07 March 2016

Corporate News Weekly Round-Up 3/7/16: New FASB Rules, Changes In SEC's Annual Meeting Requirements For NASDAQ-Listed Companies and SEC Slams Investment Adviser For A Second Time With Fines For False Advertisement


This week's Corporate news includes new FASB rules mandating greater management role in going concern evaluation and disclosure, new NASDAQ rules allowing discretion as to delisting listed companies that fail to hold an annual meeting; and the SEC's recent suit against an investment advisor for material misstatements to advisory clients** NEW FASB RULES MANDATE GREATER MANAGEMENT ROLE IN GOING CONCERN EVALUATION AND DISCLOSURE STARTING IN 2016 New FASB guidance places greater responsibility on management to evaluate and disclose a company's ability to continue as a going concern. The new rules update generally accepted accounting principles (GAAP) to require management of companies (both public and private) and not-for-profit organizations to take part in evaluating conditions that may affect the ability to continue as a going concern. The new rules also include principles intended to enhance uniformity in the timing and content of going concern disclosures in the financial statement footnotes. The new rules are effective for annual periods ending after (and interim periods beginning after) December 15, 2016, with early application permitted. For more information on Accounting Standards Update No. 2014-15, Presentation of Financial Statements – Going Concern (Subtopic 205-40): Disclosure of Uncertainties about an Entity's Ability to Continue as a Going Concern. For more information, read here. IMMEDIATE DELISTING NO LONGER REQUIRED FOR NASDAQ-LISTED COMPANIES THAT FAIL TO HOLD AN ANNUAL MEETING The SEC recently approved a proposed rule providing NASDAQ with discretion to give its listed companies time to comply with the requirement to hold an annual meeting no later than one year after fiscal year-end. Under the prior rule, failing to hold an annual meeting before the deadline would lead to immediate suspension and delisting, and NASDAQ had no discretion to allow time extensions. Under the new rule, a listed company may now at NASDAQ's discretion submit a plan of compliance for NASDAQ review and approval, since there may be mitigating reasons leading a company to fail to timely hold an annual meeting. For more information, read here. SEC CHARGED REGISTERED INVESTMENT ADVISER WITH MAKING MISSTATEMENTS TO ADVISORY CLIENTS BY ADVERTISING UNVERIFIED TRACK RECORDS The SEC recently filed proceedings against a Boston-based investment adviser, claiming that the adviser had made misstatements to its advisory clients by using an investment firm's performance data in its advertising without first obtaining sufficient documentation that substantiated the relevant firm's claims. The investment adviser consented to the SEC order finding Investment Advisers Act of 1940 violations and agreed to pay the SEC a $100,000 penalty without admitting or denying the findings. The investment firm whose performance data was used had previously settled SEC proceedings, admitting that its advertisements falsely claimed that its strategy had a high-performing history. The recent case is the second SEC action against a firm that advertised the same third-party firm's false historical performance data. In the first case, a Connecticut-based investment management firm settled for $16.5 million (including $13.4 million in disgorgement, $1.1 million in prejudgment interest and a $2 million penalty). To read the press release read here. To read the proceedings,read here.

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