US SEC, CFTC mull joint enforcement squad – sources

By Reuters Staff
October 16, 2009

By Rachelle Younglai
WASHINGTON, Oct 15 (Reuters) – U.S. securities and futures regulators are considering a joint enforcement squad to investigate and root out fraud in the markets, two sources familiar with the matter said on Thursday.

The new squad would be made up of staff from the Securities and Exchange Commission and the Commodity Futures Trading Commission, who would come together to coordinate and manage joint investigations, the sources said.
Use of such task forces is one of the recommendations being considered by SEC and CFTC commissioners in an effort to end a turf fight over market jurisdiction.
The Obama administration has pressured the agencies to resolve long-standing conflicts and come up with recommendations for Congress to align their rules.
The two agencies said in late September they would issue a so-called harmonization report on Oct. 15 outlining where their regulatory frameworks differ and ways to bridge those gaps.
A CFTC spokesman said it would not be released on Thursday. He gave no reason for the delay or when it would be issued.
For years, regulatory disputes have consumed the SEC and CFTC resources and created uncertainty in the marketplace as to how products will be regulated and laws enforced.
One of the central disputes is whether a product is a security or a commodity future. That divide has delayed product approvals, angering industry and investors.
According to one source, the SEC and CFTC are mulling asking for legislation that would help resolve product disputes. When it is not clear if a product is a security or future, timelines would be set for agencies to figure it out, the source said. If regulators miss the deadline, a court would have to break the impasse. The source cautioned the language could still change.
Regulatory lapses have been blamed for the global credit crisis and economic fallout, triggering calls for a sweeping overhaul of the country’s financial regulatory system and intensifying demands for the agencies to stop fighting.
The recommendations are expected to be released on Thursday upon receiving the approval of the SEC and CFTC commissioners.
Others being considered include the creation of a joint training program that may go beyond training for enforcement staff, one source said. The sources requested anonymity because the recommendations have not been made public.
(Reporting by Rachelle Younglai; additonal reporting by Christopher Doering; editing by Leslie Gevirtz, Steve Orlofsky and Andre Grenon) (

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