FERF recently released this Audit Fee Report that reveals audit fee information for 7,000 SEC filers over the past four years, in addition to information gleaned from over 220 survey responses including 76 public companies, 92 private companies and 57 nonprofit organizations.
Key public company survey findings include:
Median audit fee of $2.2 million for 2014 audits, representing a median increase of 3.1% over their prior year’s audit fees
Reasons for the increase reportedly were primarily due to acquisitions and review of manual controls resulting from PCAOB inspections. Other bases for increases included inflation, the new COSO framework, and changes in organization structure.
Number of audit hours required for audit: median of 6,720 (34 responses)
Average and median audit fees for companies that have centralized finance operations are significantly less than those that have decentralized finance operations
About 86.8% of companies use a Big 4 auditor—with PwC auditing 22 of the total 76
Majority of companies indicated that the volume of annual audit work by external auditors in 2014 increased compared to 2013 to obtain both an auditor’s report on the financial statements (69.3%) and an auditor’s report on ICFR (63.2%).
67.6% of companies have adopted the 2013 COSO Framework. Others indicated that they will adopt the new Framework by 2015 year-end at the latest.
Over half of respondents indicated an increase in internal cost of compliance with SOX 404 within the past three years. However, about half indicated that they have better internal controls and that the additional expense was worthwhile.
45.3% and 66.7% of respondents, respectively, indicated that their auditors requested that they make changes to their controls or controls documentation as a result of PCAOB requirements or inspection feedback.
None of the respondents indicated that the PCAOB findings resulted in a restatement of their financial statements, nor did it result in a change in their auditor’s opinion.
The SASB just launched a new credential – the “Fundamentals of Sustainability Accounting” – aimed at financial reporting professionals, sustainability professionals, investors, consultants and securities lawyers involved in evaluating sustainability issues that impact a company’s financial performance. The credential entails two exams designed to test expertise in the materiality of sustainability information for corporate strategy and investment analysis.
The first exam – Level 1 – focuses on principles and emerging practices. The second exam – Level II (currently under development) – will focus on application and analysis:
LEVEL I
Learn how sustainability factors impact financial performance
Understand the legal context for material sustainability information
Gain a common language to describe the materiality of sustainability information to finance, legal, and accounting professionals
LEVEL II
Learn how industry-specific sustainability information can inform corporate strategies or investor recommendations
Gain the skills needed to evaluate corporate performance on sustainability factors
For more information, see this infographic snapshot about the credential, and these FAQs. See also this Corporate Counsel memo.
Podcast: New SEC Enforcement Database
In this podcast, NYU’s Dr. Stephen Choi discusses the recently launched Cornerstone Research/NYU Securities Enforcement Empirical Database, or SEED, including:
– Can you provide an example of what kinds of insights someone can gain from using SEED?
– What makes it so difficult to get the same data directly from the SEC?
– How did the idea of SEED come about?
– What can we learn from SEED that would be relevant to the debate about the SEC’s so-called “home field advantage” in its administrative proceedings?
– What are your plans for SEED going forward?
The recently released 2015 CPA-Zicklin Indexreveals some noteworthy findings about the political spending-related practices of the S&P 500 that would appear to counter the perceived need by some for SEC rulemaking in this area (legitimate concerns about the information meeting any requisite disclosure materiality threshold notwithstanding), including:
– Majority of companies have a political spending webpage: 54%, or 270 companies, had a dedicated webpage or similar space on their websites to address political spending and disclosure. – Most companies have policies addressing political spending: Over 87% (435 companies) had a detailed policy or some policy governing political spending on their websites. – Many companies have placed restrictions on their political spending: 25% (124 companies) placed some type of restriction on their political spending. This included restrictions on direct independent expenditures; contributions to candidates, parties and committees, 527 groups, ballot measures, or 501(c)(4) groups; and payments to trade associations for political purposes. – Over 40% of companies have some level of board oversight of their political contributions and expenditures:
Board oversight: 215 companies (43%) said their boards of directors regularly oversaw political spending.
