SEC: 20th Anniversary of Regulation FD

 

On August 15, 2000, the United States Securities and Exchange Commission (SEC) adopted Regulation Fair Disclosure, often referred to as Regulation FD. The rulemaking was controversial, and the vote of the Commissioners to approve Regulation FD was 3 to 1 in favor. The SEC’s Chairman at the time, Arthur Levitt, believed that Regulation FD was necessary to “level the playing field” for investors, by prohibiting the selective disclosure of material non-public information to market professionals. On the other side of the debate, some feared that Regulation FD would have a chilling effect on the communications between public companies and the market, while others worried that Regulation FD would lead to information overload, where public companies would be obligated to frequently disclose too many material developments.

Over the past twenty years, Regulation FD has significantly shaped the framework for public company communications. The SEC has enforced Regulation FD judiciously, seeking action in the most egregious cases to send a clear message to public companies about the conduct that is expected in accordance with the rules. Regulation FD has also adapted with the changing times, as the Commission has provided guidance on the dissemination of material nonpublic information through websites and social media channels. Today, Regulation FD stands as a key component of the regulation of corporate disclosure.

The SEC Historical Society has prepared an extensive review on the 20th Anniversary of Regulation Fair Disclosure. The review includes an audio program that provides A Historical Perspective on the Development, Implementation and Enforcement of Regulation FD on its twentieth anniversary.

Paul Pacter: Profile and Interview

 

Accountancy Age online published an April 2010 article called “Profile: Paul Pacter, international standard setter.” The article states that, although some people may not recognise his name, Paul Pacter is one of the most influential men in the history of international accounting standards."  Since 2000, he has played a variety of roles including director of standards for small and medium-sized entities at the International Accounting Standards Board and director at the global IFRS office for Deloitte in Hong Kong. During the 1990s, he served as staff member at the International Accounting Standards Committee working on projects including financial instruments, interim financial reporting, segment reporting, discontinuing operations, extractive industries, agriculture, and electronic financial reporting. From 1984-1989, he was vice chairman of the advisory council to the US Governmental Accounting Standards Board.

 

On July 12, 2011, an Interview with Paul Pacter was conducted in New York City by James Stocker for the Securities and Exchange Commission Historical Society’s virtual museum and archive on the history of financial regulation. A 53-page transcript of that interview notes that, during the 2000s, he also set up a very popular website (www.iasplus.com) for accountants involved in international accounting standards. Pacter comments that: “This was done for Deloitte. We just had an idea that there ought to be someplace out on the Internet where all sorts of information about international accounting standards was available. The old IASC didn’t have much of a website, although I did that too, I taught myself the HTML and the graphics and how to do FTP. Deloitte said, “Why don’t you set something up for IASs?” We opened shop as a free site. We opened the door in December 2000. Visitor numbers grew dramatically. When I left Deloitte in June 2010, we were getting 60,000 to 70,000 visitors a week – unique visitors. We had about 1,000 webpages. We had 4,000 downloadable PDF files. It was, and still is, the biggest website in a very narrow area of interest, international accounting standards.”

 

Looking back at a long career, Pacter comments: “...I must just say out of respect for the U.S. SEC, they’ve been a great contributor to accounting standards. They have stayed out of the development of the standards. They’ve encouraged and prodded and commented. They’ve insisted on high quality implementation. For that, I say I have the greatest respect for the commission and for their counterparts around the world. We don’t want politics setting accounting standards. We don’t want politicians setting accounting standards any more than I want them telling my surgeon how to do my surgery. Set the broad principles and let the private sector do the job. The commission has done that, and I thank them for that.”

Indiana CPAs - In the beginning …

Before there was a tax code (1913), before there was a Department of Labor (1913), before the SEC (1935) and before the PCAOB (2002), even before audits, there were CPAs (New York – 1896). How did the profession rise to the level of prominence in business without license to do something specific?

What were the requirements in 1915? Well … you had to be 21 years old, a high school graduate, have three years of experience as a professional accountant and submit “proof” of all of that to the newly created “state board of certified accountants”. Then, per Indiana law, “shall be granted without examination a certificate authorizing him to practice as a certified public accountant”. Of course this had to be done within 90 days. After that you would have had to take an examination. The early CPAs were grandfathered. That is how the profession got its start.

The first accounting standards were issued somewhere around 1938, and by 1959 there were 51 pronouncements known as Accounting Research Bulletins – this eventually became GAAP. The pronouncements were issued by the Committee on Accounting Procedure (CAP). The first auditing standards were issued in 1939 by the American Institute of Accountants committee on auditing procedure. In 1941, the SEC mandated that the auditor’s report had to be made in accordance with GAAP (they didn’t do that in 1935 because there was no GAAP).

To learn more, read the article “In the beginning …” posted on the Indiana CPA Society blog on February 16, 2012 by Gary Bolinger.

