Corporate & Securities Law

Treasury Study on Financial Restatements

Posted on April 13, 2008
Treasury Study on Financial Restatements Focuses on Internal ControlsA new Treasury-sponsored study on financial restatements found that there was a significant increase in restatements by 2005 accelerated filers during the 2003-2005 implementation period for internal controls reporting under section 404 of the Sarbanes-Oxley Act...

PCAOB's Gradison Endorses Move

Posted on April 13, 2008
PCAOB's Gradison Endorses Move Towards Int'l Audit StandardsPCAOB Member Bill Gradison has added his voice to the growing call for convergence of US and international audit standards. In fact, in remarks to the American Accounting Association, he said that this year the PCAOB may move the issue of multiple auditing standards ``to the front burner...

Int'l Banking Group Urges IASB

Posted on April 09, 2008
Int'l Banking Group Urges IASB and FASB to Replace Fair Value with Mixed Measurement ModelThe International Banking Federation has urged standard setters to implement a mixed measurement model in place of full fair value accounting. The FASB and IASB were advised that a mixed measurement model provides investors with better information for evaluating financial instruments...

Key Senator Questions Mutual Recognition;

Posted on April 08, 2008
Key Senator Questions Mutual Recognition; While McCreevy Sees ProgressSenate Securities Subcommittee Chair Jack Reed has asked the SEC to conduct an analysis of the issues before embarking on a system of mutual recognition, which he called a radical departure from current policy...

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Senate Leaders Ask GAO to Review

Posted on April 04, 2008
Senate Leaders Ask GAO to Review SEC Enforcement; Question Mutual RecognitionNoting an almost 50% decrease in disgorgements in 2007, Senate Banking Committee Chair Christopher Dodd and Securities Subcommittee Chair Jack Reed have asked the GAO to review whether the SEC?s Division of Enforcement has sufficient staff and funds to perform its mission and whether there have been fundamental changes in operation to the way they handle cases...

Spring-Loading and Bullet-Dodging

Posted on April 02, 2008
Spring-Loading and Bullet-Dodging of Stock Options Should Have Been DisclosedCompany directors who approved spring loaded and bullet dodged stock option grants may have breached their fiduciary duty and forfeited the protection of the business judgment rule, held the Delaware Chancery Court, since the spring-loading and bullet-dodging practices constituted material information that should have been disclosed...

Treasury Proposes Massive Overhaul

Posted on March 31, 2008
Treasury Proposes Massive Overhaul of US Financial Services Regulation Affecting Fed, SEC, CFTCThe US Treasury has proposed the most complete overhaul of federal financial regulation since the current regulatory structure was erected in the 1930s. The proposal would create new federal regulators for market stability, business conduct, corporate finance and prudential finance...

SEC Allows Range of Values in Fair

Posted on March 29, 2008
SEC Allows Range of Values in Fair Value Accounting MeasurementsIn a significant move given current market conditions, the SEC will allow issuers to provide in their MD&A a range of values for hard-to-value illiquid securities. In a letter to chief financial officers, the SEC staff also urged issuers to describe in the MD&A the technique or model they use to value the illiquid securities, as well as any changes to the model made during the reporting period...

Federal Examiner Finds Internal

Posted on March 28, 2008
Federal Examiner Finds Internal Control and Audit Committee Failures at Mortgage CompanyA federal bankruptcy court examiner has found that a failure to establish and monitor internal controls over financial reporting substantially contributed to a company?s accounting errors and allowed those errors to go undetected...

Treasury Official Sees Reform of

Posted on March 27, 2008
Treasury Official Sees Reform of Credit Rating Process and Enhanced DisclosureEchoing a recent UK Treasury Committee finding that securitization is here to stay, a US Treasury senior official called for broad reform of the securitization process, including reliable ratings of complex securities, better disclosure, and improved risk management Assistant Secretary Anthony Ryan told the Exchequer Club that securitization is a financial innovation that has expanded the availability of credit and reduced the cost of capital...

New Broker and Investmest Adviser

Posted on March 27, 2008
New Broker and Investmest Adviser Regulation WhitePaper Now AvailableA new white paper addressing the future of broker and investment adviser regulation and the recent Rand report to the SEC may be found here.

Fed Gov. Kroszner Gleans Lessons

Posted on March 26, 2008
Fed Gov. Kroszner Gleans Lessons from Risk Management ReportIn the view of Federal Reserve Board Governor Randall S. Kroszner, the recent report on risk management by global regulators, including the Fed and the SEC, contains many valuable lessons for all levels of risk management...

ICI Mutual Funds Seminar Raises

Posted on March 25, 2008
ICI Mutual Funds Seminar Raises issue of International RegulationThe Investment Company Institute held its annual Mutual Funds and Investment Management Conference this month in Phoenix. Fortunately, the CCH Mutual Funds Guide editor, Amy Leisinger, attended this very substantive seminar and filed a report...

SEC Moves Forward with Mutual Recognition

Posted on March 24, 2008
SEC Moves Forward with Mutual Recognition FrameworkAgainst the backdrop of continuing cross-border exchange mergers, the SEC will accelerate its implementation of the concept of mutual recognition for high-quality non-US regulatory regimes. The Commission will explore initial agreements with foreign regulatory counterparts based on a comparability assessment by the SEC and by the foreign authority of one another's regulatory regimes...

Cox Praises Basel Committee Plan

Posted on March 23, 2008
Cox Praises Basel Committee Plan to Update Guidance on Liquidity Risk ManagementSEC Chair Christopher Cox has praised the decision by the Basel Committee on Banking Supervision to update its guidance on liquidity risk management at financial institutions...

