We are pleased to release MaloneBailey's December 2017 issue of The Crunch, our newsletter highlighting recent accounting, regulatory and tax updates. Please note that the updates provided in this newsletter are not a comprehensive list.
We encourage you to visit the SEC, FASB and IRS websites for more information as well as a complete list of updated rules, regulations and proposals.
We invite you to contact us should you have any questions about the information provided in this issue.
We invite you to visit our website to review archived versions of this newsletter containing past accounting, regulatory and tax updates.
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What's the Crunch?
Featured Podcast
Accounting and Regulatory Updates
Recent FASB Updates & Proposals
Recent SEC Updates & Proposals
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 The featured podcast in the December 2017 issue of The Crunch features Patrick Wong, Senior Audit Manager, and Caroline Rosen, Marketing Manager, as they discuss the new accounting standards for lessors, which goes into effect December 15, 2018. Click below to hear the updates regarding the new accounting guidance for leases and what to expect when it goes into effect.
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Missed our Look Ahead for 2018?
Visit our website for the July 2017 newsletter, which highlights
the
FASB updates that will be going into effect in 2018.
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Summary -
As reported in its "Summary of Board Decisions" publication, the FASB met on September 20, 2017, and discussed: (1) the results of staff research and analysis on the projects included in the FASB Invitation to Comment, Agenda Consultation, and (2) the status of its research agenda. The FASB reached a number of decisions, including the following:
- Intangibles. The FASB decided to remove the holistic project on Intangibles from its research agenda and maintain a component on its research agenda focused on developing qualitative disclosures about intangibles as part of the overall disclosure framework project. The FASB also decided to combine the following two projects on its research agenda: (a) Accounting for Identifiable Intangible Assets in a Business Combination for Public Business Entities (PBEs) and Not-for-Profit Entities (NFPs) and (b) Subsequent Accounting for Goodwill for PBEs and NFPs.
- Pensions and Other Postretirement Benefit Plans. The FASB decided to remove from its research agenda a project on pensions and other postretirement benefit plans.
- Distinguishing Liabilities from Equity (Including Convertible Debt). The FASB decided to add to its agenda a project on distinguishing liabilities from equity. The objective of the project is to improve understandability and reduce complexity (without loss of information for users). The project will focus on indexation and settlement (in the context of the derivative scope exception), convertible debt, disclosures, and earnings-per-share.
- Financial Performance Reporting. The FASB decided to add a project to its agenda to focus on the disaggregation of performance information. The project would consider disaggregation either through presentation in the income statement or through disclosure in the notes. The project would base the disaggregation on requiring functional lines to be disaggregated into natural components. The FASB also retained a component of the project on its research agenda associated with improving the structure of the performance statement and developing an operating performance measure.
- Segment Reporting. The FASB decided to add a project to its agenda on segment reporting. The objective of the project is to improve the segment aggregation criteria and to improve the disclosure requirements.
For more information, click here.
© 2017 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
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Summary
- Wolter Kluwer has added a GAAP Update Service that discusses the FASB's proposed guidance in Debt (Topic 470): Simplifying the Classification of Debt in a Classified Balance Sheet (Current versus Noncurrent). The proposal is intended to improve financial reporting by simplifying guidance used to determine whether debt should be classified as current or noncurrent in a classified balance sheet. The proposed amendments would replace the existing, fact-specific guidance with an overarching, cohesive principle for debt classification that focuses on a borrower's contractual rights and obligations that exist as of the reporting date.
Under the proposal, a borrower would continue to classify its debt as noncurrent when a violation of a debt covenant has been waived, if a borrower receives a waiver before the financial statements are issued (or are available to be issued) and the waiver meets certain conditions.
For more information, click here.
© 2017 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
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Summary
- As reported in its "Summary of Board Decisions" publication, the FASB met on October 11, 2017, and discussed working definitions of revenues and expenses, which are currently defined in FASB Concepts Statement No. 6, Elements of Financial Statements, and the relationship of those definitions with the definitions of gains and losses. The FASB provided the following tentative leanings and reactions to the working definitions:
- Retain the phrase or other activities in the working definitions of revenues and expenses to ensure the terms are sufficiently inclusive.
