Public Company Accounting

SEC steps up enforcement actions against CPAs for cooking books

Publisher: MarketWatch
Author: Francine McKenna

The Securities and Exchange Commission fined Bankrate Inc. $15 million to settle charges that their CPAs engaged in accounting fraud to ensure that its financial results met analyst expectations, Reuters reported on Tuesday.

The company’s former Chief Financial Officer Edward DiMaria and former director of accounting Matthew Gamsey, were also sued. The litigation continues against DiMaria and Gamsey. Former vice president of finance Hyunjin Lerner settled for $180,045 settlement for his role in the scheme. The SEC accused the company and the finance officials of scheming to boost revenue and understate expenses to meet analyst targets for adjusted earnings before interest, taxes, depreciation and amortization for the second quarter of 2012.

That wasn’t the only accounting-related SEC enforcement action announced Tuesday.

For full access to the article, please click here.

By : Securex /September 10, 2015 /Public Company Accounting /0 Comment Read More

Pay-disclosure advocates chafe at SEC rule delays

Publisher: Marketwatch
Author: Eric Garcia

Supporters of a rule that would require public companies to disclose the ratio between executive and median employee pay say the SEC should move soon to enact the regulation.

Under Dodd-Frank law, publicly traded companies have to disclose the ratio of executive pay to that of media employees. The disclosure must come at annual shareholder meetings. The SEC is responsible for implementing the requirement.

In September 2013, commissioners voted 3-2 to propose creating the rule. Testifying before the Senate Banking Committee in September 2014, SEC Chairwoman Mary Jo White said the commission hoped to finish the rule by the end of the year.

The commission hasn’t yet set a to vote on the proposal. A source familiar with the matter said scheduling is at White’s discretion.

An SEC spokesman declined to comment Friday.

For full access to the article, please click here.

By : Securex /January 05, 2015 /Compliance, Public Company Accounting, Securites Law /0 Comment Read More

XBRL US forms Working Group on Standards to Help Small Business

Press Release

XBRL US, the non-profit consortium dedicated to improving business reporting, announced the formation of the XBRL CET (Construction, Energy, Transportation) Working group.

The mission of the working group is to implement the XBRL data standard to reduce costs and streamline processing in financial data transaction within multiple industries.

The initial focus of the working group will be on surety bond processing for contractors, which today requires significant manual rekeying, favoring large contractors over small because of the lower return on small contractors projects. Transforming the process through the XBRL standard would make data immediately computer-readable, more timely and cheaper to manage, effectively creating a level playing field for large and small businesses.

The Digital Accountability and Transparency (DATA) Act, a bill signed into law on May 9, 2014, now mandates the use of structured data by government agencies for all program expenditures. The Act also calls for a study to determine if the contractors that work with federal agencies should also report in structured data format.

“With the DATA Act, every public agency, and the contractors that work with them, will need to develop a strategy for how they will comply by 2017, which creates a fork in the road,” said K. Dixon Wright, a surety executive who has been working with California State University Chico (CSU Chico) and the Associated General Contractors (AGC) to foster market collaboration and development of open standards for improving access to opportunities to small business.

For full access to the article, please click here

By : Securex /November 12, 2014 /Compliance, EDGAR XBRL, Public Company Accounting, XBRL Blogs /0 Comment Read More

Insider Stock Sale: SEC Announces Fraud Charges against Biotech Company and Former Executive

SEC Press Release 9/10/2014

SEC Announces Fraud Charges against Biotech Company and Former Executive who failed to report Insider Stock Sales. Today, the SEC announced charges against 28 officers, directors, or major shareholders for violating federal securities laws that require them to promptly report information about their holdings and transactions in company stock.

A total of six publicly traded companies were charged for contributing to filing failures by insiders or failing to report their insiders’ filing delinquencies.

The charges were a result of an SEC enforcement initiative focusing on two types of ownership reports that give investors the opportunity to evaluate whether the holdings and transactions of company insiders could be indicative of a company’s future performance. Both types of ownership reports (Form 4 and Schedule 13D/13G) have certain timing requirements in regards to when they have to be filed.

The accused individuals are charged with repeatedly filing their insider stock sale documents late; sometimes by weeks, months, and even years.

