Rules & Proposals

JPMorgan Loss Illustrates Difficulties of Adopting the Volcker Rule

May 22, 2012

JPMorgan Chase's $3 billion loss on derivatives trades has reignited a debate over what the final version of the Volcker Rule should include. A problem flagged by the bank's debacle is that there is no clear-cut answer to whether its actions would have violated the rule in its current form. "The fact is that proprietary trades and hedges look very much alike," says Peter Wallison, former general counsel of the Treasury Department.
 

PCAOB Contemplates Its Next Move on Improving Audit Quality

May 08, 2012

The Public Company Accounting Oversight Board may be cooling on its idea of mandatory audit rotation, but don't expect it to walk away from the idea of putting new measures in place to improve audit quality, including strengthening the role of the audit committee. "We're all anxiously awaiting exactly what they'll decide to do," says James Comito, a shareholder at audit firm Mayer Hoffman McCann.
 

OSHA Memo Cautions Against Discriminatory Workplace Safety Policies

May 08, 2012

An internal notice at the Occupational Safety and Health Administration contains several warnings for employers on workplace policies and procedures that could be considered as retaliation against whistleblowers. Among the potentially questionable practices are awards and bonus programs tied to injury rates. Details inside.
 

What's the Holdup With Dodd-Frank Rulemaking?

May 08, 2012

The Volcker rule is slated to go into effect this July. One problem: A final version of the rule still doesn't exist. In fact, many of the final Dodd-Frank Act rules still aren't written. So what's the holdup? One impediment is that regulators must do better cost-benefit analysis after a court ruling last year. "That's a huge undertaking, and it's going to slow things down," says Hal Scott, a professor at Harvard Law School.
 

Finding FCPA Violations in Employee Expense Reports

May 01, 2012

Travel and entertainment expenses have long been a haven for abuse, but since the dollar amounts are often insubstantial, companies don't always pay close attention to them. Companies are now finding, though, that they can be a conduit for bribes. "If T&E goes unchecked, it can make a company susceptible to allegations of corruption," says Andrew Levi, head of the Miami office at investigation firm Nardello & Co. How to root out fraud? More inside.
 

COSO Framework Overhaul Sparking Deeper Debates

April 24, 2012

COSO's effort to update its famed, but 20-year-old, framework for managing internal controls has sparked a deeper debate this spring about how companies should approach internal control overall. "Some of COSO's own members are critical of the draft. It speaks to the fact that these organizations took their role seriously," says Norman Marks, vice president at SAP. A closer look is inside.
 

SEC Churns Out JOBS Act Guidance

April 24, 2012

Since the JOBS Act was signed into law early this month, the SEC has issued three separate sets of guidance and called for a round of comments. The swift action is surprising to some given the JOBS Act's not-so-investor-friendly reputation. "The SEC is known to dislike the JOBS Act, but this shows good sportsmanship by jumping in," says Andrew Fabens, partner at the law firm Gibson, Dunn & Crutcher.
 

Regulators Move Closer to Deciding Who's 'Too Big to Fail'

April 17, 2012

Regulators are one step closer to putting the "Systemically Important Financial Institutions" label on several large, non-bank financial institutions. Companies swept into the SIFI net will face huge regulatory demands. "Those institutions have to develop much more seamless, more sustainable, robust infrastructure for complying with these reporting requirements," says Jitendra Sharma, head of global financial risk management for KPMG.
 

Sunshine Act Putting the Heat on Healthcare Firms

April 10, 2012

Drug companies and medical device makers still await final language for the "Sunshine Rules" of healthcare reform, but most are already building systems to comply with the disclosure requirements to come. Worry No. 1: that they won't be able to verify data that third parties give to them. "It's a fairly complex task to pull all the information together in a usable format," says Glenn Engelmann, former general counsel for the U.S. unit of Astra Zeneca.
 

New Swap Rules Put Compliance Burden on Dealers

April 03, 2012

Swaps dealers finally have a clear sense of their new compliance duties—and should prepare themselves accordingly. The new rules require them to measure market, credit, liquidity, and foreign exchange risks daily, and that could have a broad effect on the swaps market. "Corporate treasurers are not paying any attention, but they may find themselves scrambling to comply," says Andrea Kramer, a partner at law firm McDermott, Will & Emery.
 

