The Filing Cabinet

"The Filing Cabinet," which covers compliance with the Dodd-Frank Act and the Sarbanes-Oxley Act, as well as other regulatory action from the Securities and Exchange Commission, executive compensation, and shareholder activism, is written by CW staff writer Joe Mont. Mont welcomes questions, comments, and statements from readers on SEC filing matters and will address them here when appropriate. Readers can contact him at joe.mont@complianceweek.com.

House Passes Bill Demanding Tougher SEC Cost-Benefit Analyses

May 17, 2013

The House of Representatives passed a bill Friday that orders the SEC to perform new cost-benefit analyses for rules the agency wishes to adopt. The bill's Republican backers say the measure will force the SEC to be more thoughtful in its rulemaking, while opponents say the bill does nothing more than impede the agency's ability to do its job.
 

Recess Appointment Ruling Hits NLRB as Senators Duel Over Nominees

May 16, 2013

It was a bad day for the National Labor Relations Board on Thursday. Just before U.S. Senators commenced with grilling the current slate of NLRB nominees, yet another court ruling was handed down that vacated an order because of contested "recess appointments" made by President Obama.
 

Critics Prompt Nasdaq to Withdraw Internal Audit Rule Proposal

May 14, 2013

Responding to cost and implementation concerns voiced by small and growing enterprises, Nasdaq has withdrawn a proposed rule that would have required listed companies to establish and maintain an internal audit function. It plans to submit a modified rule to the Securities and Exchange Commission after a full review of submitted comments.
 

CFPB New Civil Penalty Fund, Seeks Public Comment

May 13, 2013

The Consumer Financial Protection Bureau has issued a rule governing the administration of its new Civil Penalty Fund, which was created to compensate victims of a person or company that was fined as part of an enforcement action. The first allocations are expected by May 30. More inside.
 

FLSA Lawsuits Hit New Record High

May 10, 2013

Federal wage and hour lawsuits filed under the Fair Labor Standards Act hit a record high in 2013, according to data tracked by law firm Seyfarth Shaw. For the 12-month period ending March 2013, the number of cases soared to 7,764, up 10 percent from the 7,064 FLSA cases that were filed in 2012. FLSA lawsuits have risen consistently since 2008.
 

Regulations and Enforcement High on List of In-House Counsel Woes

May 10, 2013

According to a new study of in-house counsels, regulatory compliance ranked second on the list of top business threats, just behind the poorly performing economy. Corporate counsels said regulation was a bigger threat to growth than the actions of competitors, supply-chain disruptions, and corruption. More details inside.
 

Healthcare Changes Require 190 Million Hours of Paperwork, Report Says

May 08, 2013

Congressional Republicans have launched their latest salvo against the Affordable Care Act with an updated version of their "Obamacare Burden Tracker." The regulatory tally claims that employers, healthcare providers, and families will spend nearly 190 million hours per year on compliance efforts and new paperwork. More inside.
 

SEC Under Fire for Failing to Curb Mandatory Arbitration Clauses

May 07, 2013

A group of state securities regulators is calling on the SEC to limit or prohibit the practice by broker-dealers and investment advisers of requiring clients to sign mandatory arbitration clauses. Critics say the clauses harm investors by limiting their legal options when disputes arise. More details inside.
 

Appeals Court Ruling Could Drag Out Conflict Minerals Lawsuit

May 02, 2013

Last month a U.S. appeals court dismissed an oil industry lawsuit over a regulation that requires oil, gas, and mining companies to report government payments for extraction rights. That ruling may also be a setback for a similar legal challenge over the mandated disclosure of Congo-mined conflict minerals used by manufacturers. More details inside.
 

SEC Advances New Cross-Border Swaps Rules, Revisits Delayed Ones

May 01, 2013

The Securities and Exchange Commission has proposed new rules for cross-border, security-based swap transactions, aiming to avoid overlapping and contradictory regulations. The proposal, which addresses concerns voiced by overseas regulators, allows a substituted compliance framework for global market participants. More details inside.
 

FTC Issues Guidance for Amended Children's Privacy Rules

May 01, 2013

The Federal Trade Commission has answered a series of common questions on the Children's Online Privacy Protection Act, which is set to take effect on July 1. The new guidance could be an indication that the FTC will not delay the compliance deadline until 2014, as business groups had sought. More details inside.
 

