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SEC Adopts Final Rules for Disclosure of Hedging Policies

The Securities and Exchange Commission today approved final rules to require companies to disclose in proxy or information statements for the election of directors any practices or policies regarding the ability of employees or directors to engage in certain hedging transactions with respect to company equity securities.

“The new rules will provide for clear and straightforward disclosure of company policies regarding hedging,” said Chairman Jay Clayton. “These disclosures in themselves, and in combination with our officer and director purchase and sale disclosure requirements, should bring increased clarity to share ownership and incentives that will benefit our investors, registrants, and our markets."

The final rules, which implement a mandate from the Dodd-Frank Act, will require disclosure of practices or policies in full, or, alternatively, a summary of those practices or policies that includes a description of any categories of hedging transactions that are specifically permitted or disallowed. If the registrant does not have any such practices or policies, it will disclose that fact or state that hedging is generally permitted.

* * * 

FACT SHEET

Dec. 18, 2018

Action

The Securities and Exchange Commission adopted final rules that require disclosure of hedging practices or policies in any proxy statement or information statement relating to the election of directors. The final rules implement Section 14(j) of the Securities Exchange Act of 1934, which was enacted by Section 955 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Highlights of the Final Rules

  • New Item 407(i) of Regulation S-K will require a company to describe any practices or policies it has adopted regarding the ability of its employees (including officers) or directors to purchase securities or other financial instruments, or otherwise engage in transactions, that hedge or offset, or are designed to hedge or offset, any decrease in the market value of equity securities granted as compensation, or held directly or indirectly by the employee or director.  
  • A company could satisfy this requirement by either providing a fair and accurate summary of the practices or policies that apply, including the categories of persons they affect and any categories of hedging transactions that are specifically permitted or specifically disallowed, or, alternatively, by disclosing the practices or policies in full.
  • If the company does not have any such practices or policies, the rule will require the company to disclose that fact or state that hedging transactions are generally permitted.
  • In addition, Item 407(i) specifies that the equity securities for which disclosure is required are equity securities of the company, any parent of the company, any subsidiary of the company, or any subsidiary of any parent of the company.

What’s Next?

Companies generally must comply with the new disclosure requirements in proxy and information statements for the election of directors during fiscal years beginning on or after July 1, 2019. However, companies that qualify as “smaller reporting companies” or “emerging growth companies” (each as defined in Securities Exchange Act Rule 12b-2) must comply with the new disclosure requirements in proxy and information statements for the election of directors during fiscal years beginning on or after July 1, 2020. Listed closed-end funds and foreign private issuers will not be subject to the new disclosure requirements.

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SEC Adopts Final Rules for Disclosure of Hedging Policies

The Securities and Exchange Commission today approved final rules to require companies to disclose in proxy or information statements for the election of directors any practices or policies regarding the ability of employees or directors to engage in certain hedging transactions with respect to company equity securities.

“The new rules will provide for clear and straightforward disclosure of company policies regarding hedging,” said Chairman Jay Clayton. “These disclosures in themselves, and in combination with our officer and director purchase and sale disclosure requirements, should bring increased clarity to share ownership and incentives that will benefit our investors, registrants, and our markets."

The final rules, which implement a mandate from the Dodd-Frank Act, will require disclosure of practices or policies in full, or, alternatively, a summary of those practices or policies that includes a description of any categories of hedging transactions that are specifically permitted or disallowed. If the registrant does not have any such practices or policies, it will disclose that fact or state that hedging is generally permitted.

* * * 

FACT SHEET

Dec. 18, 2018

Action

The Securities and Exchange Commission adopted final rules that require disclosure of hedging practices or policies in any proxy statement or information statement relating to the election of directors. The final rules implement Section 14(j) of the Securities Exchange Act of 1934, which was enacted by Section 955 of the Dodd-Frank Wall Street Reform and Consumer Protection Act.

