The Week In Securities Litigation: Money Market Funds The SEC Focus

Money market funds were the focus this week at the Commission. The agency issued proposed regulations for comment which may revise the operations of the widely used investment vehicles. The action follows a failed effort last year to propose new regulations and a warning from the FSOC that it may step-in if the SEC continued to dawdle on this important question.

SEC Enforcement centered on offering fraud actions. Once case filed by the SEC involved thirty- five offerings that the complaint claims were actually one, integrated. A second centered on a series of offerings made by a small business owner. family owned business. The Commission settled another offering fraud case where the shares were used in microcap manipulations. In a variation, the Commission, in parallel with the CFTC, filed an action against a foreign broker to halt the unregistered sale of binary options in the U.S.

The agency also filed cases centered on the failure of internal accounting controls and insider trading. The latter names an individual as a defendant. Yet the allegations mimic the Commission's "suspicious trading" actions - the trading is large and well timed before a take-over announcement but the source of the inside information is unknown.


Money market funds: The Commission issued proposed rules for comment regarding money market funds. The release contain two alternatives, either or both of which may ultimately be adopted. Under one, net asset value or NAV would float for a limited group. Under the other, funds would continue with the current stable NAV but would hve to "gate" the fund if certain thresholds are crossed (here).

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For more commentary on developing securities issues, visit SEC Actions, a blog by Thomas Gorman.

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