Japanese Securities Regulator to

Posted on March 23, 2008
Japanese Securities Regulator to Allow More English Language FilingsAs part of a broad reform initiative, the Japanese Financial Services Agency will significantly expand the use of English language filings permitted for the Japanese markets. Currently, disclosure in English is allowed only for foreign exchange-traded funds...

Rep. Frank Calls for Financial

Posted on March 20, 2008
Rep. Frank Calls for Financial Services Risk RegulatorWith markets in turmoil primarily because of a failure to manage the risk of complex securitized financial instruments, House Financial Services Chair Barney Frank has called for the creation of a federal Financial Services Risk Regulator to assess risk across financial markets regardless of corporate form...

IASB Reaffirms Fair Value in Proposing

Posted on March 19, 2008
IASB Reaffirms Fair Value in Proposing Revision of Standard for Measuring Financial InstrumentsWhile acknowledging concerns about volatility, the IASB said that fair value is the only measure appropriate for all types of financial instruments as it embarks on a major revision of IAS 39, the standard for measuring the value of financial instruments...

Canada Moving Towards One Securities

Posted on March 18, 2008
Canada Moving Towards One Securities RegulatorCanada is the only industrialized country without a common securities regulator. And the present system of thirteen provincial regulators is seen by many as cumbersome, fragmented, and lacking the proper tools of enforcement...

SEC Details Staff's Involvement

Posted on March 18, 2008
SEC Details Staff's Involvement in Bear Stearns TransactionDuring discussions of the Bear Stearns/JPMorgan Chase transaction, SEC officials were in close contact with Federal Reserve Board officials, as well as with representatives of the firms involved...

Basel Committee Revisiting Basel

Posted on March 17, 2008
Basel Committee Revisiting Basel II Accord in Light of Financial CrisisAs the market turmoil associated with securitization deepens, the Basel Committee is looking at making improvements to certain aspects of the Basel II Accord. In remarks, at a recent Basel II Implementation Summit in Singapore, Basel Committee Chair Nout Wellink said there are no simple measures that will capture the complex risks now facing global financial institutions...

SEC Staff Acts to Thaw Frozen Auction-Rate

Posted on March 17, 2008
SEC Staff Acts to Thaw Frozen Auction-Rate Securities MarketIn an effort to thaw the essentially frozen auction-rate securities market, the SEC staff said it would not object if municipal issuers, conduit borrowers, dealers and auction agents participated in bids for municipal auction rate securities...

PCAOB Chair Examines Double-Edged

Posted on March 16, 2008
PCAOB Chair Examines Double-Edged Sword of Fair Value AccountingFair value accounting presents the promise of making financial statements more relevant, said PCAOB Chair Mark Olson, but at the same time poses heightened audit risk, especially in illiquid markets...

Key Senator Says PCAOB Reliance

Posted on March 16, 2008
Key Senator Says PCAOB Reliance on Foreign Audit Regulators Thwarts Sarbanes-OxleyIn the view of Senator Carl Levin, the PCAOB?s proposed guidance to rely on non-US audit oversight bodies to conduct inspections of foreign audit firms registered with the Board is antithetical to its mandate under Sarbanes-Oxley...

Senate Finance Committee Will Study

Posted on March 14, 2008
Senate Finance Committee Will Study the Taxation of Sovereign Wealth FundsAs the assets controlled by sovereign wealth funds increase dramatically, leaders of the Senate Finance Committee have asked the Joint Committee on Taxation to analyze the current federal tax rules, and underlying policy, applicable to U...

Canada Overhauls Its Dealer and Adviser Registration/Exemption Rules

Posted on March 13, 2008
The Canada Securities Administrators (CSA) have proposed amendments to a rule adopted February, 2007 that overhauled registration and exemption provisions for Canadian dealers, investment advisers and investment fund managers. The new round of proposals published February 29, 2008 will continue to pertain directly to Canadian dealers, investment advisers and investment fund managers but will also impact non-Canadian dealers, investment advisers and investment fund managers doing business in Canada on a registered or exempt basis, by affecting a number of capital market activities that include private placements, public and private fund offerings, and advisory activities...

President's Working Group Proposes

Posted on March 13, 2008
President's Working Group Proposes Major Reforms to US Financial RegulationIn the wake of recent market turbulence, the President?s Working Group on Financial Markets has proposed broad and substantial changes to US financial regulation. The comprehensive reforms are nothing less than a complete overhaul of the securitization process and the concomitant mortgage origination process that relied on the sale of asset-backed securities...

Chevron Deference May Be Due Sarbanes-Oxley

Posted on March 12, 2008
Chevron Deference May Be Due Sarbanes-Oxley Whistleblower RulingA Fifth Circuit panel has ruled that a securities analyst did not engage in protected activity under the Sarbanes-Oxley Act whistleblower provision when she refused to upgrade a company?s rating in her report since she never said that changing the rating would violate any securities laws and the employer did not express an intent to change the rating, but merely questioned her decision...

3rd Circuit: SLUSA No Bar to Aiding

Posted on March 12, 2008
3rd Circuit: SLUSA No Bar to Aiding and Abetting, Foreign Claims by TrustThe Securities Litigation Uniform Standards Act did not preclude a trust from bringing state law claims for aiding and abetting breaches of fiduciary duties, concluded a 3rd Circuit panel...

House Bill Would Make Securities

Posted on March 11, 2008
House Bill Would Make Securities Litigation More TransparentA bill fostering transparency and accountability of attorneys in private securities litigation has been introduced in the House. The Securities Litigation Attorney Accountability and Transparency Act (HR 5463) would provide that, in any private securities action in which the court enters a final judgment against plaintiff, the court must determine whether the position of the plaintiff was not substantially justified; whether the imposition of fees and expenses on the plaintiff's attorney would be just; and whether the cost of such fees and expenses to the defendant is substantially burdensome or unjust...

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