FACT SHEET

Final Rules: SBS 

Fraud & 

Manipulation; CCO 

Independence

U.S. SECURITIES AND EXCHANGE COMMISSION PAGE 1 OF 2

Why This Matters

The security-based swap market has a gross notional amount outstanding of approximately 

$8.5 trillion as of late 2022, and the particular aspects and characteristics of security-based 

swaps provide opportunities and incentives for misconduct. Rule 9j-1 will be an important 

additional tool to augment the Commission’s oversight of the security-based swap markets 

and will aid the Commission in its pursuit of actions that directly target misconduct that 

reaches security-based swaps. Rule 15fh-4(c) will protect the independence and objectivity 

of an SBS Entity’s CCO by preventing the personnel of an SBS Entity from taking actions to 

coerce, mislead, or otherwise interfere with the CCO.

How This Rule Applies

Rule 9j-1 will: 

● Make it unlawful for any person, directly or indirectly, to effect any transaction in, or 

attempt to effect any transaction in, any security-based swap, or to purchase or sell, 

or induce or attempt to induce the purchase or sale of, any security-based swap in 

connection with the following misconduct:

○ Employing or attempting to employ any device, scheme, or artifice to defraud 

or manipulate;

○ Making or attempting to make any untrue statement of a material fact, or 

omitting a material fact necessary to make the statements made, in light of 

the circumstances under which they were made, not misleading;

○ Obtaining money or property by means of any untrue statement of a material 

fact or any omission of a material fact; 

The Securities and Exchange Commission adopted new Rule 9j-1 under the Securities 

Exchange Act of 1934 to prevent fraud, manipulation, and deception in connection with securitybased swap transactions.

In addition, the Commission adopted Rule 15fh-4(c) under the Exchange Act to prohibit undue 

influence over the Chief Compliance Officer (CCO) of a security-based swap dealer or a major 

security-based swap participant (each, an SBS Entity).
FACT SHEET | Final Rules: SBS Fraud & Manipulation; CCO Independence

U.S. SECURITIES AND EXCHANGE COMMISSION Page 2 of 2

○ Engaging in any act, practice, or course of business that operates or would 

operate as a fraud or deceit upon any person;

○ Attempting to obtain money or property by means of any untrue statement of 

a material fact or omission of a material fact, or attempting to engage in any 

act, practice, or course of business that operates or would operate as a fraud 

or deceit upon any person; or

○ Manipulating or attempting to manipulate the price or valuation of any 

security-based swap or any payment or delivery related thereto.

● Provide two affirmative defenses for actions taken in accordance with binding rights 

and obligations in written security-based swap documentation and for transactions 

by entities when the individual at the entity making the investment decision was not 

aware of material nonpublic information and the entity had implemented reasonable 

policies and procedures to prevent violations of the rule; and

● Provide that a person cannot escape liability for trading based on possession of 

material non-public information about a security by purchasing or selling a securitybased swap based on that security and cannot escape liability under the rule by 

purchasing or selling the underlying security (as opposed to purchasing or selling a 

security-based swap that is based on that security).

Exchange Act Rule 15fh-4(c) will:

● Prohibit any officer, director, supervised person, or employee of an SBS Entity, or 

any person acting under such person's direction, to take any action to coerce, 

manipulate, mislead, or fraudulently influence the SBS Entity's CCO in the 

performance of their duties under the federal securities laws.

What’s Next

The final rules will become effective 60 days after the date of publication of the adopting 

release in the Federal Register.