The SEC has charged a digital financial media company and three executives for their roles in an accounting fraud that artificially inflated company revenues and misstated operating income to investors. See: SEC Complaint v. TheStreet; SEC complaint v. Ashman; SEC complaint v. Alwine and Barnett. See also: SEC Press Release.

The SEC Enforcement Division's Asset Management Unit Chief, Bruce Karpati, delivered a speech on current hedge fund enforcement priorities before the Regulatory Compliance Association. See below for topics included in his speech: Development of specialized enforcement units within the SEC, including one focused on hedge funds; The Risks to Hedge Fund Investors, particularly "retail" investors, and potentially greater worries as a result of the general advertising permitted by the JOBS Act; The Operating Model of Alternative Investment Vehicles (temptation to boost fees by showing high returns

New SRO rules and rule proposals have been announced by the SEC. Click on the links to view the SEC's notices of each rule change and proposal. CME: Order Approving Proposed Rule Change to Amend Rules in Connection with Status as a "Deemed Registered" Clearing Agency DTC: Effective Immediately - Rule Change to Make Ministerial Changes to the Existing Reorganization Service Guide ICEEU: Notice of Designation of a Longer Period for Commission Action on Proposed Rule Change to Clear Western European Sovereign CDS Contracts NYSE Arca: Notice of Filing of Amendment No. 1 and Order Granting

The CFTC Division of Market Oversight ("DMO") issued the attached time-limited no-action letter providing swap dealers with relief from Parts 43 and 45reporting for prime brokerage transactions. Subject to a variety of conditions, the initial burden of trade reporting will fall on the executing dealer that enters into a swap with a counterparty and not on the prime broker that enters into a back-to-back arrangement. Compliance with the requirements of the letter will require prime brokers and executing brokers to enter into an agreement as to, among other things, the allocation between them of

The SEC issued an order granting conditional exemptive relief from compliance with certain provisions of the Exchange Act in connection with a program to commingle and portfolio margin customer positions in cleared credit default swaps, which include both "swaps" and "security-based swaps," in a segregated account. The order is necessary due to the two-track regime in the United States for the treatment of derivatives based on securities. [See related story: House Democrats Frank and Capuano Push for SEC-CFTC Merger Bill (with Lofchie Comment).] "Security-based swaps," which are also