SEC

Community News

Spitzer, Grasso Continue to Haggle in Pay Case

New York Attorney General Eliot Spitzer is seeking to have his compensation lawsuit against Richard Grasso remanded down to state court from federal court. Grasso is also fighting back this week, denying Spitzer’s charges and angling to keep the $200 million compensation package that forced his ouster as chairman of the New York Stock Exchange last year.The Wall Street Journal reported that Spitzer filed documents Wednesday in U.S.
Technology

SEC Announces Initiative to Test Tagged Financial Data

The U. S. Securities and Exchange Commission (SEC) is assessing the benefits of tagged data and its potential for improving the timeliness and accuracy of financial disclosure and analysis of Commission filings.The Commission will seek public comment on alternative methods and the costs and benefits associated with tagged data. In addition, the Commission will consider a staff proposal to accept voluntary supplemental filings of financial data using eXtensible Business Reporting Language (XBRL).

Financial Planners Sue SEC Over Lax Standards for Stock Brokers

The largest professional association for financial planners sued the Securities and Exchange Commission Tuesday to force stock brokers to be held to the same standards as financial planners.The Financial Planning Association (FPA) contends that stock brokers who act as financial planners should not be exempt from the fiduciary duties and disclosure rules required by the federal Investment Advisers Act, TheStreet.com reported."The SEC has given brokers a wholesale exemption from the Advisers Act that Congress never intended," said Barbara Roper of the Consumer Federation of America, which
A&A

SEC Votes to Propose Requirements on Hedge Fund Advisers

The Securities and Exchange Commission (SEC) voted this week to publish for comment proposed new Rule 203(b)(3)-2 that would require hedge fund advisers to register with the Commission under the Investment Advisers Act of 1940.
Community News

Denver Accounting Firm Settles SEC Case

Denver-based Levine Hughes & Mithuen settled a Securities and Exchange Commission complaint related to its audit work, paying a $50,000 fine and neither admitting nor denying wrongdoing, the Rocky Mountain News reported.The firm was accused by the SEC of destroying documents and altering work papers as the SEC investigated Sport-Haley Inc., a client of Levine Hughes & Mithuen, which is ranked as the 19th largest accounting firm in the Denver area.As part of the settlement, the firm agreed not to practice accounting before the SEC, but it can apply to be reinstated in three years.

The Year of Internal Control: The Clock Is Ticking for Sarbanes-Oxley Compliance

by J. Stephen McNally, CPAMany companies are aggressively documenting, assessing, and testing their internal controls for financial reporting and disclosure to ensure compliance with Section 404 of the Sarbanes-Oxley Act of 2002. Even companies that are not required to comply with this law are reviewing their internal control environments, recognizing that adequate internal controls are a prerequisite for long-term business continuity.
Community News

SEC Chair Subject of Probe by His Own Agency

The Securities and Exchange Commission is looking into accounting irregularities at a technology company whose audit committee once included SEC Chairman William Donaldson.According to anonymous sources cited by the Wall Street Journal, the accounting problems at EasyLink Services Corp.
Tax

Banc One Unit Agrees to Pay $50M to Settle SEC Fraud Charges

The Securities and Exchange Commission (SEC) announced on Tuesday a settled enforcement action against Banc One Investment Advisors Corporation (BOIA), a registered investment adviser based in Columbus, Ohio, and Mark A. Beeson, age 46, of Westerville, Ohio, former President and CEO of One Group Mutual Funds (One Group) and Senior Managing Director of BOIA.
Tax

SEC Settles Insider Trading Matter against Former FleetBoston Employee

The Commission announced that a Massachusetts federal court has entered a final judgment against Guillermo Garcia Simon, a former FleetBoston Financial Group employee residing in Buenes Aires, Argentina, in connection with his trading in the securities of FleetBoston in advance of the announcement of its acquisition by Bank of America Corporation. Under the terms of the final judgment, entered by consent, Simon was ordered to pay approximately $525,000 in disgorgement, interest, and a penalty.