Highlights of the Final Rules

  • New Item 407(i) of Regulation S-K will require a company to describe any practices or policies it has adopted regarding the ability of its employees (including officers) or directors to purchase securities or other financial instruments, or otherwise engage in transactions, that hedge or offset, or are designed to hedge or offset, any decrease in the market value of equity securities granted as compensation, or held directly or indirectly by the employee or director.  
  • A company could satisfy this requirement by either providing a fair and accurate summary of the practices or policies that apply, including the categories of persons they affect and any categories of hedging transactions that are specifically permitted or specifically disallowed, or, alternatively, by disclosing the practices or policies in full.
  • If the company does not have any such practices or policies, the rule will require the company to disclose that fact or state that hedging transactions are generally permitted.
  • In addition, Item 407(i) specifies that the equity securities for which disclosure is required are equity securities of the company, any parent of the company, any subsidiary of the company, or any subsidiary of any parent of the company.

What’s Next?

Companies generally must comply with the new disclosure requirements in proxy and information statements for the election of directors during fiscal years beginning on or after July 1, 2019. However, companies that qualify as “smaller reporting companies” or “emerging growth companies” (each as defined in Securities Exchange Act Rule 12b-2) must comply with the new disclosure requirements in proxy and information statements for the election of directors during fiscal years beginning on or after July 1, 2020. Listed closed-end funds and foreign private issuers will not be subject to the new disclosure requirements.

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SEC Charges Former Panasonic Executives

The Securities and Exchange Commission today charged two former senior executives of the U.S. subsidiary of Panasonic Corp. with knowingly violating the books and records and internal accounting controls provisions of the federal securities laws and causing similar violations by the parent company.   

According to the SEC’s order against Paul A. Margis, then-CEO and president of Panasonic Avionics Corp., Margis used a third party to pay over $1.76 million to several consultants, including a government official who was offered a lucrative consulting position to assist Panasonic Avionics in obtaining and retaining business from a state-owned airline. Panasonic Avionics falsely recorded these payments, and Margis circumvented company procedures for engaging the consultants, who provided few, if any services. Margis also made materially false or misleading statements to Panasonic Avionics’ auditor regarding the adequacy of Panasonic Avionics’ internal accounting controls and accuracy of the company’s books and records.

According to the SEC’s order against Takeshi “Tyrone” Uonaga, then-CFO of Panasonic Avionics, Uonaga caused Panasonic Corp. to improperly record $82 million in revenue based on a backdated contract and made false representations to Panasonic Avionics’ auditor regarding financial statements, internal accounting controls, and books and records.

“Holding individuals accountable, particularly senior executives, is critical,” said Antonia Chion, Associate Director of the SEC’s Enforcement Division. “Compliance starts at the top and senior executives who fail in their duty to comply with the federal securities laws will be held responsible.” 

The SEC’s orders require Margis and Uonaga to pay penalties of $75,000 and $50,000, respectively. The order against Uonaga also suspends him from appearing or practicing before the Commission as an accountant, which includes not participating in the financial reporting or audits of public companies. The order permits Uonaga to apply for reinstatement after five years. Margis and Uonaga consented to the entry of their orders without admitting or denying the findings.

In April of this year, the Commission instituted a related settled cease-and-desist proceeding against Panasonic Corp. finding that it violated the anti-bribery, anti-fraud, books and records, internal accounting controls, and reporting provisions of the federal securities laws.

The SEC’s investigation was conducted by Anik Shah, Mark Yost, Gregory Bockin, and Sonali Singh, and supervised by Charles E. Cain, Ms. Chion, Stacy Bogert, and Kristen Dieter. The SEC appreciates the assistance of the Department of Justice Criminal Division’s Fraud Section as well as the following regulators: Swiss Financial Market Supervisory Authority, Ontario Securities Commission, Securities and Commodities Authority of the United Arab Emirates, Financial Services Agency of Japan, Monetary Authority of Singapore, Securities Commission of Malaysia, Australian Securities & Investments Commission, and the Securities and Exchange Commission of Pakistan.

