The SEC sanctioned two investment advisory firms for failing to seek best execution on client trades placed with their affiliated or related brokerage operations. A.R. Schmeidler Co. ("ARS") and Goelzer Investment Management ("GIM") were cited, respectively, for failing to reevaluate whether it was providing best execution for clients, and for misrepresentations in its Form ADV about the process of selecting a broker for advisory clients. ARS has agreed to pay $1 million to settle the damages, while GIM has agreed to pay nearly $500,000. Lofchie Comment: The press release seems intended to

The SEC staff confirmed that the Exchange Act Section 28(e) ("Exchange, Broker, and Dealer Commissions; Brokerage and Research Services") exemption for "soft dollar" payments is available with respect to agency transactions in fixed income securities. The letter does not break any new ground. It just confirms that Section 28(e) commissions generated by agency executions of debt may be used to purchase research. For a full discussion of Section 28(e) and soft dollars, see the Trading Chapter of Lofchie's Guide to Broker-Dealer Regulation or the Trading Chapter of the Hedge Fund Guide. See: SEC

The SEC has adopted amendments to the net capital, customer protection, books and records, and notification rules for broker-dealers promulgated under the Exchange Act. The amendments (commonly called the "Onig Amendments" in the industry, named after one of the SEC staffers who had been heavily involved in their initial development when they were first proposed in 2007) are designed to address areas of concern regarding financial responsibility requirements for broker-dealers, including updating the requirements and enhancing the SEC's ability to monitor business practices. The rule

The FDIC, OCC, and Federal Reserve Board ("FRB") are seeking comment on proposed supervisory guidance describing supervisory expectations for stress tests conducted by financial companies with total consolidated assets between $10 billion and $50 billion. These medium-sized companies are required to conduct stress tests beginning in the fall under agency-issued rules implementing a provision of the Dodd-Frank Act. The public comment period will be open until September 25, 2013. See: Proposed Supervisory Guidance. See also: FDIC Press Release; OCC Press Release; FRB Press Release.

The CFTC issued a time-limited (through October 1) no-action relief from the aggregation prohibition in § 43.6(h)(6) ("Block Trades and Large Notional Off-Facility Swaps") for certain CTAs and IAs with respect to large notional off-facility swaps where the swaps are listed on a facility. In addition, the no-action letter provided indefinite relief for aggregating swaps that are not listed or offered for trading on a SEF and DCM. The letter provided the CFTC's Division of Market Oversight's rationale for relief in both cases. See: CFTC Letter 13-48; CFTC Press Release.