October 2016
Greetings,
We are pleased to release MaloneBailey's October 2016 newsletter highlighting recent SEC and FASB updates and proposals. Please note that the updates provided in this newsletter are not a comprehensive list. We have selected the updates and proposals that we believe may be of relevance to you. Our goal is to provide you with resources to keep you informed of the ever-changing rules and regulations pertaining to regulatory and accounting matters.
We encourage you to visit the SEC and FASB websites for more information as well as a complete list of updated rules and regulations and proposals. We invite you to contact us should you have any questions about the information provided in this issue. You can find a list of MaloneBailey partners and their contact information at the end of this newsletter.
For easy navigation, please refer to the 'In This Issue' section, which contains a hyperlinked table of contents of rule and regulation updates and proposals that may affect you. We invite you to visit our website to review archived versions of this newsletter containing past SEC and FASB updates and proposals.
The MaloneBailey Team
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This Issue
SEC Updates & Proposals
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Summary -
Andrew Ceresney, Director of the SEC's Division of Enforcement, recently spoke at the "Sixteenth Annual Taxpayers Against Fraud Conference" held in Washington, D.C. Mr. Ceresney discussed the success of the SEC's whistleblower program noting the "success of the program can be seen, in part, in the over $107 million we have paid to 33 whistleblowers for their valuable assistance, in cases with more than $500 million ordered in sanctions. But it can also be seen in my daily interactions with enforcement teams who when I ask the question of how an investigation began, often respond by pointing to a whistleblower."
Highlights of Mr. Ceresney's remarks included:
- The SEC has taken significant actions to ensure that employees feel secure in reporting wrongdoing. The SEC has brought its first settled action under the anti-retaliation provisions of the Dodd-Frank Act, and four settled actions against companies for violating Rule 21F-17, which prohibits anyone from taking any action to impede communications with the SEC about possible securities law violations.
- The bottom line is that in its short history, the SEC's whistleblower program has had tremendous impact and, as imitation is the sincerest form of flattery, other domestic and foreign regulators have sought to replicate the successes of its program.
- Issuer reporting and disclosure cases are one category of cases where whistleblower assistance is extremely helpful. Last fiscal year, about 18% of all whistleblower complaints we received involved issuer reporting and disclosures and, since the first full fiscal year of the whistleblower program's operation, the Enforcement Division has seen tips in this area increase approximately 25%. This continues to be the most common type of tip.
- The SEC has made significant awards to whistleblowers recognizing that they provide critical information at all phases of its investigatory processes. Whistleblowers should not shy away from providing us information, even if the SEC has an investigation ongoing.
- While whistleblowers can engage with the SEC without the assistance of counsel, counsel experienced in whistleblower representations can help with up-front triage of tips to identify those that have a nexus with the federal securities laws and that may have merit. And they can work with whistleblowers going forward to identify information that will be important to us and that will allow us to advance our investigations.
For more information, click here.
© 2016 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
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Staff Speech, Equity Market Structure in 2016 and for the Future by Mary Jo White, SEC Chair
Summary - SEC Chair Mary Jo White recently spoke at Security Traders Association's "83rd Annual Market Structure Conference" held in Washington, D.C. Chair White reported on some of the SEC's progress on both targeted enhancements to tackle issues with the operational integrity of U.S. markets, and the SEC's consideration of more fundamental market structure questions. Specific topics discussed by Ms. White included:
- Regulation SCI;
- Improvements to critical market infrastructure;
- Enhancements to volatility moderators;
- Further strengthening of market operations;
- Enhancing transparency in trading venues;
- The consolidated audit trail; and
- Addressing fairness and efficiency in algorithmic trading.
For more information, click
here.
© 2016 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
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Request for Comment on Subpart 400 of Regulation S-K Disclosure Requirements Relating to Management, Certain Security Holders and Corporate Governance Matters
Summary
- The SEC announced that it is seeking public comment on disclosure requirements in Subpart 400 of Regulation S-K, including those relating to management, certain security holders, and corporate governance matters.
The request for comment is part of the Disclosure Effectiveness Initiative, which is a broad-based staff review of the disclosure requirements and the presentation and delivery of the disclosures. The request for comment also will inform the Commission's study on Regulation S-K, which is required by the Fixing America's Surface Transportation (FAST) Act.
The public comment period will remain open for 60 days following publication of the comment request in the Federal Register.