Board committee reviews policy: 151 companies (30%) said that a board committee reviewed company policy on political spending.
Board committee reviews expenditures: 169 companies (34%) said that a board committee reviewed company political expenditures.
Board committee reviews trade association payments: 121 companies (24%) said that a board committee reviewed company payments to trade associations.
House Letter to SEC Urges Abstention from Political Spending Disclosure Rulemaking
In October, House Committee on Financial Services Chair Jeb Hensarling and Subcommittee on Capital Markets & Government Sponsored Enterprises Chair Scott Garrett sent this letter to SEC Chair White urging her to refrain from moving forward on any rulemaking that would mandate corporate political spending disclosure. The letter claims that such rulemaking efforts would be “a waste of the SEC’s finite resources” on a controversial, discretionary rule that would reflect a deviation from the materiality standard articulated by the US Supreme Court in TSC Industries v. Northway, which Chair White reportedly endorses.
The letter also notes that a recent letter to Chair White from several U.S. Senators urging the SEC to mandate disclosure in this area failed to mention the materiality standard – focusing instead on non-securities law concerns that reflect a philosophical disagreement with the Supreme Court’s 2010 Citizens United decision.
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We continue to post new items daily on our blog – “The Mentor Blog” – for TheCorporateCounsel.net members. Members can sign up to get that blog pushed out to them via email whenever there is a new entry by simply inputting their email address on the left side of that blog. Here are some of the latest entries:
– Board Risk Committee Considerations
– Industry Group Proposes XBRL Guidance
– New COSO Framework Gaining Steam
– Survey: Implications of Board Gender Diversity
– Board Succession Planning: Chess vs. Checkers
With the increasing focus on minimizing short-term thinking and behaviors that might overshadow due consideration for behaviors that drive long-term value has come a debate about whether and to what extent quarterly earnings reporting contributes to – or promotes – management’s focus on the short-term. Regardless of which side of that debate you fall, this recent Harvard Law post suggests some thought-worthy considerations relative to quarterly vs. semiannual reporting, along with a new “middle ground” position consisting of quarterly earnings releases/calls bolstered by two streamlined quarterly reports sandwiched between a detailed 10-K and semi-annual report.
Considerations: Quarterly vs. Semi-Annual Reporting
Will replacing quarterly with semi-annual reporting really induce corporate executives to make longer-term business decisions? For example, would that sort of change elicit notably more new five-year investment projects?
Will earnings smoothing (to the extent this is an issue generally) occur in six-month intervals rather than three-month intervals if quarterly reporting is eliminated in favor of semi-annual reporting?
If the time period betwen earnings reports is elongated, will the gap between actual earnings and management’s projections similarly widen, thus triggering undesirable consequences (e.g., more pressure to smooth earnings)?
Would the opportunity and temptation for insider trading increase with a longer time period between management’s reporting out?
If mandatory quarterly reporting were eliminated (like it is in the UK) and some companies elect to report quarterly while some elected only to report semi-annually, would this disparity negatively impact investors’ need/desire for comparability among investments?
SEC’s Investor Advisory Committee Members Oppose FASB’s Materiality Proposals
At last month’s Investor Advisory Committee meeting, several IAC members reportedly voiced their objections to FASB’s recent proposals aimed at clarifying the concept of “materiality” for financial disclosure purposes to comport with legal standards. Among other things, some members reportedly perceived the proposals as an effort to reduce disclosure and expressed concerns that the proposal would effectively place disclosure decision-making within the purview of lawyers, who (they claim) tend to err on the side of “less is more” disclosure and regard disclosure of non-material (based on the legal standard) information as potential liability risks.
See Cahill Gordon’s recent post – which does a nice job of explaining the rationale for FASB’s sound (in my view) approach, and this WSJ article.