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SEC Charges Former Panasonic Executives

The Securities and Exchange Commission today charged two former senior executives of the U.S. subsidiary of Panasonic Corp. with knowingly violating the books and records and internal accounting controls provisions of the federal securities laws and causing similar violations by the parent company.   

According to the SEC’s order against Paul A. Margis, then-CEO and president of Panasonic Avionics Corp., Margis used a third party to pay over $1.76 million to several consultants, including a government official who was offered a lucrative consulting position to assist Panasonic Avionics in obtaining and retaining business from a state-owned airline. Panasonic Avionics falsely recorded these payments, and Margis circumvented company procedures for engaging the consultants, who provided few, if any services. Margis also made materially false or misleading statements to Panasonic Avionics’ auditor regarding the adequacy of Panasonic Avionics’ internal accounting controls and accuracy of the company’s books and records.

According to the SEC’s order against Takeshi “Tyrone” Uonaga, then-CFO of Panasonic Avionics, Uonaga caused Panasonic Corp. to improperly record $82 million in revenue based on a backdated contract and made false representations to Panasonic Avionics’ auditor regarding financial statements, internal accounting controls, and books and records.

“Holding individuals accountable, particularly senior executives, is critical,” said Antonia Chion, Associate Director of the SEC’s Enforcement Division. “Compliance starts at the top and senior executives who fail in their duty to comply with the federal securities laws will be held responsible.” 

The SEC’s orders require Margis and Uonaga to pay penalties of $75,000 and $50,000, respectively. The order against Uonaga also suspends him from appearing or practicing before the Commission as an accountant, which includes not participating in the financial reporting or audits of public companies. The order permits Uonaga to apply for reinstatement after five years. Margis and Uonaga consented to the entry of their orders without admitting or denying the findings.

In April of this year, the Commission instituted a related settled cease-and-desist proceeding against Panasonic Corp. finding that it violated the anti-bribery, anti-fraud, books and records, internal accounting controls, and reporting provisions of the federal securities laws.

The SEC’s investigation was conducted by Anik Shah, Mark Yost, Gregory Bockin, and Sonali Singh, and supervised by Charles E. Cain, Ms. Chion, Stacy Bogert, and Kristen Dieter. The SEC appreciates the assistance of the Department of Justice Criminal Division’s Fraud Section as well as the following regulators: Swiss Financial Market Supervisory Authority, Ontario Securities Commission, Securities and Commodities Authority of the United Arab Emirates, Financial Services Agency of Japan, Monetary Authority of Singapore, Securities Commission of Malaysia, Australian Securities & Investments Commission, and the Securities and Exchange Commission of Pakistan.

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SEC Publishes Two Reports on Credit Rating Agencies Showing Continued Focus on Compliance and Competition

Credit rating agencies registered with the SEC continue to promote compliance by enhancing their policies, procedures, and internal controls in response to Commission rules and staff examinations. SEC staff reports released today on nationally recognized statistical rating organizations (NRSROs) show that some firms are self-reporting instances of noncompliance and some smaller firms are continuing to compete with the larger firms in certain rating categories.       "NRSROs have maintained the improvements that they implemented in prior years in response to the staff's recommendations," said Jessica S. Kane, Director of the SEC's Office of Credit Ratings. "We continue to assess potential risks at each NRSRO when determining areas to examine so that we provide the most effective oversight for the protection of investors." The report on NRSRO examinations summarizes the staff’s findings and recommendations within each of the eight review areas required by statute. The annual report on NRSROs discusses the state of competition, transparency, and conflicts of interest among the firms and also identifies applicants for NRSRO registration.  The following SEC staff contributed to the 2018 examinations and reports: Diane Audino, Michael Bloise, Sondra Boddie, Rita Bolger, Patrick Boyle, Aaron Byrd, Roseann Catania, Kristin Costello, Doreen Crawford, Scott Davey, Jill Flory, Ilya Fradkin, William Garnett, Kenneth Godwin, Michael Gonzalez, Barry Huang, Julia Kiel, Russell Long, Chichita Nickens, Sam Nikoomanesh, Kevin O’Neill, Harriet Orol, Abraham Putney, Jeremiah Roberts, Mary Ryan, Cynthia Sargent, Charles Schiller, Andrew Smith, Alexa Strear, Warren Tong, Evelyn Tuntono, Chris Valtin, Kevin Vasel, Andrew Vita, and Michele Wilham.

