(Journal of Securities Law, Regulation & Compliance . Oct2010, Vol. 3 Issue 4, p294-306. 13p.) - This paper analyses the recent volley of market structure initiatives issued by the Securities and Exchange Coin miss ion (SEC) since time autumn of 2009. It observes that these initiatives are a natural outgrowth of the SEC'S adoption tinder the Securities Exchange Act of 1934 of Regulation ATS in 1998 and Regulation NMS in 2005 and time electronic market structure that has resulted from these rules.
In a case that has been watched closely in the industry, the SEC’s Chief Administrative Law Judge recently cleared the former General Counsel of Ferris Baker Watts of charges that he failed to supervise a rogue broker at the firm.
Joseph Lombard joins Murphy & McGonigle's DC Office
In Merck & Co. v. Reynolds, 130 S. Ct. 1784, 2010 U.S. LEXIS 3671, (2010), the Supreme Court unanimously rejected the inquiry notice standard numerous circuits applied in determining when the limitations period for a Section 10(b) claim begins. The Supreme Court has now made clear that the statute begins to run only when a plaintiff actually discovers, or when a reasonably diligent plaintiff would have discovered, "facts constituting the violation," including scienter. Applying this standard to the facts of Merck & Co., the Court found that the plaintiffs did not discover, nor could a reasonably diligent plaintiff have discovered, facts suggesting that Merck had acted with scienter more than two years before filing suit.
The investor protection provisions of Title IX of the Dodd-Frank Wall Street Reform and Consumer Protection Act, H.R. 4173, 111th Cong. (2010) promise to make major changes in the world of securities enforcement and regulation. Thanks to Dodd-Frank, we will shortly see whistleblowers enticed by potentially lucrative bounties for reporting violations to a much larger and more powerful SEC.
The United States Supreme Court recently rejected years of federal jurisprudence on the extraterritorial application of §10(b) of the Securities Exchange Act. In Morrison v. National Australia Bank, the Court held that a claim brought by foreign investors against a foreign company based on shares bought on a foreign exchange — a so-called "F-cubed" case — may not be litigated in United States courts under §10(b). The Court explained that §10(b) is silent on its scope beyond US borders and, as a result, prohibits fraud only in connection with the purchase or sale of stock either made in the US or listed on a domestic exchange.