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2010’s Speed, Data & New Guardrails

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The Timeline highlights significant developments in the history of financial regulation against U.S. and world events. Scroll down to discover more.

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U.S. and World Events
Developments in Financial Regulation
2010
2010
2010
Affordable Health Care Act

Affordable Health Care Act

Wikileaks
U.S. Supreme Court Blocks Ban on Corporate Political Funding
Chile Mine Rescue
Eyjafjallajokull Volcanic Eruption

Affordable Health Care Act
Colocation

Colocation

In order to serve increasing numbers of High Frequency Traders, NYSE Euronext opened a colocation facility in Mahwah, New Jersey. Traders using computers next to the NYSE’s servers were able to trade a microsecond ahead of other investors.
Colocation
Flash Crash

Flash Crash

On May 6, the Dow Jones Industrial Average dropped nearly 600 points in a few minutes before ending the day down just over 200 points. The event, ultimately believed to be due to use of an algorithm to sell futures contracts, raised concern about the impact of high speed trading on the equities and futures markets. The SEC later approved curbs including trading pauses and circuit breakers and directed exchanges to design a consolidated audit trail.
Flash Crash
Dodd-Frank Act

Dodd-Frank Act

Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act in response to the financial crisis that began in 2008. It granted the federal government new authority to seize and wind down large troubled financial firms, established a council of federal regulators to monitor threats to the financial system, and mandated oversight of the derivatives market. It also gave the PCAOB authority to oversee the auditors of SEC-registered securities broker-dealers. In addition, it permanently exempted non-accelerated filers (more than 5,500 small public companies) from Section 404(b) of the Sarbanes-Oxley Act, requiring an independent auditor to attest to management’s assessment of the effectiveness of the company’s internal control over financial reporting.
Dodd-Frank Act
Consumer Financial Protection Bureau

Consumer Financial Protection Bureau

The Dodd-Frank Act established the Consumer Financial Protection Bureau to create and enforce new rules governing mortgages and other financial products. President Obama appointed Elizabeth Warren, a Harvard Law School professor with a long track record in consumer advocacy, as a special adviser to set up the bureau; Warren later was elected to the U.S. Senate from Massachusetts. The CFPB offically began its work in July 2011, with Richard Cordray, a former Ohio attorney general, as its first director. In 2016, the U.S. Court of Appeals for the District of Columbia found the CFPB structure unconstitutional, and ordered that the bureau be restructured in line with other independent agencies; the CFPB challenged the ruling.

Consumer Financial Protection Bureau
Financial Stability Oversight Council

Financial Stability Oversight Council

The Dodd-Frank Act established the Financial Stability Oversight Council to identify and monitor excessive risks to the U.S. financial system, respond to emerging threats to financial stability, and eliminate “too big to fail” expectations. Chaired by the Secretary of the Treasury, voting members included the Federal Reserve Chair, Comptroller of the Currency, Consumer Financial Protection Bureau Director, and chairs of the U.S. Securities and Exchange Commission, Federal Deposit Insurance Corporation and Commodity Futures Trading Commission.
Financial Stability Oversight Council
SEC Bolsters Municipal Regulation

SEC Bolsters Municipal Regulation

Following the Dodd-Frank Act, the U.S. Securities and Exchange Commission established a Municipal Securities and Public Pension Unit within the Division of Enforcement. The SEC Office of Municipal Securities was restored to independent status.
SEC Bolsters Municipal Regulation
Money Market Fund Rules

Money Market Fund Rules

After the failure of the Reserve Fund in the 2008 financial crisis, the U.S. Securities and Exchange Commission implemented changes to the operation of money market funds, including tighter credit standards, increased transparency and the provision for an orderly liquidation process.
Money Market Fund Rules
Muni Council

Muni Council

With encouragement from the Municipal Securities Rulemaking Board, municipal bond market participants formed the Muni Council to address industry problems, especially in improving secondary market disclosure.