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We continue to post new items daily on our blog – “The Mentor Blog” – for TheCorporateCounsel.net members. Members can sign up to get that blog pushed out to them via email whenever there is a new entry by simply inputting their email address on the left side of that blog. Here are some of the latest entries:
– Study: Director Age & Tenure on the Rise
– CEO Evaluations: Majority Assigned to Compensation Committees
– Breaking the Silence on Quiet Periods
– Survey: Directors Favor Evaluations for Succession
– Audit Committees: Establishing an Effective Whistleblower Program
The CAQ recently released this Alert addressing select auditing considerations for the 2015 audit cycle, many of which were also identified by the PCAOB in its recently issued Inspection Brief. Although logically oriented toward auditors, the Alert is equally instructive for the typically multiple company representatives involved in the audit process. Among other things, the Alert does a nice job of outlining in a plain English fashion the auditor’s scope of responsibility relative to the company’s cybersecurity and related party transactions pursuant to the fairly new PCAOB AS 18.
The Alert includes a discussion of these key topical areas:
Professional skepticism
Internal Control over Financial Reporting
Risk Assessment and Audit Planning
Supervision of Other Auditors and Multi-Location Audit Engagements
Testing Issuer-Prepared Data and Reports
Cybersecurity
Revenue recognition
Auditing Accounting Estimates, Including Fair Value Measurements
Related Parties and Significant Unusual Transactions
Relatedly, the CAQ submitted this comment letter to the PCAOB in response to the PCAOB’s Audit Quality Indicators Concept Release, making a strong case for audit committee-determination of (rather than regulatory-mandated) AQIs – which the CAQ indicates should be used and reported only voluntarily, in the context of learnings attained from its own AQI initiative.
See these additional comment letters on the Concept Release, and this PCAOB Dialogues AQIs podcast. Note that the initial comment period for the release closed at the end of September, but (purportedly consistent with its standard practice) the Board announced that it is reopening the comment period until November 30th to provide further opportunity for comment – including on any new information that becomes available as a result of a PCAOB Standing Advisory Group meeting being held today and tomorrow, which will focus largely on the PCAOB’s AQI initiative and emerging issues.
Deloitte recently issued this report on SEC comment letters, which contains (among other helpful information) extracts of SEC comment letters, links to relevant related resources, an analysis of staff comments to help companies understand trends and improve their financial statements and disclosures, and a best practice checklist for managing unresolved SEC comments. Disclosure topics covered include MD&A, non-GAAP measures, disclosure controls & procedures and ICFR, and executive compensation and other proxy disclosures.
We continue to post new items daily on our blog – “The Mentor Blog” – for TheCorporateCounsel.net members. Members can sign up to get that blog pushed out to them via email whenever there is a new entry by simply inputting their email address on the left side of that blog. Here are some of the latest entries:
– New & Departing D&O Checklists
– Auditor Independence: Deloitte Violation Serves as Good Director Compliance Reminder
– Hey There Fellow Securities Defense Lawyers: Omnicare is GOOD for Us!
– Pre-IPO Share Selling Under Scrutiny?
– Proxy Puts: Declining Use in Credit Agreements
PwC’s recently released 2015 Annual Corporate Directors Survey of 783 public company directors reveals heaps of noteworthy data, including a startling gender gap concerning the perceived importance of boardroom diversity. Findings include:
63% of female directors describe gender diversity as a very important attribute – compared to just 35% of male directors
46% of female directors describe racial diversity as very important, compared to only 27% of male directors
80% of female directors “very much” believe diversity leads to enhanced board effectiveness – compared to just 40% of male directors
74% of female directors “very much” agree that board diversity leads to enhanced company performance, compared to only 31% of male directors
Other noteworthy board diversity perspective gaps include:
67% of mega-cap company directors believe diversity is “very important” to board composition – compared to only 31% of micro-cap company directors
62% of directors with less than one year of board service “very much” agree that having diversity on the board is important, compared to only 39% of directors with tenure of more than ten years.