- Excluding the phrase carrying out from the working definitions was an improvement.
- Not remove the phrase that constitute the entity's ongoing major or central operations in the working definitions at this time.
The FASB directed its staff to develop working definitions of gains and losses in order to further analyze whether the phrase that constitute the entity's major or central operations can be excluded from the working definitions of revenues and expenses.
For more information, click here.
© 2017 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
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AICPA Issues New Technical Q&As on Public Business Entities
Summary
- The AICPA has released new Technical Questions and Answers (TQAs) Section 7100, Definition of a Public Business Entity. Section 7100 includes sixteen new questions and answers that provide guidance on terms and definitions and numerous other matters related to public business entities.
Technical Questions and Answers
AICPA's Technical Questions and Answers include guidance in applying AICPA standards but are not themselves sources of established authoritative principles. The AICPA developed the new TQAs to assist entities in defining their status as public business entities. The TQAs include detailed discussion specific to entities such as depository institutions, broker-dealers, insurance companies and not-for-profit entities.
Determination of Public Business Entity Status
The determination of whether an entity is a public business entity (PBE) is important because, as noted by Matthew Schell, CPA, who headed the effort on behalf of AICPA's Financial Reporting Executive Committee, "PBE status means an entity must comply with FASB's accounting standards, with implementation dates for several, including revenue recognition and lease accounting, just around the corner. Entities that are not public business entities, however, can take advantage of certain scaled disclosures and other accommodations, such as using Private Company Council-driven or other non-PBE accounting alternatives."
The FASB amended the Codification glossary in FASB Accounting Standards Update (ASU) No. 2013-12, Definition of a Public Business Entity-An Addition to the Master Glossary, to include one definition of public business entity in future use of accounting principles.
For more information, click here.
© 2017 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
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FASB Discusses Disclosure Framework and Other Matters
Summary
- As reported in its "Summary of Board Decisions" publication, the FASB met on November 1, 2017, and discussed issues related to the proposed FASB Concepts Statement, Conceptual Framework for Financial Reporting-Chapter 8: Notes to Financial Statements. The FASB reached a number of decisions, including the following:
- The Concepts Statement would retain Appendix A, Decision Questions to Be Considered in Establishing Disclosure Requirements, with additional introductory language.
- Information about the potential effects of changes in: (a) general economic conditions or market factors; or (b) entity- or sector-specific factors on a line item should be removed from the chapter as disclosures that the FASB should consider in establishing disclosure requirements.
- Future-oriented information is acceptable for disclosure when it is information about estimates and assumptions used as inputs to measurements; it is not acceptable when it is information about the effect of specified future changes in existing conditions on specific line items.
- The discussion of information about existing plans and strategies should be limited to those that affect recognition and measurement.
- The Concepts Statement would retain the concepts on interim disclosures
For more information, click here.
© 2017 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
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Summary
- Sagar Teotia, Deputy Chief Accountant of the SEC, recently spoke about the implementation new GAAP standards on revenue recognition, leases, and measurement of credit losses on financial instruments. Teotia noted that while "there is significantly more work to be done, a meaningful amount of progress has been made towards implementation and the efforts to date have been a true collaborative effort by preparers, auditors, audit committees, standard setters, and regulators, and has been done both domestically and internationally."
Implementation Observations
Teotia outlined the following six broad observations regarding the new GAAP standards:
- Keep going, keep going. There has been a significant amount of progress made by many companies. To these companies, Teotia encouraged each to keep the momentum and "finish strong" with revenue implementation. For those companies that may be in the earlier stages of your implementation efforts, Teotia encouraged them to significantly ramp up efforts.
- Internal control over financial reporting. The new GAAP standards will most likely impact internal control over financial reporting. It takes time of course to implement internal control changes. This is one of the many reasons it is critical to stay on top of raising and resolving implementation and application issues.
