NASDAQ Merger Completed, NYSE Acquisition Approved

NASDAQ announced today that its acquisition of the trading platform of Instinet was been completed. Completion of the deal comes two days after the New York Stock Exchange announced approval of its deal to buy electronic trading company Archipelago Holdings Inc.

http://yahoo.reuters.com/financeQuoteCompanyNewsArticle.jhtml?duid=mtfh36194_2005-12-08_19-08-37_n08330737_newsml

http://today.reuters.com/stocks/QuoteCompanyNewsArticle.aspx?view=CN&symbol=AX.P&storyid=273470+07-Dec-2005+RTRS

SEC Accounting and Auditing Changes Coming?

According to the Associated Press, SEC Chairman Cox is urging a cooperative effort to make accounting rules simpler for reporting companies.

While that is certainly a noble and worthwhile goal, one has to wonder if the accounting rules are the biggest issue facing public companies these days. The complaint that those of us in the trenches here is not about accounting, but rather Sarbanes-Oxley.

But, a simplification of the accounting rules is still a worthwhile goal, under the theory that half a loaf is better than none.

There were two interesting points in the article. First is that the AP is reporting that Chairman Cox is "blaming the corporate scandals earlier this decade in part on the complexity of the current system." I tried to find the original quotes, but the text of his speech is not on line. I am a bit puzzled by this statement, since much of the "corporate scandals earlier this decade" have resulted in criminal convictions of corporate officers. One does not get convicted of fraud because of complex accounting rules.

The other interesting point came at the end of the piece, where the AP reports that "the Big Four firms audit the books of some 80 percent of the publicly traded companies in the United States."

Four firms do 80% of the work? That is a huge number and one that apparently concerns the Chairman. Quoting from the article:

"Is this intense concentration in the market for large public-company auditing services good for America?," Cox asked in his speech. "If you believe, as I do, that genuine competition is essential to the proper functioning of any market, then the answer is no. ... As regulators, we have a stake in seeing to it that our rules promote, rather than restrict, competition."

Let's simplify those accounting rules, re-think Sarbanes-Oxley and can someone call the IRS and make similar simplification suggestions?

Fraud Counts Dismissed from SEC Complaint Against Scrushy

U.S. District Judge Inge Johnson dismissed the two securities fraud counts from the SEC's civil complaint against former HealthSouth CEO Richard Scrushy. The White Collar Crime Prof Blog has the details and analysis.

Shareholders May Get Material on Internet

The SEC commissioners voted 5-0 at a public meeting to allow companies to provide the annual proxy material electronically rather than requiring them to mail the bulky documents to shareholders. The proposal, which was opened to a 60-day public comment period, is expected to save U.S. corporations some $500 million a year or more in printing and postage costs.

It could be formally adopted by the SEC sometime after the comment period, but would not take effect until 2007.

Mutual Fund Settlements Coming to an End?

We may be at the end of the mutual fund market timing scandal settlements. The Washington Post is reporting that Federated Investors became mutual fund number 14 to settle improper trading charges, agreeing to pay $100 million to settle charges against it.

NASD Arbitrators Award $2M In Merrill Sex-Discrimination Case

Three female brokers from the Merrill Lynch Princeton NJ office received an arbitration award of 2 million dollars. The brokers claimed that their managers of denying them access to walk-in customers, deprived them of adequate support staff, and defamation and other discriminatory behavior.

More Reg FD Cases Coming SEC Won't Appeal Dismissal of Reg FD Case Against Siebel

As the SEC announced that it would not appeal the dismissal of the Reg FD case against Siebel's chief financial officer, it's spokesman made it a point of stating that it has about a dozen other Reg FD cases pending.

Let's hope for their sake that they have a better case this time.

For those of you who missed it, the SEC had accused Kenneth Goldman, Siebel's chief financial officer, of tipping off institutional investors at two private events in 2003 by characterizing the company's performance as 'good' or 'better' and noting that there were $5 million deals in the software company's pipeline. The SEC believed that the disclosure violated Reg FD, and commenced proceedings. In September, a federal judge ruled that the statements were, in essence, the same as the chief executive officer's forecasts in a public conference call two weeks prior.

ImClone Insider Trading Cases Settle

Martha Stewart went to jail for lying about her ImClone sales, and was not prosecuted for insider trading. In my discussions on the subject one of my points was that the SEC would have had a very difficult time proving the inside trading allegation, which was why the US Attorney did not charge her with that violation in the criminal case.

Now we learn that the US Attorney has dropped the criminal insider trading cases against other ImClone tippees, and they will not be criminally prosecuted. While that event comes with their agreement to pay some 2.8 million in disgorgement and penalties, I would be willing to bet that Marth would have paid the combined sum of $200,000 to the SEC to settle the insider trading civil case, than to spend 5 months in a federal prision for lying.

SEC To Relax Registration Requirements for Hedge Fund Managers?

Last year, when the SEC adopted rules to require the managers of certain hedge funds to register with them, a number of commentators, myself included, criticized the Commission for its decision, and for the rationale behind it. My comments are available here.

One problem was how in the world was the SEC going to monitor and inspect all of those hedge fund managers when it couldn't effectively monitor the broker-dealers, mutual fund companies, investment advisors, and public companies that it is currently responsible for monitoring?

Well, as the effective date for registration is approaching (it is February 2006) the press is starting to report that the Commission is having second thoughts, and is considering relaxing the registration rules to be less inclusive, and to limit the number of managers who are effected by it.

The problem? Apparently they suddenly realized that they would not possibly be able to effectively deal with all those hedge funds.

Surprise!

Article here and here.

Libby Indicted for Perjury - When Will They Learn?

The indictment of a top White House official - Vice President Cheney's Chief of Staff - is not a good thing, but I believe the nature of the indictment evidences a significant problem - the fact that for many of us, the truth is only a passing acquaintance, and we are too stupid, or arrogant, to think it is important.

Mr. Libby is certainly innocent until the prosecutor can prove the charges in the indictment beyond a reasonable doubt to a jury. But the indictment demonstrates that some people still don't get it - and there are a number of people who are calling the charges of perjury a "technicality".

When did the truth become a technicality? It is not, and never was. Ask President Clinton, ask Martha Stewart, or any of the other individuals who have been caught in a lie.

The truth is important. If it is not important for your personal morals, it is important to keep your butt out of the slammer. You cannot lie to an investigator, a prosecutor or a grand jury. You simply cannot do it. Don't go to the interview or simply refuse to testify. But do not lie.

The truth is important. It is important in our daily lives, it is important in our professional lives, and it is important when we are being questioned by an investigator.

Does everyone get it now?