For more information, click here.
© 2016 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
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Summary
- The SEC has issued for public comment a proposed rule and form amendments that would require registrants to include a hyperlink to exhibits in their filings. The proposed amendments would require registrants that file registration statements and periodic and current reports that are subject to the exhibit requirements under Item 601 of Regulation S-K, or that file on Forms F-10 or 20-F, to include a hyperlink to each exhibit listed in the exhibit index of the filings. The amendments would also require that registrants submit all of these filings in HyperText Markup Language format.
Comments on the proposal are due 45 days following publication in the Federal Register.
For more information, click here.
© 2016 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
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Disclosure of Order Handling Information
Summary
- The SEC has issued for public comment a proposed rule, Disclosure of Order Handling Information. This proposal would amend Rules 600 and 606 of Regulation National Market System ("Regulation NMS") under the Securities Exchange Act of 1934 ("Exchange Act") to require additional disclosures by broker-dealers to customers about the routing of their orders. Specifically, with respect to institutional orders, the SEC is proposing to amend Rule 606 of Regulation NMS to require a broker-dealer, upon request of its customer, to provide specific disclosures related to the routing and execution of the customer's institutional orders for the prior six months. The SEC also is proposing to amend Rule 606 of Regulation NMS to require a broker-dealer to make publicly available aggregated information with respect to its handling of customers' institutional orders for each calendar quarter. With respect to retail orders, the SEC is proposing to make targeted enhancements to current order routing disclosures under Rule 606 by requiring limit order information to be broken down into marketable and non-marketable categories, requiring the disclosure of the net aggregate amount of any payment for order flow received, payment from any profit-sharing relationship received, transaction fees paid, and transaction rebates received by a broker-dealer from certain venues, requiring broker-dealers to describe any terms of payment for order flow arrangements and profit-sharing relationships with certain venues that may influence their order routing decisions, and eliminating the requirement to divide retail order routing information by listing market. In connection with these new requirements, the Commission is proposing to amend Rule 600 of Regulation NMS to include a number of newly defined terms which are used in the proposed amendments to Rule 606. The SEC is also proposing to amend Rules 605 and 606 of Regulation NMS to require that the public order execution and order routing reports be kept publicly available for a period of three years and to make conforming changes to Rule 607.
Comments on the proposal are due 60 days from publication in the Federal Register.
For more information, click here
.
© 2016 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
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FASB Accounting Standards Update No. 2016-15,
Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments
Summary -
The FASB has issued Accounting Standards Update (ASU) No. 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments, to address diversity in how certain cash receipts and cash payments are presented and classified in the statement of cash flows.
The amendments provide guidance on the following eight specific cash flow issues:
- Debt Prepayment or Debt Extinguishment Costs;
- Settlement of Zero-Coupon Debt Instruments or Other Debt Instruments with Coupon Interest Rates That Are Insignificant in Relation to the Effective Interest Rate of the Borrowing;
- Contingent Consideration Payments Made after a Business Combination;
- Proceeds from the Settlement of Insurance Claims;
- Proceeds from the Settlement of Corporate-Owned Life Insurance Policies, including Bank-Owned;
- Life Insurance Policies;
- Distributions Received from Equity Method Investees;
- Beneficial Interests in Securitization Transactions; and
- Separately Identifiable Cash Flows and Application of the Predominance Principle.
The amendments are effective for public business entities for fiscal years beginning after December 15, 2017, and interim periods within those fiscal years. For all other entities, the amendments are effective for fiscal years beginning after December 15, 2018, and interim periods within fiscal years beginning after December 15, 2019. Early adoption is permitted, including adoption in an interim period.
The amendments should be applied using a retrospective transition method to each period presented. If it is impracticable to apply the amendments retrospectively for some of the issues, the amendments for those issues would be applied prospectively as of the earliest date practicable.
For more information, click
here
.
© 2016 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
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FASB Proposed Accounting Standards Update 2016-340 - Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20) - Premium Amortization on Purchased Callable Debt Securities
Summary -
The FASB has issued a proposed ASU, Receivables - Nonrefundable Fees and Other Costs (Subtopic 310-20): Premium Amortization on Purchased Callable Debt Securities. Comments are due by November 28, 2016. The proposed amendments would affect all entities that purchase callable debt securities at a premium.
