April 25, 2005

SEC Chief Accountant Offers Peek at Future of Offering Process by Non-US Companies

On Saturday, the NY Times ran this article about a “road map” from SEC Chief Accountant Donald Nicolaisen which would allow European companies to sell securities in the U.S. without having to revise their financial statements.

Outlined in this recent speech by the Chief Accountant, the road map envisions that by 2009 (and perhaps as early as 2007) companies that follow International Accounting Standards might be able to file financial reports with the SEC without reconciling the reports with US GAAP. Here is a Paul Weiss memo that discusses the road map.

The article has quotes from European regulators and this one from SEC Chairman Donaldson: “achieving the goal would depend in part on a detailed analysis of the faithfulness and consistency of the application and interpretation of international accounting standards in financial statements across companies and jurisdictions.” This jibes with what the Chairman noted in his meeting last week with EU Market Commissioner Charles McCreevy.

The article also says the SEC expects about 300 companies, primarily European, to file annual reports next year that use international standards, which are now required in Australia and in the European Union. While Australian companies must follow all of these international rules, the European Commission gave European companies permission to opt out of complying with major parts of a rule concerning derivative securities.

30 Nuggets Transcript is Up!

On, the much-sought-after transcript from “30 M&A Nuggets in 60 Minutes” is posted.

My Last Word on Lease Restatements

I’ve blogged a bit about the “biggest category of restatements we’ve ever seen” after the SEC’s Office of Chief Accountant posted a letter regarding lease accounting in February. In last Wednesday’s WSJ, I saw the most accurate description of why the SEC released that letter, indicating that the SEC Chief Accountant was merely reacting to what the Big 4 had suddenly realized regarding past lease accounting practices. Here is an excerpt from that article:

“It all started in November, when KPMG LLP told fast-food chain CKE Restaurants Inc. that it had problems with the way CKE recognized rent expenses and depreciated buildings. That led CKE to restate its financials for 2002 as well as some prior years. CKE will also take a charge in its upcoming annual filing for 2003 through its just-ended 2005 fiscal year.

By winter, the Big Four accounting firms had banded together to ask the Securities and Exchange Commission’s chief accountant to clarify rules on lease accounting. Retail and restaurant trade groups began battling rule makers about the merits of issuing such guidance.

Now, about 250 companies have announced restatements for lease-accounting issues similar to CKE’s, and the number continues to rise daily.”

“Gripe Sites” Protected in 9th Circuit

Many companies have had to deal with so-called “gripe sites” — unauthorized websites that not only criticize the company or its products, but also use the company’s own trademark as part of the website’s domain name. Here is an article that explains what gripe sites are and here is a website that comments upon – and keeps track – of gripe sites.

As noted in this Skadden Arps’ memo, earlier this month, the U.S. Court of Appeals for the Ninth Circuit found that the noncommercial use of a trademark as the domain name of a gripe site does not constitute infringement of a trademark. The court’s decision removed an important argument on which plaintiffs rely in such cases and split from an earlier Fourth Circuit decision.