Appeals Court Dismisses Oil Industry Lawsuit Against SEC

April 29, 2013

A federal appeals court has dismissed a lawsuit seeking to overturn a regulation that requires oil, gas, and mining companies to report payments to governments for extraction rights. As the case now heads to a lower court, Congress is considering a bill that would exempt oil and gas companies that drill in Mexico from the disclosure requirement. More inside
 

Brown-Vitter Bill Boosts Big Bank Capital Reserves to 15 Percent

April 25, 2013

Sens. Sherrod Brown (D-Ohio) and David Vitter (R-La.) have unveiled long-anticipated legislation they claim would end "too big to fail" bank policies. Their proposed bill subjects some of the largest banks to a 15 percent capital reserve, and pushes the United States to move past the international banking accord known as Basel III. Details inside.
 

FCA Details Approach to Investigating Regulatory Failures in U.K.

April 19, 2013

Responding to inadequacies and missteps in the former Financial Services Authority's handling of LIBOR manipulation and big bank failures, the Financial Conduct Authority, a newly formed financial watchdog in the U.K., has detailed its approach to investigating and reporting on regulatory failures.
 

Fed Hopes to Raise $440 Million With Proposed Big Bank Fees

April 18, 2013

To fund its supervision of big banks, the Federal Reserve Board of Governors has proposed hefty new regulatory fees on big banks intended to raise as much as $440 million. Banks with $50 billion or greater in total consolidated assets would be required to pay an assessment of approximately $1 million; those with assets of $1 trillion would pay approximately $22 million. More inside.
 

Cheer and Jeers Target California Bill Demanding Big Data Disclosues

April 18, 2013

California is once again a battleground as privacy advocates and Internet companies square off over data collected from consumers online and through other means. A pending bill would make the state the first in the nation to give consumers the right to demand reports on what data is collected from them, how it is shared, and with whom.
 

SEC Commissioner Aguilar Calls for End to Mandatory Arbitration Clauses

April 17, 2013

SEC Commissioner Luis Aguilar in a speech last week before state securities regulators called for an end to mandatory arbitration clauses. Such clauses, found in most contracts between brokerage firms and their clients, require clients to settle any claims in an arbitration forum rather than the courts. Details inside.
 

Regulators Demand More Risks Be Considered in Banks' Living Wills

April 17, 2013

Citing concerns uncovered in 2012 resolution plans filed by 11 of the largest banks, the Federal Reserve Board and the Federal Deposit Insurance Corp. have announced additional demands on what must be included in the next round of "living wills." They also extending the 2013 filing deadline by three months.
 

Study: Securities Class-Action Filings at a Crossroads

April 16, 2013

Companies faced fewer federal securities class action lawsuits in 2012 compared to the same period last year, according to recent analysis by PwC. Details inside.
 

New U.K. Regulator Details Millions of Consumer Bank Complaints

April 15, 2013

Topping the list of banks in the U.K. with the largest number of customer complaints for the second half of 2012 were Barclays, Lloyds, and Bank of Scotland. Driving much of that dissatisfaction, according to the newly launched Financial Conduct Authority, were issues involving payment protection insurance on charge cards and loans.
 

Big Budget Boost for Regulators Included in White House Proposal

April 11, 2013

The White House's proposed budget for Fiscal Year 2014 includes substantial funding increases for the Securities and Exchange Commission and the Commodity Futures Trading Commission. The extra funding is hardly guaranteed though, with Republican critics, including two CFTC commissioners, questioning the need. More details inside.
 

SEC and CFTC to Enforce Identity Theft 'Red Flag' Rules

April 10, 2013

The Securities and Exchange Commission and the Commodity Futures Trading Commission adopted rules requiring broker-dealers, mutual funds, investment advisers, and other financial institutions and creditors to adopt programs for detecting and responding to cases of identity theft. The rules require financial firms to provide staff training and oversight of service providers. More inside.
 

EU Joins U.S. With Disclosure Demands For Oil and Mining Firms

April 09, 2013

The European Union is adding new requirements for oil, gas, and mining companies to report payments made to governments for extraction rights on a country and project basis. Meanwhile, regulators in the United States head to court to defend a similar rule that was adopted as part of the Dodd-Frank Act. More details inside.
 

U.S. Chamber Details Long Wish List of Dodd-Frank Changes

April 09, 2013

As part of a new campaign to rethink and revise the Dodd-Frank Act, the U.S. Chamber of Commerce is pushing for several changes including combining the Securities and Exchange Commission and the Commodity Futures Trading Commission, ditching the Volcker Rule, and repealing conflict minerals disclosure. It also wants to end any plans for exploring mandatory audit-firm rotation. More details inside.
 

Senate Confirms Mary Jo White as New SEC Chairman

April 08, 2013

Mary Jo White has been confirmed as the new chairman of the Securities and Exchange Commission by unanimous consent. The former New York prosecutor benefited from bipartisan support that emerged during a confirmation hearing before the Senate Banking Committee. More inside.
 

