Corporate & Financial Weekly Digest

Corporate & Financial Weekly Digest

SEC Division of Corporation Finance Issues 12 New and Revised C&DIs Regarding Non-GAAP Measures

Posted in SEC/Corporate

As noted in the May 13 edition of Corporate and Financial Weekly Digest, SEC Chair Mary Joe White, Deputy Chief Accountant Wesley R. Bricker and other high-ranking members of the staff of the SEC have expressed concerns regarding non-GAAP disclosure practices. Correspondingly, on May 17, the Securities and Exchange Commission’s Division of Corporation Finance issued 12 new and revised Compliance and Disclosure Interpretations (C&DIs) relating to the use of non-GAAP financial measures. Continue Reading

PCAOB Re-Proposes Auditor Reporting Standard to Enhance Auditor Reports

Posted in SEC/Corporate

On May 11, the Public Company Accounting Oversight Board (PCAOB) re-proposed its standard for information that auditors are required to provide in their audit opinions. As noted in its press release regarding the re-proposed standard, the PCAOB desires to make auditor’s reports more informative for investors. In 2013, the PCAOB proposed a standard that would require a firm to disclose in its audit reports critical audit matters arising from an audit of an issuer’s financial statements. The PCAOB received extensive comments in response to its original proposal and held a public roundtable to discuss the previously proposed standard and comments received. As a result, the PCAOB has re-proposed the standard with modifications to its original proposal. Continue Reading

CFTC Issues Residual Interest Deadline Report

Posted in CFTC, Derivatives

On May 13, the Commodity Futures Trading Commission’s Division of Swap Dealer and Intermediary Oversight (DSIO) issued the Residual Interest Deadline for Futures Commission Merchants Report (Report). The Residual Interest Deadline is the time by which a futures commission merchant (FCM) must assure that it is holding in its customer segregated accounts a sufficient amount of its own funds (i.e., its residual interest, that is at least equal to the amount by which its customers’ segregated accounts, in the aggregate, are undermargined). The Residual Interest Deadline is currently 6:00 p.m. Eastern on the date of settlement. DSIO staff determined that changing the Residual Interest Deadline to the time of settlement or another time would not be practicable for customers or FCMs and, therefore, recommended that the Residual Interest Deadline remain at 6:00 p.m.

Comments on the Report may be submitted until June 13.

A copy of the report is available here.

PRA Publishes Meeting Minutes With Notes on the Application of Best Execution to FX Derivatives and FX Spot Transactions

Posted in Derivatives, UK Developments

On May 16, the UK Prudential Regulation Authority published the minutes (Minutes) of a Foreign Exchange Joint Standing Committee meeting held on April 22.

Notably, the Minutes summarize a presentation given by the Financial Conduct Authority (FCA) as to the application of best execution obligations under the Markets in Financial Instruments Directive (MiFID) to foreign exchange (FX) derivatives and FX spot transactions. The FCA noted that FX derivatives, and FX spot transactions that are ancillary to transactions with financial instruments, are already covered by MiFID best execution obligations. However the FCA also confirmed that for all other FX spot transactions outside the scope of MiFID, the obligations owed vary according to the trading relationship between market participants and clients. Continue Reading

Cybersecurity Directive Adopted by the EU Council

Posted in EU Developments

On May 17, the Council of the EU (Council) announced it had formally adopted the new EU Directive concerning measures for a high common level of security for network and information systems (Cybersecurity Directive).

The Cybersecurity Directive establishes EU-wide security and incident notification requirements for operators of essential services (such as banking and financial market infrastructures) and digital service providers (such as online marketplaces and online search engines). It also establishes obligations for EU Member States to adopt national strategies on the security of network and information systems and to designate national authorities for similarly related tasks. Continue Reading

European Commission Adopts MiFIR Delegated Act

Posted in Derivatives, EU Developments

On May 18, the European Commission (EC) adopted a delegated act to supplement the Markets in Financial Instruments Regulation (MiFIR). The delegated act is in the form of a regulation (Delegated Regulation) and covers definitions, transparency, portfolio compression and supervisory requirements on product intervention and position management under MiFIR. Continue Reading

SEC Approves PCAOB Rules Requiring Disclosure of Audit Participants

Posted in SEC/Corporate

On May 9, the Securities and Exchange Commission adopted the proposed new rules and related amendments to auditing standards (Rules). As reported in the January 8 edition of Corporate and Financial Weekly Digest, the Public Company Accounting Oversight Board (PCAOB) adopted and proposed the Rules for SEC approval to provide investors with more information about who participates in public company audits. Continue Reading

SEC Deputy Chief Accountant Discusses Use of Non-GAAP Measures

Posted in SEC/Corporate

In a May 5 speech at the 2016 Baruch College Financial Reporting Conference, Wesley Bricker, deputy chief accountant at the Securities and Exchange Commission, discussed his observations regarding the use of non-generally accepted accounting principles (GAAP) financial measures, the transition to new standards for revenue recognition and leases, and the Financial Accounting Standards Board’s (FASB) financial instruments’ credit impairment proposal. Mr. Bricker’s sentiments regarding certain non-GAAP disclosure practices echo concerns expressed by others at the SEC, including Chair Mary Joe White, Chief Accountant Jim Schnurr and Director of the Division of Corporation Finance Keith Higgins. Continue Reading

FINRA Publishes Guidance With Respect to Reporting Large Options Positions

Posted in Broker-Dealer

On May 5, the Financial Industry Regulatory Authority released Regulatory Notice 16-17 (Notice), which pertains to large options positions reporting (LOPR) under FINRA Rule 2360(b)(5) and other options exchange rules. The Notice provides an overview of applicable LOPR requirements and consolidates previously issued guidance.  Continue Reading

CFTC Proposes to Amend RTO-ISO Order

Posted in CFTC

The Commodity Futures Trading Commission has proposed to amend its order exempting specified electric energy-related transactions administered by regional transmission organizations (RTOs) and independent system operators (ISOs) from certain provisions of the Commodity Exchange Act (CEA). As set forth in the order, these transactions currently are exempt from all provisions of the CEA with the exception of the CFTC’s general anti-fraud and anti-manipulation authority and scienter-based prohibitions under CEA Sections 2(a)(1)(B), 4(d), 4b, 4c(b), 4o, 4s(h)(1)(A), 4s(h)(4)(A), 6(c), 6(d), 6(e), 6c, 6d, 8, 9 and 13, and any regulations promulgated thereunder. Continue Reading