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November 2016 

Greetings,

We are pleased to release MaloneBailey's November 2016 newsletter highlighting recent SEC and FASB updates and proposals. Please note that the updates provided in this newsletter are not a comprehensive list. We have selected the updates and proposals that we believe may be of relevance to you. Our goal is to provide you with resources to keep you informed of the ever-changing rules and regulations pertaining to regulatory and accounting matters. 

We encourage you to visit the SEC and FASB websites for more information as well as a complete list of updated rules and regulations and proposals. We invite you to contact us should you have any questions about the information provided in this issue. You can find a list of MaloneBailey partners and their contact information at the end of this newsletter. 

For easy navigation, please refer to the 'In This Issue' section, which contains a hyperlinked table of contents of rule and regulation updates and proposals that may affect you. We invite you to visit our website to review archived versions of this newsletter containing past SEC and FASB updates and proposals.

The MaloneBailey Team
www.malonebailey.com
 
     Recent SEC Updates & Proposals

Summary - The SEC voted to adopt new rules to establish enhanced standards for the operation and governance of securities clearing agencies that are deemed systemically important or that are involved in complex transactions, such as security-based swaps.
 
The Dodd-Frank Wall Street Reform and Consumer Protection Act called for an enhanced regulatory framework for certain securities clearing agencies, which perform a range of services critical to the effective operation of the securities markets, including acting as intermediaries between the parties to a securities transaction, ensuring that funds and securities are correctly transferred between parties and, in some cases, assuming the risks of a party defaulting on a transaction by acting as a central counterparty.
 
The rules adopted today apply to SEC-registered securities clearing agencies that have been designated as systemically important by the Financial Stability Oversight Council or that are involved in more complex transactions. Securities clearing agencies covered by the new rules will be subject to new requirements regarding, among other things, their financial risk management, governance, recovery planning, operations, and disclosures to market participants and the public.
 
The adopted rules will become effective 60 days after publication in the Federal Register. Affected securities clearing agencies must comply with the requirements 120 days after the effective date.

For more information, click here.
 
© 2016 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
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SEC2 Staff Speech, "Tandy" Representations No Longer Needed in Filing Reviews
 
Summary - The SEC has issued an announcement indicating that "Tandy" representations are no longer needed in filing reviews. Beginning in the mid-1970s, the SEC staff began to include in filing review comment letters what became known as "Tandy" language. Tandy letters required a company to acknowledge in writing that the disclosure in the document was its responsibility and to affirmatively state that it would not raise the SEC review process and acceleration of effectiveness as a defense in any legal proceeding.
 
While it remains true that companies are responsible for the accuracy and adequacy of the disclosure in their filings, the SEC staff does not believe that it is necessary for them to make the affirmative representations in their filing review correspondence. Going forward, the SEC staff will no longer request those representations, but instead will include the following statement in their comment letters: "We remind you that the company and its management are responsible for the accuracy and adequacy of their disclosures, notwithstanding any review, comments, action or absence of action by the staff."

For more information, click here.
 
© 2016 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.


Summary - SEC Chair Mary Jo White recently spoke before the Legal Practice Division Luncheon at the International Bar Association's Annual Conference. Chair White discussed securities regulation in the global marketplace, including the importance of international issues to securities regulation and the SEC. Ms. White noted that all securities regulators "need to be very cognizant of our global, as well as domestic, responsibilities, whether we are implementing standards for the global over-the-counter derivatives markets; detecting and protecting against new systemic risks in our financial systems; helping each other enforce our respective laws by gathering evidence from across the globe; examining our registrants, wherever they may be located, to ensure that they are abiding by the rules; or raising the bar on world-wide enforcement efforts to combat corrupt corporate payments, through our Foreign Corrupt Practices Act (FCPA) or similar regimes in other jurisdictions."
 
Topics discussed by Chair White included:
  • Regulation of the asset management industry;
  • Supervising financial firms in a global marketplace: data protection and the regulators' need for access to data; and
  • Strong enforcement against foreign corrupt payments.
For more information, click here.
 
© 2016 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.

Summary  - As discussed above, the SEC adopted new rules to establish enhanced standards for the operation and governance of securities clearing agencies that are deemed systemically important or that are involved in complex transactions, such as security-based swaps. The SEC also voted to propose to apply the enhanced standards established by the new rules to other categories of securities clearing agencies, including all SEC-registered central counterparties.
 
The SEC's proposal would apply the newly-adopted rules to other categories of securities clearing agencies, including all SEC-registered securities clearing agencies that are central counterparties, central securities depositories, or securities settlement systems. The public will have 60 days to comment after publication in the Federal Register.
 
The public comment period will remain open for 60 days following publication of the proposing release in the Federal Register.
 
For more information, click  here.
 
© 2016 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
SEC5Amendment to Securities Transaction Settlement Cycle

Summary  - The SEC voted to propose a rule amendment to shorten the standard settlement cycle for most broker-dealer securities transactions from three business days after the trade date (T+3) to two business days after the trade date (T+2). The proposed amendment is designed to reduce the risks that arise from the value and number of unsettled securities transactions prior to the completion of settlement, including credit, market, and liquidity risk directly faced by U.S. market participants.
 
The public comment period will remain open for 60 days following publication of the proposing release in the Federal Register.
 
For more information, click here.
 
© 2016 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.
      Recent FASB Updates & Proposals
FASB1FASB Proposed Accounting Standards Update 2016 -330 - Financial Services - Insurance (Topic 944) - Targeted Improvements to the Accounting for Long-Duration Contracts

Summary - The FASB has issued a proposed ASU, Financial Services - Insurance (Topic 944): Targeted Improvements to the Accounting for Long-Duration Contracts. The proposal is intended to improve financial reporting for insurance companies that issue long-duration contracts, such as life insurance, disability income, long-term care, and annuities. Comments are due by December 15, 2016.
 
The FASB believes the proposal for improves insurance accounting by:
  • Improving the timeliness of recognizing changes in the liability for future policy benefits by requiring that updated assumptions be used to measure the liability;
  • Eliminating the usage of an asset rate (that is, an insurance company's expected investment yield) to discount liability cash flows, and instead requiring that cash flows be discounted at a high-quality fixed-income instrument yield;
  • Simplifying and improving the accounting for certain options or guarantees in variable products (such as guaranteed minimum death, accumulation, income, and withdrawal benefits) by requiring those benefits to be measured at fair value instead of using two different measurement models;
  • Simplifying the amortization of deferred acquisition costs; and
  • Increasing transparency by improving the effectiveness of disclosures.
The effective date will be determined after the FASB considers comments received during the comment period and from the public roundtable meetings.
 
For more information, click here.
 
© 2016 CCH Incorporated and/or its affiliates. All rights reserved. Used with permission.