April 15, 2005

Enforcement Director Cutler To Leave SEC

After nearly four years at the SEC, Enforcement Chief Stephen Cutler has announced he will go back into private practice in a month. Stephen joined the Commission as Deputy Director of Enforcement on Arthur Levitt’s watch and was appointed Director of Enforcement by Harvey Pitt. If past experience of other former Enforcement Directors is any indication, he will do quite well in private practice. Here is the related SEC press release.

Now comes the traditional scramble to determine whether the next Enforcement Director comes from within the agency or from the outside world. In terms of post-SEC earning power, this position can be even more lucrative than the Chairman spot or any other position within the Commission.

Six-Month Delay for Option Expensing

Yesterday, the SEC announced the adoption of a new rule that amends the compliance dates for the FASB’s 123R. Under Statement No. 123R, companies would have been required to implement the standard as of the beginning of the first interim or annual period that begins after June 15, 2005, or after December 15, 2005 for small business issuers. Calendar year-end companies that are not small business issuers, therefore, would have been permitted to follow the pre-existing accounting literature for the first and second quarters of 2005, but required to follow 123R for their third quarter reports.

The SEC’s new rule allows companies to implement 123R at the beginning of their next fiscal year, instead of the next reporting period, that begins after June 15, 2005, or Dec. 15, 2005 for small business issuers. This means, for example, that the financial statements for a calendar year-end company do not need to comply with 123R until the interim financial statements for the first quarter of 2006 are filed. The financial statements for a company, other than a small business issuer, with a June 30 year-end, however, must comply with 123R when the interim financial statements for the quarter beginning July 1, 2005 are filed. The SEC’s new rule does not change the accounting required by 123R; it changes only the dates for compliance with the standard.

Chairman Donaldson Bobblehead?

Each of us has our own gauge of our own success. For some, it’s money; for others, it’s fame. For me, it’s a bobblehead. When they make a bobblehead with your likeness, you know you made it! Check out this article regarding bobbleheads of the US Supreme Court Justices.