A new disclosure data model has just been proposed by the SEC for U.S. securities lenders. Adoption of the model, called 10c-1 after the revised regulation, would be “one of the most drastic adjustments in the history of the securities lending industry,” writes Sidley Austin, a leading Wall Street law firm and advisor to broker-dealers. Previously, we have explained the proposal and intended benefits. Now we begin to analyze the proposed 10c-1 disclosure system’s value proposition. Will disclosure help more than it will cost to create and manage the network that supports the new disclosure system?

Master Criminals don’t usually confess in public. If prosecutors’ charges are true, Sanjay Shah is the leading figure in the largest reported tax swindle in history. Yet, Mr. Shah, unbowed, pleading his case to reporters, has openly admitted to borrowing the assets of widows and orphans in one country to kick-start a pyramid scheme of dividend capture trades, so as to swindle widows and orphans in other countries. Mr. Shah’s attorneys argue that his trades were not illegal. Mr. Shah, according to the reporters, claims everything he did was legal, and then he appeals to the Law of the Jungle:

“If there’s a big sign on the street saying, ‘please help yourself’,
then me or somebody else would go and help themselves.”

Paris, September 24, 2021 - The next shoe has fallen in reaction to the January 2021 GameStop short squeeze, by which certain online brokers interpreted clearinghouse rules to necessitate suspension of their retail customers’ ability to buy “meme stocks." Today, the European Securities Markets Authority (ESMA), citing SEC and EU data for January 2021 on suspiciously high levels of failed meme stock settlements, asked for public comment on rule changes to avoid future short squeezes. This ESMA consultation on systemic risk management will surely propel industry leaders to advance their previously-announced plans for a block-chained securities market infrastructure, so as to add even more robust operating and disclosure protocols.