Fed Sets Stage For Enhanced Oversight of Nonbank Financial Companies

April 08, 2013

As a prelude to the Financial Stability Oversight Council issuing long-anticipated designations of "systemically important financial institutions," a final rule issued last week by the Federal Reserve Board has detailed the criteria used when considering that designation for a "nonbank financial company."
 

Four Fined $15 Million as CFPB Targets 'Kickbacks' by Mortgage Insurers

April 08, 2013

Fining four companies a combined $15.4 million in penalties, the Consumer Financial Protection Bureau has announced enforcement actions that target "improper kickbacks" paid by mortgage insurers to mortgage lenders in exchange for business. More details inside.
 

SEC Embraces Social Media for Company Announcements

April 02, 2013

The SEC announced that companies can now use social media outlets such as Facebook and Twitter to disseminate material information—including quarterly earnings data—without running afoul of Regulation Fair Disclosure as long as they alert investors which outlets will be used. The move constitutes an about-face for the SEC, which has launched investigations into companies, including Netflix, for statements made on social media Websites. More inside.
 

SEC Advisory Group Calls for Small-Company Exchange

April 02, 2013

The SEC Advisory Committee on Small and Emerging Companies, formed in 2011, released a report last week calling for the creation of a new small-company equity market. The companies, defined by those with a market capitalization of less than $250 million, would also be subject to a separate set of potentially less onerous regulations and fewer disclosures. Details inside.
 

CFPB's Controversial Complaint Database Goes Live With 90,000 Records

March 28, 2013

Last week the Consumer Financial Protection Bureau announced that its database of 90,000 searchable complaints about financial products and services from mortgage providers, credit card companies, and others is now live and available for public use. Included with the data are company responses.
 

FSA Spends Final Days Crafting Guide for Successor, Bank Capital Rules

March 28, 2013

The Financial Services Authority went out with a bang. Last week it published a business plan and risk outlook for the Financial Conduct Authority, which replaced it on April 1. It also pushed out new policies that allow smaller banks to better compete with Britain's "Big Four."
 

In a Twist, CFPB Rule Favors Credit Card Companies Over Consumers

March 27, 2013

The Consumer Financial Protection Bureau, which has aggressively pursued questionable practices by credit card companies, has issued rulemaking that may benefit them at the expense of customers. The rule limits restrictions on up-front fees assessed prior to opening an account.
 

U.K. Regulator Finalizes LIBOR Reform

March 27, 2013

Britain's Financial Services Authority finalized new rules in March that bring regulatory oversight of LIBOR under the scope of the newly created Financial Conduct Authority. Banks must appoint an individual, approved by the FCA, to oversee compliance and will also be required to put a clear conflicts-of-interest policy in place.
 

Nasdaq's Compensation Plan for Botched Facebook IPO Draws Fire

March 26, 2013

The Securities and Exchange Commission has approved Nasdaq OMX Group's plan to pay $62 million in compensation to firms that suffered losses during its botched execution of Facebook's initial public offering in May. The plan has garnered plenty of criticism, however, including from banking giant UBS. Estimating its losses at $350 million, it described the payout as "woefully inadequate."
 

Bills Chipping Away at Dodd-Frank Hop One Hurdle, Next Vote April 11

March 25, 2013

Some of the most extensive changes to the Dodd-Frank Act proposed yet moved closer to reality when the House Agriculture Committee approved seven legislative proposals last week to amend the landmark reform law. While proponents say these are necessary tweaks, critics see them as yet another effort by Wall Street to undermine protections.
 

Leveraged Lending Guidance Updated for First Time Since 2001

March 21, 2013

Citing rapid growth in leveraged lending and deteriorating underwriting standards, federal bank regulators have updated guidance on such transactions for the first time in more than a decade. The agencies suggest that management and the board of directors identify their risk appetite for leveraged finance, establish appropriate credit limits, and ensure prudent oversight.
 

Equity-Based Incentives Not Executive Loans, Says 'Landmark' SOX Guidance

March 21, 2013

A "no-action" letter issued by the Securities and Exchange Commission says a company's use of a novel equity-based incentive compensation does not violate a Sarbanes-Oxley Act prohibition on providing personal loans to executives. An EBIC plan offered by RingsEnd Partners relies on equity acquired by using funds loaned by a third party. Details inside.
 

O'Malia Slams CFTC's Swaps Data as Unusable, Servers as Unstable

March 19, 2013

A bungled reporting process, unusable data, and crashing servers have thwarted the Commodity Futures Trading Commission's efforts to monitor swap trade data, according to Commissioner Scott O'Malia. "The problem is so bad that staff cannot find the 'London Whale' in the current data files," he says.
 

