US SEC Proposes Rule Prohibiting Fraud, Manipulation and Deception in Connection with Security-Based Swaps

Originally published November 8, 2010

Keywords: US, SEC, security-based swaps, Exchange Act, anti-fraud, federal securities, Dodd Frank

Pursuant to the authority contained in Section 763(g) of the Dodd-Frank Act, the US Securities and Exchange Commission (SEC) in Release 34-63236 has proposed a new Rule 9j-1 under the Securities Exchange Act of 1934, as amended (Exchange Act). This new rule extends the general anti-fraud and anti-manipulation provisions of the federal securities laws to explicitly reach misconduct that affects the exercise of any right or performance of any obligation (including required on-going payments and deliveries that the SEC believes characterize security-based swaps) under any security-based swap or the avoidance of such exercise or performance. These general anti-fraud and anti-manipulation provisions were already applicable to the offer, purchase and sale of security-based swaps since these are "securities" under Section 3(a)(10) of the