Are you in compliance?

Don't miss out! Sign up today for our weekly newsletters and stay abreast of important GRC-related information and news.

Get updates on Compliance Week offerings, including new features, databases, research, and other resources, along with announcements of upcoming Webcasts, conferences, seminars, CPE/CLE opportunities and more.

Published every Thursday, Compliance Week Europe offers a condensed summary of risk, audit, and compliance news either originating in Europe, or of special interest to European compliance professionals. This newsletter will follow developments by the European Commission, as well as those of national governments across the region, or any U.S.-based news that might have consequence across the Atlantic. Frequency: weekly; Thursday a.m.

A fresh edition of Compliance Week delivered via e-mail and online every Tuesday morning, relentlessly focused on the disclosure, reporting and compliance requirements of our 25,000+ paying subscribers.

Published every Friday, Compliance Weekend was launched at the behest of subscribers, and offers a quick Plain English review of the week's key developments. We hope you enjoy this supplement to Compliance Week's Tuesday edition.

SEC Acts on Rules for Mine Safety, Net Worth; Stalls on Volcker

December 28, 2011

Perhaps not a creature was stirring in your house just before Christmas last week, but the Securities and Exchange Commission adopted several more rules relevant to the Dodd-Frank Act on mine safety disclosure and how to define accredited investors.

Adopted on Dec. 21 without any formal meeting of SEC commissioners, the rules implement Section 1503 of Dodd-Frank (mine safety disclosure) and Section 413(a) of Dodd-Frank (the net worth of accredited investors). Both rules were originally proposed in January 2011 and have been lingering quietly on the SEC's rule-making schedule since then. The mine-safety rules will go into effect 30 days after publication in the Federal Register, the accredited investor rules 60 days after publication.

The SEC and several other federal agencies also announced that they would extend the public comment period on the proposed Volcker Rule—a crucial and hugely controversial part of the Dodd-Frank Act, which would bar banks from many types of risky trades—for another month, from Jan. 13 to Feb. 13.

The 298-page proposal, first unveiled in October, foremost prohibits banks from “trading on their own account,” to deter them from making risky investments such as what led to the financial crisis in 2008. (The proposal also contains a series of exemptions for when proprietary trading is acceptable.)

The proposal also calls for banks to establish an internal compliance program to monitor suspicious activities at trading desks. Member banks with significant trading activity would be required to collect measurable data and submit them to the supervisory agencies. That data would be used by regulators to identify trading violations. 

The Volcker Rule is scheduled to take effect next July, whether or not regulations are finished and adopted by then. The SEC alone, however, has already received scores of comments on the proposal, and the numerous agencies that must adopt a final version of the rule (the Federal Deposit Insurance Corp., the Federal Reserve, the Office of the Comptroller of the Currency and more) decided to allow more time for public input.

New Rules

The mine-safety disclosure rules apply to all issuers that own or operate any mine in the United States. For each mine the issuer does own, it must include the following on all of its quarterly or annual reports:

  • The total number of health or safety violations the mine has received;
  • The total number of orders the mine has received from the Mine Health and Safety Administration, under numerous sections of the Mine Act;
  • The total penalties and other assessments the MHSA has proposed for violations of the Mine Act;
  • Any warnings of patterns of failure to abide by health and safety rules for mine operations;
  • The total number of mining-related fatalities; 
  • A summary of pending legal action from the Federal Mine Safety and Health Review Commission.

What's more, the issuer must also file a Form 8-K disclosure for the following two circumstances:

  • An imminent-danger order issued by the MHSA under Section 107 of the Mine Act;
  • Any warning from the MHSA that the mine either has a pattern of health or safety violations, or has the potential for such a pattern.

The accredited-investor rule, meanwhile sets the net worth of accredited investors (those deemed eligible to invest in hedge funds) at $1 million—but excludes the value of the investor's primary residence when calculating that person's net worth. The Dodd-Frank Act also requires the SEC to review that threshold every four years starting from the year the law was passed, so the next review will happen in 2014. The SEC will have the power to adjust that $1 million threshold at that time.