10.1.28: SEC Adopts New Anti-Fraud Rule for Private Funds as Proposed

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Abstract

As has been stated several times in the Alert, while Pillar 1 (capital) of Basel II has received significant attention, Pillar 3 (market disclosures) has received very little. Standard and Poor's Rating Services ("S&P") recently published several key areas of supplementary Pillar 3 disclosure that is intended to "promote sound market discipline" (the "Proposed Supplemental Disclosures"). As to credit risk, the Proposed Supplemental Disclosures would involve banks providing, among other things, greater disclosure of exposure at default by risk bucket, and greater breakdown of exposures by geography. As to Operational Risk, the Proposed Supplemental Disclosures include a breakdown of capital charges for each risk factor, and the allocation of operational risk per business line. As to the trading book, the Proposed Supplemental Disclosures include the specific risk components, the characteristics and drivers of the Value-at-Risk, model, and stress testing. ...