All GLG News Analyses Filed Under: Exchange & Other Regulatory Bodies

No ifs and or buts - Round 2

July 28, 2006

Analysis by: GLG Expert Contributor

Analysis of:Cox: Backdating Charges Imminent | www.cfo.com

1. Backdating options would require you to record expense if the price was less than the price at the grant date.

Who is in charge of the Accountants?

July 25, 2006

Analysis by: GLG Expert Contributor

Analysis of:SEC: More Questions than Answers on 404 | www.cfo.com

1. More regulations are coming out on how internal controls should be documented, tested and audited.

It may not be all bad

July 24, 2006

Analysis by: GLG Expert Contributor

Analysis of:Cox: Backdating Charges Imminent | www.cfo.com

1. The SEC is concluding its investigation into back dating options and may issue civil penalties.

2. Back dating options is getting significantly bad press.

Clarification to 404 could spell better guidance and cost control for companies

July 18, 2006

Analysis by: GLG Expert Contributor

Analysis of:SEC: More Questions than Answers on 404 | www.cfo.com

As the author of this article mentions, public companies are concerned with the lack of guidance for 404 compliance and the high level of spending that is being realized to get certified.  Note that the roundtable contributors include corporate executives and, not mentioned in this article, that the SEC Commissioner would be reviewing requirements in an effort to possible curb some of the spending for smaller companies.

SOX Section 404

July 18, 2006

Analysis by: GLG Expert Contributor

Analysis of:SEC: More Questions than Answers on 404 | www.cfo.com

When discussing the impact with many public company CFOs, most reply by stating that their financial and accounting resources are strained significantly..... they are also incurring tremendously increased consulting and auditing cost as a result of 404, but such changes are not resulting in improved financial reporting or accounting.

Backdating Stock Options

July 18, 2006

Analysis by: GLG Expert Contributor

Analysis of:Cox: Backdating Charges Imminent | www.cfo.com

If there are any new rules related to the timing of the grant date of stock options, I believe they will merely reinforce the recently implemented accounting rules related to stock options that were put in place on January 2006 (independent of the recent backdating issue).

Paul MillerProfessorREGENTS OF THE UNIVERSITY OF COLORADO

Commissioner Atkins Misses the Boat on Spring-Loaded Options

July 14, 2006

Analysis of:Remarks by SEC Commissioner Paul S. Atkins Before the International Corporate Governance Network 11th Annual Conference, July 6, 2006 | www.sec.gov

The press has reported on Commissioner Atkins’s July 6 speech in Washington by focusing on two astounding claims that granting spring-loaded options is neither insider trading nor harmful to investors.  In contrast, this analysis shows how mistaken Atkins is by describing that spring-loading is designed specifically to produce misleading financial statements.  If so, it would be appropriate to bring charges against management that they also violated Rule 10(b) on deceptive reporting as well as committing insider trading.  And, it would also be appropriate to doubt other claims made by Atkins.

Paul MillerProfessorREGENTS OF THE UNIVERSITY OF COLORADO

The commissioner’s conclusions don’t pass the smell test

July 13, 2006

Analysis of:'Spring-loading' not insider trading | www.chron.com

This article is perplexing.  First, Mr. Atkins’s seems to be well out of order by commenting so definitively on an issue that is bound to be addressed by the commission and eventually the courts; therefore, his comments appear to be prejudicial and unwise. Second, his quoted conclusion that spring-loading is good for shareholders strikes me (and others) as a disingenuous effort to minimize the foul odor of unethical behavior.  Third, he ignores the fact that spring-loading is designed to minimize the reported compensation expense from the options.

SEC’s Official Stance on “Smaller Companies” and SOX 404 – No Free Pass

May 19, 2006

Analysis by: GLG Expert Contributor

Analysis of:SEC Takes a Stand on 404 | www.cfo.com

*  Article discusses the SEC’s official announcement that “smaller” companies will be required to comply with Section 404 internal-control requirements - contradicting the recommendations of its own committee which recommended that companies of certain sizes should be exempted from 404 requirements.
*  Importantly, this announcement by the SEC should have relevance to investors because smaller companies (1) make up a material amount of all public companies which could have been potentially exempted from SOX 404 requirements and (2) represent a disproportionate and substantial amount of all public companies that have restated financial results in recent years.
*  In an attempt to make the rules less costly and cumbersome, the SEC plans to issue additional guidance on how companies should assess the adequacy of their internal controls and also plans to work with the Public Company Accounting Oversight Board (PCAOB) on revisions to the rules governing the way auditors test internal controls.
*  Interestingly, the SEC's decision may not completely put to rest the issue of potentially exempting smaller companies from SOX 404 requirements. The SEC’s statement also came on a day when a group of senators and representatives introduced a bill in Congress that would give many smaller companies the right to choose not to comply with the internal-control rules.

David YoungProfessorFONDATION INSEAD

The Future of Sarbanes-Oxley

May 19, 2006

Analysis of:SEC's Cox says Sarbanes-Oxley tricky in practice | www.marketwatch.com

The commentary below addresses the issue of what changes we can expect from Sarbanes-Oxley in future, and what effect these changes might have on the Big 4.

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