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U.S. Securities and Exchange Commission

SEC News Digest

Issue 2010-122
July 1, 2010

COMMISSION ANNOUNCEMENTS

SEC to Publish for Public Comment Proposed Rules Expanding Stock-By-Stock Circuit Breakers

On June 30, 2010, the Securities and Exchange Commission published for public comment proposals by the national securities exchanges and FINRA to expand a recently adopted circuit breaker program to include all stocks in the Russell 1000 Index and certain exchange-traded funds.

The circuit breaker program was approved earlier this month in response to the market disruption of May 6 and currently applies to stocks listed in the S&P 500 Index. Trading in a security included in the program is paused for a five-minute period if the security experiences a 10 percent price change over the preceding five minutes. The pause gives the markets an opportunity to attract new trading interest in an affected stock, establish a reasonable market price, and resume trading in a fair and orderly fashion. The circuit breaker program is in effect on a pilot basis through Dec. 10, 2010.

"The proposals would expand the uniform circuit breakers to many more stocks and ETFs," said SEC Chairman Mary Schapiro. "We look forward to receiving comments from the public on the proposed addition of the Russell 1000 Index securities and the selected exchange-traded funds to the circuit breakers."

A list of the securities included in the Russell 1000 Index, which was rebalanced on June 25, is available on the Russell website. The exchange-traded funds included in the proposal will be available on the SEC's website along with the proposed rule changes under Exhibit 3 to each filing.

The circuit breaker pilot program was developed after Chairman Schapiro convened a meeting of exchange leaders and FINRA at the SEC immediately following the May 6 market disruption. The markets will continue to use the pilot period to make appropriate adjustments to the parameters or operation of the circuit breakers as warranted based on their experience. "It is my hope to continue to expand the program to additional publicly traded companies," added Chairman Schapiro.

At Chairman Schapiro's request, the SEC staff is also:

  • Considering ways to address the risks of different order types and their potential to contribute to sudden price moves.
     
  • Considering steps to deter or prohibit the use by market makers of "stub" quotes, which are not intended to indicate actual trading interest.
     
  • Studying the impact of other trading protocols at the exchanges, including the use of trading pauses and self-help rules.
     
  • Continuing to work with the exchanges and FINRA to improve the process for breaking erroneous trades, by assuring consistency across markets.

The SEC staff also is working with the markets to consider recalibrating market-wide circuit breakers currently on the books - none of which was triggered on May 6. These circuit breakers apply across all equity trading venues and the futures markets.

Once the proposals have been published in the Federal Register, the public will have 10 days to submit comments. (Press Rel. 2010-117)


Commission Meetings

Closed Meeting - Thursday, July 8, 2010 - 2:00 p.m.

The subject matter of the Closed Meeting scheduled for Thursday, July 8, 2010, will be: institution and settlement of injunctive actions; institution and settlement of administrative proceedings; consideration of amicus participation; a regulatory matter regarding a financial institution; and other matters relating to enforcement proceedings.

At times, changes in Commission priorities require alterations in the scheduling of meeting items. For further information and to ascertain what, if any, matters have been added, deleted or postponed, please contact: The Office of the Secretary at (202) 551-5400.


RULES AND RELATED MATTERS

Political Contributions by Certain Investment Advisers

Today the Securities and Exchange Commission adopted new rule 206(4)-5 under the Investment Advisers Act of 1940. The rule prohibits an investment adviser from providing advisory services for compensation to a government client for two years after the adviser or certain of its executives or employees make a contribution to certain elected officials or candidates. The new rule also prohibits an adviser from providing or agreeing to provide, directly or indirectly, payment to any third party for a solicitation of advisory business from any government entity on behalf of such adviser, unless such third parties are registered broker-dealers or registered investment advisers, in each case themselves subject to pay to play restrictions. Additionally, the new rule prevents an adviser from soliciting from others, or coordinating, contributions to certain elected officials or candidates or payments to political parties where the adviser is providing or seeking government business. The Commission also adopted amendments to rule 204-2 under the Advisers Act that require a registered adviser to maintain certain records of the political contributions made by the adviser or certain of its executives or employees. The new rule and rule amendments address "pay to play" practices by investment advisers. (Rel. IA-3043)


ENFORCEMENT PROCEEDINGS

Commission Revokes Registration of Securities of Broadengate Systems, Inc. (n/k/a Otter Lake Resources, Inc.) for Failure to Make Required Periodic Filings

On July 1, 2010, the Commission revoked the registration of each class of registered securities of Broadengate Systems, Inc. (n/k/a Otter Lake Resources, Inc.) (OTLK) for failure to make required periodic filings with the Commission.

