Alert July 05, 2011

SEC Issues Additional Guidance, Interim Relief and Exemptions Relating to Security-Based Swaps

The SEC issued an order granting temporary relief and providing interpretive guidance designed to make clear that a substantial number of the requirements of the Securities Exchange Act of 1934 applicable to securities will not apply to security-based swaps (“SBSs”) when the revised definition of “security” under the Dodd-Frank Act goes into effect on July 16, 2011.  Although the order was effective July 1, 2011, public comment may be submitted through July 15, 2011.  The SEC also approved interim final rules providing exemptions from the Securities Act of 1933, the Trust Indenture Act of 1939 and other provisions of the federal securities laws to allow certain SBSs to continue to trade and be cleared as they have prior to the Dodd-Frank Act.  This exemptive relief will extend until the SEC adopts rules further defining “security-based swap” and “eligible contract participant.”  The interim final rules are effective upon publication in the Federal Register; comments may be submitted through August 14, 2011.  The SEC previously issued an order providing temporary exemptions from, other temporary relief from and guidance regarding, compliance dates for provisions of the Securities Exchange Act of 1934 that address and regulate SBSs as a result of the Dodd-Frank Act as discussed in the June 21, 2011 Alert.  The SEC plans additional steps related to the July 16 effective date under the Dodd‑Frank Act.