Share price response to the SEC administrative proceedings against Chinese auditors

2019 ◽  
Vol 34 (9) ◽  
pp. 1131-1148
Author(s):  
Guoping Liu ◽  
Jerry Sun
Keyword(s):  
Design Methodology ◽  
Securities And Exchange Commission ◽  
Share Price ◽  
Accounting Firms ◽  
Content Type ◽  
Share Prices ◽  
Audit Failure ◽  
Price Response ◽  
Chinese Auditors ◽  
Administrative Proceedings

Purpose The purpose of this study is to examines whether clients’ share prices responded to three events, including the Securities and Exchange Commission (SEC) launch of administrative proceedings against five Chinese accounting firms on December 3, 2012, for their failure to hand over audit work papers due to conflict of jurisdiction; the issuance of SEC Administrative Law Judge Elliot’s ruling on January 22, 2014; and the settlement of the administrative proceedings on February 6, 2015. Design/methodology/approach This study uses the Schipper and Thompson approach. Findings It is found that share prices responded negatively around December 3, 2012, for USA-listed Chinese companies who were audited by Chinese auditors. Originality/value This study provides evidence on how share prices reacted to SEC enforcement actions against an affair of non-audit failure.

US Supreme court rules SEC administrative law judges are subject to the appointments clause

2019 ◽  
Vol 20 (1) ◽  
pp. 22-26
Author(s):  
Joshua D. Roth ◽  
Justin J. Santolli
Keyword(s):  
Design Methodology ◽  
The United States ◽  
Administrative Law ◽  
Securities And Exchange Commission ◽  
Content Type ◽  
Us Supreme Court ◽  
Expert Analysis ◽  
Administrative Proceeding ◽  
Administrative Proceedings ◽  
Practical Implications

Purpose The purpose of this paper is to analyze the Supreme Court’s decision in Lucia v. Securities and Exchange Commission, 138 S.Ct. 2044 (June 21, 2018). Design/methodology/approach The approach of this paper is to discuss the Securities and Exchange Commission’s (“SEC”) use of Administrative Law Judges (“ALJs”), and the litigation challenging the appointment of those ALJs, culminating in the Supreme Court’s decision in Lucia. Findings In Lucia, the Court held that SEC ALJs are “officers of the United States,” and thus subject to the Constitution’s Appointments Clause, which limits the power to appoint “officers” to the President, “Courts of Law” or “Heads of Departments.” Because the ALJ who presided over Lucia’s administrative proceeding was not appointed by the SEC itself, the Court held that the ALJ’s appointment was unconstitutional and ordered the SEC to provide Lucia with a new hearing in front of a new (constitutionally appointed) ALJ. Practical implications The Supreme Court’s decision in Lucia provides defense counsel with new ammunition to challenge SEC administrative proceedings. It will likely have a significant effect on many pending and already-concluded SEC administrative proceedings but also leaves open a number of important questions for further litigation. Originality/value This paper provides expert analysis and guidance from experienced securities litigators.

How firms borrow in international bond markets

2018 ◽  
Vol 26 (1) ◽  
pp. 135-169
Author(s):  
Alberto Fuertes ◽  
Jose María Serena
Keyword(s):  
Emerging Economies ◽  
Design Methodology ◽  
Choice Behavior ◽  
Global Financial Crisis ◽  
Securities And Exchange Commission ◽  
Bond Markets ◽  
Data Set ◽  
Content Type ◽  
Parametric Analyses ◽  
The Global Financial Crisis

Purpose This paper aims to investigate how firms from emerging economies choose among different international bond markets: global, US144A and Eurobond markets. The authors explore if the ranking in regulatory stringency –global bonds have the most stringent regulations and Eurobonds have the most lenient regulations – leads to a segmentation of borrowers. Design/methodology/approach The authors use a novel data set from emerging economy firms, treating them as consolidated entities. The authors also obtain descriptive evidence and perform univariate non-parametric analyses, conditional and multinomial logit analyses to study firms’ marginal debt choice decisions. Findings The authors show that firms with poorer credit quality, less ability to absorb flotation costs and more informational asymmetries issue debt in US144A and Eurobond markets. On the contrary, firms issuing global bonds – subject to full Securities and Exchange Commission requirements – are financially sounder and larger. This exercise also shows that following the global crisis, firms from emerging economies are more likely to tap less regulated debt markets. Originality/value This is, to the authors’ knowledge, the first study that examines if the ranking in stringency of regulation – global bonds have the most stringent regulations and Eurobonds have the most lenient regulations – is consistent with an ordinal choice by firms. The authors also explore if this ranking is monotonic in all determinants or there are firm-specific features which make firms unlikely to borrow in a given market. Finally, the authors analyze if there are any changes in the debt-choice behavior of firms after the global financial crisis.

