GRC Blog from The GRC Group

SEC Issues Rule for PCAOB Dispute Process

GRC Group — Fri, 20 Aug 2010 21:14:00 +0000

On September 7, a new Securities and Exchange Commission rule will enable accounting firms to take part in a formal appeals process to dispute the Public Company Accounting Oversight Board’s findings. When an accounting firm appeals to the SEC, the PCAOB can no longer make the disputed items public. After the review process, which typically takes between one and three months, the SEC may opt to shield the information permanently if it finds that the PCAOB’s findings were arbitrary.

Countrywide Settles Class Action Fraud Suits

GRC Group — Fri, 20 Aug 2010 21:13:10 +0000

According to the L.A. Times, a U.S. District Judge in Los Angeles preliminarily approved a $600 million fraud settlement against Countrywide Financial Corp., while independent accounting firm KPMG has agreed to pay $24 million. The settlements would halt several class action lawsuits charging that the mortgage lender fraudulently covered up its increasing risks during the housing bubble. While Countrywide has denied allegations of wrongdoing, the settlement would ensure that Countrywide’s former CEO, President, and CFO would not be required to fund payments to shareholders. Countrywide continues to face other lawsuits and investigations, including one by the Securities and Exchange Commission.

Will Dodd-Frank Whistleblowers Bypass Compliance Officers?

GRC Group — Fri, 20 Aug 2010 21:11:52 +0000

According to the Washington Post, the Dodd-Frank Wall Street Reform and Consumer Protection Act includes whistleblower provisions that are causing some corporations to rethink their internal compliance policies. The so-called bounty program provides for whistleblowers to receive up to 30% of enforcement actions exceeding $1 million, which some say will incentivize employees to go directly to the SEC rather than to internal compliance officers. While the SEC hasn’t developed the necessary rules to implement the provision, companies are already reviewing employee complaint processes and procedures.

Former Deloitte Partner Settles with SEC

GRC Group — Fri, 20 Aug 2010 21:10:45 +0000

According to the New York Times , Thomas Flanagan, a former Deloitte & Touche partner, and his son, Patrick Flanagan, have agreed to pay over $1.1 million to settle a Securities and Exchange Commission case that accused the pair of insider trading. The SEC claimed that Thomas Flanagan violated auditor independence rules and Deloitte policies by trading on information about Deloitte clients Best Buy, Sears, and Walgreen, and by providing information to his son for additional trades. Under the settlement agreement, the pair neither admits nor denies wrongdoing.

SEC Opens Doors to Dodd-Frank Public Comment

GRC Group — Tue, 10 Aug 2010 16:35:18 +0000

In a speech to the Chamber of Commerce, Securities and Exchange Commission Chairman Mary Schapiro pointed to the breadth and depth of rulemaking required by the recently enacted Dodd-Frank Act, and noted that the SEC would go beyond legal requirements and open the doors for public comment – even before proposed regulations are drafted. A series of email in-boxes have been created at sec.gov and organized by topic, so that interested parties can provide preliminary comments. Schapiro also noted five areas of regulatory reform that the SEC would address, namely OTC derivatives, fiduciary duty of broker-dealers and investment advisors, hedge fund registration, expanding corporate disclosures, and credit rating agency oversight.