Bramwell’s Lunch Beat: SEC About to Unleash New Rules on Clawbacksby
Chaffetz presses IRS FOIA czar on transparency
House Oversight and Government Reform Committee Chairman Jason Chaffetz (R-UT) vowed on Wednesday to bring the IRS to heel after he had to issue a subpoena to compel the agency’s top transparency officer to appear before Congress to talk about transparency, wrote Stephen Dinan of the Washington Times. “We will drag the IRS up here every single week if we have to. You are going to respond to the United States Congress. You are going to respond to the people,” Chaffetz told Mary Howard, director of disclosure at the IRS. More than 150 Freedom of Information Act requests were filed related to the IRS targeting scandal, and multiple congressional committees began investigations. Howard defended the IRS’s transparency record, saying the agency is trying to do the best it can with the money and manpower it has.
SEC eyes broadened ‘clawback’ restrictions
US companies whose financial statements contain errors may soon have to “claw back” some of their top executives’ compensation as a result, wrote Andrew Ackerman of the Wall Street Journal. The US Securities and Exchange Commission (SEC) will soon propose long-awaited rules forcing companies to claw back, or revoke, some of their top officials’ incentive pay if they have to restate the financial results that led to it. The rules, if finalized, could force an executive who received stock options after the company met a performance target, such as a revenue figure, to return some or all of that compensation if a misstatement shows revenue fell below the executive’s performance target. The five-member SEC is tentatively set to vote on the clawback proposal on July 1. The SEC would have to collect public comment on the measure and vote on it a second time before it could go into effect.
FIFA auditor KPMG totally missed the soccer scandal
In an article for MarketWatch, Francine McKenna wrote that KPMG, the external auditor for FIFA, has largely escaped scrutiny in the soccer association’s bribery and corruption scandal. KPMG’s Swiss member is responsible not only for the audit of the multibillion-dollar-umbrella FIFA organization, and has been since before the period under scrutiny by US and Swiss prosecutors, but also audits a large sample of member associations around the world that receive FIFA funding on an annual basis. KPMG also prepares a compilation of all financial reports after the completion of each four-year World Cup cycle. Robert Appleton, a former assistant US attorney, said KPMG should have caught – and called out – these alleged illegal activities. “There were sufficient red flags of improper and highly suspicious payments, as well as money transfers to and from officials and others, that should have been identified and should have caused the auditors to highlight and report on them internally, and recommend further investigation,” he said.
White House official: Upcoming rules could have stopped IRS breach
Cory Bennett of The Hill wrote that the recent IRS data breach would have been mitigated or even thwarted altogether by identity authentication measures the Obama administration is requiring federal agencies to adopt by next April, said Ari Schwartz, a top White House cybersecurity official. President Obama last October signed an executive order that included a requirement that all federal agencies move to some form of multifactor authentication for all digital accounts that access personal information. That means in addition to a password, a user would need some other form of identification, such as a fingerprint or time-sensitive pin sent to a smartphone or email account. Many federal agencies like the IRS ask for a password, then pose personal questions about a monthly mortgage or car payment, for instance, as an additional form of verification. That process is widely seen as more vulnerable to hackers.
Nevada’s new tax will target Burning Man and escorts
Looking for new vices to tax, Nevada lawmakers have turned their sights on escort services and massive music-and-light festivals in the desert, wrote James Nash of Bloomberg. Lawmakers this week eliminated loopholes in Nevada’s live-entertainment tax, which now includes a 9 percent charge on tickets for events such as Burning Man, a free-form art encampment, and the Electric Daisy Carnival, a three-day music and light show in Las Vegas that attracts 400,000 people. The tax on the tickets, which can cost $400, also would apply to “pickup fees” for escort services, but not prostitutes at Nevada’s 24 legal brothels. Along with the entertainment tax, lawmakers approved Gov. Brian Sandoval’s $1.1 billion package of new and extended taxes on businesses, cigarettes, payroll, and sales.
Baron David de Rothschild’s bank fined over US tax dodging
Rothschild Bank AG, the Zurich-based private bank of the Rothschild financial dynasty, became the latest Swiss bank to be fined by the US Justice Department for helping Americans conceal assets offshore, wrote Giles Broom of Bloomberg. The firm, overseen by Baron David de Rothschild and majority-owned by Paris Orleans, will pay a penalty of $11.5 million, according to a statement by the Justice Department on Wednesday. Banca Credinvest SA, with headquarters on Switzerland’s Lake Lugano, agreed to pay $3 million. Rothschild and Banca Credinvest join seven other Swiss firms that have settled with the United States in exchange for revealing how they used shell companies and banking secrecy to conceal undeclared assets. More than 100 entered the Justice Department program at the end of 2013. Rothschild Bank knew it was “highly probable” that some Americans weren’t compliant with income tax and reporting obligations, the Justice Department said.
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