Are your customer accounts in order? – SEC announces sweep of broker-dealers and implementation of the customer protection rule initiative

2017 ◽  
Vol 18 (1) ◽  
pp. 68-74
Author(s):  
Melissa Beck Mitchum ◽  
Bob Xiong
Keyword(s):  
Current Account ◽  
Design Methodology ◽  
Securities And Exchange Commission ◽  
Content Type ◽  
Policies And Procedures ◽  
Practical Guidance ◽  
Reporting Mechanism

Purpose To explain the Customer Protection Rule Initiative announced by the Securities and Exchange Commission (SEC) and offer practical guidance for complying with Rule 15c3-3 under the Securities Exchange Act of 1934. Design/methodology/approach This article discusses Rule 15c3-3 under the Securities Exchange Act of 1934, related interpretative guidance, and the Customer Protection Rule Initiative announced in June 2016 by the SEC. Findings This article concludes that broker-dealers should take advantage of the Customer Protection Rule Initiative’s self-reporting mechanism and use this time to review their current account arrangements with banks, existing internal policies and procedures, and account documentation. Originality/value This article contains valuable information about the SEC’s Customer Protection Rule Initiative and practical compliance guidance from experienced securities lawyers.

Appraisal of the regulatory frameworks for combatting money laundering in Nigeria

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Adegboyega Adekunle Ige
Keyword(s):  
Money Laundering ◽  
Financial Institutions ◽  
Design Methodology ◽  
Attorney General ◽  
Securities And Exchange Commission ◽  
Review Of Literature ◽  
Content Type ◽  
Regulatory Frameworks ◽  
Legal Context ◽  
Made In

Purpose A review of literature revealed that many publications on efforts at combatting money laundering focus on two frameworks, namely, legal/legislative and institutional, while overlooking the third and equally important framework – the “regulatory/ supervisory framework.” This paper aims to eradicate the dearth in literature with regards to this third and seldom acknowledged framework and it aims at filling that gap. Design/methodology/approach The analysis took the form of a desk study, which distinguished the three frameworks for combatting money laundering and provided a comprehensive list of the main actors in each regime within the Nigerian legal context. The Money Laundering (Prevention and Prohibition) Act, 2016 was examined in detail. Findings Three categories of regulators were identified and discussed in this paper: the supervisory bodies that regulate the activities of financial institutions, namely, Central Bank of Nigeria, Securities and Exchange Commission and Nigerian Insurance Commission; The Bureau for Money Laundering Control which supervises – designated non-financial institutions and businesses; the Attorney General of the Federation; and (Self-Regulatory Organizations. The Attorney General of the Federation was identified as the prime regulator within the context of the 2016 Act. Suggestions on how the regulators could make the most of their roles were made in the concluding part. Research limitations/implications This paper only considered the Nigerian legal context and only the extant law – the Money Laundering (Prevention and Prohibition) Act, 2016 was critically examined. Originality/value The findings in this paper and the writing approach are original.

SEC reporting obligations for insiders and large traders under Section 13 and Section 16 of the Exchange Act

2019 ◽  
Vol 20 (3) ◽  
pp. 39-53
Author(s):  
Arthur L. Zwickel ◽  
Keith D. Pisani ◽  
Alicia M. Harrison
Keyword(s):  
Design Methodology ◽  
Securities And Exchange Commission ◽  
Individual Investors ◽  
Content Type ◽  
Disclosure Requirements ◽  
Beneficial Ownership ◽  
Expert Analysis ◽  
Investment Advisers ◽  
Trading Restrictions ◽  
A Current