See also this recent Lord Davies report on the status of the UK’s board gender diversity initiative, noting that 26.1% of FTSE 100 board positions and 19.6% of FTSE 250 board positions are occupied by women, and the absence of any all-male boards in the FTSE 100 (there are just 15 in the FTSE 250). The report also recommends a new voluntary target for women’s representation on FTSE 350 boards of a minimum of 33% to be achieved within the next five years, which has been endorsed by the UK Government.
Thirty Percent Coalition Issues Board Diversity “Call to Action”
Following its Fourth Annual Summit last month, the Thirty Percent Coalition, a national organization committed to women attaining 30% of public company board seats, issued this “Call to Action” to U.S. companies:
– Commit to best practice corporate governance policies that include explicit recognition of gender and race as considerations in the board nomination process
– Select from a gender and racially diverse candidate pool when a board opportunity presents itself
– Periodically report on their progress, as public accountability is an essential component of positive corporate change
During the summit, the Coalition commended these 62 companies that had appointed a woman to their board since the January 2012 start of the Coalition’s “Adopt a Company” Campaign, which was aimed at S&P 500 and Russell 1000 boards that were (at that time) completely lacking in gender diversity.
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We continue to post new items daily on our blog – “The Mentor Blog” – for TheCorporateCounsel.net members. Members can sign up to get that blog pushed out to them via email whenever there is a new entry by simply inputting their email address on the left side of that blog. Here are some of the latest entries:
– CCO Survey: Regulatory Fatigue & Personal Liability Concerns
– XBRL Checklist
– Non-GAAP Measures: Reg. G vs. Reg S-K
– Why & How to Engage in FASB’s Standard-Setting
– Cybersecurity on Most Board Meeting Agendas
On the heels of recent SEC enforcement actions against Chief Compliance Officers (CCO) and associated statements by Commissioners Gallagher and Aguilar and Chair White, the National Society of Compliance Professionals, a financial services industry trade group for compliance officers, sent this letter to SEC Director of Enforcement Andrew Ceresney requesting that the Commission establish policy that permits initiation of enforcement proceedings against CCOs only if they acted intentionally or recklessly – not negligently – to facilitate the underlying primary securities law violation.
See my earlier blog discussing the recent enforcement actions and internal SEC enforcement debate.
Survey: Compliance Officer Increasingly a Stand-Alone Position
This recent annual survey report from Deloitte/Compliance Week – reflecting input from over 350 multi-industry compliance professionals world-wide – generally reveals increasing acknowledgement of the importance of the compliance function.
Key results include:
57% of respondents say their CCO reports directly to either the CEO or the board – the highest level in at least three years
51% say the CCO has a seat on the executive management committee – up from 37% last year
59% say the CCO job is a stand-alone position, compared to 50% in 2014 and 37% in 2013
55% say they regularly brief the board on the company’s overall ethics and culture
Not surprisingly, financial services industry organizations are more likely to have larger compliance program budgets, larger staffs and standalone CCOs, and smaller organizations are less likely to have a designated or standalone CCO.
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We continue to post new items daily on our blog – “The Mentor Blog” – for TheCorporateCounsel.net members. Members can sign up to get that blog pushed out to them via email whenever there is a new entry by simply inputting their email address on the left side of that blog. Here are some of the latest entries:
– Most Common XBRL Errors
– Board Effectiveness: Role of Introverts
– Why Ds & Os Should Demand Indemnification Agreements
– Turnarounds: Tips for Maintaining a Long-Term View
– Information Security: Board Presentation Guidance
Assistant Attorney General Leslie Caldwell has – seemingly appropriately – softened the DOJ’s recently issued updated guidance focused on individual accountability for corporate misconduct. According to the widely reported, so-called Yates Memo (which Broc blogged about last month), in order to qualify for any cooperation credit, companies must (among other things) provide to the DOJ “all relevant facts relating to the individuals responsible for the misconduct.” In a speech announcing the new policy, Deputy Attorney General Sally Yates elaborated:
Effective immediately, we have revised our policy guidance to require that if a company wants any credit for cooperation, any credit at all, it must identify all individuals involved in the wrongdoing, regardless of their position, status or seniority in the company and provide all relevant facts about their misconduct. It’s all or nothing. No more picking and choosing what gets disclosed. No more partial credit for cooperation that doesn’t include information about individuals.
