09/24/09 -- SEC Amends Money Fund Disclosures in Release No. IC-28903
As discussed in the article entitled "Money Fund Disclosures Are Amended
in Release No. IC-28903" in the September 23, 2009, issue of Accounting
& Compliance Alert, the SEC recently issued Release No. IC-28903,
Disclosure of Certain Money Market Fund Portfolio Holdings, as
a final rule and an interim temporary final rule, to extend some of the
disclosure requirements tied to the Treasury Department's support for
the money market industry.
Treasury's support was issued through the Temporary Guarantee Program
for Money Market Funds, which expired on September 18. The program was
set up to stabilize the money markets at the peak of the financial crisis,
and it helped guarantee the $1 net asset value (NAV) that is the common
benchmark for money funds.
In Release No. IC-28903, the SEC is establishing Rule 30b1-6T under the
Investment Company Act of 1940 to require money funds to provide the SEC
with weekly updates of the value of their portfolios and holdings if their
NAVs fall below $1.
The rule is set to expire September 17, 2010.
Because the rule is being issued as an interim temporary final rule,
the SEC is seeking comments on the release and has a deadline of October
26, 2009.
09/23/09 -- SEC Proposes Flash Order Ban in Release No. 34-60684
As discussed in the article entitled "SEC Proposes Flash Order Ban in
Release No. 34-60684" in the September 21, 2009, issue of Accounting
& Compliance Alert, the SEC recently issued Release No. 34-60684,
Elimination of Flash Order Exception From Rule 602 of Regulation NMS.
The proposal was published a day after the SEC approved issuing it.
If approved, the rule would amend Rule 602 of Regulation NMS, for National
Market System, to prohibit an exception for the use of flash orders by
stock and options exchanges. Rule 602 deals with public displays of stock
quotes, and agency officials want to know if the high-speed automated
trading strategy, called flash orders, should be prohibited.
The SEC said if the amendment to Rule 602 is adopted, it would change
the way Rule 301(b) of Regulation ATS, for Alternative Trading System,
and Rule 610(d) of Regulation NMS are applied.
09/22/09 -- SEC's Rating Agency Rules Target Conflicts of Interest
As discussed in the article entitled "Rating Agency Rules Target Conflicts
of Interest" in the September 21, 2009, issue of Accounting & Compliance
Alert, the SEC responded to the public outcry about bad behavior at
the credit rating agencies and decided to crack down on practices blamed
for contributing to the financial crisis.
Regulators approved a series of proposed and final rules on September
17 that, taken together, may fundamentally alter a business that has been
fundamental to Wall Street's activities for decades, but has become a
hot button of controversy in recent years.
The rules will require the rating agencies to improve their disclosures,
address conflicts of interest, and improve the quality of their rating
practices. The SEC also wants to heighten the industry's degree of accountability,
increase the level of competition, and clamp down on a long-standing practice
among issuers of shopping around for the agency that is willing to give
them the best rating.
"It is incumbent upon us to do all that we can to improve the reliability
and integrity of the ratings process and give investors the appropriate
context for evaluating whether ratings deserve their trust," SEC Chairman
Mary Schapiro said.
09/21/09 -- SEC Chief Accountant Is Bullish on Prospects for IFRS
in U.S.
As discussed in the article entitled "Chief Accountant Is Bullish on Prospects
for IFRS in U.S." in the September 18, 2009, issue of Accounting &
Compliance Alert, ever since Mary Schapiro took over the SEC in January
2009, there's been a bold-faced question mark hanging over the SEC's plan
to have U.S. companies adopt IFRS and abandon GAAP.
James Kroeker, who was elevated to the SEC's chief accountant's post
in August, wasted little time after he was promoted in trying to erase
the doubt. During a September 14 speech to an AICPA conference, he said
the proposal in Release No. 33-8982, Roadmap for the Potential Use
of Financial Statements Prepared in Accordance with International Financial
Reporting Standards by U.S. Issuers, would become a priority again
during the fall.
Kroeker repeated the assertion before a September 17 conference sponsored
by the New York State Society of Certified Public Accountants. But as
he discussed the issues SEC officials have to contend with as they consider
the more than 200 comments submitted in response to the proposal, Kroeker,
perhaps unintentionally, described what may be an impossible task.
"The one thing that comes across resoundingly clear is that people agree
with the idea of one set of accounting standards," Kroeker said. "It's
like motherhood and apple pie. How do you object to the idea that accounting
standards in the U.S should be the same as accounting standards globally?"
Once he summarized the area of agreement in a single sentence, Kroeker
spent 15 minutes describing the many potholes on the IFRS Roadmap.
09/18/09 -- SEC Formed Division of Risk and Strategy to Deal with
Market Changes
As discussed in the article entitled "Division of Risk and Strategy Formed
to Deal with Market Changes" in the September 17, 2009, issue of Accounting
& Compliance Alert, the SEC said that it established a division
of risk, strategy, and financial innovation and named University of Texas
School of Law professor Henry Hu as its first director.
The division combines the offices of economic analysis and risk assessment
with functions housed in other SEC departments. Agency officials want
the division to provide economic, financial, and legal analysis.
SEC Chairman Mary Schapiro expects the division to enhance the agency's
capabilities and help identify developing risks and trends in the financial
markets.
Hu said he looks forward to using an interdisciplinary approach that
is informed by law and modern finance and economics, as well as developments
in real world products and practices on Wall Street.
The SEC said the division will:
- Perform strategic and long-term analysis;
- Identify new developments and trends in the financial markets;
- Make recommendations as to how these new developments and trends affect
the commission’s regulatory activities;
- Conduct research and analysis to aid the agency's other divisions
and offices; and
- Provide training on new developments and trends.
