(The news featured below is a selection from the news covered in Federal Securities Law Reporter, which is distributed to subscribers of Federal Securities Law Reporter.)

Cox Outlines Broad Agenda for 2008

Chairman Christopher Cox outlined the SEC's top priorities in 2008 in an appearance at the Practising Law Institute's "SEC Speaks" conference. One of the most recent developments is the creation of an Office of Collections and Distributions to distribute the funds collected from penalties and disgorgements to investors. The office will also centralize the collection functions of the SEC, which will free up the enforcement resources in 12 offices.

The full impact of the subprime mortgage crisis for the U.S. and global markets is not fully known, but Chairman Cox said the SEC has begun investigations into whether fraud or breaches of fiduciary duty were implicated with respect to collateralized debt obligations. The SEC will examine whether bank holding companies and securities firms properly disclosed information about their collateralized debt obligation portfolios and valuations.

Mr. Cox said the staff will examine whether brokers adhered to the suitability requirements when they sold complex debt-related derivatives and whether insiders traded on non-public information to sell these securities. The investigation has been launched by the SEC's subprime working group.

He reported that the microcap fraud group in the Enforcement Division will set new standards in 2008 for the use of resources in tracking down shell company manipulators, pump-and-dump schemes and Internet spammers. The municipal securities markets are another priority area on which the municipal fraud working group is focused.

In connection with the subprime investigation, Chairman Cox said the role of the credit rating agencies will also be examined. The problems with the subprime market also raise significant accounting questions, he said, so the Office of the Chief Accountant plays a significant role as a member of the task force. The Division of Corporation Finance will focus on disclosure-related concerns.

The SEC has a broad rulemaking agenda for 2008, according to Chairman Cox, including potential new rules under the Credit Rating Agency Reform Act to address concerns that arose during the subprime market crisis. He said the SEC may consider rules to require credit rating agencies to disclose their past ratings in a format that would improve the ability to compare track records and the accuracy of past ratings.

Next month, the SEC will consider amendments to Rule 15c2-12 to authorize the Municipal Securities Rulemaking Board to create an EDGAR-like system that will provide investors with access to company filings such as official statements, annual financial reports and material event notices that are filed in connection with municipal securities.

Mr. Cox said that another problem in the municipal market is the inadequacy of pricing information related to floating-rate bonds, such as auction rate securities. The Division of Trading and Markets will propose a rule to improve the pricing transparency for these securities, according to Mr. Cox. Additional rulemaking proposals will address other deficiencies in municipal disclosure and accounting.

The Division of Trading and Markets will also propose new procedures for approving self-regulatory organization rule changes. Currently, these proposals can take years for approval, Chairman Cox said, which is incompatible with the competitive environment of demutualized exchanges. The Commission will also consider issues related to the pricing of market data. The chairman said the SEC's decision in this area will be precedent setting, so the deliberative process has been very thorough.

The SEC will consider improvements to mutual fund disclosures at the point of sale related to fees, expenses and conflicts of interest. That proposal may be considered this summer, he indicated.

Chairman Cox reported that he has directed the Divisions of Trading and Markets and Investment Management to work together to reconcile the broker-dealer and investment adviser statutes to reflect today's market realities. The Division of Investment Management is expected to recommend a complete overhaul of Rule 12b-1 this spring, he added.

The Division of Corporation Finance will continue its review of the federally-regulated proxy system to achieve a better fit with the state-authorized rights of shareholders when it comes to selecting company directors. Mr. Cox also reviewed the recently announced initiative with NASAA and FINRA to address the challenges faced by senior investors. The regulators will seek input from a broad array of interested parties in an attempt to tailor surveillance, compliance reviews and employee training to focus on older investors.

The chairman noted that the Committee on Improvements to Financial Reporting will vote on recommendations to reduce unnecessary complexity and to make financial information more useful for investors. Chairman Cox has asked the staff to analyze the committee's proposals, to be voted on today, and to provide recommendations for the SEC's consideration later this year.

Mutual recognition, international accounting standards and interactive disclosure are among the other important rule proposals that may be presented in late spring for Commission action. He reported that the staff plans to propose an updated roadmap with a schedule and milestones for accepting international financial reporting standards in the United States.

Chairman Cox said there are more than two dozen additional initiatives underway that he did not have time to review at the conference. All of these are aimed at building stronger markets, protecting investors and promoting the international integration of high standards for securities trading, he concluded.