Presumably in response to the backlash, and confusion and uncertainty, about the implications of this aspect of the guidance, according to the WSJ, Assistant Attorney General Caldwell subsequently clarified in remarks before the Global Investigative Review conference in late September that, effectively, companies need only share the information they have and – provided they have conducted an adequate investigation – they will still be eligible for cooperation credit even if they come up empty-handed as to culpable individuals:
Companies seeking cooperation credit “have to work affirmatively” to identify relevant information about culpable individuals and they can’t just disclose general misconduct without identifying the people behind the misconduct, said Ms. Caldwell, but she acknowledged that a company can’t be expected to provide what it doesn’t have, and that some investigations just don’t bear fruit.
“When a company is truly unable to identify culpable individuals, even after an appropriately tailored, careful, thorough investigation, but [it] still provides the government with all the relevant facts, and otherwise assists us in obtaining the relevant evidence, the company will still be eligible for cooperation credit,” she said.
See also this WSJ article noting the DOJ’s current focus on “bigger, higher impact [bribery] cases,” this blog discussing internal audit concerns with the DOJ’s new guidance, this blog addressing the governance implications of the guidance, and oodles of memos in our “White Collar Crime” Practice Area.
Companies with a larger proportion of alumni from their current audit firm among their lower level accounting employees are purportedly significantly less likely to issue financial misstatements and have lower absolute abnormal accruals – so concludes this new paperreflecting the results of a study that examined whether alumni affiliations between companies’ auditors and accounting employees impact audit quality, as measured by financial misstatements and abnormal accruals.
Using the two key measurables of “alumni affiliations” (i.e., accounting employess who previously worked for their companies’ current audit firms) and audit quality based on the two commonly used proxies of financial material misstatements and absolute abnormal accruals, the results suggest that the stronger the connection between auditors and accounting employees, the better the audit quality.
Importantly, however, audit quality varies by accounting employee position level. Strong auditor alumni affiliations among lower level accounting employees have significantly positive effects on audit quality in terms of both reducing egregious misreporting (misstatements) and within GAAP earnings management (abnormal accruals), while alumni affiliations with auditors among middle management only reduce the likelihood of misstatement and, among upper management, only marginally restrain earnings management. The study’s authors surmise that this variability by position level is based on the fact that lower level accounting employees are likely to enhance audit quality given their previous working experience with the auditor (as further discussed in the paper), but have few incentives or opportunities to reduce it.
Given that hiring accounting employees from the company’s current audit firm is fairly common – and the close and ongoing interaction between the audit firm and the company’s accounting employees throughout the year (and during the audit process in particular) – the study’s findings are worth consideration.
We continue to post new items daily on our blog – “The Mentor Blog” – for TheCorporateCounsel.net members. Members can sign up to get that blog pushed out to them via email whenever there is a new entry by simply inputting their email address on the left side of that blog. Here are some of the latest entries:
– Cybersecurity Tops Director & GC Concerns
– Study: Director Tenure Counterbalances CEO Authority
– Audit Committee Collaboration Releases External Auditor Assessment Tool
– DOJ Furthers Transparency on Corporate Cooperation
– Cybersecurity Preparedness
In conjunction with the SEC’s request for comments on its Audit Committee Disclosure Concept Release, the Institute of Internal Auditors (IIA) has requested that the SEC require all public companies to have an internal audit function or – at a minimum – explain why they don’t.
Assuming the requirement of an internal audit function, the IIA’s comment letter further recommends that, to assist investors’ understanding and evaluation of audit committee performance, audit committees be required to disclose:
– Whether the internal audit function has the stature, independence, and resources to fulfill its mission “to enhance and protect organizational value by providing risk-based and objective assurance, advice, and insight,” and
– Whether the internal audit function is performing in accordance with globally recognized standards, such as the IIA’s International Standards for the Professional Practice of Internal Auditing.