- Transition Disclosures. On a number of occasions, the SEC staff has emphasized the importance of providing transition disclosures that are articulated in Staff Accounting Bulletin ("SAB") No. 74. These disclosures should reflect the state of companies' implementation efforts. As SAB 74 intended, the SEC expects companies to be transparent in their disclosure as to where the company is in its implementation progress.
- Disclosures within the New GAAP Standards. Each of the new GAAP standards requires disclosures that will provide investors with useful information. As we are now moving closer to the effective date, if you have not started work on the required revenue disclosures - such as the disclosure of remaining performance obligations and disaggregation of revenue - you are at risk of falling behind.
- Importance of Reasonable Judgment. The SEC's Office of the Chief Accountant (OCA) staff will continue to accept reasonable judgments in the application of the new GAAP standards. OCA has already answered numerous pre-filing consultation questions regarding the new GAAP standards where it has accepted reasonable judgments. This point underscores the importance for companies to put in place a good implementation process that enables them to apply sound judgment.
- Role of Audit Committees in the Implementation of the New GAAP Standards. The process of implementing the new GAAP standards is a collaborative effort from different stakeholders, and the importance of the audit committee in promoting an environment for management's successful implementation of the new GAAP standards cannot be overstated. Audit committees should continue to set the tone for the adoption of the new GAAP standards. This should include actively monitoring the implementation efforts, including taking the time to understand, and assess the quality and status of implementation.
Implementation of Revenue Recognition Standard
OCA observes that some companies have chosen to early adopt and are getting the information to investors now. The SEC staff applauds their efforts and is encouraged by their progress and commitment to providing transparency to their investors and other users of their financial statements. For those whose implementation efforts haven't started or are still underway, the time until required application of the new standard is just a few months away.
As companies finalize their company-specific accounting policies and prepare disclosures, OCA staff continues to be available for consultation on a formal or informal basis, as needed, to both domestic and foreign registrants. However, to avoid a massive backlog at the end of the year, which would potentially be a detriment to all stakeholders, the time for those questions is now.
OCA has stressed the importance of SAB 74 disclosures, including any expected material impact on company financials. The assessment of the materiality of the new revenue standard must include consideration of the new required disclosures. In addition, as we approach the fourth quarter of 2017, it is critical for the transition disclosures to be as informative as possible to the users of the financial statements.
Implementation of Lease Standard
To the extent a company has not yet commenced with its implementation efforts for leases, OCA encourages companies to consider beginning its leases implementation efforts now. While this is not necessarily required, sequential implementation of the revenue recognition standard followed by the leases standard may leave a company in a situation where it finds that it has potentially limited its time to adopt the new leases standard and has limited its time to formulate reasonable judgments and assess potential changes needed in ICFR.
Given the significant amount of work done on revenue, there are many lessons learned that can be leveraged to more successfully implement the leases standard. A couple of the lessons learned that are relevant to leases include:
- Companies should have appropriate resources to evaluate lease arrangements and properly apply the principles of the new standard.
- The new leases standard will require judgments. This highlights the importance of another element of a company's control environment - setting the right "tone at the top" and expectations for responsible conduct throughout the organization.
Implementation of Credit Losses Standard
This standard clearly has a significant impact on banks and other financial institutions, but the impact goes beyond any particular industry group. The new credit losses standard represents a change in how entities account for credit losses. Implementation of the new standard is of course important and successful implementation requires companies to allocate sufficient resources and develop or engage appropriate financial reporting competencies in this area.
A few observations OCA has learned from its monitoring activities of the implementation of the credit losses standard include:
- The importance of coordination among all stakeholders in the transition and implementation activities.
- Registrants are making progress on implementation and continue to elevate interpretative concerns to OCA.
- The TRG remains a forum for stakeholders to potentially work through and address implementation issues. As preparers, industry groups, and other stakeholders continue their implementation efforts, I would encourage them to consider referring challenging issues to the TRG.
- Consistent with revenue recognition and leases, OCA will accept well-reasoned judgments in the application of this new standard.
