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SEC Corp Fin Director Speaks on Applying Securities Laws to Digital Assets

Speaking at the Yahoo Finance All Markets Summit last month in San Francisco, CA, Securities and Exchange Commission (“SEC”) Division of Corporation Finance (“Corp Fin”) director William Hinman discussed how federal securities laws are applied to digital assets. Hinman argued that securities laws apply to digital asset transactions considering that funds are raised under the assumption that promoters will develop their system and that investors expect a return on the instrument. He also noted several factors to consider when determining whether a digital asset is a security. One factor involves considering whether a third party pushes the expectation of a. Read More.

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SEC Deputy Chief Accountant Discusses Impact of Tax Reform

Earlier this month at the 37th annual Securities and Exchange Commission (“SEC”) and Financial Reporting Institute Conference, SEC deputy chief accountant Sagar Teotia spoke on the financial reporting impact of the Tax Cuts and Jobs Act. In particular, Teotia shared his observations on Staff Accounting Bulletin (“SAB”) No. 118, which was issued in January to help public companies and auditors adjust to the tax changes . He noted that SAB No. 118 does not offer companies an option to defer the application of the income tax guidance and splits the accounting for the income tax effects caused by the Act into three “buckets”. Teotia also cautioned that the disclosure guidance under SAB No. 118 offers financial statement users vital information concerning how. Read More.

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SEC Proposes Rolling Back the Volcker Rule

Weeks after President Trump signed the Economic Growth, Regulatory Relief, and Consumer Protection Act , a bill to roll back systemic risk regulations under the Dodd-Frank Act, the Securities and Exchange Commission (“SEC”) is taking aim at reversing another Dodd-Frank rule. In a 3-2 vote on June 5, the SEC issued a proposal to amend the Dodd-Frank Act’s Volcker Rule, which limits banks’ proprietary trading and prohibits them from owning hedge funds and private equity funds. The proposal would create new requirements centered on a bank’s trading activities, with an aim to alleviate the burden small- and mid-sized companies face in complying with the Volcker rule. It would also revise the exemptions. Read More.

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Senate Committee Aide Nominated to Open SEC Seat

Last week, President Trump announced that he would nominate Senate Banking Committee aide Elad Roisman to the open seat on the Securities and Exchange Commission (“SEC”). Currently the chief counsel to Senate Banking Committee chairman Mike Crapo, Roisman was counsel to Daniel Gallagher from 2012-2014 when Gallagher was an SEC commissioner. Crapo stated that Roisman would be a valuable asset to the agency. The seat on the SEC became vacant when commissioner Michael Piwowar announced he would leave the agency when his term ends this month. Piwowar, however, did say he is open to staying until the Senate confirms his. Read More.

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SEC Proposes Changes to Auditor Independence Rules

To address circumstances when auditors borrow funds or issue debt to accrue working capital, the Securities and Exchange Commission (“SEC”) has proposed updates to its auditor independence rules for lending relationships. The proposed amendments include updating Rule 2-01 of Regulation S-X to replace the current 10 percent bright-line shareholder ownership test with what the SEC calls a “significant influence” test and introducing a “known through reasonable inquiry” standard for recognizing the beneficiaries of the audit client’s equity securities. The SEC also wants to change its definition of “audit client” to exclude funds that are otherwise deemed affiliates of the audit. Read More.

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Dodd-Frank Executive Compensation Rules Still Delayed

For the last eight years, the Securities and Exchange Commission (“SEC”) has been working to finish the Dodd-Frank Act’s executive compensation rules. Based on recent comments by William Hinman, the rules are far from being completed. Speaking on April 26 before the House Financial Services Committee’s Capital Markets subcommittee, the director of the agency’s Division of Corporation Finance said the executive compensation rules would not be finished this fiscal year. Minnesota Rep. Keith Ellison pressed Hinman about why the SEC is taking so long to complete the executive compensation rules. During his questioning, Ellison referenced unfinished rules on clawbacks (Release. Read More.

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