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While we didn’t see a flood of Dodd-Frank Act rulemaking in the first quarter of 2012 (there was one proposed rule relating to identity theft red flags, a final rule providing exemptions for securities-based swaps discussed below, changes to the net worth standard for accredited investors, and rules regarding investment adviser performance fees), the Staff did deliver the second of four reports to Congress on the implementation of consultant recommendations, as required by Section 967(c) of the Dodd-Frank Act. The SEC Staff had engaged Boston Consulting Group to comply with Section 967(b), which directed the SEC to engage an independent consultant to conduct a broad and independent assessment of the SEC’s internal operations, structure, funding, and the agency’s relationship with SROs.

The report notes that over the past year, the Staff has conducted assessments of potential organizational improvement opportunities under an initiative called the SEC Mission Advancement Program (MAP). The report notes operational improvements in three key areas: (1) reorganizing critical internal infrastructure, such as the Division of Enforcement and the Office of Compliance Inspections and Examinations, as well as the restructuring important administrative offices; (2) analyzing a broad array of agency activities in an effort to improve efficiency and the distribution of resources to key activities, implement stronger internal controls, and improve responsiveness; and (3) identifying areas for cost improvement, resulting in projected saving of $8.3 million over the next two years. However, the report notes that, given the limited resources that the SEC has available now, future activity will be focused on only a limited number of projects.

SEC Adopts Key Exemptions for Security-Based Swaps

Last week, the SEC adopted rules which exempt transactions by clearing agencies in security-based swaps from all provisions of the 1933 Act (other than the Section 17(a) anti-fraud provisions), as well as exempt these security-based swaps from 1934 Act registration requirements and from the provisions of the Trust Indenture Act, provided that conditions specified in the rules are met. Title VII of the Dodd-Frank Act does not contain an exemption from the 1933 Act or the 1934 Act registration provisions, or from Trust Indenture Act qualification, for security-based swaps. In the SEC’s view, however, compliance by a clearing agency with the registration and qualification provisions would likely be impracticable and frustrate the purposes of Title VII, which seeks to ensure that, wherever possible and appropriate, security-based swaps are cleared. The final rules are effective April 16, 2012.

JOBS Act to be Signed Today: Time to Generally Solicit?

The Jumpstart Our Business Startups Act will be signed today at a ceremony in the Rose Garden this afternoon. While a number of key portions of the law will go into effect immediately, most notably the breaks for “emerging growth companies,” many parts of the law will require further SEC action to implement the changes. Notably, Title II’s repeal of the ban on general solicitation and general advertising in Rule 506 offerings directs the SEC to change its rules, rather than changing the rules effective upon enactment – likewise for the provisions regarding crowdfunding and Regulation A style offerings. There will no doubt be guidance forthcoming on these topics once the JOBS Act is enacted, so stay tuned.

– Dave Lynn