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Article
Publication date: 20 March 2007

Anthony H. Zacharski, Alan Rosenblat, Erin Wagner and Adam Teufel

This paper sets out to describe the FASB Statement on Fair Value Measurements (FAS 157).

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Abstract

Purpose

This paper sets out to describe the FASB Statement on Fair Value Measurements (FAS 157).

Design/methodology/approach

Explains the Statement's definition of fair value, the three valuation techniques pre‐scribed by the Statement, a fair value hierarchy established by the Statement, a valuation method used when inputs are based on bid and ask prices, and disclosures required by the Statement to enable users to assess the inputs used to develop fair value measurements.

Findings

The Statement identifies three valuation techniques: the market approach, the income approach, and the cost approach. The Statement establishes a fair value hierarchy based on whether the inputs are “observable” or “unobservable”.

Originality/value

Explains a new accounting statement that may change some accounting practices of investment companies and broker‐dealers.

Details

Journal of Investment Compliance, vol. 8 no. 1
Type: Research Article
ISSN: 1528-5812

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Article
Publication date: 20 March 2007

Jeffrey Puretz, Robert Robertson, Alan Rosenblat, Jutta Frankfurter and Cortney Scott

This paper aims to summarize amendments to Rule 22c‐2 under the Investment Company Act of 1940, the “redemption fee rule”, adopted by the Securities and Exchange Commission on…

82

Abstract

Purpose

This paper aims to summarize amendments to Rule 22c‐2 under the Investment Company Act of 1940, the “redemption fee rule”, adopted by the Securities and Exchange Commission on September 26, 2006.

Design/methodology/approach

Provides background to the redemption fee rule, defines financial intermediaries and intermediary chains, and discusses how funds are expected to implement the rule and associated frequent trading policies.

Findings

Under the redemption fee rule, the boards of most mutual funds are required to consider whether to implement a fee of up to 2 percent of the value of any shares redeemed by a customer from a fund within a short time after purchase. Amendments to the rule clarify operation of the rule and reduce mutual funds' costs in complying with it.

Originality/value

Outlines the requirements of the amendments to Rule 22c‐2 under the Investment Company Act of 1940.

Details

Journal of Investment Compliance, vol. 8 no. 1
Type: Research Article
ISSN: 1528-5812

Keywords

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Article
Publication date: 13 June 2008

Jeffrey S. Puretz, Anthony H. Zacharski, Alan Rosenblat and Alison C. Ryan

The purpose of this paper is to summarize and discuss FINRA Rule 2821, which covers broker‐dealer sales practices with respect to purchases and exchanges of deferred variable…

141

Abstract

Purpose

The purpose of this paper is to summarize and discuss FINRA Rule 2821, which covers broker‐dealer sales practices with respect to purchases and exchanges of deferred variable annuities.

Design/methodology/approach

The paper describes the transactions to which the rule applies; summarizes the four primary components, which relate to suitability obligations, review and approval, supervisory procedures, and training programs; discusses the background and history of the rule; and explains a conditional exemption from Rules 15c3‐3 and 15c3‐1 that permit a principal's review of transactions subject to Rule 2821 for up to seven days without triggering requirements for additional capital or customer reserve accounts.

Findings

The paper finds that deferred variable annuities now join a very small group of securities products that have their own custom suitability requirements.

Originality/value

The paper provides practical guidance by experienced lawyers specializing in financial services.

Details

Journal of Investment Compliance, vol. 9 no. 2
Type: Research Article
ISSN: 1528-5812

Keywords

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Article
Publication date: 21 November 2008

Susan C. Ervin, Philip T. Hinkle, Brendan C. Fox and Alan Rosenblat

The purpose of this paper is to summarize key provisions of the CFTC Reauthorization Act of 2008 which reauthorizes the Commodity Futures Trading Commission (CFTC) through the…

101

Abstract

Purpose

The purpose of this paper is to summarize key provisions of the CFTC Reauthorization Act of 2008 which reauthorizes the Commodity Futures Trading Commission (CFTC) through the year 2013 and substantially enhances the CFTC's authority in several areas.

Design/methodology/approach

The paper discusses the enhancements to the CFTC's authority over off‐exchange retail foreign currency transactions; explains the expanded CFTC oversight of significant price discovery contracts; and summarizes other amendments to the Commodity Exchange Act (CEA), including expansion of CFTC anti‐fraud authority over principal‐to‐principal futures transactions, modification of civil and criminal penalties for certain violations of the CEA, required CFTC and Securities and Exchange Commission (SEC) rulemaking on: risk‐based portfolio margining for security options and security futures products; and trading of futures on broad‐based indexes of foreign equities, and other technical amendments.

Findings

This paper notes that the key provisions of the CFTC Reauthorization Act substantially enhances the CFTC's regulatory authority in several areas and provides an introduction to those provisions.

Originality/value

The paper is an introduction to the new regulatory authority of the CFTC by experienced lawyers specializing in financial services.

Details

Journal of Investment Compliance, vol. 9 no. 4
Type: Research Article
ISSN: 1528-5812

Keywords

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Article
Publication date: 27 November 2007

Stuart J. Kaswell, Alan Rosenblat and Christopher S. Ha

The purpose of this paper is to summarize and explain amendments to SEC Regulation SHO adopted on June 13, 2007

101

Abstract

Purpose

The purpose of this paper is to summarize and explain amendments to SEC Regulation SHO adopted on June 13, 2007

Design/methodology/approach

The paper explains elimination of “grandfather” exception to Reg SHO close‐out requirement, explains proposed amendments to options market maker exception and long locate requirement, and explains elimination of all price tests that were designed to restrict short selling in bear markets.

