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SEC Improves Internal Controls

According to a recent Government Accountability Office (“GAO”) report, the Securities and Exchange Commission’s (“SEC”) internal controls are improving. In fiscal 2015, only six of the SEC’s 58 internal supervisory controls tested had deficiencies. Comparative to the GAO’s 2013 review, the six deficiencies mark a significant reduction from the 27 flaws identified in fiscal 2011. The GAO noted that none of the flaws are likely to inhibit the SEC from ensuring their divisions and offices carry out actions accordingly. Specifically, the watchdog agency found two flaws without clear control activities, three that showed a major element did not align with. Read More.

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New C&DIs Address Pay Ratio Disclosure Rule

Clarifying guidance for pay ratio disclosures, the Securities and Exchange Commission’s Division of Corporate Finance has updated its Compliance and Disclosure Interpretations (“C&DI”): Regulation S-K. The new C&DIs address Release No. 33-9877, Pay Ratio Disclosure, which calls for public companies to disclose the ratio comparing the chief executive officer’s salary with the median pay of a company’s employees. Questions answered in the C&DIs concern the calculation of the median employee compensation, as well as how companies should handle furloughed employees and independent contractors. Public companies will be required to comply with the new pay ratio disclosure requirements in 2018. More. Read More.

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Staff Report on Accredited Investor Definition Issued

The Securities and Exchange Commission (“SEC”) is seeking public comments on its staff report regarding the definition of an “accredited investor.” Prepared by members from the SEC’s Divisions of Corporation Finance and Economic and Risk Analysis, the report discusses the history behind the accredited investor definition and includes the following: Feedback on the definition from public commenters and various committees; Alternative ways to define an accredited investor; Staff recommendations for possible revisions to the current definition; and Analysis of the effect the potential approaches could have on accredited investors. More on the staff report is available in the SEC’s December 18th press release .

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SEC Concerned over Companies Using Non-GAAP Earnings Measures

Public companies’ growing use of non-GAAP earnings measures has caught the attention of Securities and Exchange Commission (“SEC”) Chair Mary Jo White. At a November 17th conference in Washington, D.C., White said the SEC’s Division of Corporation Finance want to make sure that companies’ reliance on non-GAAP measures for presenting better-looking financial results does not mislead investors. In particular, SEC officials want to determine if companies are adequately disclosing why non-GAAP measures provide valuable information regarding their financial conditions and results of operations. White cited the lack of consensus on how companies define certain non-GAAP measured decreases comparability between companies. In. Read More.

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SEC Creates New Office for Division of Economic and Risk Analysis

To support the agency with data-driven risk assessment tools for various activities, the Securities and Exchange Commission (“SEC”) has created a new office within its agency’s Division of Economic and Risk Analysis (“DERA”). Announced last week , the Office of Risk Assessment will continue the DERA’s existing efforts of creating effective risk evaluation tools and models, as well as work in collaboration with SEC market experts. Since being established five years ago, the DERA has led the SEC charge to develop risk assessment tools. For instance, the DERA created a broker-dealer risk assessment tool for SEC examiners to allot resources by evaluating a. Read More.

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Higgins Highlights Corp Fin Initiatives in Congress Testimony

Promoting his division’s current initiatives and directives, the U.S. Securities and Exchange Commission’s (“SEC”) Corp Fin (“the Division”) Director Keith Higgins testified recently in front of the U.S. House of Representatives Committee on Financial Services Subcommittee on Capital Markets and Government Sponsored Enterprises. Some of the notables from Higgins’ testimony included: Review of Registrant Filings: Higgins stated that Corp Fin is dedicated to the financial statements and disclosures of the companies that make up 98 percent of total market capitalization. Based on the work completed thus far in fiscal 2014, Higgins believes the Division’s review of 4,500 reporting companies will be in. Read More.

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