Michael Doan

Archive for the ‘SEC’ tag

“Accredited Investor” definition changes with Wall Street Reform Act

The Corporate & Securities Law blog has a great summary on how the Dodd-Frank Wall Street Reform and Consumer Proctection Act will affect the definition of “accredited investor”. The pertinent points are below:

  • Net worth of $1 million excludes the value of the investor’s primary residence.
  • The SEC can revise the definition for the first four years following enactment of the act.
  • Within the next four years the definition of accredited investor must include an increase to the net worth threshold.
  • SEC is required to review the definition of net worth every four years.
  • the net worth amount will not be go below a $1 million floor.

23 July 2010

Posted in Business

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Bond rating disclosure law: SEC grants six month deferral

Now that the Dodd-Frank bill has been signed into law, issuers of asset-back bonds are required to disclose their credit rankings in their regulatory filings. Credit rating agencies like Moody’s are not happy about this because it subjects them to expert liability , “meaning that they would face the same legal risks as accountants and other parties that participate in bond sales.” Issuers were not able to obtain ratings for inclusion in their flings wit the SEC so the SEC granted issuers a waiver for six months which allows time for implementation of the law.

The article briefly mentions that issuers will consider an alternatives to this a law by using Rule 144a but doesn’t adequately explain what 144a is. A good explanation of 144a is here.

23 July 2010

Posted in Accounting,Business

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Dell pays $100MM to SEC for lack of disclosure

Financial statement disclosures in a public filing should allow an investor to see the company through the “eyes of management”. Dell’s management and the investors were seeing different things:

SEC said [Dell] also failed to disclose to investors large payments it received from Intel Corp. in exchange for not using central processing units made by Intel’s main rival, Advanced Micro Devices Inc

22 July 2010

Posted in Accounting,Business

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Say-on-Pay Provision of Wall Street Reform Bill affects Company Reporting

The Dodd-Frank Wall Street Reform and Consumer Protection Act, will have an impact on public companies. 

The bill, if passed, calls for shareholder votes (PDF) on executive compensation. The “say-on-pay” provision of the bill may alter the annual proxy process. The bill calls for hareholder votes on executive pay to take place within six months of the bill’s enactment. The SEC will have to act quickly to implement the bill.

A “say-on-pay” rule already applies to recipients of government aid under the Troubled Asset Relief Program. The current bill extends it to all public companies; however, it does allow the SEC to exempt an issuer or class of issuers. 

The bill also require public companies to: 

  • hold shareholder votes every three years on executive compensation
  • consider increasing the frequency to annual or bi-annual votes every six years 

Shareholders may make proposals, independent of management, on executive compensation practices. These proposals may be off-cycle; that is, they don’t have to fall within the three year and six year cycles noted above. 

The bill also requires that compensation committee members be independent. 

Posted via email from Michael Doan

6 July 2010

Posted in Accounting

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SEC takes criticism for shell company filings

Imagine a public company, registered with the SEC, that has no revenues and limited assets (if any). That’s a fair description of your typical public shell company. According to a WSJ article, the SEC is getting heat for allowing these types of companies become registered in the first place but insists that it has “limited powers when it comes to blocking an initial public offering of stock—no matter how flimsy a company may look on paper.”

In a statement, the SEC said it has begun asking new shell companies how they plan to meet federal requirements for preparing audited financial statements. The agency said it also is looking more closely at the role of outside auditors at such companies.

Posted via email from Michael Doan

6 July 2010

Posted in Accounting

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