Muni Council
2011
2011
2011
Occupy Wall Street

Occupy Wall Street

Deaths of Bin Laden and Gaddafi
Arab Spring Movement

Occupy Wall Street
Proxy-Access Rule Denied

Proxy-Access Rule Denied

In July, the U.S. Circuit Court of Appeals overturned the 2010 U.S. Securities and Exchange Commission proxy-access rule, requiring shareholders’ candidates on corporate boards to be listed on proxy ballots. The court rebuked the SEC for not fully analyzing the economic costs and benefits of the rule.
Proxy-Access Rule Denied
SEC Appeal of Judicial Ruling

SEC Appeal of Judicial Ruling

The U.S. Securities and Exchange Commission appealed a ruling by U.S. District Court Judge Jed Rakoff in rejecting a settlement with Citigroup over the bank’s sale of mortgage-backed securities; the assets later defaulted with a loss to investors of nearly $700 million. The SEC claimed that the court was in error in requiring an admission of facts as a prerequisite for approving the settlement, instead of accepting the resolution – used by the SEC since the 1970s – in which the firm would neither admit nor deny wrongdoing. The SEC’s settlement was upheld by the U.S. Court of Appeals for the Second Circuit in New York in 2014.
SEC Appeal of Judicial Ruling
Financial Crisis Inquiry Report

Financial Crisis Inquiry Report

Congress appointed a commission to investigate the causes of the 2008 financial crisis. The commission’s report concluded that the crisis was avoidable, and that failures in financial regulation and risk management, along with excessive borrowing, risky investments and lack of transparency, led to the crisis.
Financial Crisis Inquiry Report
Say-on-Pay Regulation

Say-on-Pay Regulation

As part of the Dodd-Frank Act, the U.S. Securities and Exchange Commission adopted a rule requiring companies to hold a shareholder vote on executive compensation at a minimum of every three years.
Say-on-Pay Regulation
2012
2012
2012
Syrian Civil War

Syrian Civil War

Higgs Boson Discovered
Syrian Civil War
JOBS Act

JOBS Act

Congress passed the Jumpstart Our Business Startups (JOBS) Act, permitting emerging growth companies to raise capital through initial public stock offerings and crowd funding – using social media to reach large numbers of potential investors – exempt from U.S. Securities and Exchange Commission disclosure regulations.

JOBS Act
STOCK Act

STOCK Act

The Stop Trading on Congressional Knowledge (STOCK) Act was approved after a 60 Minutes report that some members of Congress allegedly used insider trading information for personal gain.

STOCK Act
2013
2013
2013
Boston Marathon Bombings

Boston Marathon Bombings

Pope Benedict Retires – Pope Francis Elected
National Security Agency Surveillance

Boston Marathon Bombings
MIDAS

MIDAS

The SEC Market Information Data Analytics System went on line, providing regulators with a billion records a day from the proprietary feeds of each equity exchange. The step was considered crucial in regulating increasingly fast and complex markets.

MIDAS
Volcker Rule

Volcker Rule

U.S. financial regulatory agencies approved the Volcker Rule, banning proprietary trading and curbing risky trading activities by banks. The rule had been proposed by former Federal Reserve Chairman Paul Volcker as part of the Dodd-Frank Act.
Volcker Rule
Broken Windows Enforcement Strategy

Broken Windows Enforcement Strategy

The U.S. Securities and Exchange Commission adopted a “broken-windows” approach in enforcement, modeled on a theory of community policing targeting small problems in an effort to fight crime. The SEC pursued both small legal violations and more serious fraud to foster a culture of compliance.

Broken Windows Enforcement Strategy
Dark Pools Disclosure

Dark Pools Disclosure

FINRA approved new disclosure rules for dark pools: platforms run by banks and broker-dealers matching buyers and sellers privately, away from public markets.
Dark Pools Disclosure
Exchange Mergers

Exchange Mergers

NYSE Euronext merged with Intercontinental Exchange, Inc. (ICE), ending the independence of the once-New York Stock Exchange, founded in 1792. Bats Global Markets, Inc. merged with Direct Edge Holdings LLC to form the second-largest U.S. stock exchange operator.
Exchange Mergers
2014
2014
2014
Janet Yellen First Woman Chairman of Federal Reserve

Janet Yellen First Woman Chairman of Federal Reserve

U.S. Resumes Diplomatic Relations with Cuba
Ebola Virus
Islamic State of Iraq and Syria

Janet Yellen First Woman Chairman of Federal Reserve
Reg SCI

Reg SCI

Following a series of high profile technological trading failures, Regulation Systems Compliance and Integrity was adopted to ensure the resiliency of hardware and software at every SRO, exchange, and ATS.
Reg SCI
Bitcoin Regulation