Prison Terms Begin for 3 Ex-Rite Aid Executives

Three former Rite Aid Corp. executives turned themselves in Monday to begin serving prison time for their part in an accounting scandal that involved overstating earnings by $1.6 billion in the late 1990s.Former chief executive Martin L. Grass, 50, the son of the company’s founder who was forced out in October 1999, started serving eight years at the federal prison camp at the Eglin Air Force Base in Florida, the Associated Press reported. He pleaded guilty to conspiracy to defraud and conspiracy to obstruct justice. David P.

Gemstar-TV Guide Settles SEC Action for $10M

On Wednesday, The Securities and Exchange Commission filed a complaint in federal court in Los Angeles charging Gemstar-TV Guide International, Inc. with improperly reporting its highly touted interactive program guide licensing and advertising revenues in its financial statements from 1999 through 2002.Gemstar agreed to settle the case by, among other things, paying a $10 million civil penalty. That money will be distributed to harmed shareholders pursuant to Section 308 of the Sarbanes-Oxley Act of 2002.
Community News

SEC, PCAOB Offer FAQs on Auditing Standard No. 2

The Securities and Exchange Commission (SEC) and the Public Company Accounting Oversight Board (PCAOB) have released two sets of frequently asked questions to help practitioners implement the new auditing standard approved by the SEC this week.Auditing Standard No.
A&A

SEC Says Mutual Funds Must Have Independent Chairmen

After a vigorous debate, the Securities and Exchange Commission squeaked through a rule change that will require mutual-fund companies to have independent chairmen.The changes approved Wednesday, on a 3-2 vote, will also require 75 percent of fund seats be filled with independent directors, who must hold meetings separate from fund management, the Wall Street Journal reported.
Tax

Embattled HealthSouth Names New Chief Operating Officer

HealthSouth Corp. announced this week the appointment of Mike Snow, age 49, to the position of Chief Operating Officer (COO), effective June 30, 2004. Snow, who most recently served as the President of the Gulf Coast Division of HCA, will be responsible for the day-to-day operations of the company on an ongoing basis. Snow has an extensive background in the healthcare industry.

Mutual Fund Agrees to Pay $100 Million to Settle Improper Trade Practices

This week, Pilgrim Baxter & Associates, investment advisor to the PBHG Funds, confirmed that the firm has reached agreements with the U.S. Securities and Exchange Commission (SEC) and the Office of the New York State Attorney General to settle charges related to past trading activity. The settlement agreements address past trading activity in the PBHG Funds, which led to the appointment of new leadership at Pilgrim Baxter in November 2003.

Financial Planners Say SEC Brokerage Proposal Unfair

Financial planners are urging the Securities and Exchange Commission to fix a problem it created when it developed a proposal allowing brokers to act as financial advisors in some cases.That was in 1999.

SEC Approves PCAOB Auditing Standard No. 2

The Public Company Accounting Oversight Board (PCAOB) announced that its Auditing Standard No. 2, "An Audit of Internal Control over Financial Reporting Performed in Conjunction with an Audit of Financial Statements," has been approved by the Securities and Exchange Commission (SEC). The PCAOB expects to publish staff guidance regarding implementation of the standard. “This standard is one of the most important and far-reaching auditing standards the Board will ever adopt,” said PCAOB Chairman William J. McDonough.

Past Scandals Make Securities Law More Enticing for Many

With the recent swell in accounting scandals, securities law has become an increasingly enticing profession for current and upcoming lawyers. Private firms are willing to pay hefty prices for lawyers that specialize in securities-fraud law, especially those with experience at the Securities and Exchange Commission (SEC). This experience is extremely valuable to many corporations as the demand for lawyers to assist with fraud continues to shoot upward.
Practice

SEC Cracking Down on Contingency Fee, Independence

The U.S. Securities and Exchange Commission, acting to preserve auditor independence, is making sure the nation’s largest accounting firms are getting the message that accepting contingency fees for doing tax work for the companies they audit is not allowed.SEC Chief Accountant Donald Nicolaisen held a private meeting last week with the seven largest firms and the American Institute of Certified Public Accountants where he reinforced the SEC’s position on the contingency fee issue.
A&A

SEC, NASD Release Report on Broker-Dealer Sales of Variable Insurance Products

The Securities and Exchange Commission (SEC) and NASD today released a joint staff report on the findings of their examinations of broker-dealer sales of variable annuities and variable life insurance.

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