SEC Adopts Two Rules For Security-Based Swaps (But Not Proposed Rule 10B-1)

On June 7, 2023, the SEC adopted two final rules addressing misconduct in the SBS market. The adopted rules expand the scope of antifraud rules and prohibit certain attempts to influence the chief compliance officer ("CCO") of an SBS dealer ("SBSD"). The SEC is not adopting Rule 10B-1, which was part of the same proposal, at this time as it is still considering comments.

The rules will become effective 60 days after publication in the Federal Register.

Expanded Antifraud and Anti-Manipulation Rules

The SEC has adopted Rule 9j-1, which prohibits fraud, manipulation, and deception in connection with executing, early terminating, amending, transferring, or extinguishing rights in a SBS. While the SEC narrowed the scope of the proposed rule, which had also applied to interim performance obligations and exercises of rights, the final rule still broadly includes conduct that affects payments and deliveries under the SBS and can apply to conduct in the securities