The proposed amendments amend the amortization period for callable debt securities purchased at a premium. The FASB is proposing to shorten the amortization period for the premium to the earliest call date. The proposed amendments would not require an accounting change for securities purchased at a discount; the discount would continue to be amortized to maturity. Under current generally accepted accounting principles, entities generally amortize the premium as an adjustment of yield over the contractual life of the instrument.
For more information, click
here
.
© 2016 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
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FASB Proposed Accounting Standards Update 2016-320 - Technical Corrections and Improvements to Update No. 2014-09, Revenue from Contracts with Customers (Topic 606) - Additional Corrections
Summary -
The FASB has issued a proposed Accounting Standards Update (ASU), Technical Corrections and Improvements to Update No. 2014-09, Revenue from Contracts with Customers (Topic 606): Additional Corrections. Comments are due by October 4, 2016.
The proposed amendments affect narrow aspects of the guidance issued in ASU 2014-09. The proposed amendments include four additional items that were brought to the FASB's attention after the initial deliberations of proposed ASU, Technical Corrections and Improvements to Update No. 2014-09, Revenue from Contracts with Customers (Topic 606), which was issued in May 2016. The proposed amendments include:
- Issue 1: Loan Guarantee Fees. The proposed amendments would clarify that guarantee fees within the scope of Topic 460 (other than product or service warranties) are not within the scope of Topic 606, Revenue from Contracts with Customers.
- Issue 2: Contract Asset versus Receivable. The proposed amendments would provide a better link between the analysis in Example 38, Case B and the receivables presentation guidance in Topic 606.
- Issue 3: Refund Liability. The proposed amendments would remove from the journal entry in Example 40 the reference to the term contract liability because of concerns that the example indicates that a refund liability should be characterized as a contract liability.
- Issue 4: Advertising Costs. The proposed amendments would reinstate the guidance on the accrual of advertising costs included in Subtopic 340-20 and superseded by ASU 2014-09.
For more information, click
here
.
© 2016 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
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FASB Proposed Accounting Standards Update 2016-310 -
Derivatives and Hedging (Topic 815) - Targeted Improvements to Accounting for Hedging
Summary -
The FASB has issued for public comment a proposed ASU, Derivatives and Hedging (Topic 815): Targeted Improvements to Accounting for Hedging Activities, that would make targeted improvements to the accounting guidance for hedging activities. Stakeholders are encouraged to review and provide comment on the proposed ASU by Tuesday, November 22, 2016.
The proposed ASU sets forth the FASB's recommendations for improving the portrayal of the economic results of an entity's risk management activities, and for simplifying the application of hedge accounting guidance without compromising the quality of financial reporting information provided to investors.
This Exposure Draft contains proposals for improving how the economic results of an institution's risk management activities are portrayed by:
- Expanding the use of component hedging for both nonfinancial and financial risks;
- Refining the measurement techniques for hedged items in fair value hedges of benchmark interest rate risk;
- Eliminating the separate measurement and reporting of hedge ineffectiveness;
- Requiring for cash flow and net investment hedges that all changes in fair value of the hedging instrument included in the hedging relationship be deferred in other comprehensive income and released to the income statement in the period(s) when the hedged item affects earnings;
- Requiring that changes in the fair value of hedging instruments be recorded in the same income statement line item as the earnings effect of the hedged item; and
- Requiring enhanced disclosures to highlight the effect of hedge accounting on individual income statement line items.
Additionally, the Exposure Draft contains proposals to simplify the application of hedge accounting by:
- Providing more time for the completion of initial quantitative assessments of hedge effectiveness;
- Allowing subsequent assessments of hedge effectiveness to be performed on a qualitative basis when an initial quantitative test is required;
- Clarifying the application of the critical terms match method for a group of forecasted transactions; and
- Allowing an institution that elects the shortcut method to continue hedge accounting by using a "long-haul" method to assess hedge effectiveness if use of the shortcut method was not or no longer is appropriate after hedge inception.
To elicit additional feedback on its proposals, the FASB tentatively has scheduled two public roundtable meetings at its Norwalk, Connecticut offices on December 2, 2016. Those interested in participating in one of the roundtables are asked to submit written comments on the proposed ASU by November 4, 2016.
The FASB will determine an effective date for the ASU after redeliberating all comments received during the comment period and from the public round table meetings. Early application of the proposed amendments would be permitted at the beginning of any fiscal year before the effective date.
For more information, click
here
.
© 2016 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
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