In his recent blog, IIA President & CEO Richard Chambers reiterates the value to good governance and – more specifically – control environment oversight – that an effective internal audit function can provide, while (wisely) being careful to not imply that a company’s success or failure rides on the presence of internal audit.
While I understand the likely resistance to the suggested mandate and believe it is more appropriately the province of the exchanges (e.g., the NYSE already requires its listed companies to have an internal audit function) rather than the SEC, as noted previously, I am a firm believer – based on my personal experience – in the benefits attainable by a strong internal audit function.
Internal Audit: Opportunities to Increase Use of Technology
According to a recent worldwide survey conducted by the world’s largest ongoing study of the internal audit (IA) profession (the Global Internal Audit Common Body of Knowledge (CBOK)), 50% of North American CAEs report using technology appropriately or extensively for audit processes, while 37% report some use of electronic workpapers or other office information technology tools, and 13% rely primarily on manual techniques. CBOK posits that this may be due to inadequate IT expertise on the IA staff, or the risk-taking and creativity associated with finding new ways to use technology that exceed that required for normal IA activities.
Whereas more than 90% of survey respondents worldwide hold four-year degrees or higher, only 1 out of 10 studied computer science or information technology – revealing little change since 2006. CBOK cites as one possible explanation of this the fact that technology is being incorporated into other areas of study, e.g., an information systems course as part of the IA curriculum, AIS as part of an accounting program.
Other notable stats:
57% identified accounting as a major or significant field of study, followed by auditing at 43%.
17% of North American CAEs reported certifications in information systems auditing (such as CISA, QICA, CRISC)
11% relied on academic studies for obtaining their tech skills
3% reported certifications in security for IT (such as CISM, CISSP, CSP, CDP)
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We continue to post new items daily on our blog – “The Mentor Blog” – for TheCorporateCounsel.net members. Members can sign up to get that blog pushed out to them via email whenever there is a new entry by simply inputting their email address on the left side of that blog. Here are some of the latest entries:
– Directors Debate Approaches to Board Refreshment
– SOX Compliance Costs & Audit Scrutiny on the Rise
– Effective Crisis Management: Impediments & Strategies
– Relationship Guidance for GCs & Internal Audit
– Board Effectiveness: Continuing the Journey
Institutional investors are playing an increasingly important role in shareholder activist campaigns according to new survey findings from FTI Consulting/Activist Insight. The 2015 survey of 24 engaged activist firms revealed that 70% expect an increase in cooperation or “future partnerships” with institutional investors and pension funds in pursuing their target companies – and all perceive greater acceptance by these institutional investors.
Additional noteworthy findings include:
300 companies worldwide were subjected to public demands in the first half of 2015 – compared with 142 in all of 2010
96% suggest that M&A activism will increase in general
Number of board seats sought by activists has almost doubled – from 23 between 2010 and 2012, to 43 from 2013 to present
Activists believe that assets allocated to shareholder activism will continue to increase; 86% of surveyed funds expect to engage in new capital-raising over the next 12 months
Activists increasingly believe that the US activism market (i.e., competition for targets) is getting crowded, and are turning their sights toward Canada and Europe
In this new post, Wachtell Lipton’s Marty Lipton aims to encourage major institutional investors to recognize the harmful effects on company behavior and their overall portfolio value associated with the antics of activist hedge funds. The memo identifies three new studies by economists and law professors that Marty claims undermine the reliability of what has been characterized by some as “empirical evidence” allegedly supporting “short-termism, attacks by activist hedge funds and shareholder-centric corporate governance.”
See also this recent St. Louis Post Dispatch article wherein NYC Comptroller Scott Stringer expresses his concern about companies being too eager to succumb to activist demands to avoid a proxy fight to the detriment of long-term shareholder value.