Teotia also noted that Jonathan Wiggins has been appointed as the new Senior Associate Chief Accountant in the Accounting Group. Jonathan will be joining Kevin Vaughn as one of two Senior Associate Chief Accountants in the Accounting Group.
For more information, click here.
© 2017 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
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Summary - The SEC has proposed for public comment to modernize and simplify certain disclosure requirements in Regulation S-K and related rules and forms. Regulation S-K governs non-financial reporting requirements for SEC filings, including Annual Reports on Form 10-K, Quarterly Reports on Form 10-Q, and proxy statements. The amendments are based on the recommendations in the SEC staff's Report on Modernization and Simplification of Regulation S-K, issued in November 2016 as required by the Fixing America's Surface Transportation Act.
The proposal includes a number of amendments to Regulation S-K to modernize and streamline disclosure requirements, including the following:
- Management's Discussion and Analysis (MD&A). Companies would be permitted to forgo discussion within MD&A of the oldest period included in a filing if it was included and discussed in a previously report and is no longer material. Companies that include 3 years of financial statements within a filing would not need to discuss, within MD&A, the oldest period if it is not material to the understanding of the company's financial condition and a discussion of this period was included in the company's Form 10-K for the previous year. The SEC believes this will reduce the regulatory burden on companies and improve the readability of filings for investors who would no longer sift through redundant financial information previously disclosed.
- Confidential Treatment. The amendments would provide efficiencies for companies seeking confidential treatment for exhibits within a filing. A company would be permitted to omit information in exhibits that is not material and would be competitively harmful without having to first seek confidential treatment from the SEC staff. Companies would also be permitted to omit personally identifiable information without first requesting confidential treatment. Companies would have to mark their filings to indicate omitted items and may be asked for supplemental information on the omitted information in exhibits if specifically requested by the SEC staff.
- Description of Property. The amendments would make clear that disclosure of physical properties is only required if these facilities are material to the issuer. Certain industries in which all facilities are deemed material, including oil and gas companies, would continue to report under the current Regulation S-K requirements.
- Material Contracts. Item 601 of Regulation S-K requires registrants to file every contract not made in the ordinary course of business if the contract is material to the registrant and is to be performed at or after the filing of the registration statement or report or was entered into not more than two years before such filing. The proposal would limit the two-year look back requirement to newly reporting registrants, not all registrants.
- Hyperlinks. Companies would include hyperlinks for references in current filings to previous filed documents on the SEC's EDGAR filing system.
- Legal Entity Identifiers. Item 601 of Regulation S-K requires a registrant to list all of its subsidiaries, the state or other jurisdiction of incorporation or organization of each, and the names under which such subsidiaries do business. A Legal Entity Identifier (LEI) is a 20-character, alpha-numeric code that connects to key reference information that allows for unique identification of entities engaged in financial transactions. The proposal would require registrants to include the LEI of the registrant and each subsidiary included on the list, to the extent that each entity has an LEI.
For more information, click
here
.
© 2017 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
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Summary
- SEC Chairman Jay Clayton spoke about the SEC's agenda, focusing on key aspects related to governance and transparency.
SEC's Near-Term Agenda
The next SEC near-term agenda will be published in coming months. Clayton noted that "the SEC's near-term agenda has swelled over the years. The Commission has limited resources, and rulemaking is, by its very nature, time- and resource-intensive. As a result, if all, or substantially all, of the rulemakings listed on previous near-term agendas were to evolve through to adoption, the process would take years." Clayton noted that the SEC's next near-term agenda, "which will be published as part of the federal government's Unified Agenda in coming months, will be shorter than in the recent past."
SEC's Longer-term Agenda
Regarding the SEC's approach to its five-year strategic plan, Clayton noted that the SEC is applying a similar streamlining approach. When the SEC completes its new strategic plan, Clayton expects the numbers of projects on this longer-term plan will be noticeably smaller and will reflect, on an agency-wide basis the:
- Key challenges and trends facing U.S. markets and regulatory programs;
- Agency's most important strategic priorities; and
- Initiatives the SEC is pursuing to help attain those goals.
