The Street (December 1)
To promote diversity and better governance, Nasdaq has proposed new rules that “would require companies to appoint at least two diverse directors on their boards or explain their rationale for not meeting that objective.” Before submitting its proposal to the SEC, Nasdaq analyzed over “two dozen studies that found an association between diverse boards and better financial performance and corporate governance.”
Tags: Boards, Directors, Diversity, Explain, Governance, Nasdaq, Performance, Rationale, Rules, SEC
Wired (October 2)
“The SEC’s ‘punishment’ of Elon Musk is exactly what Tesla needed.” Though these results were probably unintentional, the settlement will “shore up Tesla’s leadership structure, save Musk from himself, and put both the company and its leader on firmer footing.”
Tags: Leadership, Musk, Punishment, SEC, Settlement, Tesla, Unintentional
Institutional Investor (October 17)
Due to strained resources, the Securities Exchange Commission (SEC) is less likely to investigate insider trading that occurs further afield from its field offices. Traders seem to know this. “A 100-kilometer increase in distance between a firm and the nearest SEC office resulted in a 16.5 percent jump in illegal trades at that firm. Meanwhile, firms within 100 kilometers of the SEC were less likely to engage in these types of trades.”
Tags: Distance, Firm, Illegal trades, Insider trading, Investigate, Resources, SEC, Traders
Reuters (November 16)
“It will be a new day at the U.S. Securities and Exchange Commission after President-elect Donald Trump installs his choice to run the agency.” With the resignation of SEC Chairman Mary Jo White, who was a proponent of regulation, Trump’s team will have a relatively free hand. “Some rules already are marked for death or dialback.” Among them are the conflict mineral disclosure requirements and “a proposal that would require companies to disclose pay ratios between their CEOs and employees.”
Tags: CEOs, Conflict minerals, Dialback, Employees, Mary Jo White, Pay ratios, Regulation, Resignation, SEC, Trump, U.S.
Institutional Investor (October 2)
The Securities Exchange Commission is conducting a pilot program to determine whether a wider tick range will help drive liquidity and research, while reducing volatility. “Proponents believe a wider spread–$0.05, instead of the current $0.01 on exchanges—will lead to more displayed liquidity and thus an easier trading regime.” Over the next two years, 400 stocks will trade at the widened tick, while 1,200 stocks will serve as a control and two other groups of 400 stocks will test the effects of other variations.
Washington Post (November 23)
“No matter how much more money flows into the top tier of college athletics, few big-time athletics departments turn a profit.” Of the over 50 public schools in the Power Five conferences (The NCAA’s SEC, PAC12, Big 10, Big 12 and ACC), only about 15 to 25 have been profitable over the past decade. The majority operate at a loss, despite a more than doubling of revenue in the past decade.
Wall Street Journal (February 27)
“Tens of billions of dollars in U.S. market value have disappeared in recent years as more than 170 U.S.-listed Chinese companies have faced scrutiny for embezzlement, theft, misrepresentation and other alleged abuses.” Regrettably, the Securities and Exchange Commission (SEC) has caved-in on tighter inspections, deciding “not to suspend the Chinese audit firms or penalize them beyond token fines of $500,000.” As a result, U.S. investors “still lack basic protections against Chinese fraudsters” while Chinese authorities “remain as free as ever to stymie future investigations.” Furthermore, the SEC’s lack of spine increases “China’s rising confidence that it can play by its own rules.”
Tags: Abuses, Audit firms, Embezzlement, Inspections, Investors, Market value, Misrepresentation, Rules, SEC, Theft, U.S.-listed Chinese companies
Euromoney (October Issue)
Warning some stock exchanges could face downgrades, ratings agency S&P cautioned that they “have become more prone to operational risk.” Fragmentation is one key challenge. “There are now 16 SEC-registered securities exchanges in the US and more than 50 alternative trading systems, whereas before 2005 the equities market was dominated by NYSE and Nasdaq. It is this interconnectivity that is fueling operational risk. When Nasdaq halted trading in August, for example, other stock exchanges, including NYSE, Bats and Direct Edge, were also forced to stop trading in Nasdaq-listed securities.”
Tags: BATS, Challenge, Direct Edge, Downgrades, Fragmentation, Interconnectivity, Nasdaq, NYSE, Operational risk, S&P, SEC, Securities, Stock exchanges, Trading, U.S.
New Yorker (October 21)
“In 1965, C.E.O.s at big companies earned, on average, about twenty times as much as their typical employee. These days, C.E.O.s earn about two hundred and seventy times as much.” Two close that gap, the Securities Exchange Commission (SEC) will require “companies to disclose the ratio of the C.E.O.’s pay to that of the median worker.” This is unlikely to help. “Even as companies are disclosing more and more, executive pay keeps going up and up. This isn’t a coincidence: the drive for transparency has actually helped fuel the spiraling salaries…. It gives executives a good idea of how much they can get away with.”
Tags: C.E.O., Disclosure, Executives, Median worker, Salaries, SEC, Transparency
Financial Times (August 19)
Auditors bear some blame for the financial crisis, yet little has been done to improve the quality of their audits. The Public Company Accounting Oversight Board (PCAOB) has now proposed more detailed disclosure to highlight items of concern, even when a company passes the audit. “The Securities and Exchange Commission, which has the final say, should adopt the PCAOB’s proposal. This would match similar rules passed by the UK’s Financial Reporting Council…. Pass-fail cannot distinguish accounts that pass with flying colours and those that barely scrape by. Investors deserve better – and investors are auditors’ true constituency even if managers are their employers.”
Tags: Auditors, Audits, Disclosure, Financial Crisis, Financial Reporting Council, Investors, Pass-fail, PCAOB, Quality, Rules, SEC, UK
