In June the SEC disclosed a list of 49 proposed rule changes that were on the Commission’s agenda for 2021. To advance the effort, the Commission this week announced the appointment of five people to Gary Gensler’s Policy Staff, including:
Corey Klemmer, Corporation Finance Counsel, who “focuses on policies designed to ensure that investors are provided with material information in order to make informed investor decisions.” Her career includes work as analyst at the AFL-CIO Office of Investment.
Adam Large, Trading and Markets Counsel, who “focuses on day-to-day oversight of the major securities market participants with a focus on broker-dealers and security-based swaps.” He was with the SEC’s Division of Economic and Risk Analysis and the Division of Examinations.
Mika Morse, Climate Control Counsel, who “serves as the lead policy advisor on climate-risk finance issues.” She previously worked as deputy legislative director for U.S. Senator Brian Schatz.
Sirimal Mukerjee, Investment Management Counsel, who “counsels on matters related to investment companies and investment advisors.” He served as branch chief in the SEC’s Investment Advisor Regulation Office.
Sai Rao, Trading and Markets Counsel, who “focuses on oversight of the major securities market participants with a focus on market structure.” He worked in the SEC’s Division of Economic and Risk Analysis.
In announcing the appointments, Policy Director Heather Slavkin Corzo said “I’m excited to work with this team to advance the SEC’s ambitious rulemaking agenda….”
Some notable rules in the “proposed” and “final” SEC rulemaking areas include:
Disclosure relating to climate risk, human capital, including workforce diversity and corporate board diversity, and cybersecurity risk
Market structure modernization within equity markets, treasury markets, and other fixed income markets.
Transparency around stock buybacks, short sale disclosure, securities-based swaps ownership, and the stock loan market.
Investment fund rules, including money market funds, private funds, and ESG funds.
10b5-1 affirmative defense provisions.
Unfinished work directed by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, including, among other things, securities-based swaps and related rules, incentive-based compensation arrangements, and conflicts of interest in securitizations.
Enhancing shareholder democracy.
Special purpose acquisition companies.
Mandated electronic filings and transfer agents.
SEC May Shorten 10-DAY Disclosure Rule for Large Stakeholders
The SEC is considering speeding up the disclosure timeline for investors who have accumulated more than five percent of a public company’s stock.
In a speech at the City and Financial Global Conference in London in June, SEC Chair Gary
Gensler said existing rules, which give investors ten days to file and disclose when they’ve exceeded the five percent threshold, may be outdated.
“Those rules might’ve been appropriate for the 1970s, but I have my doubts about whether they continue to make sense given the rapidity of current markets and technologies,” said Gensler. “I’ve asked staff how we might update these rules, including possibly shortening reporting deadlines.”
When Congress instituted the 10-day rule in 1968, large-stake investors filed their disclosures with the government on paper. With modern technology, the SEC is saying that electronic filing capabilities have made it easy to report ownership changes quickly.
The Wall Street Journal is reporting that “activists may object to changes in the reporting timetable since they use the 10-day window to build positions and avoid having the stock price rise before they have built their stake.”
Another area on the SEC’s radar is security-based swaps, where Gensler says, “The disclosures there aren’t as robust as they are in the rest of the market.”
He told the conference audience that two additional areas of focus include short selling where “we have unused authorities in that space that were granted by Congress nearly a dozen years ago,” and company stock buy-backs.
No Agreement on Inflation
Inflation is expected to remain in the relatively high 3 to 4 percent range into 2022, fueled by a variety of factors, including a pent-up demand in consumer spending post-lockdown, record fiscal and monetary stimulus, and constraints on supply because of continued low labor participation. That’s according to Jason Furman, former Chairman of the Council of Economic Advisors under the Obama Administration.
During a recent panel discussion hosted by the Committee for a Responsible Federal Budget, Furman, currently a professor at Harvard University, said, “For a sustained period of time we’re going to have demand above trend, supply below trend, and that’s upward pressure on inflation.”
“As businesses sit down in September to set their wages for January, are they going to think about inflation? It’s sort of damned if you do and damned if you don’t. If they don’t think about inflation, then real wages are getting creamed next year; if they do, then nominal wages are going up and with that some pressure on prices.”
Furman’s comments appear to be in conflict with Federal Reserve Chair Jerome Powell and Secretary Treasury Janet Yellen, both of whom have called recent price surges “transitory.”
Within days of Furman’s prediction, the Bureau of Labor Statistics (BLS) issued its June Consumer Price Index Report showing that the CPI rose 0.9 percent in June, following a 0.6 percent increase in May. The June increase “was the largest 1-month change since June 2008, when the CPI rose 1.0 percent”, said the report.
The BLS noted that, “Over the last 12 months, the all items index increased 5.4 percent before seasonal adjustment; this was the largest 12-month increase since a 5.4-percent increase for the period ending August 2008.
The cost of used cars and trucks saw a 10.5 percent price increase in June, topping the list, and accounting for more than one-third of the seasonally adjusted increase. The food index came in second, increasing 0.8 percent in June, compared to a 0.4 percent increase in May. The energy index increased 1.5 percent in June, with the gasoline index rising 2.5 percent over the month.
According to the BLS report, the overall index rose 5.4 percent for the 12 months ending June and “it has been trending up every month since January, when the 12-month change was 1.4 percent.” Energy was hit hardest, with costs rising 24.5 percent over the last 12 months, followed by food, which increased 12.4 percent.
Debunking ‘Work-Life Balance’
A just released study is debunking widely held views on the benefits of work-life balance amongst accounting professionals. Researchers expressed surprise at their own findings that although a good work-life balance may improve work performance, it does not equate with job satisfaction.
The study examined 19,673 employee reviews of 137 accounting firms spanning 2008 to 2016, and evaluated data about compensation, career opportunities and work-life balance.
They found that auditors associated job satisfaction with “career opportunities”, “senior management” and “culture and values.” Surprisingly, “compensation and benefits” and “work-life balance” were least associated with job satisfaction.
The findings don’t surprise Corey Fischer, Managing Partner at Weinberg & Company. “We don’t see “work” and “life” as opposing sides of a balance scale—where one side goes down when the other side goes up. You really won’t enjoy your life if you hate your job. It’s not about balance or offsetting. The two should complement each other. And it should be obvious, if you want to improve ‘job satisfaction’ you have to improve the job.”
The survey bears out what Weinberg has experienced. “Most of our accounting professionals came to us from Big 4 and large regional accounting firms, unsatisfied by assembly-line accounting, and industrialized culture,” said Fischer.
“Here they can still have the same stimulating and challenging client assignments, but with more client contact, and without all the bureaucratic layers. And here they can accelerate their careers because we promote based on demonstrated skills, not the calendar,” he continued.
Fischer says he is constantly assessing office morale, striving to maintain a culture that values the work, and the people who do the work. He thinks that business casual attire and an open-door policy helps him get honest and direct feedback.
Noting that Weinberg is expanding its Century City office and is currently hiring additional audit and tax professionals, he concluded: “I didn’t mean for this interview to sound like a recruiting advertisement.”
“Did I mention we offer free employee parking,” he quipped.
PCAOB Penalties Fund Accounting Scholarships
The PCAOB has awarded $10,000 scholarships to each of 253 students in US colleges and universities to further their study in accounting and auditing.
Under the Sarbanes Oxley Act of 2002, portions of money collected as penalties by the PCAOB must be used to fund a merit scholarship program for students in accredited accounting degree programs.
The PCAOB Scholars Program was created to identify eligible students and to award funds through the students’ educational institutions.
Since its inception in 2011, the scholarship program has awarded $16.23 million in scholarships to 1,623 students.
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