09/16/09 -- SEC Chief Accountant Commits to Giving IFRS Roadmap a
Second Look
As discussed in the article entitled “Chief Accountant Commits
to Giving IFRS Roadmap a Second Look” in the September 14, 2009,
issue of Accounting & Compliance Alert, the appointment of a chief
accountant at the SEC is answering some questions about the status of
international convergence.
Unifying U.S. GAAP with IFRS will be a priority for regulators in the
“coming weeks and months,” said James Kroeker at the AICPA's
banking conference in Washington, on September 14, his first public speech
since being named the SEC's chief accountant. Kroeker had the job in an
acting capacity for eight months after his predecessor, Conrad Hewitt,
retired.
Kroeker said the SEC staff continues to analyze comments it received about
the proposed roadmap for IFRS issued in November 2008 as Release No. 33-8982,
Roadmap for the Potential Use of Financial Statements Prepared in Accordance
with International Financial Reporting Standards by U.S. Issuers.
He added that some accounting practitioners viewed the SEC's decision
earlier this year to extend the comment period as a sign that the commission
no longer supported moving to IFRS. Kroeker said this was a wrong assumption,
and the comment period was extended because a number of potential respondents
to the roadmap had called the SEC saying the original 90-day comment period
was too short.
09/15/09 -- SEC Schedules Roundtable to Address Securities Lending
and Short Selling
As discussed in the article entitled "Roundtable Scheduled to Address
Securities Lending and Short Selling" in the September 14, 2009, issue
of Accounting & Compliance Alert, the SEC said it plans to hold
a roundtable discussion about securities lending and short selling on
September 29-30.
The SEC wants more information about how to protect brokers' finances,
whether there should be more information about the cost of borrowing stock,
and whether there should be better warnings to investors that their stock
is out on loan.
The roundtable will feature a review of securities lending practices
and panel discussions that analyze possible short-sale pre-borrowing requirements
and additional disclosures about short-selling activity.
The participants in the six panel discussions that have been scheduled
will be announced closer to the roundtables. They are expected to include
investors, corporate issuers, financial services firms, owner-lenders,
lending agents, borrowers of securities, self-regulatory organizations,
international regulators, and academics.
On September 29, the roundtable will focus on securities lending issues,
and on September 30, it will focus on short-sale pre-borrowing requirements
and additional short-sale disclosures.
09/14/09 -- Schumer Bill Would Give SEC Big Hike in Spending
As discussed in the article entitled "Schumer Bill Would Give SEC Big
Hike in Spending" in the September 9, 2009, issue of Accounting & Compliance
Alert, Sen. Charles Schumer (D-NY), a senior member of the Senate
Banking Committee, is ready to propose a bill that would add hundreds
of millions of dollars to the SEC's annual budget.
Schumer announced his plan to propose the legislation on September 3,
the day before the SEC's inspector general released a scathing report
that slammed agency officials for ignoring the many clues extending for
years that, had they been acted upon, would have been useful in stopping
disgraced financier Bernard Madoff's Ponzi scheme before it mushroomed
into a $50 billion fraud.
"The SEC's failure to catch Bernie Madoff shows a level of incompetence
unseen since FEMA's handling of Hurricane Katrina," Schumer said. "It
is clear the SEC needs a bigger, more reliable funding stream so it can
retain and recruit the top talent that has fled the agency of late."
Shortly after it took office, the Obama administration requested a 7%
jump in budget authority for the SEC to $1.03 billion for fiscal 2010,
which begins October 1, 2009, giving the agency the largest increase in
spending it has had in recent years.
09/11/09 -- Schumer Bill Would Give SEC Big Hike in Spending
As discussed in the article entitled "Schumer Bill Would Give SEC
Big Hike in Spending" in the September 9, 2009, issue of Accounting
& Compliance Alert, Sen. Charles Schumer (D-NY), a senior member of
the Senate Banking Committee, is ready to propose a bill that would add
hundreds of millions of dollars to the SEC's annual budget.
Schumer announced his plan to propose the legislation on September 3,
the day before the SEC's inspector general released a scathing report
that slammed agency officials for ignoring the many clues extending for
years that, had they been acted upon, would have been useful in stopping
disgraced financier Bernard Madoff's Ponzi scheme before it mushroomed
into a $50 billion fraud.
"The SEC's failure to catch Bernie Madoff shows a level of incompetence
unseen since FEMA's handling of Hurricane Katrina," Schumer said. "It
is clear the SEC needs a bigger, more reliable funding stream so it can
retain and recruit the top talent that has fled the agency of late."
Shortly after it took office, the Obama administration requested a 7%
jump in budget authority for the SEC to $1.03 billion for fiscal 2010,
which begins October 1, 2009, giving the agency the largest increase in
spending it has had in recent years.
09/09/09 -- SEC's Fall Agenda to Focus on Big-Picture Reforms
As discussed in the article entitled "Fall Agenda to Focus on Big-Picture
Reforms" in the September 8, 2009, issue of Accounting & Compliance
Alert, the SEC is heading into the fall intent on addressing several
high-profile reform initiatives, including its proposed rules on the money
markets and executive compensation.
As of September 4, the SEC had six proposed rules out for comment, with
comment periods for three proposals ending September 8.
Given the length and depth of the recession and the several hits to its
reputation suffered by the SEC, agency officials are doing their best
to regain the confidence of investors and the public.
One of the proposals, which offers amendments to the Investment Company
Act of 1940, is Release No. IC-28807, Money Market Fund Reform.
Specifically, the proposal would require funds to maintain a portion
of their portfolios in instruments that can be readily converted to cash,
require money market funds to file monthly reports on their portfolio
holdings, and permit a money market fund that has repriced its securities
below $1 per share--commonly known as breaking the buck--to suspend redemptions
to allow for the orderly liquidation of fund assets.
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