Purpose The purpose of this paper is to provide investment advisers, broker dealers, individual investors and other securities firms with a current and detailed summary of the reporting regime under Sections 13 and 16 of the Securities Exchange Act of 1934 (the “Exchange Act”) and guidance on how to comply with the disclosure requirements of the U.S. Securities and Exchange Commission (the “SEC”) on Schedule 13D, Schedule 13G, Form 13F, Form 13H and Forms 3, 4 and 5. Design/methodology/approach The approach of this paper discusses the transactions or beneficial ownership interests in securities that trigger a reporting requirement under Section 13 and/or Section 16 of the Exchange Act, identifies the person or persons that have the obligation to file reports with the SEC, details the information required to be disclosed in the publicly available reports, and explains certain trading restrictions imposed on reporting persons as well as the potential adverse consequences of filing late or failing to make the requisite disclosures to the SEC. Findings The SEC continues to provide updated guidance on the disclosure requirements under Sections 13 and 16 of the Exchange Act, which individual investors and securities firms – largely insiders – must take into account when filing any new or amended reports on Schedule 13D, Schedule 13G, Form 13F, Form 13H and Forms 3, 4 and 5. Originality/value This article provides expert analysis and guidance from experienced securities lawyers.

SEC credits self-reporting and cooperation in not imposing penalty on ICO sponsor

2019 ◽  
Vol 20 (2) ◽  
pp. 13-15
Author(s):  
Daniel Hawke
Keyword(s):  
Design Methodology ◽  
Securities And Exchange Commission ◽  
Self Report ◽  
Content Type ◽  
Enforcement Action ◽  
Expert Analysis ◽  
Securities Laws ◽  
Insight Into ◽  
Civil Penalty ◽  
Do So

Purpose To explain a February 20, 2019 US Securities and Exchange Commission (SEC) settled enforcement action against Gladius Network LLC for failing to register an initial coin offering (ICO) under the federal securities laws, in which Gladius was able to avoid a civil penalty by self-reporting the violation and cooperating with the SEC enforcement staff. Design/methodology/approach Explains Gladius’ self-reporting, cooperation and remedial steps; why the SEC imposed no civil penalty on Gladius; and two similar cases the SEC instituted in July 2018 against companies that conducted unregistered ICOs, did not self-report, and were penalized. Provides analysis and conclusions. Findings The Gladius case offers important insight into how the SEC and its staff think about cooperation credit in resolving SEC enforcement actions and sends a clear message that self-reporting to the SEC can result in meaningful cooperation credit. In three recent cases, the Commission has made clear that once it put the industry on notice that ICOs could be securities that must be registered under the federal securities laws, a party risks enforcement action by failing to do so. Originality/value Expert analysis and guidance from an experienced securities lawyer who counsels clients on all manner of SEC enforcement, examination and regulatory policy matters.

The effect of financial crisis on auditor conservatism: US evidence

2015 ◽  
Vol 28 (2) ◽  
pp. 160-171 ◽  
Author(s):  
Joseph Beams ◽  
Yun-Chia Yan
Keyword(s):  
Financial Crisis ◽  
Design Methodology ◽  
Environmental Changes ◽  
Accounting Firms ◽  
Content Type ◽  
Going Concern ◽  
Big 4 ◽  
Distressed Firms ◽  
Recent Financial Crisis ◽  
Auditor Conservatism

Purpose – This paper aims to examine the effect that the recent financial crisis had on auditor conservatism in the form of increased going-concern opinions. Design/methodology/approach – This study uses a sample of US’ distressed firms from 2005 to 2011 to test the change in going-concern opinions issued. This paper uses a logistic regression model to control for other predictors of going-concern opinions to determine when the financial crisis led to an increase in auditor conservatism. Findings – The authors find that auditors became more conservative in the form of issuing higher levels of going-concern opinions even after controlling for other predictors of going-concern opinions. This increased conservatism was present in both Big 4 and non-Big 4 accounting firms. The increased conservatism quickly returned to normal levels when the financial crisis eased. Originality/value – These findings add to the literature on the effects of environmental changes on audit opinions. Additionally, this study finds a difference in the timing of the reaction by large and small accounting firms, but, overall, it finds consistency in that both increased conservatism during the crisis and quickly returned to normal afterward.