Clayton discussed anticipated efforts on the following specific longer-term agenda items:
- Shareholder engagement and the proxy process. Given the core role of the proxy process in public company governance, Clayton believes the SEC should be "lifting the hood" and taking a hard look at whether the needs of shareholders and companies are being met. The SEC should consider whether in its rulemaking processes the views and fundamental interests of long-term retail investors are being advocated fully and clearly, either by individual investors or groups that represent them.
- Shareholder proposals. The shareholder proposal process is a corporate governance issue that is subject to diverse and deeply held beliefs. While Clayton is supportive of rules that allow shareholder proposals, he is searching for a way to reconcile the multiple positions and find common ground. History has shown that shareholder proposals can gain traction and lead to corporate governance changes that better track the long-term interests of Main Street investors. They also create costs, including out-of-pocket costs and the use of board and management time that otherwise could be devoted to the operation of the company itself. Questions exist about the appropriate level of ownership that should be required to submit shareholder proposals, as well as whether our current resubmission thresholds are too low. The concern is that the thresholds allow proposals that shareholders previously rejected to be repeatedly resubmitted even though they receive a small fraction of shareholder support.
Transparency in Securities Markets
Clayton discussed efforts to help deter, mitigate, and eliminate misconduct through transparency and other measures. Clayton highlighted areas he noted "that have proven over time to be fertile ground for fraud on investors. The SEC may not yet have policy or rulemaking answers in these areas, but we are on the lookout for ways to fight the type of opacity that can create an environment conducive to misconduct." Areas discussed by Clayton included:
- Fee disclosure. The SEC's Enforcement Division will continue to be active in pursuing cases where hidden or inappropriate fees that can harm investors are at issue, but will also explore whether more can be done to clarify fee disclosures made to retail investors and, thereby, deter and reduce the opportunities for misbehavior.
- Penny stocks. The SEC's enforcement record also shows that many penny stocks have a conspicuous lack of transparency with respect to their financial condition and other key business information. The SEC will continue to vigorously pursue bad actors in the penny stock market, but we also will examine ways to bring more light into the opaque aspects of this market.
- Initial coin offerings. There is a distinct lack of information about many online platforms that list and trade virtual coins or tokens offered and sold in Initial Coin Offerings (ICOs). The SEC recently warned that instruments, such as "tokens," offered and sold in ICOs may be securities, and those who offer and sell securities in the United States must comply with the federal securities laws. The SEC will continue to seek clarity for investors on how tokens are listed on these exchanges and the standards for listing; how tokens are valued; and what protections are in place for market integrity and investor protection.
For more information, click here.
© 2017 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
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Summary -
SEC Commissioner Michael S. Piwowar recently spoke about the SEC's potential future efforts in the market structure space. Piwowar noted that "market structure really represents the gears that turn the clock of the capital markets. From the moment we get up in the morning, until the moment we turn out the lights at night, we rely on clocks to order our days. Yet most people will never open a clock to inspect the gears that make it work, much less comprehend the operation of the complex and interrelated system sitting behind it. In the same way, most investors and business owners who rely on the capital markets will never dig into the details of market structure. They may never understand the way that tick sizes, the order protection rule, or maker-taker pricing function. But they rely on them every day to raise capital, invest in securities, and save for retirement. Thus, the details of market structure matter, not just because academics, industry participants, and regulators like to debate them, but because they ensure the smooth operation of our complex financial markets."
For more information, click here.
© 2017 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
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SEC Staff Updates Non-GAAP Guidance
Summary -
The staff in the SEC's Division of Corporation Finance (Corp Fin) has updated its Compliance and Disclosure Interpretation (C&DI), Non-GAAP Financial Measures. This C&DI provides Corp Fin's interpretations of the rules and regulations on the use of non-GAAP financial measures.
Corp Fin has added new questions 101.01 and 101.02, which provide guidance on business combination transactions. These two questions provide guidance on the following two questions:
- Are financial measures included in forecasts provided to a financial advisor and used in connection with a business combination transaction non-GAAP financial measures?