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Daniel Kahl Named Deputy Director of the Office of Compliance Inspections and Examinations

The Securities and Exchange Commission today announced that Daniel Kahl has been named Deputy Director of the agency’s Office of Compliance Inspections and Examinations (OCIE). Mr. Kahl has been with the SEC for over 17 years, serving as OCIE’s Chief Counsel since February 2016. He will continue to serve as Chief Counsel while also assuming this additional leadership role in OCIE. As a Deputy Director, Mr. Kahl will be based in Washington, D.C. and, together with current Deputy Director Kristin Snyder, will oversee many of OCIE’s strategic initiatives, as well as advise OCIE’s leadership on legal, strategic, and policy matters regarding the agency’s National Exam Program.  “The Commission has benefited from Dan’s knowledge and leadership for almost two decades,” said SEC Chairman Jay Clayton. “I’m glad that he will continue to serve our investors and our markets in his expanded role at OCIE.” “Dan is a talented leader with sound judgment and extensive expertise in regulatory and policy matters affecting the Commission and OCIE,” said OCIE Director Peter B. Driscoll. “I’m excited Dan will serve as a Deputy Director, helping Kristin Snyder and me lead the National Exam Program.”   Mr. Kahl said, “I’m excited to take on this additional role and continue to work with Pete, Kristin, and the entire nationwide OCIE team as we execute on our shared mission to protect Main Street and other investors through promoting compliance and monitoring risk at SEC-registered firms.”  Mr. Kahl joined the SEC in April 2001, most recently serving as OCIE’s Chief Counsel, where he advised leadership on legal, strategic, and policy matters regarding the agency’s National Exam Program. Before joining OCIE, Mr. Kahl led the Division of Investment Management’s Office of Investment Adviser Regulation.  Earlier, Mr. Kahl was an attorney at the Investment Adviser Association, FINRA, and the North American Securities Administrators Association (NASAA). Mr. Kahl holds a B.S. from Penn State University, a J.D. from Southern Methodist University, and an LL.M. from Georgetown University Law Center.  OCIE conducts the SEC’s National Examination Program through examinations and inspections of SEC-registered investment advisers, investment companies, broker-dealers, self-regulatory organizations, clearing agencies, and transfer agents. It uses a risk-based approach to examinations to fulfill its mission to promote compliance with U.S. securities laws, prevent fraud, monitor risk, and inform SEC policy.

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Bex Options

Almost all firms and individuals offering, promoting or selling financial services or products in the UK have to be authorised by us.

However, some firms act without our authorisation and some knowingly run investment scams. 

This firm is not authorised by us and is targeting people in the UK. Based upon information we hold, we believe it is carrying on regulated activities which require authorisation.

Bex Options

Address: 49 Station Road, Polegate East Sussex, BN26 6EA

Telephone: 01792 720789

Email: [email protected]

Website: https://bexoptions.com/

Please note that Bex Options and https://bexoptions.com/ is in no way connected to the registered company Bex Trading Limited (CRN: 09563470)

How to protect yourself

We strongly advise you to only deal with financial firms that are authorised by us, and check the Financial Services Register to ensure they are. It has information on firms and individuals that are, or have been, regulated by us.

If you want to check a consumer credit firm that may not yet have been authorised by us, please also check the Interim Permission Register.

