SEC Lightens Load to Ease Market Liquidity

The standing regulation, designed to prevent market manipulation, restricts companies from trading in the first and last 30 minutes of each market day.

The idea for the relief came from the SEC, reportedly after discussions with pension funds, broker-dealers and trade associations.

Emergency Powers

For the first time, the SEC has exercised its emergency powers to ease certain regulatory restrictions for up to 10 days, including:

• Allowing public companies to repurchase their own securities without meeting the volume restrictions that ordinarily apply to purchases. Those purchases, other than block purchases, may in the aggregate be up to 100% of the average daily trading volume for the security in the preceding four calendar weeks.
• Permitting public companies to repurchase their shares without adverse accounting consequences, e.g. without affecting the availability of pooling-of-interest accounting treatment
• Providing brokerage firms with the flexibility to calculate net capital without considering the days the market was closed
• Allowing mutual funds to borrow from and lend to related parties.

In addition, the SEC has relaxed requirements for in-person meetings to facilitate mutual fund board meetings. Accounting firms may also provide bookkeeping services to and help recover records for clients with offices in and around the World Trade Center, without violating auditor independence rules.

Right Idea

Harvey Pitt, who represented many major companies as a private attorney for over two decades before he became SEC chairman last month, specifically proposed the idea of easing the rule governing company stock repurchases, SEC officials said, according to Dow Jones.

The SEC also may lift restrictions on officers, directors and big holders from trading in their related company stock.

Copies of the orders and interpretive release are available on the Commission’s website, at http://www.sec.gov/rules/other/34-44791.htm