Bitcoin Regulation

Bitcoin, an independent digital currency, entered into negotiations with the New York Department of Financial Services over the state’s proposal to regulate bitcoin businesses, following the bankruptcy of the Mt. Gox bitcoin exchange due to flaws in its software algorithm.
Bitcoin Regulation
Supreme Court Rules for Stanford Investors

Supreme Court Rules for Stanford Investors

The U.S. Supreme Court ruled that investors in Allen Stanford’s Ponzi scheme of up to $7 billion could sue to recoup losses from lawyers, insurance brokers and financial services firms, allowing state lawsuits to proceed. The majority opinion stated that, as the defendents were not selling securities listed on national exchanges, the Securities Litigation Uniform Standards Act (SLUSA) did not pertain.
Supreme Court Rules for Stanford Investors
New Rules for Money Funds

New Rules for Money Funds

The U.S. Securities and Exchange Commission approved rules requiring prime money funds for large institutional investors to abandon a fixed $1 share price and float in value similar to other mutual funds, while requiring prime funds sold to individual investors to retain the $1 share price. The rules permitted funds to temporarily block investors from withdrawing cash in times of stress or allow funds to impose fees for investors to redeem shares.
New Rules for Money Funds
National Stock Exchange

National Stock Exchange

The National Stock Exchange (NSX) resumed trading after closing operations due to low volume. Founded as the Cincinnati Stock Exchange in 1885, the exchange shut its trading floor and became fully electronic in 1980. In late 2016, days prior to NSX’s decision to cease operations, the New York Stock Exchange announced its acquisition of NSX.
National Stock Exchange
Impact of Real Time Reporting in Municipal Market

Impact of Real Time Reporting in Municipal Market

In its study of secondary market trading in the municipal securities market, the Municipal Securities Rulemaking Board confirmed that price differentials decreased with the introduction of real time reporting.

Impact of Real Time Reporting in Municipal Market
Insider Trading Liability Limited

Insider Trading Liability Limited

In U.S. v. Newman, the Second U.S. Circuit Court of Appeals limited tippee insider trading liability, finding that an insider breached fiduciary duty only when disclosing inside information in exchange for personal benefit, and that the tippee knew of such benefit.

Insider Trading Liability Limited
Treasury Bond Flash Crash

Treasury Bond Flash Crash

Near the beginning of the trading day on October 15, 2014, the yield on 10-year treasuries plunges 37 basis points in just over half an hour and recovers within less than 15 minutes. A report issued by the Commission in July 2015 is unable to identify a cause for the extreme volatility beyond recent technological changes in the market.
Treasury Bond Flash Crash
2015
2015
2015
Supreme Court Affirms Same-Sex Marriage

Supreme Court Affirms Same-Sex Marriage

Black Lives Matter
European Refugee Crisis
China Abandons One-Child Policy

Supreme Court Affirms Same-Sex Marriage
Bitcoin Exchange

Bitcoin Exchange

Coinbase opened as the first licensed bitcoin exchange in the United States.
Bitcoin Exchange
ETF Flash Crash

ETF Flash Crash

On August 24, one-fifth of exchange-traded funds experienced significant price drops at the start of trading, with their overall worth less than their underlying assets. A study by the U.S. Securities and Exchange Commission identified market structure and trading issues, not the characteristics of ETFs, as the cause of the volatility.
ETF Flash Crash
2016
2016
2016
Donald Trump Elected President

Donald Trump Elected President

Brexit – UK Votes to Exit European Union “Gig” Economy Zika Virus
Donald Trump Elected President
Regulatory Scrutiny of Dark Pools

Regulatory Scrutiny of Dark Pools

Barclays and Credit Suisse, two of the largest operators of dark pools, settled with the U.S. Securities and Exchange Commission and the New York Attorney General on charges that they did not disclose to their customers that their dark pools included high-frequency traders. The firms together paid over $154 million in penalties, the largest penalty to date levied by the SEC against dark pools.
Regulatory Scrutiny of Dark Pools
CBOE Acquires Bats

CBOE Acquires Bats

CBOE Holdings, Inc., operator of the Chicago Board Options Exchange, the nation’s largest options platform, announced its acquisition of Bats Global Markets, Inc., creating a new global exchange.
CBOE Acquires Bats
European Exchange Mergers