If a firm does not appear on the Register but claims it does, contact our Consumer Helpline on 0800 111 6768.

There are more steps you should take to avoid scams and unauthorised firms.

You should also be aware that if you give money to an unauthorised firm, you will not be covered by the Financial Ombudsman Service or Financial Services Compensation Scheme (FSCS) if things go wrong.

Report an unauthorised firm

If you think you have been approached by an unauthorised firm or contacted about a scam, you should contact our Consumer Helpline on 0800 111 6768. If you were offered, bought or sold shares, you can use our reporting form.

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SEC Solicits Public Comment on Earnings Releases and Quarterly Reports

The Securities and Exchange Commission today published a request for comment soliciting input on the nature, content, and timing of earnings releases and quarterly reports made by reporting companies.   

The request for comment solicits public input on how the Commission can reduce burdens on reporting companies associated with quarterly reporting while maintaining, and in some cases enhancing, disclosure effectiveness and investor protections.  In addition, the Commission is seeking comment on how the existing periodic reporting system, earnings releases, and earnings guidance, alone or in combination with other factors, may foster an overly short-term focus by managers and other market participants. 

“There is an ongoing debate regarding the effects of mandated quarterly reports and the prevalence of optional quarterly guidance,” said SEC Chairman Jay Clayton.  “Our markets thirst for high-quality, timely information regarding company performance and material corporate events.  We recognize the importance of this information to well-functioning and fair capital markets.  We also recognize the need for companies and investors to plan for the long term.  Our rules should reflect these realities.  I look forward to receiving thoughtful comments as we think about ways to encourage long-term investment in our country.”

The public comment period will remain open for 90 days following publication of the request for comment in the Federal Register.

*   *   *


FACT SHEET
 

Background

On Apr. 13, 2016, the Commission issued a concept release on the business and financial disclosure requirements of Regulation S-K.  Among other topics, the release solicited comment on periodic frequency and its impact on reporting companies and market participants.  In response, the Commission received a range of comments on reporting frequency and the quarterly reporting process generally.  This request for comment seeks to build on the quarterly reporting process information we received in response to the concept release.

Highlights

The request for comment seeks public input on how the Commission can reduce administrative and other burdens on reporting companies associated with quarterly reporting while maintaining or enhancing appropriate investor protection.  The request for comment addresses:

  • The nature and timing of disclosures that reporting companies must provide in their quarterly Form 10-Q reports, including when the Form 10-Q disclosure requirements overlap with the disclosures such companies voluntarily provide to the public in earnings releases furnished on Form 8-K.
  • How the Commission can promote efficiency in periodic reporting by reducing unnecessary duplication in the information that reporting companies disclose and how any such changes could affect capital formation, while enhancing, or at a minimum maintaining, appropriate investor protection.
  • Whether Commission rules should allow reporting companies, or certain classes of reporting companies, flexibility as to the frequency of their periodic reporting.
  • How the existing periodic reporting system, earnings releases, and earnings guidance (either standing alone or in combination with other factors) may affect corporate decision making and strategic thinking, including whether these factors foster an inefficient outlook among reporting companies and market participants by focusing on short-term results.

What’s Next?

The comment period will remain open for 90 days following publication in the Federal Register.

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Gulf FX (clone)

Almost all firms and individuals carrying out financial services activities in the UK have to be authorised or registered by us. This firm is not authorised or registered by us but has been targeting people in the UK, claiming to be an authorised firm.

This is what we call a 'clone firm'; and fraudsters usually use this tactic when contacting people out of the blue, so you should be especially wary if you have been cold called. They may use the name of the genuine firm, the 'firm reference number' (FRN) we have given the authorised firm or other details.

You can find out more about this scam tactic and how to protect yourself from clone firms.

Clone firm details

Fraudsters are using or giving out the following details as part of their tactics to scam people in the UK:

Gulf FX (clone of FCA authorised firm)

Website: www.gulsfx.co

Be aware that the scammers may give out other false details or mix these with some correct details of the registered firm.