Findings

The paper finds that, in June 2007, the Securities and Exchange Commission (SEC) adopted and proposed amendments to the short sales rules under the Securities Exchange Act of 1934 (the “Exchange Act”). The SEC: adopted amendments to Rules 200 and 203 of Regulation SHO to: the eliminate the “grandfather” exception to the “close out” requirement, extend the current close out requirement of 13 consecutive settlement days for securities sales pursuant to Rule 144 under the Exchange Act to 35 settlement days, and update the market decline limitation relating to index arbitrage trading activity;proposed and re‐proposed amendments to Regulation SHO to eliminate the “option market maker” exception to the close out requirement, and to require broker‐dealers making a sale as “long” to document the present location of the securities being sold; and adopted amendments to Rule 10a‐1 and Regulation SHO to repeal all price tests, including the “tick” test, and to provide that no price test, including any price tests of any self‐regulatory organization (“SRO”), shall apply to short sales of any securities. The adopted amendments to Rule 10a‐1 and Regulation SHO to repeal all price tests took effect on July 3, 2007. The other adopted amendments to Regulation SHO will take effect 60 days after publication in the Federal Register.

Originality/value

The paper provides a concise, practical summary by lawyers who specialize securities markets regulations.

Details

Journal of Investment Compliance, vol. 8 no. 4
Type: Research Article
ISSN: 1528-5812

Keywords

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Article
Publication date: 21 November 2008

Thomas J. Friedmann, Anthony H. Zacharski, Margaret A. Bancroft, Roger Mulvihill, Susan A. Reading, Robert J. Williams and Alan Rosenblat

The purpose of this paper is to summarize and analyze the SEC's July 9, 2008 roundtable discussion regarding fair value accounting and auditing standards.

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Abstract

Purpose

The purpose of this paper is to summarize and analyze the SEC's July 9, 2008 roundtable discussion regarding fair value accounting and auditing standards.

Design/methodology/approach

The paper discusses investor, auditor/accountant/actuary, and corporation views concerning the usefulness of fair value accounting, potential market behavior effects from fair value accounting, challenges in applying fair value standards, possible improvement to the current standards, and working with auditors who provide assurance for fair value accounting.

Findings

Some investor panelists said fair value provides investors with the most current and relevant information of any accounting method and some believe fair valuation is important for market integrity and trust because it is a transparent measure for valuation. Auditors are especially challenged in determining fair values in illiquid or frozen markets. Roundtable participants viewed disclosure as critical for implementation of fair valuation, particularly regarding key inputs and assumptions. Auditors and corporations would like more guidance on applying fair value accounting from the SEC and Public Company Accounting Oversight Board.

Originality/value

The paper provides expert guidance by experienced securities lawyers.

Details

Journal of Investment Compliance, vol. 9 no. 4
Type: Research Article
ISSN: 1528-5812

Keywords

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Article
Publication date: 1 July 2006

Stuart J. Kaswell, Alan Rosenblat and Michael L. Sherman

To describe and analyze in detail an Interpretive Release (the “2006 Interpretation”) approved on July 12, 2006 by the US Securities and Exchange Commission (“SEC”) regarding the…

167

Abstract

Purpose

To describe and analyze in detail an Interpretive Release (the “2006 Interpretation”) approved on July 12, 2006 by the US Securities and Exchange Commission (“SEC”) regarding the soft dollar safe harbor under Section 28(e) of the Securities Exchange Act of 1934.

Design/methodology/approach

Following a brief discussion of the history of soft dollars, describes and analyzes in greater detail relevant aspects of the 2006 Interpretation, including an explanation of the three‐part test concerning the use of soft dollars to pay for products and services under the safe harbor, a discussion of “mixed use” items, further detail on soft dollar arrangements, an explanation of liabilities and obligations of managers and broker dealers, and an implementation timeline.

Findings

Under the 2006 Interpretation, a money manager may rely on the safe harbor to acquire products or services only upon satisfaction of each part of a three‐part test. First, does the product or service meet the eligibility criteria of Section 28(e)(3)? Second, does the eligible product or service provide lawful and appropriate assistance in the performance of relevant responsibilities? Finally, may the money manager properly conclude, in good faith, that the commissions paid are reasonable in relation to the value of the research and brokerage products and services provided by the broker (in relation either to the particular transaction or to the money manager's overall responsibilities with respect to discretionary accounts)? The 2006 Interpretation also is relevant to broker‐dealers who may receive soft dollars. Under Section 28(e), a money manager can pay soft dollars only to broker‐dealers who “provide” research or brokerage services and “effect” transactions. Under the 2006 Interpretation, the circumstances under which broker‐dealers will be seen as “providing” services and “effecting” transactions will be interpreted more broadly than under past interpretations, allowing brokers and money managers greater flexibility to structure soft dollar and commission‐sharing arrangements in a manner that will better serve the interests of investors.

Originality/value

Provides a detailed analysis of the 2006 Interpretation concerning soft dollars.

Details

Journal of Investment Compliance, vol. 7 no. 3
Type: Research Article
ISSN: 1528-5812

Keywords

Available. Content available
Article
Publication date: 21 November 2008

Henry A. Davis

469

Abstract

Details

Journal of Investment Compliance, vol. 9 no. 4
Type: Research Article
ISSN: 1528-5812

Available. Content available
Article
Publication date: 1 July 2006

Henry A. Davis and James A. Tricarico Jr

182

Abstract

Details

Journal of Investment Compliance, vol. 7 no. 3
Type: Research Article
ISSN: 1528-5812

Available. Content available
Article
Publication date: 20 March 2007

Henry A. Davis

283

Abstract

Details

Journal of Investment Compliance, vol. 8 no. 1
Type: Research Article
ISSN: 1528-5812

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