SEC Proposes Rule to Readopt Beneficial Ownership Reporting Requirements on Security-Based Swaps


The SEC recently (Mar. 17, 2011) proposed a rule on beneficial ownership reporting requirements and security based swaps (PDF).  According to its summary, the rule is intended to preserve the application of the SEC’s existing beneficial ownership rules to persons who purchase or sell security-based swaps after the effective date of new Section 13(o) of the Securities Exchange Act of 1934. 

The SEC proposes to readopt without change the relevant portions of Rules 13d-3 and 16a-1, as such proposals, “are intended to clarify that following the July 16, 2011 statutory effective date of Section 13(o), which was added by Section 766 of the Dodd-Frank Wall Street Reform and Consumer Protection Act (“Dodd-Frank Act”), persons who purchase or sell security-based swaps will remain within the scope of these rules to the same extent as they are now.”

Comments should be received on or before April 15, 2011.

OUR TAKE:  The proposed rule is necessary to preserve the existing scope of the SEC’s rules relating to beneficial ownership after Section 766 of the Dodd-Frank Act becomes effective.  Substantive changes will likely follow however, as the SEC continues efforts to modernize reporting under Exchange Act Sections 13(d) and 13(g).   

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