November 11, 2010

The Role of the SEC’s New “Office of Investor Advocate”

One item in Dodd-Frank that I admit that I haven’t paid much attention is the SEC’s creation of a new “Office of Investor Advocate.” I imagine I shrugged it off because the SEC’s primary mission is investor protection. So shouldn’t the entire agency essentially should be in this new office? Not to mention that an “Office of Investor Education and Advocacy” already exists – and an “Investor Advisory Committee” was created just last year. Like so many things in Dodd-Frank, Section 915 seems to mandate things the SEC already does (or has done).

Anyways, as this NY Post article notes, the SEC is now searching for someone to head up this new Office (which makes sense given the SEC’s tentative schedule for Dodd-Frank implementation indicates that this Office will be created this month). Here’s the job description posted by Korn/Ferry, a recruiter hired to help in the search. It looks like a significant part of the Advocate’s job will be preparing reports for Congress, in addition to the primary task of serving in an ombudsman role to investors.

It is doubtful that this new Office will be combined with the existing Office of Investor Education for two reasons. One is that I believe Congress mandated this new Office because it wanted to function separately and independently from the existing Office of Investor Education. There are several signs of that (egs. new Advocate reports directly to SEC Chair and has power to hire “independent” counsel, etc.). In addition, the new Advocate job can’t be filled by someone already at the SEC, as Dodd-Frank mandates that the person shall not have worked at the SEC for at least two years prior to being hired. It will be interesting to see how the Advocate’s role evolves over time…

For some fun, watch this three-minute video entitled “Toxie’s Dead” from NPR’s show, Planet Money. It’s about Toxie, a personified toxic asset that helped burst the housing bubble.

More on “FASB: Proposed Loss Contingency Standard Won’t Apply to Calendar Year-End Form 10-Ks”

A few weeks ago, I blogged how the FASB advised that calendar year-end companies will not be required to comply with the FASB’s proposed new loss contingency disclosure standards in their 2010 Form 10-Ks. Here is an update on this development from PricewaterhouseCoopers:

At yesterday’s meeting, the FASB discussed the redeliberation plan for its loss contingencies disclosure project. The FASB staff summarized the feedback provided by respondents in the comment letter process. Many respondents recommended that the existing standard be retained and that the proposal not be finalized. The Board discussed whether the concerns raised by investors result from a compliance or standard-setting issue. The Board noted that the SEC has recently emphasized compliance with the existing standard through the SEC’s process of providing comment letters to registrants, and its recent “Dear CFO letter”, dated October 2010.

Prior to concluding on whether an amendment to the existing standard is still needed, the Board decided to evaluate whether there is improved disclosures of loss contingencies during the 2010 year-end financial reporting cycle. At that time, the Board will decide whether any future redeliberations are needed or whether additional outreach on the proposal should be made. This decision effectively delays the project until the second quarter of 2011 at the earliest, and most likely until the second half of 2011.

Poll: Which Flintstones’ Character Could Best Serve as the Investor Advocate?

Since it’s a holiday, take part in this “fun & easy” anonymous poll:

Online Surveys & Market Research

– Broc Romanek