviews:

A Goldman minnow finally lands in the SEC’s net

By Reynolds Holding
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

A Goldman Sachs minnow has finally landed in the Securities and Exchange Commission’s net. The federal jury verdict against Fabrice “Fabulous Fab” Tourre on Thursday ends a losing streak in the courts for the U.S. watchdog. But the former trader played a minuscule role in Wall Street machinations that led to the financial crisis. The SEC’s win won’t absolve it from letting the big fish get away.

from Breakingviews:

“Fab” Tourre verdict can only make SEC look bad

By Reynolds Holding
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.

 

Any verdict in the trial of Fabrice “Fabulous Fab” Tourre can only make the Securities and Exchange Commission look bad. Lawyers for the former Goldman Sachs banker seem sure the U.S. regulator has blown it. But even a win would only highlight the watchdog’s failure to bag a high-level bank boss.

from The Great Debate:

Derivative rules: Global problem needs global solution

The 2008 financial crisis demonstrated how interconnected the global financial system is. What began as a real estate bubble fueled by subprime mortgages in many states ballooned into a global financial panic of unprecedented magnitude. Bundles of poorly underwritten mortgages generated toxic derivatives bet on in a global market. When the dust settled, there was broad agreement that not only did we need a new financial regulatory regime, it had to be globally coordinated.

The United States, the European Union, Britain, Japan and other nations should come up with a regulatory regime that works across all borders. This does not have to be the exact same set of rules and regulations, but rather compatible systems, based on a common set of definitions and structures.

from The Great Debate:

A case of lobbysts vs. small cap investors

It's tick season again: the time of year when those small, seemingly unimportant beasts emerge and attack the unsuspecting or unaware. This year, they seem to be everywhere and have a particularly robust group of carriers. The problem with ticks is that, while they seem benign, they can cause significant harm to those who are not vigilant.

But this is not about those annoying little creatures that hang out in the tall grass and spread Lyme disease. We're talking about the kind on Wall Street, transported not by deer, but by a loud army of lobbyists.

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