Andrew M. Calamari, Director of the SEC’s New York Regional Office, added, “The reporting requirements in the federal securities laws are not mere suggestions, they are legal obligations that must be obeyed.  Those who fail to do so run the risk of facing an SEC enforcement action.”

These reporting requirements under Section 16(a) of the Securities Exchange Act of 1934 and under Section 13(d) or (g) of the Exchange Act apply irrespective of profits or a person’s reasons for acquiring holdings or engaging in transactions.  The failure to timely file a required beneficial ownership report, even if inadvertent, constitutes a violation of these rules.

The individuals that chose to settle the charges are required to pay financial penalties totaling $2.6 million.

For full access to the SEC press release, please click here.

By : Securex /September 11, 2014 /Compliance, General EDGAR filing,, Public Company Accounting, SEC EDGAR Filing Deadlines, SEC News and Public Statement, Section 16 Filings, Securites Law /0 Comment Read More

SEC Playing Bigger Role In Cyber-Security

Publisher: The National Law Journal
Author: Nick Akerman and Parker Schweich

The Securities and Exchange Commission has ramped up its efforts in prompting public companies to take proactive steps in ensuring the integrity of market systems and customer data protection.

Although the SEC is not an agency that typically comes to mind in the war against cyber threats, the SEC does maintain jurisdiction over cyber-security issues for public companies, broker-dealers and investment advisers.

In October 2011, the SEC began its focus on cyber security issue by issuing guidance for public companies on disclosing risk and incidents that require disclosure. Since issuing that guidance, the amount of disclosures in regards to data breach incidents, risk factors, trends and uncertainties have grown. A benefit associated with this guidance is that board executives are rethinking their disclosure controls and procedures in terms of risk oversight.

For full access to the article and more details to the SEC’s continuing guidance on cyber security, please click here.

By : Securex /July 29, 2014 /Public Company Accounting, SEC News and Public Statement, Securites Law /0 Comment Read More

Form SD – EDGAR filing glitch – Conflict Minerals Report is “Exhibit 1.02″

Publisher: Lexology
Authors: Dynda A. Thomas

The Division of Corporation Finance has confirmed that there is a glitch in the EDGAR filing system.

EDGAR is not accepting Exhibit 1.01 to the Form SD but is accepting Exhibit 1.02.

Therefore, despite the Instructions to the Form SD, you will need to refer to your Conflict Minerals Report as “Exhibit 1.02” in order for the filing to be accepted.  The Division of Corporation Finance recommends changing the reference on the report itself as well – in order to be internally consistent.

So, we urge you to change the reference on your Conflict Minerals Report to Exhibit 1.02, change your filing index reference to Exhibit 1.02, and code your filing for EDGAR purposes so that the Conflict Minerals Report is Exhibit 1.02 rather than Exhibit 1.01.

By : Securex /May 30, 2014 /Compliance, General EDGAR filing, Public Company Accounting, SEC News and Public Statement, Securites Law /0 Comment Read More

Substantial Risk of Forfeiture

Publisher: NASPP

At the same time that the IRS released regulations designed to clarify which restrictions constitute a substantial risk of forfeiture under Section 83, a recent tax court decision casts doubt on the definition in the context of employees that are eligible to retire.


When an employee is eligible to retire and holds restricted stock that provides for accelerated or continued vesting upon retirement, the awards are considered to no longer be subject to a substantial risk of forfeiture, and, consequently, are subject to tax under Section 83. This also applies to RSUs, because for FICA purposes, RSUs are subject to tax when no longer subject to a substantial risk of forfeiture and the regs in this area look to Section 83 to determine what constitutes a substantial risk of forfeiture.

Although there’s usually some limited risk of forfeiture in the event that the retirement-eligible employee is terminated for cause, that risk isn’t considered to be substantial. As a practical matter, at many companies just about any termination after achieving retirement age is treated as a retirement.

Austin v. Commissioner

In Austin v. Commissioner however, the court held that an employee’s awards were still subject to a substantial risk of forfeiture even though the only circumstance in which the awards could be forfeited was termination due to cause. In this case, in addition to the typical definition of commission of a crime, “cause” included failure on the part of the employee to perform his job or to comply with company policies, standards, etc.


