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Article
Publication date: 18 September 2007

Edward J. Ferraro

The purpose of this article is to analyze and draw conclusions from recent SEC staff proposals and commissioners' comments and a recent roundtable discussion concerning access to…

235

Abstract

Purpose

The purpose of this article is to analyze and draw conclusions from recent SEC staff proposals and commissioners' comments and a recent roundtable discussion concerning access to foreign exchanges and broker‐dealers by US investors.

Design/methodology/approach

The paper summarizes a proposal by Erik Sirri, Director of the SEC Division of Market Regulation; a proposal by Ethiopis Tafara and Robert J. Peterson, respectively, the Director of the SEC Office of International Affairs and its Senior Counsel; and comments in speeches by Commissioners Roel Campos, Paul Atkins, and Annette Nazareth; and draws conclusions regarding the SEC's current efforts to develop and articulate a strategic approach to mutual recognition.

Findings

As the securities market becomes globalized, there is a growing interest among US investors for foreign securities and for more direct access to foreign broker‐dealers and exchanges. The SEC is determined to remain in the forefront among US government agencies on securities exchange mutual recognition issues, and therefore is pursuing an accelerated agenda to address these issues. The SEC sees its role as not only to function as a bulwark for the protection of US investors but also to take constructive, affirmative steps that serve to strengthen the US capital markets. While the SEC has historically been an advocate for the global convergence of national regulatory standards, it is now considering proposals for a country‐by‐country bilateral approach based upon cooperation among regulators with substantively comparable regulatory regimes.

Originality/value

This paper presents a useful analysis of the direction the SEC is likely to take on the mutual recognition issue by an experienced securities lawyer.

Details

Journal of Investment Compliance, vol. 8 no. 3
Type: Research Article
ISSN: 1528-5812

Keywords

Article
Publication date: 12 April 2011

Edward J. Ferraro

This paper aims to analyze and discuss the implications of the August 2010 decision of the D.C. Circuit Court of Appeals vacating and remanding to the SEC its December 2008 order…

Abstract

Purpose

This paper aims to analyze and discuss the implications of the August 2010 decision of the D.C. Circuit Court of Appeals vacating and remanding to the SEC its December 2008 order approving a proposed fee filed by NYSE Arca, LLC for its depth‐of‐book product ArcaBook. It also seeks to consider the effect on the court's decision of the Dodd‐Frank Act amendments to Section 19(b) of the Exchange Act.

Design/methodology/approach

The paper analyzes the evolution of the SEC's policy regarding SRO market data fees including the 1999 Concept Release on Market Information, the Advisory Committee on Market Information, the effects of decimalization and the 2005 adoption of Regulation NMS. It focuses on market data fee policy in connection with the Commission's decade‐long project to increase the role of competition in the US securities markets, culminating in the 2006 NYSE Arca fee filing, the SEC's 2008 order approving those fees and the NetCoalition decision.

Findings

The court's decision that a cost analysis is not irrelevant to the SEC's review of proposed SRO fee filings brings clarity and finality to a long‐standing dispute within the Commission and the securities industry and identifies a procedure for reaching an economically sound determination of “fair and reasonable” fees for SRO market data.

Practical implications

A cost‐based analysis of SRO market data fee filings is likely to result in a significant decline in market data revenues for those exchanges that charge fees for their data. For the Commission, cost‐based analysis is likely to require a significant reallocation of its regulatory staff and resources.

Originality/value

The paper presents a useful analysis for securities regulatory lawyers and financial analysts and investors following the stock exchange and financial information industries.

Details

Journal of Investment Compliance, vol. 12 no. 1
Type: Research Article
ISSN: 1528-5812

Keywords

Book part
Publication date: 3 September 2014

Ricardo Colón and Héctor G. Bladuell

This paper aims to help auditors manage the risk of Foreign Corrupt Practices Act (“FCPA”) violations of the companies that they audit, particularly those with operations in Latin…

Abstract

Purpose

This paper aims to help auditors manage the risk of Foreign Corrupt Practices Act (“FCPA”) violations of the companies that they audit, particularly those with operations in Latin America.