White, Cordray Nominations Advance to Full Senate Vote

March 19, 2013

Mary Jo White seems well on her way to be the next chairman of the Securities and Exchange Commission, with a 21-1 Senate Banking Committee vote that advances her nomination to the full Senate. Richard Cordray's continued leadership at the Consumer Financial Protection Bureau, however, is less certain, as he squeaked by with a 12-10 vote.
 

Guidance Issued for Social Media Reviews by Investment Companies

March 19, 2013

Mutual funds and other investment companies are submitting social media materials for regulatory review more often than necessary, according to new guidance from the SEC about exactly when such reviews are needed. The guidance includes examples of when submitting reviews is required, and when it is not. More details inside.
 

Report: JPMorgan Manipulated Risk Controls, Thwarted Regulators

March 15, 2013

Executives past and present of JPMorgan Chase were grilled at a Senate hearing Friday, following up on a scathing 300-page report that dissected extensive risk and control failures that culminated in a $6 billion trading loss at the bank last year. The so-called 'whale trades' in London were an immense black eye for the bank.
 

CFPB Seeks Greater Oversight of Student Loan Marketplace

March 15, 2013

A proposed a rule would give the Consumer Financial Protection Bureau new oversight of non-banks that service student loans, subjecting many of them to the same oversight already demanded of the large banks they compete against. The proposal calls for examinations of the complete cycle of private student loan debt, from origination through servicing to debt collection and credit reporting.
 

Cordray and White Make Their Case to Be Top Regulators

March 12, 2013

During a two-hour confirmation hearing before the Senate Banking Committee, Richard Cordray and Mary Jo White, President Obama's nominees to head the Consumer Financial Protection Bureau and Securities and Exchange Commission, took turns answering questions about accountability, pending regulations, and the oversight of too-big-to-fail firms. Committee votes on their confirmations could come as soon as Tuesday.
 

Mandatory Clearing Begins Today for Swap Dealers, Private Funds

March 11, 2013

As of March 11, swap dealers, major swap participants, and private funds are required to begin clearing their credit default swaps and interest rate swaps. CFTC Chairman Gary Gensler described this initial batch of clearing requirements as "one of the most significant Dodd-Frank Act reforms"
 

Nasdaq Seeks Rule Change Requiring Internal Audit Function

March 08, 2013

The Securities and Exchange Commission is seeking comments on a proposed Nasdaq rule change that will require its listed companies to establish an internal audit function. The intent is to ensure that management is provided with ongoing information about risk management processes and can adequately identify and remedy any weaknesses.
 

SEC Proposes Rule to Better Battle Unexpected Market Meltdowns

March 07, 2013

The SEC has proposed a new rule to compel stock exchanges and other clearinghouses to better prepare themselves for sudden disruption, be they electronic menaces such as flash crashes or natural disasters like last year's Hurricane Sandy. SEC Chairman Elisse Walter said the rule is necessary because of "extremely fast, interconnected systems" creating poorly understood risks.
 

Nomination Hearings for Cordray and White Begin on Tuesday

March 07, 2013

Mary Jo White will face the Senate Banking Committee this week to testify on why she should be confirmed as chairman of the SEC. In prepared testimony she emphasized her time as a vigorous prosecutor. Robert Cordray will also testify as he looks to be formally confirmed as director of the Consumer Financial Protection Bureau, which he has headed since a January 2012 recess appointment. Excerpts from their advance testimony inside.
 

Occupy the SEC Sues Regulators Over Volcker Rule Delay

March 04, 2013

Occupy the SEC, an offshoot of the Occupy Wall Street protests, is suing financial regulators over their ongoing impasse on finalizing the Volcker Rule, a Dodd-Frank Act mandated ban on proprietary trading by commercial banks. The group argues that, by law, the Volcker was required to be finalized by October, 2012. More details inside.
 

Globally, Compliance Teams Juggle Regulatory and Board Demands

March 04, 2013

A global survey of compliance personnel by Thomson Reuters finds many struggling to balance their resources with growing regulatory demands and the needs of their Board of Directors. Specific to the U.S., it found compliance pros spending less time than other countries preparing board reports, but devoting much more of their workweek to consulting with lawyers.
 

Regulators and Prosecutors Gird for Sequester Cuts

March 01, 2013

The dreaded sequester has arrived, and regulators—including the Securities and Exchange Commission—may soon need to figure out how to trim as much as 8 percent off budgets they already claim are too meager for the job at hand. The good news for bank regulators is that their budgets are among those spared from across-the-board cuts.
 
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