- Does the exemption from Regulation G and Item 10(e) of Regulation S-K for non-GAAP financial measures disclosed in communications relating to a business combination transaction extend to the same non-GAAP financial measures disclosed in registration statements, proxy statements and tender offer statements?
For more information, click here.
© 2017 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
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Summary -
The staff in the Division of Corporation Finance (Corp Fin) of the SEC has updated its Compliance and Disclosure Interpretation (C&DI), Securities Act Rules. This C&DI provides Corp Fin's interpretations of the rules adopted under the Securities Act of 1933.
Corp Fin has added new question 271.25 that provides guidance on the exemption for offers and sales of securities pursuant to certain compensatory benefit plans and contracts relating to compensation. Specifically, Corp Fin provides guidance to companies having concerns when satisfying their Rule 701(e) delivery obligations electronically about the potential disclosure of sensitive company information. Standard electronic safeguards, such as user-specific login requirements and related measures, are permissible. Corp Fin cautions that the "use of a particular electronic disclosure medium either alone or in combination with other safeguards, such as the use of dedicated physical disclosure rooms that house the medium used to convey the information required to be disclosed, should not be so burdensome that intended recipients cannot effectively access the required disclosures."
For more information, click here.
© 2017 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
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Summary
- The House, on November 16, 2017, approved its sweeping tax reform package - the Tax Cuts and Jobs Act (HR 1) - by a vote of 227-205, moving the GOP one-step closer to achieving a signature legislative victory. The Senate is now in the process of preparing its own tax reform package which, if passed, would then need to be reconciled with the House bill before a final bill can be sent to the White House.
Both the House GOP bill and Senate GOP plan would impact virtually every individual and business on a level not seen in over 30 years. As with any tax bill, however, there would be "winners" and 'losers " Both versions call for lowering the individual and corporate tax rates, repealing countless tax credits and deductions, eliminating the alternative minimum tax (AMT), enhancing the child tax credit, boosting business expensing, and more.
The White House has signaled its support for the House GOP bill. Possible roadblocks to ultimately getting a bill to the President's desk before year end are unified opposition from Democrats, intense lobbying efforts to preserve tax breaks slated for elimination, and the significant differences in the House and Senate proposals.
© 2017 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
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Summary - The SEC unanimously approved a PCAOB auditing standard that requires significant enhancements to certain public company reports, including the communication of critical audit matters (CAMs) and the disclosure of auditor tenure. These changes are intended to make the auditor's report more informative. The new auditor's report should provide investors with more meaningful information about the audit, including significant estimates and judgments, significant unusual transactions, and other areas of risk at a company.
SEC Chairman Jay Clayton noted that he strongly supports the objective of the rule to provide investors with meaningful insights into the audit from the auditor. Clayton noted that "CAMs are designed to provide investors and other financial statement users with the auditor's perspective on matters discussed with the audit committee that relate to material accounts or disclosures and involved especially challenging, subjective, or complex auditor judgment. Investors will benefit from understanding more about how auditors view these matters."
Clayton indicated that he is sensitive to some of the concerns with the changes to the auditor's report raised by different stakeholders. Clayton would be disappointed if the new audit reporting standard, which has the potential to provide investors with meaningful incremental information, instead resulted in frivolous litigation costs, defensive, lawyer-driven auditor communications, or antagonistic auditor-audit committee relationships.
Accordingly, Clayton urges "all involved in the implementation of the revised auditing standards, including the Commission and the PCAOB, to pay close attention to these issues going forward, including carefully reading the guidance provided in the approval order and the PCAOB's adopting release." Clayton is encouraged by the PCAOB's stated intent to monitor the results of implementation, including consideration of any unintended consequences. Clayton noted that post-implementation review "of new standards, including the use of economic analysis tools, is an important component of high-quality regulatory decision-making."
For more information, click here.
© 2017 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
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COSO ERM Framework Update
Summary -
The Committee of Sponsoring Organizations of the Treadway Commission's (COSO's) updated ERM Framework: Enterprise Risk Management-Integrating with Strategy and Performance (ERM Framework) is now available on Accounting Research Manager. This updated ERM Framework builds on the prior version, Enterprise Risk Management-Integrated Framework. COSO designed the update to help organizations improve their approach to managing risk and at the same time create, preserve, and realize value.