European Exchange Mergers

The London Stock Exchange Group PLC and Deutsche Boerse AG agreed to merge. In a separate action, Nasdaq bought the options-exchange operator International Securities Exchange from Deutsche Boerse.
European Exchange Mergers
IEX Exchange

IEX Exchange

The SEC certified the IEX Group, Inc. as an exchange. Opening as an ATS in 2013, IEX attracted investors by utilizing a “speed bump” (imposing a delay of microseconds) to thwart predatory high-speed trading.
IEX Exchange
Fiduciary Rule

Fiduciary Rule

The U.S. Department of Labor issued regulations requiring brokers paid to provide investment guidance on certain retirement accounts to act solely in the best interest of the investor.
Fiduciary Rule
Salman v. United States

Salman v. United States

The U.S. Supreme Court issued an unanimous decision, holding that a tipper’s gift of confidential information to a trading family member constituted a sufficient personal benefit to support an insider trading conviction. The Supreme Court invoked its 1983 Dirks v. SEC ruling and narrowed part of the 2014 U.S. v. Newman decision.

Salman v. United States
SEC In-House Courts Ruled Unconstitutional

SEC In-House Courts Ruled Unconstitutional

The U.S. Court of Appeals for the 10th Circuit ruled that the U.S. Securities and Exchange Commission’s process for hiring administrative-law judges violated a clause of the U.S. Constitution governing Presidential and other appointments. The 10th Circuit’s decision diverged from an earlier ruling by the U.S. Court of Appeals for the District of Columbia Circuit, which upheld the SEC’s use of its in-house courts. The D.C. Circuit’s ruling had concluded that judges did not need to be appointed directly by the Commission as the judges’ decisions are not final and are subject to Commission review.
SEC In-House Courts Ruled Unconstitutional
2017
2017
2017
Donald Trump is sworn in as President.

Donald Trump is sworn in as President.

Brexit begins in the UK.
Donald Trump is sworn in as President.
Kokesh v. SEC

Kokesh v. SEC

In a decision resulting from a 2009 case against an investment manager, the Supreme Court deals a blow to the Commission, holding disgorgement subject to a 5-year statute of limitations since it is punitive rather than compensatory. The decision has the potential to undercut SEC leverage in settlements and cause the Commission to bring cases more quickly than usual.

Kokesh v. SEC
Retail Strategy Task Force

Retail Strategy Task Force

Part of new Chairman Jay Clayton’s “Main Street Investors” push, the Retail Strategy Task Force is formed to target misconduct most affecting retail customers such as “pump and dump” efforts, Ponzi schemes, and sales of unsuitable products.
Retail Strategy Task Force
Fixed Income Market Structure Advisory Committee

Fixed Income Market Structure Advisory Committee

A response to the 2014 Treasury Bond Flash Crash and ongoing concerns about liquidity in the bond markets, the SEC creates the Fixed Income Market Advisory Committee to identify new developments in the corporate and municipal bond markets and make regulatory recommendations.
Fixed Income Market Structure Advisory Committee
SEC deems Cryptocurrency a Security

SEC deems Cryptocurrency a Security

In a report of investigation following a July decision by the Commission, the SEC determines that a particular form of cryptocurrency called “DAO Tokens” are securities. The report notes that they satisfy all four criteria of the test established in the 1946 SEC v W.J. Howey case. They involve: investment of money, a common enterprise, expectation of profit, and profits expected to be from entrepreneurial or managerial effort.
SEC deems Cryptocurrency a Security
2018
2018
2018
The United States begins a trade war with China.

The United States begins a trade war with China.

The Senate confirms Brett Kavanaugh’s nomination to the Supreme Court.

The United States begins a trade war with China.
“Notice and Access” via Internet

“Notice and Access” via Internet

After 85 years of requiring issuers to provide “notice and access” to current and potential shareholders on paper, the Commission approves Rule 30e-3, which allows issuers to provide shareholder information on a publicly available website.
“Notice and Access” via Internet
Extending Scaled Disclosure

Extending Scaled Disclosure

In July, the Commission expands the definition of a “smaller reporting company” from $100 million to $250 million. This rule change is intended to allow more companies to use “scaled disclosure requirements” available as a result of the 2012 JOBS Act.