Without admitting or denying the findings in the Order, except as to jurisdiction, which it admitted, OTLK consented to the entry of an Order Making Findings and Revoking Registration of Securities Pursuant to Section 12(j) of the Securities Exchange Act of 1934 finding that OTLK had failed to comply with Section 13(a) of the Securities Exchange Act of 1934 (Exchange Act) and Rules 13a-1 and 13a-13 thereunder and revoking the registration of each class of OTLK's securities pursuant to Section 12(j) of the Exchange Act. This Order settled the charges brought against OTLK in In the Matter of Broadengate Systems, Inc. (n/k/a Otter Lake Resources, Inc.), Administrative Proceeding File No. 3-13902.

Brokers and dealers should be alert to the fact that Exchange Act Section 12(j) provides, in pertinent part, as follows:

No member of a national securities exchange, broker, or dealer shall make use of the mails or any means or instrumentality of interstate commerce to effect any transaction in, or to induce the purchase or sale of, any security the registration of which has been and is suspended or revoked . . . .

For further information see Order Instituting Administrative Proceedings and Notice of Hearing Pursuant to Section 12(j) of the Securities Exchange Act of 1934, In the Matter of Broadengate Systems, Inc. (n/k/a Otter Lake Resources, Inc.), Administrative Proceeding File No. 3-13902, Exchange Act Release No. 62111 (May 14, 2010). (Rel. 34-62426; File No. 3-13902)


SELF-REGULATORY ORGANIZATIONS

Immediate Effectiveness of Proposed Rule Change

A proposed rule change filed by OneChicago (SR-OC-2010-02) amending position limits has become effective under Section 19(b)(7) of the Securities Exchange Act of 1934. Publication is expected in the Federal Register during the week of July 5. (Rel. 34-62398)


Proposed Rule Changes

New York Stock Exchange filed a proposed rule change (SR-NYSE-2010-49) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 amending Rule 80C to add additional securities to the pilot rule. Publication is expected in the Federal Register during the week of July 5. (Rel. 34-62411)

NYSE Amex filed a proposed rule change (SR-NYSEAmex-2010-63) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 amending NYSE Amex Equities Rule 80C to add additional securities to the pilot rule. Publication is expected in the Federal Register during the week of July 5. (Rel. 34-62412)

NYSE Arca filed a proposed rule change (SR-NYSEArca-2010-61) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 amending NYSE Arca Equities Rule 7.11 to add additional securities to the pilot rule. Publication is expected in the Federal Register during the week of July 5. (Rel. 34-62413)

The NASDAQ Stock Market filed a proposed rule change (SR-NASDAQ-2010-079) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 to amend NASDAQ Rule 4120(a)(11) to add securities included in the Russell 1000 Index (Russell 1000) and specified Exchange Traded Products (ETP) to the pilot rule. Publication is expected in the Federal Register during the week of July 5. (Rel. 34-62414)

NASDAQ OMX BX filed a proposed rule change (SR-BX-2010-044) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 to amend IM-4120-3. Publication is expected in the Federal Register during the week of July 5. (Rel. 34-62415)

The Financial Industry Regulatory Authority filed a proposed rule change (SR-FINRA-2010-033) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 relating to FINRA Rule 6121 (Trading Halts Due to Extraordinary Market Volatility). Publication is expected in the Federal Register during the week of July 5. (Rel. 34-62416)

EDGA Exchange filed a proposed rule change (SR-EDGA-2010-05) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 to amend EDGA Rule 11.14, entitled "Trading Halts Due to Extraordinary Volatility." Publication is expected in the Federal Register during the week of July 5. (Rel. 34-62417)

EDGX Exchange filed a proposed rule change (SR-EDGX-2010-05) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 to amend EDGX Rule 11.14, entitled "Trading Halts Due to Extraordinary Volatility." Publication is expected in the Federal Register during the week of July 5. (Rel. 34-62418)

International Securities Exchange filed a proposed rule change (SR-ISE-2010-66) pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934 to amend ISE Rule 2102 to add additional securities to the pilot rule. Publication is expected in the Federal Register during the week of July 5. (Rel. 34-62419)


SECURITIES ACT REGISTRATIONS


RECENT 8K FILINGS

 

http://www.sec.gov/news/digest/2010/dig070110.htm


Modified: 07/01/2010