SEC Historical Society – 10th anniversary and timeline update

The Securities and Exchange Commission (SEC) Historical Society, through its virtual museum and archive, shares, preserves and advances knowledge of the history of financial regulation. It is a non-profit organization, independent of the US Securities and Exchange Commission.

The SEC Historical Society celebrates the 10th anniversary of its founding in 2012. Since opening on June 1, 2002, this independent and objective resource provides access to primary materials on the creation and development of the regulation of the capital markets from the 20th century to the present.

The comprehensive collection includes a Virtual Museum Timeline that highlights significant developments in the history of financial regulation against US and world events. To start, choose a decade, click the arrow button to move through the years, and click on any development to read more. In addition, learn more about building the Timeline.

The collection also includes: Galleries (permanent exhibits within the museum, providing access to materials from throughout the collection on a particular topic); Papers (letters, speeches, memos, telegrams and reports, many not accessible through other online sources); Photos (historic and current images of people significant to financial regulation); and Oral Histories (remembrances, available in audio, MP3 and edited transcript formats, from people who helped create and continue to shape the financial regulatory system). As well, the collection comprises a variety of original programs - including Fireside Chats, the Society's Annual Meeting, The Best of NERA, etc. - offering historic perspective on current regulatory issues (broadcast live and preserved in audio, MP3 and edited transcript formats).

About the US Securities and Exchange Commission (SEC)

The mission of the US Securities and Exchange Commission (SEC) is to protect investors, maintain fair, orderly and efficient markets, and facilitate capital formation. Before the Great Crash of 1929, there was little support for federal regulation of the securities markets. This was particularly true during the post-World War I surge of securities activity. Proposals that the federal government require financial disclosure and prevent the fraudulent sale of stock were never seriously pursued. During the peak year of the Depression, Congress passed the Securities Act of 1933. This law, together with the Securities Exchange Act of 1934, which created the SEC, was designed to restore investor confidence in capital markets by providing investors and the markets with more reliable information and clear rules of honest dealing. President Franklin Delano Roosevelt appointed Joseph P. Kennedy (President John F. Kennedy's father) to serve as the first Chairman of the SEC. (Read the SEC’s What We Do and access digital archives from 1929 to 2010 containing Commission Speeches and Public Statements on a wide range of topics concerning the state of the markets and the regulatory agenda.)

Opening the Door to Financial Regulatory History

At a time when financial regulatory reform is capturing headlines, an online museum administered by the SEC Historical Society is granting users equal access to resources, relics and research material. The online galleries preserve eyewitness accounts, oral histories, correspondences, research papers and photographs. An interactive timeline features hundreds of digital artifacts. Interviews and round-table discussions cast light on current topics. (Read the article "Opening the Door to Financial Regulatory History" in the June 2010 Journal of Accountancy online.)

SEC Historical Society virtual museum

The SEC Historical Society's virtual museum and archive is an open door to the history of the regulation of the capital market system from the 20th century to the present. Its collection is built and exhibited independent of any oversight from the U.S. Securities and Exchange Commission (SEC). Founded in 1999, the SEC Historical Society is a non-profit organization and receives no funding from the public sector. Read the Society's most recent Annual Report.



The museum and archive's comprehensive collection includes:

• Timeline: Linking regulatory developments against U.S. and world events from 1930 to the present.
• Galleries: A unique search function within the museum, providing an alternate way to access all museum material on a particular subject. Current Galleries look at insider trading, international financial regulation and eras in SEC history.
• Papers: Letters, speeches, memos, telegrams and reports, many not accessible through other online sources.
• Photos: Historic and current images of people significant to financial regulation.
• Oral Histories: Remembrances, available in audio, MP3 and edited transcript formats, from people who helped create and continue to shape the financial regulatory system.
• Programs: A variety of original programs - including Fireside Chats, the Society's Annual Meeting, The Best of NERA, etc. - offering historic perspective on current regulatory issues. Broadcast live on www.sechistorical.org, and preserved in audio, MP3 and edited transcript formats.

A History of XBRL: The story of our new language

XBRL (eXtensible Business Reporting Language) is a royalty-free, international information format designed specifically for business information, also referred to as “interactive data” by the US Securities and Exchange Commission (SEC). The concept of XBRL is that all individual disclosure items within business reports are assigned unique electronically readable tags (like a barcode). These tags are mapped to taxonomies that are being developed by market constituents and are publicly available on the XBRL website. Taxonomies are, in essence, dictionaries of financial concepts in which each concept is defined and assigned a relationship to other concepts.

XBRL has been a journey of high and lows that met with great success in 2008. Success is defined as (1) the acceptance of this new tool in the broad-based business and business-reporting community and (2) the use of this tool in areas broader than just financial statement information. Those two fundamental beliefs grounded some early decisions that the American Institute of Certified Public Accountants (AICPA) believes will make XBRL a critical foundation for business and government in the decades to come. (Read the AICPA publication XBRL: The story of our new language.)