Because risk influences strategy and performance throughout an organization, the updated ERM Framework emphasizes embedding ERM throughout an organization. It also highlights the importance of enterprise risk management in strategic planning.
The first part of the updated ERM Framework offers a perspective on current and evolving concepts and applications of enterprise risk management to meet the demands of an evolving business environment. The ERM Framework itself is organized into five components that accommodate different viewpoints and operating structures to enhance strategies and decision-making.
The update also focuses on challenges and evolving expectations of enterprise risk management that business leaders and boards are dealing with in today's landscape, including shifts in economic markets, evolving technologies, and changing demographics in supporting decision-making.
For more information, click here.
© 2017 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
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OTC Markets Group Releases New Stock Promotion Policy
Summary -
OTC Markets Group has released a
new stock promotion policy
, in conjunction with best practices for issuers, to improve overall market transparency for investors and better address the problems of fraudulent stock promotion.
Fraudulent stock promotion is an industry-wide concern that can mislead investors and disrupt the efficient pricing mechanisms of national exchanges and OTC markets. Solving this issue requires a collective effort among industry participants and regulators to proactively share information and drive greater transparency.
The new policy and best practices codify a core principle of OTC Markets Group's disclosure-based philosophy and the OTCQX and OTCQB Rules. It clarifies the responsibility of reputable public companies to make adequate current information available and provide timely disclosure of any news or information that might reasonably be expected to materially affect the market for its securities. This responsibility also requires public companies to quickly correct any false statements or materially misleading information spread by promoters so that public markets are not disrupted.
The enclosed policy discusses:
- Publicly Identify Securities Being Promoted
- Identifying Fraudulent Promotional Campaigns
- Responsibilities of Companies with Promoted Securities
- Impact on OTCQX or OTCQB Designation
- Caveat Emptor Policy and Stock Promotion
- Regulatory Referrals
Recognizing the need to advance the dialogue surrounding this critical issue, OTC Markets Group continues to actively engage with regulators to improve capital formation and create more transparency for investors when there is stock promotion paid for by third-parties. They believe the SEC should modernize its promotion regulations to ban anonymous, paid stock promotion and require clear disclosure when there is promotion paid for by third-parties, allowing for markets to better identify market manipulators.
OTC Markets Group encourages a more thoughtful approach by regulators that lowers barriers to small company public offerings, utilizes the vast amounts of data available today to identify bad actors hiding among the private financing markets, and accelerates real-time enforcement, regulatory intervention and change.
For more information, click here.
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Texas Association of Business Brokers (TABB) Annual State Convention and Trade Show
The Texas Association of Business Brokers (TABB) is hosting its Annual State Convention and Trade Show on February 9, 2018 at the Wyndham West Houston Energy Corridor. MaloneBailey is proud to be a sponsor of the event. TABB is the oldest Business Broker trade association in the country formed in 1979. TABB Members consist of Business Brokers/Owners, and our affiliate members are individuals and companies that provide services to Business Owners/Brokers such as Accountants, Attorneys, Financial Planners, Private Equity Groups, Investors, Appraisers/Valuations, Tax Professionals, Franchise Consultants, Exit Planners, Insurance agencies, etc.
The TABB Convention offers networking, a trade show, workshops and much more. There are many levels of participation:
- Attend as a participant or sponsor
- Sponsorships available: exhibit hall booth, raffle prizes and more
- Networking luncheon with keynote speaker
- Trade show and happy hour mixer opens FREE to the general-public on February 9th after 4:30pm
- TABB-accredited education courses available February 7-8
If you are interested in participating, please contact Shanna Caravella, Treasurer of TABB Houston (713-783-5800 /
[email protected]
)
Be sure to visit the TABB website for more information about the organization and event:
www.TABBconvention.com.
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Should you be interested in a complimentary estimate for audit, tax or consulting services, please contact Caroline Rosen at [email protected] or 713.343.4286.
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