SEC Speaks on Proxy Access

March 27, 2012

The SEC's latest batch of decisions on no-action letters offers a bit more insight for companies looking to thwart shareholder proposals about access to the proxy statement. The good news: The SEC did give several companies permission to ignore such proposals. The bad news: Most of those were issued for technical reasons, not any broad attempt by the SEC to limit shareholder proxy access. More details inside.
 

CFTC Issues External Business Conduct Standards for Swap Dealers

March 20, 2012

The Commodity Futures Trading Commission has adopted final business conduct standards for how derivatives traders report the details of their over-the-counter swap transactions. Critics say some terms are still vague. "Until all the open questions get sorted out, it's going to be difficult to feel comfortable that you're in full compliance," says Guy Dempsey of the law firm Katten Muchin Rosenman.
 

PCAOB Calls for More Scrutiny of Related-Party Transactions

March 06, 2012

Auditors are getting new pressure to sniff out business deals with insiders and to probe unusual transactions, including executive compensation deals, that might suggest something could be amiss. "There's a fair degree of push here to drill down further into compensation structures for executives," says Michael Scanlon, a partner with law firm Gibson, Dunn & Crutcher. More details inside.
 

HHS Steps Up Demands in Hospital Audits

March 06, 2012

The Department of Health and Human Services is expanding the scope of audits for healthcare providers that accept federal funds, and compliance officers at those institutions can expect demands for more data and documentation. The reviews "are more comprehensive ... looking at actual claims plus the systems hospitals have in place to make sure services are billed correctly," says Joanne Erde of the law firm Duane Morris.
 

Mass. Data Privacy Law Goes Into Full Effect

February 28, 2012

The final provision of Massachusetts' data privacy law kicks in March 1, putting companies nationwide in the tenuous position of policing their third-party service providers. "Many companies will say, 'I've hired the biggest guy in town,' but it doesn't hurt them to ask if you have the right to audit," says Sara Jane Shanahan of the law firm Sherin and Lodgen.
 

More Clues on SEC Whistleblower Office

February 28, 2012

The SEC now receives an average of seven tips each day to its new Office of the Whistleblower, according to agency officials, and compliance departments are scrambling to shore up their own internal compliance operations in response. "Most of the activity we see is on investigation protocols around hotline calls," says Steve Kuzma of Ernst & Young. More inside.
 

Delays Raise Uncertainties in Food Safety Compliance

February 22, 2012

Agribusinesses and food companies are preparing for the largest safety reform in 75 years to arrive later this summer—except for the small detail that few final regulations have been adopted yet. "There are a lot of questions to which we do not know the answers," says Clifford Pappas, senior adviser of food safety education at food safety auditor AIB International. Feast on the details inside.
 

Regulatory Changes at Record Levels

February 14, 2012

Regulators around the world issued an average of 60 new or amended rules per day last year, according to a study from Thomson Reuters, and 2012 is likely to bring still more thanks to the Dodd-Frank Act and similar laws. "For end users, there's a scary amount of work ahead," says Alex Robson, chief editor of the report. A round-the-world tour of compliance officers' headaches is inside.
 

Proxy Access Moves Forward at Two Companies

February 07, 2012

Meanwhile, shareholders are having more success with proposals to gain proxy access. So far they have launched proposals to put proxy access to a vote—a process known as private ordering—at 18 companies, and two of those companies are moving toward adopting provisions to allow investors to nominate board candidates. "We're in private-ordering land now. I think we'll be there for the extended future," says Patrick McGurn, executive director at ISS.
 

Foreign Banks, Others Struggle to Prepare FATCA Compliance

January 17, 2012

As the 2013 deadline nears for foreign banks and others to strike a deal with the Internal Revenue Service to monitor accounts held by U.S. citizens, confusion remains about exactly which companies must comply with the law. "Until companies really pull up their sleeves and take a hard look at all the necessary changes, they won't realize the impact," says Laurie Hatten-Boyd, a principal at KPMG.
 

