Inevitably, the SEC's cases against governmental entities have a political element. In this instance, the SEC did not charge that the municipal entities or governmental officials made affirmative misstatements about their financial condition. The SEC has brought a limited number of such actions so far; based on reports as to municipal entities' status, it could bring more. To me, the question that arises is: why are municipal entities and their officials not held to the same…

This is a rule change that could be very significant. Firms that currently are registered as broker-dealers should consider whether there is any benefit to changing their regulatory status. See now adopted  (concerning the process for changing a firm's registration status).

More significantly, firms that currently are unregistered and do not know whether they might be subject to a registration requirement, or that wish to expand the scope of their…

Since the SEC's recommendation is not terribly controversial, FINRA likely will seek to act on it reasonably promptly. FINRA members should expect changes to these rules to become effective and should determine whether the implementation will require any time-consuming operational changes. The only real issue here is when the changes will be made.

Historically, the FINRA rules have not applied fully to transactions in U.S. government securities because the U.S. Treasury…

Though the information in the working paper is useful, the banking regulators seem overly focused on risks posed by securities-lending transactions relative to other substantial risks to the economy. For that reason, the OFR should broaden its scope. Here are two closely related areas for the OFR to examine: (i) state and municipal insolvency (Puerto Rico is not the end of the story), and (ii) public and private pension obligations (e.g., what are the combined risks of underfunding…