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SEC Calls for More Uniform Disclosure of European Debt Exposure

Tammy Whitehouse | February 14, 2012

The Securities and Exchange Commission has decided to specify how it wants companies to describe their risks related to the European debt crisis, since so far those disclosures have been, well, all over the map.

SEC staff in the Division of Corporation Finance published “CF Disclosure Guidance: Topic No. 4” last month to address its concerns that financial institutions in particular are making disclosures about their exposure to European sovereign debt holdings that are inconsistent, both in substance and presentation. “We believe this inconsistency may lead to disclosures that lack transparency and comparability for investors,” the staff wrote.

The guidance notes that the SEC has tried putting up “guardrails” around the disclosures through its routine process of reviewing financial statements and commenting on them directly to preparers. Staff members also gave speeches at an accounting conference late last year calling for more focus on disclosing risks related to...

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