Methodology/approach

First, the paper describes the relevant provisions of the FCPA. Second, it identifies the common schemes and transactions associated with heightened risk of FCPA liability in Latin America and provides recommendations to minimize this risk. Third, it discusses the responsibilities of auditors under U.S. securities laws and regulations with respect to the FCPA violations of their clients. Finally, it describes the sanctions that auditors could face if they fail to fulfill their responsibilities regarding these FCPA violations. The paper is based on data collected from various documents including laws, cases, accounting and auditing standards, litigation releases, press releases, deferred prosecution agreements, and enforcement actions.

Findings

Auditors have a responsibility under Section 10A(a) of the Exchange Act to design procedures that provide reasonable assurances of detecting the FCPA violations of their clients, which are illegal acts with direct and material effects on the financial statements. In addition, auditors have a responsibility under Section 10A(b) of the Exchange Act to report the violations of the FCPA that they detect during the audit to the appropriate level of management. If management does not take the necessary remedial steps, auditors must report FCPA violations to the U.S. Securities and Exchange Commission. In order to reduce their FCPA-related liability and fulfill their responsibilities under U.S. securities laws and accounting standards, auditors should closely scrutinize transactions with a high risk of FCPA liability. An analysis of FCPA cases occurring in Latin America reveals six categories of transactions with heightened FCPA risk.

Originality/value of paper

While there is much literature regarding a company’s compliance with the FCPA, there has not been much literature about the auditor’s responsibilities with respect to the FCPA violations of their clients. This paper attempts to start bridging this gap by providing guidance to auditors regarding their responsibilities to detect and report FCPA violations.

Details

Accounting in Latin America
Type: Book
ISBN: 978-1-78441-067-4

Keywords

Book part
Publication date: 16 January 2023

Philip C. Sookram

This chapter examines the current state of crypto exchange-traded funds (ETFs). It focuses on issues preventing wider implementation and specific products. ETFs have become a…

Abstract

This chapter examines the current state of crypto exchange-traded funds (ETFs). It focuses on issues preventing wider implementation and specific products. ETFs have become a popular investment vehicle that investors use to help achieve their long-term goals. A recurring theme is that regulators protect individual investors from direct exposure to cryptocurrency, which many view as highly speculative investments. Pressure from institutions and investors for a bitcoin-based ETF made progress in 2021 when Proshares, an ETF specialized investment company, debuted the first-ever bitcoin futures ETF in the United States. This event is the first-time investors could buy a fund on the New York Stock Exchange that tracks derivative futures contracts of bitcoin. This occurrence pushed this digital asset’s spot price to all-time highs, serving as a breakthrough in cryptocurrency history.

Details

The Emerald Handbook on Cryptoassets: Investment Opportunities and Challenges
Type: Book
ISBN: 978-1-80455-321-3

Keywords

Content available
Book part
Publication date: 28 November 2017

Francesco Bellandi

Abstract

Details

Materiality in Financial Reporting
Type: Book
ISBN: 978-1-78743-736-4

Article
Publication date: 1 June 1999

Rocco R. Vanasco

The Foreign Corrupt Practices Act (FCPA) of 1977 and its amendment – the Trade and Competitive Act of 1988 – are unique not only in the history of the accounting and auditing…

17271

Abstract

The Foreign Corrupt Practices Act (FCPA) of 1977 and its amendment – the Trade and Competitive Act of 1988 – are unique not only in the history of the accounting and auditing profession, but also in international law. The Acts raised awareness of the need for efficient and adequate internal control systems to prevent illegal acts such as the bribery of foreign officials, political parties and governments to secure or maintain contracts overseas. Its uniqueness is also due to the fact that the USA is the first country to pioneer such a legislation that impacted foreign trade, international law and codes of ethics. The research traces the history of the FCPA before and after its enactment, the role played by the various branches of the United States Government – Congress, Department of Justice, Securities Exchange commission (SEC), Central Intelligence Agency (CIA) and the Internal Revenue Service (IRS); the contributions made by professional associations such as the American Institute of Certified Public Accountants (AICFA), the Institute of Internal Auditors (IIA), the American Bar Association (ABA); and, finally, the role played by various international organizations such as the United Nations (UN), the Organization for Economic Cooperation and Development (OECD), the World Trade Organization (WTO) and the International Federation of Accountants (IFAC). A cultural, ethical and legalistic background will give a better understanding of the FCPA as wll as the rationale for its controversy.