Bringing order to non-GAAP financial measures: SEC sues to enforce “equal-or-greater-prominence” requirement

2019 ◽  
Vol 20 (4) ◽  
pp. 51-57
Author(s):  
Richard J. Parrino
Keyword(s):  
Design Methodology ◽  
Securities And Exchange Commission ◽  
Content Type ◽  
Financial Measures ◽  
Generally Accepted Accounting Principles ◽  
Enforcement Action ◽  
Accounting Principles ◽  
Depth Analysis ◽  
The Us ◽  
Earnings Releases

Purpose This article examines the first action by the US Securities and Exchange Commission to enforce the “equal-or-greater-prominence” requirement of its rules governing the presentation by SEC-reporting companies, in their SEC filings and earnings releases, of financial measures not prepared in accordance with generally accepted accounting principles (GAAP). Design/methodology/approach This article provides an in-depth analysis of the equal-or-greater-prominence rule and the SEC’s enforcement posture in the context of the SEC’s concern that some companies present non-GAAP financial measures in a manner that inappropriately gives the non-GAAP measures greater authority than the comparable GAAP financial measures. Findings Although the appropriate use of non-GAAP financial measures can enhance investor understanding of a company’s business and operating results, investors could be misled about the company’s GAAP results by disclosures that unduly highlight non-GAAP measures. The SEC’s enforcement action signals a focus on the manner in which companies present non-GAAP financial measures as well as on how they calculate the measures. Originality/value This article provides expert guidance on a major SEC disclosure requirement from an experienced securities lawyer.

Parties push to enforce statutory time limits on SEC enforcement actions

2015 ◽  
Vol 16 (3) ◽  
pp. 30-32
Author(s):  
Benjamin Neaderland ◽  
Jared Cohen
Keyword(s):  
Design Methodology ◽  
District Of Columbia ◽  
Securities And Exchange Commission ◽  
Courts Of Appeals ◽  
Content Type ◽  
Time Limits ◽  
Court Of Appeals ◽  
Securities Law ◽  
The Us ◽  
Practical Implications

Purpose – To alert companies and individuals subject to regulation and investigation by the US Securities and Exchange Commission (SEC) of potential arguments to enforce time limits on enforcement actions that have heretofore commonly been ignored. Design/methodology/approach – Analyzes two cases - one recently decided and one pending - in US Courts of Appeals, explains significance of issues at stake. Findings – The Courts of Appeals for District of Columbia Circuit has recently reviewed, and the Court of Appeals for the 11th Circuit will soon decide whether statutory timing provisions effectively remove SEC power to bring enforcement actions past their deadlines, at least in some circumstances. Practical implications – Depending on the outcomes of the cases, companies and individuals may gain a new procedural defense or two against SEC enforcement actions. They may also expect the SEC to respond by more actively seeking tolling agreements, and/or being more cautious in issuing Wells notices. Originality/value – Guidance based on pending decisions interpreting US securities law, may bring regulatory adjustments to agency practice and procedure.

Investing in change

2017 ◽  
Vol 33 (10) ◽  
pp. 7-9
Keyword(s):  
Information Sharing ◽  
Design Methodology ◽  
Reading Time ◽  
Content Type ◽  
Share Prices ◽  
The Road ◽  
Oak Trees ◽  
Bona Fide ◽  
Pertinent Information ◽  
Practical Implications

Purpose This paper aims to review the latest management developments across the globe and pinpoint practical implications from cutting-edge research and case studies. Design/methodology/approach This briefing is prepared by an independent writer who adds their own impartial comments and places the articles in context. Findings The Financial Times newspaper, founded in London in 1888, started life in competition with a rival financial daily, as well as its distinctive pink paper, sought to differentiate itself by being the friend of the “honest financier, the bona fide investor”. From such admirable roots do oak trees grow, and the newspaper is worth well over $1bn itself after a storied history as one of the cornerstones of business and economics. But aside from the share prices, inside gossip, and educated opinion on performance in the financial centers of the road, have you ever stopped to wonder why so many people still read it in an era of instant data and information sharing? Practical implications The paper provides strategic insights and practical thinking that have influenced some of the world’s leading organizations. Originality/value The briefing saves busy executives and researchers hours of reading time by selecting only the very best, most pertinent information and presenting it in a condensed and easy-to-digest format.

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