Canadian Shareholder Coalition Seeks Universal Proxy
The Canadian Coalition for Good Governance, Canada’s largest shareholder coalition, is calling on companies and dissidents to voluntarily adopt the use of universal proxies in contested director elections pending sought-after corporate and securities laws reforms that would mandate their use. As blogged previously, on the US front, SEC Chair White indicated in June that she had asked the Staff for rulemaking recommendations on universal proxy ballots.
Matt Orsagh on Bank of America CEO/Chair Split
In this podcast, Matt Orsagh, Director of Capital Markets Policy for the CFA Institute, discusses combined and split CEO/Chair roles in the context of Bank of America’s recent shareholder vote, including:
– What was this vote all about?
– Is Bank of America backsliding on corporate governance?
– Are there potential conflicts of interest in combining the roles?
– What checks & balances do companies implement when they combine the roles?
– What is the trend in combining/separating the roles in the US?
This recent report from The Network outlines a profile of the average whistleblower that is, in many respects, contrary to the stereotype – and certainly instructive for companies. The report includes suggestions on how to foster a culture of reporting to mitigate whistleblower risks.
Average Whistleblower
– Likely to be an actively engaged, well-performing employee – most likely a supervisor or high-level manager
– 92% report internally first.
– Only 20% ever share their concerns with anyone outside the company; 9% report to the government.
– Reasons for reporting externally run the gamut – with the most frequently cited being “a big enough crime,” but the least likely reason is the potential to receive a substantial monetary award. 65% of surveyed employees would be willing to report externally if their company was not responsive to their internal report.
– 1 in 5 whistleblowers purportedly experienced retaliation after reporting misconduct internally.
– 1 in 3 non-reporters cited fear of retaliation as their reason for not reporting internally.
– An astounding 1 in 5 whistleblowers are the company’s consultants and contractors – not employees.
As Broc blogged last week, on the heels of the SEC’s recently released Interpretive Guidance clarifying its position that an individual doesn’t need to report possible violations of the securities laws to the SEC to be characterized as a “whistleblower” entitled to Dodd-Frank’s anti-retaliation protections (rather, such protections are also available to individuals who report internally first), the Second Circuit – in a split decision – agreed with the SEC in Berman v. Neo@Ogilvy LLC that a Dodd-Frank whistleblower did not have to make a report directly to the SEC to bring a Dodd-Frank retaliation claim.
However, as discussed in Proskauer’s blog, in a fairly concurrent case, the US District Court for the Central District of California, in Jennifer Davies v. Broadcom, dismissed a whistleblower retaliation claim, ruling that Dodd-Frank’s anti-retaliation provision only protects whistleblowers who provide information to the SEC – thus again demonstrating a circuit split on this key issue.
SEC Enforcement: Accounting-Barred Felon Resumes Practice Under Assumed Name
Even after decades of practice in the public company arena, I never cease to be amazed at what some people will do. After being convicted for wire fraud and attempted tax evasion, snitching on mobsters as a government informant and declining to go into the DOJ’s witness-protection program, and then having his accountant license revoked pursuant to an SEC order, Stephen P. Corso reportedlyallegedly resumed providing accounting and consulting services to public and pre-IPO companies under the assumed name of Steven John Corso.
The SEC apparently has called on Corso to cease providing accounting services and surrender all improperly received compensation since 2009, and is investigating his activities as part of a potential enforcement action into a penny-stock fraud.
We continue to post new items daily on our blog – “The Mentor Blog” – for TheCorporateCounsel.net members. Members can sign up to get that blog pushed out to them via email whenever there is a new entry by simply inputting their email address on the left side of that blog. Here are some of the latest entries:
– Board Basics: Director Effectiveness Reminders & Tips
– OSHA Clarifies Whistleblower Investigation Standard for Merit Finding
– Audit Committee Charters: Cybersecurity Oversight
– NYC Bar Opines on Ethical Duties for Internet Scams
– Board Evaluations: Back to Basics