On Friday, the Supreme Court announced that it would hear a challenge to the SEC’s appointment of its administrative law judges. Here’s the intro from this Bloomberg article:
The U.S. Supreme Court will decide whether the SEC’s in-house judges were appointed in violation of the Constitution, agreeing to hear a case that could upend administrative hearing systems across the federal government. The move came at the request of the Trump administration, which switched sides in November and told the justices it would no longer defend the SEC’s system.
The dispute could affect more than 100 cases currently at the SEC, along with a dozen that are on appeal in the federal courts. It also could have ramifications for other government agencies, including the Federal Deposit Insurance Corp. and the Consumer Financial Protection Bureau, which have similar systems for appointing their administrative law judges.
As we blogged at the time, the Trump Administration’s decision to change the government’s position in this case led to the SEC’s reappointment of all its ALJs in an effort to cure any constitutional defects in the appointment process. Left unanswered for now is the question of the effect that a Supreme Court decision invalidating those prior appointments would have on previously adjudicated cases.
This D&O Diary blog has more details on the case and the issues involved – and says that the case is likely to be resolved during the current term.
SEC Updates “Enforcement Manual”
Also, check out this new Cleary Gottlieb blog – “Cleary Enforcement Watch” – which covers global enforcement, white collar, and regulatory trends & developments.
Lease Standard: FASB Proposes Implementation Tweaks
We haven’t blogged much about FASB’s new lease accounting standard, but now that the new revenue recognition standard’s in place, here’s a reminder – the new lease standard will go into effect for fiscal years beginning after December 15, 2018.
With the deadline approaching, FASB recently issued an exposure draft of a new auditing standard update intended to ease the implementation process. According to FASB’s press release, the proposed ASU would:
– Add an option for transition to ASU No. 2016-02, Leases (Topic 842), that would permit an organization to apply the transition provisions of the new standard at its adoption date instead of at the earliest comparative period presented in its financial statements
– Add a practical expedient that would permit lessors to not separate nonlease components from the associated lease components if certain conditions are met. This practical expedient could be elected by class of underlying assets; if elected, certain disclosures would be required.
Yeah, I could pretend that I know what this means, but that wouldn’t be a smart play. Fortunately, there’s this Thompson Reuters article on FASB’s proposed action to help us all out. Comments on FASB’s exposure draft are due by February 5th.
The FASB lease accounting standard evolved over a period of years – but this recent blog from Steve Quinlivan says that another new standard designed to address “stranded tax effects” of the new tax reform legislation is being fast tracked. On second thought, since the proposed change has only a 15-day comment period, it might be more accurate to say that it’s being strapped to a rocket sled!
– John Jenkins