Federal Securities: Dodd-Frank Act of 2010

Question 1

Federal Securities

Dodd-Frank

Answer 1

• impact on accounting is relatively minor
  Goal: strengthen financial market performance by improving financial institutions accountability and transparency, and protecting consumers from abusive practices.
  1. creates Financial Stability Oversight Council
  
  • prevent big institutions from failing. Can require to hold extra reserves
  • bank holding companies with $50 billion in assets
    2. limitations on trading by banks and their support of hedge funds
    3. increased transparency in OTC markets & clearing houses cannot be controlled by banks
    4. requires SEC registration of hedge funds
    5. protect customers from a range of fraudulent and predatory practices

Question 2

Federal Securities
Dodd-Frank
Other

Answer 2

• whistle-blower provisions
• whistle-blower protection
• punish insider trading
• increase shareholder access to proxy process
• requires companies to create mandatory clawback systems for executive pay whether or not fraud is a factor
• amends SOX to make permanent exclusion from SOX smaller firms with less than $75M market capitalization
• authorized SEC to punish those who aid and abet securities fraud
• new federal insurance regulator
• require pension funds to buy investment grade securities
• require FED to direct publicly traded non-bank financial institutions with at lease $10 billion in assets to create separate “risk committee” of board
• Increase SEC’s ability to punish bad guys

Question 3

Federal Securities
Dodd-Frank
Impact on Accountants

Answer 3

• increase SEC and PCAOB ability to get foreign audit workpapers
• requiring firms to get agreements to get foreign worklpapers
• confidentiality provisions to get foreign workpapers
• monitor auditors of nonpublic broker dealers
• move 2,000 investment advisers to state regulation
• eliminate private adviser exemption, now must register under SEC