SEC Proposals Target Fraud, Misconduct in Security-Based Swap Transactions

The Securities and Exchange Commission today proposed three new rules aimed at preventing fraud and misconduct in connection with security-based swaps. The first rule, 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.

The second rule, Rule 15Fh-4(c), would prohibit personnel of a security-based swap entity from taking any action to coerce, mislead or otherwise interfere with the firm’s chief compliance officer, and the third, Rule 10B-1, would require prompt reporting  by any person or group who owns a security-based swap position that exceeds the threshold amount set by the rule. Comments on the proposed rule will be due 45 days after publication in the Federal Register.