An emergency SEC rule that went into effect today prohibits short selling of the publicly traded securities of 799 financial firms. This rule coincides with a similar rule adopted by the U.K. Financial Services Authority yesterday. As the SEC explains in its press release: “Under normal market conditions, short selling contributes to price efficiency and … Continue Reading
An emergency SEC rule that went into effect today prohibits naked short selling of any equity security. This rule expands on the emergency rule issued by the SEC in July, which prohibited naked short selling of 19 financial company securities. Naked short selling occurs when short sellers and the entities loaning the shares (market makers … Continue Reading
Financial institutions and businesses that extend credit to consumers will soon need to comply with new rules effective November 1, 2008 designed to protect against identity theft. The Federal Trade Commission, Federal Reserve, and other financial regulators have developed the Red Flag Rules under the Fair and Accurate Credit Transactions Act of 2003. The Red … Continue Reading
The U.S. Department of Justice will no longer allow its prosecutors to pressure corporate executives to disclose privileged documents. The much-criticized current policy had been to label companies uncooperative if they failed to reveal documents and communications that fall under the attorney-client privilege. The DOJ has revised the policy effective immediately. Furthermore, the DOJ can … Continue Reading
Xcel Energy has agreed to expand its disclosure of risks associated with climate change in its filings with the SEC. The announcement by Xcel comes in response to a subpoena issued by New York Attorney General Andrew Cuomo seeking information on the company’s plans to build an electric power plant in Pueblo, Colorado. The most … Continue Reading
The SEC has announced a new filing system and database called IDEA (Interactive Data Electronic Applications) that will eventually replace the EDGAR system originally begun in the 1980s. IDEA will be a major shift in the way the SEC maintains its extensive and valuable data contained in SEC filings. IDEA depends on interactive data for … Continue Reading
The major U.S. securities exchanges and self-regulatory organizations have agreed to consolidate oversight of insider trading in the hands of two regulators: NYSE Regulation and FINRA. The following equity exchanges and FINRA have signed the agreement, which must now be approved by the SEC: American Stock Exchange LLC Boston Stock Exchange, Inc. CBOE Stock Exchange, … Continue Reading
The SEC has announced it will soon provide guidance on how a company can use its corporate website to deliver important information to investors. It has been eight years since the Commission last issued guidance on websites. The guidance, which is scheduled to fittingly appear on the SEC’s website soon, is expected to answer the following … Continue Reading
RiskMetrics Group—a significant source of proxy voting guidance for institutional investors—has published its Preliminary U.S. Postseason Report for the 2008 proxy season. The report indicates that before the most recent proxy season, analysts were predicting increases in “shareholder discontent.” Shareholders were expected to increasingly withhold votes for incumbent directors; however, this did not happen, and … Continue Reading
An emergency SEC rule that will go into effect on Monday prohibits naked short selling of 19 financial companies including Freddie Mac and Fannie Mae. The SEC expects the rule to curb illegal shorting practices that several financial firms claim are causing unnecessary panic and capital market dysfunction. Short selling is the process of borrowing … Continue Reading
As described in a recently-issued No Action Letter, the SEC has lessened the burden of reporting multiple stock sales of insider holdings. Section 16 reporting persons may now report multiple transactions with similar prices on an aggregate basis instead of listing each transaction at each price. When a Section 16 insider sells a large block … Continue Reading
The SEC has released its 168-page proposed rule regarding nationally recognized statistical rating organizations (NRSROs). Recently, major rating agencies—Standard & Poor, Moody’s Investors and Fitch Ratings—have come under scrutiny for failing to identify risks in subprime mortgage investments that touched off the credit-market crisis. Seeking to avoid this problem in the future, the proposed rule … Continue Reading
Yesterday the SEC extended the deadline by which non-accelerated filers must file auditor attestation reports on internal controls to December 15, 2009 for annual reports filed after that date. The auditor attestation report is a requirement of Section 404(b) of Sarbanes-Oxley. It correlates with one of the key aspects of Sarbanes-Oxley: the requirement that management … Continue Reading
The SEC has recently updated its Guide to Broker-Dealer Registration regarding a variety of new topics, including: Regulation R, which addresses bank brokerage activity and when banks that engage in securities transactions must register as broker-dealers; A broker-dealer’s obligation to recommend only investment strategies that are suitable for their customers and for which the broker-dealer … Continue Reading
The SEC has released its 143-page proposed rule regarding data tagging of financial statements, including over 100 questions designed to prompt comments on or before August 1, 2008. Data tagging of financial statements using eXtensible Business Reporting Language (XBRL) is expected to dramatically simplify how analysts, investors, and others compare the financial statements of publicly-traded … Continue Reading
On Wednesday the SEC unanimously voted to propose a rule that calls for companies to report their financial data using interactive data tags that uniquely identify individual financial statement items. The data tags are often referred to as extensible business reporting language (XBRL). The data tags allow the information in financial statements to be more … Continue Reading
Earlier this week Aflac became the first large US company to offer shareholders the opportunity to approve compensation for top executives. Faced with an up or down vote, the shareholders resoundingly approved the $12 million pay package by a vote of 93 percent. Institutional investors and shareholder services have pushed proposals to give shareholders the … Continue Reading
SEC Commissioners will meet on Monday to consider implementation of a plan to require companies to file financial statement information in an interactive format known as XBRL (extensible business reporting language). XBRL or data tagging is the process of identifying accounting principals with unique data tags that allow financial statements to be easily downloaded into … Continue Reading
Earlier this week the US Department of Treasury released its self-commissioned study, the “Blueprint for a Modernized Financial Regulatory Structure.” In part in response to the current financial crises of lenders and investment banks, the Department of Treasury has proposed an overhaul of the way the federal government regulates securities, banks, investment banks, and the … Continue Reading
Effective February 4, 2008, smaller reporting companies may begin preparing their SEC reports and registration statements using the same forms as other SEC reporting companies but with scaled disclosure requirements. Eventually, there will be no special “small business” forms such as Forms 10-KSB and SB-2. Companies qualify as a smaller reporting company if they: have … Continue Reading
In an effort stop identity theft and intrusions into online brokerage accounts, the SEC has proposed amendments to Regulation S-P to provide more specific requirements for protecting personal information. Regulation S-P requires certain institutions to safeguard customer records and information. It was adopted in 2000 in direct response to the Gramm-Leach-Bliley Act, which requires every … Continue Reading
Last week the House of Representatives Committee on Oversight and Government Reform rescheduled a hearing on CEO termination payments in connection with the mortgage lending crisis. In January, Committee Chairman Henry Waxman sent letters to Citigroup, Merrill Lynch and Countrywide Financial asking them to justify payments to outgoing CEOs despite significant subprime-related losses and decreasing … Continue Reading
As the Green Movement continues, more institutional investors are becoming concerned with the potential costs and risks of investing in projects that produce high amounts of carbon. This was the topic of a recent meeting of investors in New York organized by the United Nations Foundation and Ceres, a coalition of investors and environmental groups. … Continue Reading
Brokerage firms that issue fairness opinions regarding corporate transactions have new disclosure obligations that will likely require changes to form documents used to draft the opinions and the internal procedures that govern the process. The Financial Industry Regulatory Authority (“FINRA”) has established a new Rule 2290 that requires disclosure of potential conflicts of interest between … Continue Reading