Details

Managerial Auditing Journal, vol. 14 no. 4/5
Type: Research Article
ISSN: 0268-6902

Keywords

Article
Publication date: 1 April 1999

Thomas C. Newkirk and Ira L. Brandriss

In a high‐profile case that first drew big media headlines last February, a New York brokerage firm and a ring of eight brokers on the floor of the New York Stock Exchange were…

Abstract

In a high‐profile case that first drew big media headlines last February, a New York brokerage firm and a ring of eight brokers on the floor of the New York Stock Exchange were charged with perpetrating a scheme in which they made over $11.1m in illegal profits and at the same time covered their tracks with an elaborate fraud.

Details

Journal of Money Laundering Control, vol. 3 no. 2
Type: Research Article
ISSN: 1368-5201

Article
Publication date: 1 March 2001

JAMES C. YONG

This article is an exploration of the history of the regulation of stock futures leading up to the recent regulatory resolution in which the regulators (SEC and CFTC) share…

Abstract

This article is an exploration of the history of the regulation of stock futures leading up to the recent regulatory resolution in which the regulators (SEC and CFTC) share responsibilities, thus leading to the trading of single stock futures.

Details

Journal of Investment Compliance, vol. 2 no. 2
Type: Research Article
ISSN: 1528-5812

Article
Publication date: 1 January 2004

Susan S. Krawczyk

During 2003, compensation practices for the retail sale of mutual funds came under fire. Recent revelations about failures in the processing of mutual fund breakpoints had…

Abstract

During 2003, compensation practices for the retail sale of mutual funds came under fire. Recent revelations about failures in the processing of mutual fund breakpoints had triggered a more in‐depth investigation into mutual fund marketing and compensation practice by securities regulators, Congress, and the states. This article focuses on the regulation of sales compensation practices primarily as it affects a broker‐dealer selling mutual funds in the retail market. It addresses the regulatory framework for three key compensation practices: (1) the use of non‐cash compensation in connection with mutual fund sales; (2) marketing and compensation arrangements providing enhanced compensation to a selling firm as well as to its sales representatives for the promotion of certain fund securities over others, such as proprietary funds over non‐proprietary funds, preferred funds over non‐preferred funds, and Class B shares over Class A shares; and (3) the use of commissions for mutual fund portfolio trades as an additional source of selling compensation for selling firms, a practice sometimes referred to as ”directed brokerage.“

Details

Journal of Investment Compliance, vol. 4 no. 4
Type: Research Article
ISSN: 1528-5812

Keywords

Article
Publication date: 5 May 2015

Richard J. Parrino, Peter Romeo and Alan Dye

The purpose of this paper is to review the enforcement initiative announced by the US Securities and Exchange Commission (SEC) in September 2014 directed at reporting violations…

287

Abstract

Purpose

The purpose of this paper is to review the enforcement initiative announced by the US Securities and Exchange Commission (SEC) in September 2014 directed at reporting violations of the Securities Exchange Act of 1934 (Exchange Act) by public company officers, directors and significant stockholders. The paper considers the notable features of the first round of SEC enforcement actions pursuant to that initiative and proposes measures public companies and their insiders can adopt to enhance compliance with their reporting and related disclosure obligations under the Exchange Act.

Design/methodology/approach

The paper examines the SEC’s enforcement initiative against the backdrop of the agency’s enforcement activity since 1990 for violations by public company insiders of the reporting provisions of Sections 13 and 16 of the Exchange Act. The paper summarizes the features of the reporting violations that attracted SEC enforcement interest in the recent proceedings and identifies the factors apparently weighed by the SEC in determining the amount of the penalties sought against those charged with the violations.

Findings

The SEC’s latest enforcement actions are unprecedented for insider reporting violations. The new enforcement initiative represents an abandonment by the SEC of its largely passive approach of the past dozen years in which it charged insider reporting violations only when they related to fraud or other major violations of the securities laws. If reporting violations are flagrant, the SEC now promises to target the offenders for enforcement on a stand-alone basis without regard to other possible wrongdoing. The SEC also cautions that, as it did in some of the recent enforcement actions, it may charge companies that promise to assist their insiders in the preparation and filing of their reports, but do not to make the filings in a timely manner, with contributing to the filing failures.

Originality/value

The paper provides expert guidance from experienced securities lawyers.

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