FCA authorised firm details

This FCA authorised firm that fraudsters are claiming to work for has no association with the ‘clone firm’. It is authorised to offer, promote or sell services or products in the UK and its correct details are:

Firm Name: ​​​Gulf Central Merchant Bank Ltd 

Firm Reference Number: 601013

Address: 100 Pall Mall, London, SW1Y 5NQ, UNITED KINGDOM 

Telephone: 44 2071129005 

Email: [email protected]

How to protect yourself

We strongly advise you to only deal with financial firms that are authorised by us, and check the Financial Services Register to ensure they are. It has information on firms and individuals that are, or have been, regulated by us.

If you want to check a consumer credit firm that may not yet have been authorised by us, please also check the Interim Permission Register.

If a firm does not appear on the Register but claims it does, contact our Consumer Helpline on 0800 111 6768.

There are more steps you should take to avoid scams and unauthorised firms.

You should also be aware that if you give money to an unauthorised firm, you will not be covered by the Financial Ombudsman Service or Financial Services Compensation Scheme (FSCS) if things go wrong.

Report a clone firm

If you think you have been approached by an unauthorised or clone firm, or contacted about a scam, you should contact us. If you were offered, bought or sold shares, you can use our reporting form.

What to do if your firm is cloned

If you think your authorised firm has been cloned or scammers are fraudulently using your name or other details, contact our Firm Helpline on 0300 500 0597.

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Gulf FX (clone)

Almost all firms and individuals carrying out financial services activities in the UK have to be authorised or registered by us. This firm is not authorised or registered by us but has been targeting people in the UK, claiming to be an authorised firm.

This is what we call a 'clone firm'; and fraudsters usually use this tactic when contacting people out of the blue, so you should be especially wary if you have been cold called. They may use the name of the genuine firm, the 'firm reference number' (FRN) we have given the authorised firm or other details.

You can find out more about this scam tactic and how to protect yourself from clone firms.

Clone firm details

Fraudsters are using or giving out the following details as part of their tactics to scam people in the UK:

Gulf FX (clone of FCA authorised firm)

Website: www.gulsfx.co

Be aware that the scammers may give out other false details or mix these with some correct details of the registered firm.

FCA authorised firm details

This FCA authorised firm that fraudsters are claiming to work for has no association with the ‘clone firm’. It is authorised to offer, promote or sell services or products in the UK and its correct details are:

Firm Name: ​​​Gulf Central Merchant Bank Ltd 

Firm Reference Number: 601013

Address: 100 Pall Mall, London, SW1Y 5NQ, UNITED KINGDOM 

Telephone: 44 2071129005 

Email: [email protected]

How to protect yourself

We strongly advise you to only deal with financial firms that are authorised by us, and check the Financial Services Register to ensure they are. It has information on firms and individuals that are, or have been, regulated by us.

If you want to check a consumer credit firm that may not yet have been authorised by us, please also check the Interim Permission Register.

If a firm does not appear on the Register but claims it does, contact our Consumer Helpline on 0800 111 6768.

There are more steps you should take to avoid scams and unauthorised firms.

You should also be aware that if you give money to an unauthorised firm, you will not be covered by the Financial Ombudsman Service or Financial Services Compensation Scheme (FSCS) if things go wrong.

Report a clone firm

If you think you have been approached by an unauthorised or clone firm, or contacted about a scam, you should contact us. If you were offered, bought or sold shares, you can use our reporting form.

What to do if your firm is cloned

If you think your authorised firm has been cloned or scammers are fraudulently using your name or other details, contact our Firm Helpline on 0300 500 0597.

Let's block ads! (Why?)

Become a member of The Financial Analyst today. TFA publishes original opinion and news content on trending financial topics and breaking stories related to analysis and global markets. If you have a tip or a financial opinion to share get in touch to submit your story.

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