Article: S.E.C. Eases Regulations on Business 1890

  • This article provides an update on several forthcoming changes for next year, although not all of the work on SOX 404 is complete:
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    S.E.C. Eases Regulations on Business
    WASHINGTON, Dec. 13  Responding to criticism that regulators had overreacted to years of major corporate scandals, the Securities and Exchange Commission on Wednesday issued a flurry of deregulatory orders and proposals intended to lower costs to public companies. It said the moves would not reduce investor protection

    1. Easier for foreign companies to withdraw their securities from American markets.
    2. Increase the financial qualifications for investors in hedge funds, to a net worth of USD2.5 million from the current standard of USD1 million.
    3. The S.E.C. adopted a rule that would save corporations the expense of mailing financial reports and proxy statements by enabling them to communicate with the vast majority of their investors through the Internet. (Investors can continue to receive paper copies of proxies and other material through the mail if they request them.)
      And it proposed rules that would make it easier and less costly for banks to offer brokerage services.
    4. Under those new guidelines, prosecutors in the field will now have to obtain permission from senior officials before trying to get companies that are under investigation to waive their attorney-client privilege.
    5. In weighing whether to seek the indictment of a company, the prosecutors will also no longer be permitted to consider whether the company is paying the legal fees of an employee involved in the inquiry.
    6. The changes announced by the commission on Wednesday fell short of what some companies and groups had sought. In the case of the auditing rules, for instance, many businesses had sought an exemption from the requirements of Section 404 of the Sarbanes-Oxley Act.
    7. Instead of a blanket exemption, officials said, the proposed guidance would give many small companies a powerful new tool in restricting their auditors from engaging in what the executives viewed as expensive and unnecessary audits of financial controls that had minimum impact on financial statements.
    8. Under the guidance proposed by the S.E.C., executives would evaluate the design of only those financial controls that might carry the risk of having a material impact on financial statements. Commission officials emphasized that the guidance is being drafted to be less onerous on smaller or less intricate companies.

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