The SEC sure has a sense of humor. With everyone screaming for the agency's blood unless it does something to curb rampant and blatantly speculative high frequency trading, as well as to tighten insider trading regulation, what does the Mary Schapiro-lead circus do? Just the opposite. And even as the commission is weeping that its $1 billion budget is woefully inadequate, the agency decides to reduce its own projected revenue in the form of Section 31 fees, to benefit the High Frequency Scalping brigade. The schizophrenic, sociopathic, deranged lunatics have certainly taken over the asylum at 100 F Street, NW Washington.
Zero Hedge has written previously about Section 31. We also, prophetically, pointed out, that the SEC is massively conflicted on the topic of HFT as the paradigm generates revenues for the agency. We, however, did not realize just how conflicted Mary Schapiro is, and just how pervasive the HFT lobby power is: in order to make the lives of High Frequency Traders easier (and their lobby ever wealthier), the SEC is willing to axe one of its own revenue streams. All this is happening even as the SEC is bleating daily that its catastrophic corruption and incompetence can be easily fixed by just one or two $100 million budget boosts. And with the US taxapayer raped daily by the administration, certainly not an ounce of KY will be needed to fill the... budget shortfall from making the P&Ls of HFTs even more artificially propped up.
Yes, we are not making this shit up. Read the following SEC press release and weep:
Effective Jan. 15, 2010, the Section 31 fee rate applicable to securities transactions on the exchanges and over-the-counter markets will decrease to $12.70 per million dollars. Until that date, the current rate of $25.70 per million dollars will remain in effect. The Section 31 assessment on security futures transactions will remain unchanged at $0.0042 per round turn transaction. The Office of Interpretation and Guidance in the Commission's Division of Trading and Markets is available for questions regarding Section 31 and may be reached at (202) 551-5777 or by e-mail at firstname.lastname@example.org.
So much for inflation:
Under the Investor and Capital Markets Fee Relief Act, the Commission is required to adjust the filing and securities transaction fee rates on an annual basis to levels the SEC estimates will generate collections equal to numeric targets set in the statute. A copy of the Commission's April 30, 2009, order regarding fee rates under Section 6(b) of the Securities Act of 1933 and Sections 13(e), 14(g), and 31 of the Securities Exchange Act of 1934 for fiscal year 2010 is available at http://www.sec.gov/rules/other/2009/33-9030.pdf.
And here is the piece de resistance that proves that the SEC is convinced only illiterate apes who have access to a busted abacus fetish read its press releases:
The adjusted fee rates will not affect the amount of funding available to the Commission. The Commission will announce the new fee rates for fiscal year 2011 no later than April 30, 2010. These fee rates will become effective Oct. 1, 2010, or after the Commission's fiscal year 2011 appropriation is enacted, whichever is later.
We are certain that the GETCO et als of the HFScalping world have sent numerous "To Cash" checks and Christmas cards expressing their gratitude to the email@example.com address. We urge all our readers to do the same. After all, the ponzi casino has to be kept up one way or another, lest everyone realize just how hollow the US stock market truly is.
And since bullshit rarely travels alone, why should the SEC's public excretions, er, relations, machine be any exception. The other SEC press release that caught our eye is simply a stunner. It appears that the SEC is planning to gradually repeal Reg FD. Long live insider trading. They caught Raj Raj (and SAC is allegedly going down next) - so their quota for the next 20,000 years is now fulfilled.
If you feel like blowing chunks at your monitor, please read the following insanity:
Washington, D.C., Dec. 22, 2009 — The Securities and Exchange Commission today announced that it has proposed amendments to Rule 163 under the Securities Act to further facilitate the ability of certain large companies to communicate with broader groups of potential investors and gauge the level of interest in the market for their securities offerings.
In other words, Reg FD can be circumvented in order to make sure that the 18,274th in a row follow-on offering for DDR or Kimco will go through without a glitch, 1E^1,000,000,000 dilution be damned.
The proposed amendments would apply to companies that are "well-known seasoned issuers" (WKSIs) and would allow them to authorize an underwriter or dealer to communicate with potential investors on their behalf about potential securities offerings prior to filing registration statements for such offerings. Under the current Rule 163, only WKSIs are permitted to communicate directly with potential investors before filing a registration statement.
A WKSI is an issuer that is current and timely in its Exchange Act reports for at least one year and has either $700 million of publicly-held shares or has issued $1 billion of non-convertible securities, other than common equity, in registered offerings for cash in the preceding three years.
Thanks for the politically correct thesaurus SEC, but we all know that anyone looking up the definition of "well-known seasoned issuers" will see the logo of every single REIT/ML client extraordinaire for 2009.
All other current requirements of Rule 163 would continue to apply, including that all communications made by or on behalf of the WKSI in reliance on the rule would be subject to Regulation FD (Fair Disclosure).
Oh really - and who gets to enforce Reg FD in this exclusionary context? You SEC? Last time we checked you were still in a dark corner attempting to discover your gluteus maximus using a taxpayer subsidized 1 megawatt flashlight, and still shellshocked by just how it happened that one Judge Rakoff managed to expose you for the greedy, corrupt, pathetic, sycophantic, incompetent, worthless and soon to be hopefully disbanded and prosecuted den of thieves you truly are.