Alert November 16, 2010

SEC Proposes Anti-Fraud Rule for Security-Based Swaps

The SEC proposed for comment a new rule under the Securities Exchange Act of 1934 (the “1934 Act”) that prohibits certain fraudulent, manipulative, and deceptive acts and practices in connection with the offer, purchase or sale of any security-based swap, the exercise of any right or performance of any obligation under a security-based swap, or the avoidance of such exercise or performance.  The proposal is an exercise by the SEC of expanded rulemaking authority under  provisions of the Dodd‑Frank Wall Street Reform and Consumer Protection Act that extended the anti‑manipulation provisions of Section 9 of the 1934 Act to apply to security-based swaps.  Comments on the proposed rule are due on or before December 23, 2010.