Up until now, most practitioners have assumed that providing for forfeiture solely in the event of termination due to cause is not sufficient to establish a substantial risk of forfeiture, regardless of how broad the definition of “cause” is. Austin seems to suggest, however, that, in some circumstances, defining “cause” more broadly (e.g., as more than just the commission of a crime) could implicate a substantial risk of forfeiture, thereby delaying taxation (for both income and FICA purposes in the case of restricted stock, for FICA purposes in the case of RSUs) until the award vests.

For full access to the rest of the implications of Austin v. Commissioner, please click here. Give us your thoughts on forfeiture risk in the comments below.


By : Securex /April 24, 2014 /Compliance, Public Company Accounting, Section 16 Filings, Securites Law /0 Comment Read More

US insider trading cases face test at appeals court

Publisher: Reuters
Author: Nate Raymond

A U.S. appeals court is set hear a case whose outcome could make it harder for the government to prosecute insider trading and potentially jeopardize several high-profile guilty verdicts, including that of SAC Capital Advisors portfolio manager Michael Steinberg.

The question facing the 2nd U.S. Circuit Court of Appeals in New York on Tuesday is one that has divided lower court judges: whether to be convicted of insider trading, the recipient of non-public information must know that the source of the tip benefited from the disclosure.

In 1983, the US Supreme court held that a “tippee” can only be found to have engaged in insider trading if the tipper benefited from the disclosure. The case in question today highlights the issue of whether the prosecutors must show the tippee knew of the tipper’s benefit, whether financial or non-monetary. The results of the verdict will answer the question of whether prosecutors are trying to stretch securities law too far and will give guidance to the business community to protect itself from potential insider trading violations. For full access to the article, please click here.

What are some of your thoughts on insider trading laws? Give us your opinion in the comment section below.

By : Securex /April 22, 2014 /Compliance,, Public Company Accounting, SEC News and Public Statement, Section 16 Filings, Securites Law /0 Comment Read More

SEC issues new and revised guidance on intrastate crowdfunding

Publisher: Morrison Foerster LLP
Author: Ze’-Ev Eiger

On April 10th, 2014, the Division of Corporation Finance of the SEC issued one revised and two new compliance and disclosure interpretations regarding crowd funding and Rule 147 under the Securities Act of 1933, as amended, which are summarized in the full article here.

Section 3(a)(11) of the Securities Act (“Section 3(a)(11)”) provides an exemption from the registration requirements of the Securities Act for any security which is a part of an issue offered and sold only to persons who reside in a single state or territory, where the issuer of such security is a person resident and doing business within or, if a corporation, incorporated by and doing business within, such state or territory. Rule 147 under the Securities Act (“Rule 147”) provides a safe harbor for offerings conducted pursuant to Section 3(a)(11), which requires that the issuer must be a resident of, and doing business in, the same state in which all offers and sales are made, and the offering may not be offered or sold to non-residents.

What is your opinion on the new and revised guidelines on intrastate crowd funding? Give us your thoughts in the comments below.

By : Securex /April 17, 2014 /Compliance, General EDGAR filing, Public Company Accounting, Securites Law /0 Comment Read More

New SEC guidance provides answers on conflict minerals disclosures

Publisher: Dinsmore
Authors: David Lavan, Andrew Gammill

The SEC has issued new guidance designed to help companies prepare their mandatory reports as the deadline approaches for publicly traded US companies to file new conflict mineral reports.

Many companies have had questions about what the new conflict minerals rules mean to them, and the first of the reports required by the rules are due May 31st, 2014. The new SEC guidance in the form of FAQs can be accessed here The Dodd-Frank Wall Street Reform and Consumer Protection Act required the SEC to promulgate rules regarding the use of conflict minerals by public companies. Conflict minerals are defined as four minerals – gold, cassiterite (tin), columbite-tantalite (tantalum), and wolframite (tungsten) – that are commonly mined in parts of central Africa and the mining of which has been used to fund armed conflict and human rights abuses. Publicly traded companies whose products include those four minerals must make a reasonable inquiry to determine whether the conflict minerals they used came from that region and, in some cases, file a report with the SEC.

For full access to the details of the article, please read here.  Do you have any thoughts on the new SEC guidance on conflict mineral reports? Or perhaps you have any questions regarding the disclosure of conflict minerals? Give us your opinion in the comment section below.

By : Securex /April 17, 2014 /Compliance, General EDGAR filing, Public Company Accounting, SEC News and Public Statement /0 Comment Read More