SEC Outlines Ambitious Agenda for 2012 on Dodd-Frank and Beyond

December 06, 2011

Despite criticism that it has fallen far behind schedule, the SEC says it will complete the majority of the remaining rules required by the Dodd-Frank Act next year in addition to several other projects. "With the budget that they have, the SEC has to look at its priorities," says Christopher Robertson, a partner at law firm Seyfarth Shaw.
 

Winter of Dodd-Frank Delays

November 29, 2011

It's been nearly 18 months since Congress passed the Dodd-Frank Act, and many of the rules remain to be finalized or even proposed due to delays and other roadblocks. Here's an update on what lies ahead for Dodd-Frank rulemaking, including rules on disclosure of CEO pay ratios, hedging, conflict minerals, and much more.
 

OSHA Makes It Easier to File a Whistleblower Claim

November 22, 2011

Psst—looking for a roadmap to how OSHA investigates whistleblower complaints? The Occupational Safety and Health Administration has updated its Whistleblower Investigations Manual with new guidance paving the way for employees to file whistleblower claims. OSHA investigators also have new procedures to follow when investigating claims, and companies face more penalties for violations. Full coverage inside.
 

What to Expect: Preparing for the 2012 Proxy Season

November 22, 2011

Now is the time, say governance experts, to begin preparing for the 2012 proxy season. Shareholders are expected to focus on chairman and board committee independence, majority voting, political spending disclosure, proxy access proposals, and, of course, compensation. "Investors are going to try to take a harder look at pay levels," says Amy Borrus, deputy director at the Council of Institutional Investors.
 

CEO's Tweets Raise Reg FD Questions

November 08, 2011

Alan Meckler, CEO of WebMediaBrands, uses Twitter to send out notes about his music interests, travel plans—and the occasional remark about the company's new products and how the quarter is going. Do the CEO's missives violate the selective disclosure rules of Regulation Fair Disclosure? Some say they do; Meckler disagrees. "I'm not specifically targeting investors or shareholders," he says. More on what others say inside.
 

Regulators Consider New Warning Measures for Troubled Companies

November 08, 2011

Investors are clamoring for new mechanisms to warn that a company may be on the verge of collapsing, but the Financial Accounting Standards Board is still wondering whether the answer is new rules, or better enforcement of current rules. "I'm very concerned we are talking about adding things through [new rules] that are already required," FASB Chairman Leslie Seidman says.
 

Bracing for XBRL Liability

November 01, 2011

Companies with market caps of more than $5 billion began submitting their financial statements in the interactive data format known as XBRL two years ago. Now the transitional period is ending, opening these companies up to litigation and additional regulatory scrutiny. Worse, there is no audit standard for XBRL to assure the accuracy of their filings. More details inside.
 

Conflict Minerals Rule Casts a Wide Shadow

November 01, 2011

Think the SEC's conflict minerals rule doesn't apply to you? Think again. Many companies are finding that trace amounts of the minerals in packaging and other materials could subject them to compliance with the rule, which requires reporting on the sourcing of certain minerals mined in Africa. "We had no idea this legislation was going to be covering companies like us," says Irma Villarreal, assistant corporate secretary of Kraft Foods. Details inside.
 

SEC's Corp Fin Staff Attacks Cyber-Security Disclosure

October 25, 2011

The Securities and Exchange Commission's latest burst of staff guidance takes aim at the tricky realm of disclosing cyber-security risks, with a five-part checklist of the sorts of disclosure the SEC expects to see in corporate filings. In other words, says Sanjay Shirodkar of the law firm DLA Piper, the SEC staff considers cyber-security disclosure important, "and it's likely they'll be issuing more comments regarding the matters in the guidance."
 

Labor Dept. Clears Path for Electronic ERISA Compliance

September 27, 2011

The Labor Department is easing restrictions on sending out retirement plan information to plan participants electronically: It will now allow employers to send information by e-mail without first getting a paper consent form. The new rules, which take effect immediately, should smooth the path for compliance with more disclosure rules coming into effect next May. More details inside.
 

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