Extending Scaled Disclosure
Tesla Twitter Charges

Tesla Twitter Charges

The Commission charges Tesla CEO Elon Musk with securities fraud after a series of tweets to his 22 million followers about taking Tesla private. Musk ultimately agrees to pay a $200 million penalty and step down as chairman for three years. The case extends CEO responsibility to make truthful statements to social media.
Tesla Twitter Charges
2019
2019
2019
The yield curve inverts and the Dow drops 500 points the next day.

The yield curve inverts and the Dow drops 500 points the next day.

The Coronavirus pandemic begins in Wuhan, China.

The House impeaches President Trump.

The yield curve inverts and the Dow drops 500 points the next day.
Lorenzo v. SEC

Lorenzo v. SEC

This landmark Supreme Court decision holds that a person can be liable under 10(b) anti-fraud provisions even if he or she did not make the fraudulent statement in question. Lorenzo essentially reverses the more restrictive 2011 Janus Capital Group v. First Derivative Trusts decision and wipes out a common defense used by fraudsters.

Lorenzo v. SEC
Courts Deem Cryptocurrency A Security

Courts Deem Cryptocurrency A Security

Following the lead of the SEC and the 2nd Circuit Court, the Southern District of New York, in the Balestra v. ATBCoin LLC decision, subjects cryptocurrency to the Howey test and deems it to be a security.

Courts Deem Cryptocurrency A Security
Facebook Settlement

Facebook Settlement

Despite promises that it did not give away or sell data, in 2018 it is revealed that Facebook made personal information available to Cambridge Analytica. Facebook stock declines and investors sue. The Commission charges the company with making false and/or misleading claims by keeping its relationship with Cambridge Analytica secret. Facebook settles for $100 million.
Facebook Settlement
ETF Rule

ETF Rule

Since their origin in 2008, every new exchange traded fund required a specific exemption under the 1940 Investment Company Act. After over a decade and more than 300 exemptions, the ETF Rule allows exchange traded funds meeting particular requirements eligible to go to market without exemptive relief.
ETF Rule
Insider trading “Personal Benefit Test” overturned

Insider trading “Personal Benefit Test” overturned

Upending years of precedent going back to the Dirks decision, the 2nd Circuit Court in the US v. Blazczak decision expands the definition of insider trading, holding that inside traders need not benefit personally from the fraud. This greatly widens the latitude to bring insider trading cases.

Insider trading “Personal Benefit Test” overturned
2020
2020
2020
The US-Mexico-Canada Trade Agreement replaces NAFTA.

The US-Mexico-Canada Trade Agreement replaces NAFTA.

The WHO names COVID-19 and declares a pandemic.

The killing of George Floyd spurs a powerful resurgence of the Black Lives Matter Movement.

The US-Mexico-Canada Trade Agreement replaces NAFTA.
Regulation Best Interest Implemented

Regulation Best Interest Implemented

On implementation a year after approval in June 2019, Reg BI requires that broker dealers must act in the best interest of their clients. Going beyond formerly applied suitability standards, “Reg BI” sets new standards of conduct for broker dealers with four obligations regarding disclosure, care, conflict of interest, and compliance.
Regulation Best Interest Implemented
Liu v. SEC

Liu v. SEC

In a case with the potential to moderate the effects of the Kokesh decision, the Supreme Court finds that the SEC can seek disgorgement as an equitable remedy if it meets certain principles including: returning fines to investors, excluding joint and several penalties, and deducting legitimate expenses from the disgorgement.

Liu v. SEC
Facebook Settlement

Facebook Settlement

Despite promises that it did not give away or sell data, in 2018 it is revealed that Facebook made personal information available to Cambridge Analytica. Facebook stock declines and investors sue. The Commission charges the company with making false and/or misleading claims by keeping its relationship with Cambridge Analytica secret. Facebook settles for $100 million.

Facebook Settlement
ETF Rule

ETF Rule

Since their origin in 2008, every new exchange traded fund required a specific exemption under the 1940 Investment Company Act. After over a decade and more than 300 exemptions, the ETF Rule allows exchange traded funds meeting particular requirements eligible to go to market without exemptive relief.

ETF Rule
Insider trading “Personal Benefit Test” overturned

Insider trading “Personal Benefit Test” overturned

Upending years of precedent going back to the Dirks decision, the 2nd Circuit Court in the US v. Blazczak decision expands the definition of insider trading, holding that inside traders need not benefit personally from the fraud. This greatly widens the latitude to bring insider trading cases.

Insider trading “Personal Benefit Test” overturned