Bloomberg the Company & Products

Bloomberg Anywhere Login


Connecting decision makers to a dynamic network of information, people and ideas, Bloomberg quickly and accurately delivers business and financial information, news and insight around the world.


Financial Products

Enterprise Products


Customer Support

  • Americas

    +1 212 318 2000

  • Europe, Middle East, & Africa

    +44 20 7330 7500

  • Asia Pacific

    +65 6212 1000


Industry Products

Media Services

Follow Us

Audit Rotation, M.D. Sass Probe, MF Global: Compliance

March 22 (Bloomberg) -- Senior executives of Ernst & Young LLP, KPMG LLP and other large accounting firms said regulators should back away from a proposal that public companies be required to rotate their auditors.

The Public Company Accounting Oversight Board, the nonprofit that regulates auditors of U.S.-listed companies, is weighing mandatory term limits to combat auditor bias toward longtime clients. Chief executives and other leading officials at the so-called Big Four firms criticized the rotation proposal yesterday at a meeting in Washington, arguing it would hurt the quality of audits.

Stephen R. Howe, managing partner of Ernst & Young in the U.S., in remarks submitted to the board pointed out that most of the 630 comment letters to the PCAOB were against rotation. He said the change would cause higher costs and disruptions.

Auditor rotation is one of several ideas under debate at the PCAOB -- a watchdog overseen by the U.S. Securities and Exchange Commission after being established by the Sarbanes-Oxley Act in the wake of the collapse of Enron Corp.

PCAOB Chairman James R. Doty has repeatedly pointed to the dangers of auditing firms getting too comfortable with clients they’ve retained for decades.

The accounting firms -- including Deloitte LLP, KPMG and PricewaterhouseCoopers LLP -- contend the rotation proposal is burdensome and unnecessary.

Compliance Policy

Bill Easing Capital Laws Advances Over Opposition in U.S. Senate

The U.S. Senate will vote today on a measure to ease securities laws for closely-held firms as well as amendments to strengthen protections in the bill for investors.

A day after postponing a final vote on legislation due to objections from Democrats, lawmakers voted 76-22 yesterday in favor of a procedural motion setting up today’s votes. The amendments, should they be adopted, would be the first changes to the bill since it passed by a wide majority in the House earlier this month.

Even with the support of President Barack Obama and more than 150 Democrats in the House, the measure unexpectedly slowed as Senate Democrats pushed to add amendments forcing major changes to the bill. Proponents say the legislation would allow closely held firms to more easily raise capital and present more opportunities for startup companies to go public.

Senators debated the House measure this week amid opposition from Securities and Exchange Commission Chairwoman Mary L. Schapiro, consumer and investor advocates, and pension funds. The measure would undo a ban on closely held firms soliciting investments, increase the number of investors they can have, and exempt newly public companies with less than $1 billion in revenue from some reporting requirements of the Dodd-Frank and Sarbanes-Oxley laws.

Lawmakers also will consider changes to the so-called crowdfunding exemption created by the bill, or the exemption from SEC rules for startups that use the Internet or social media platforms to solicit and pool small dollar investments in their companies.

For more, click here.

FDIC Extends Comment Period on Portion of Dodd Frank to April 30

The Federal Deposit Insurance Corp. has extended the comment period on implementing part of the Dodd-Frank Act to April 30, according to a statement.

The portion of the measure in question would require non-member banks and savings associations with more than $10 billion in consolidated assets to conduct annual stress tests, the agency said. The deadline had been set to expire tomorrow, according to a notice in the Federal Register yesterday announcing the extension.

Separately, the FDIC, responding to requests from industry groups, proposed changing the way banks evaluate assets for the purpose of calculating payments to the regulator’s insurance fund.

FDIC board members voted unanimously at a meeting in Washington March 20 to seek comment on an update to a rule that shifts the burden for protecting depositors against bank failures to larger lenders. The rule, which took effect last year, bases fees on liabilities rather than domestic deposits.

Banks said the 2011 rule made it difficult to report liabilities because it sought data they weren’t collecting. The proposal released March 20 would let banks report liabilities using available data, and change the way subprime and leveraged loans are defined. It would also raise the risk-assessment threshold for some loans to $5 million from $1 million and exclude some loans secured by liquid collateral.

The revisions could change the amount individual banks pay, though the overall amount collected by the FDIC wouldn’t be affected, according to staff members. The changes, which are subject to a final vote, would take effect Oct. 1.

MSRB to Show Inter-Dealer Yield Data on EMMA Website

The Municipal Securities Rulemaking Board said it received regulatory approval to begin displaying inter-dealer yield data on the Electronic Municipal Market Access website.

Inter-dealer yields will be displayed on the website beginning April 30, the MSRB said yesterday in a statement. The board said it was granted approval from the U.S. Securities and Exchange Commission March 20.

Compliance Action

Chevron, Transocean Managers Face Brazil Criminal Charges

Seventeen Chevron Corp. and Transocean Ltd. executives were charged with environmental crimes for an oil leak off Rio de Janeiro’s coast.

The companies took risks when drilling at Chevron’s offshore Frade field, used faulty equipment and failed to avoid or counter spills, the federal prosecutor’s office said in an e-mailed statement yesterday. The field will keep leaking oil and shouldn’t be used again for safety reasons, Eduardo Santos, the Federal prosecutor investigating the case, said at a press conference in Rio yesterday.

George Buck, head of Chevron in Brazil, and other executives were charged with obstructing a probe. Prosecutors are seeking prison sentences of as much as 31 years for the executives.

“Chevron will vigorously defend the company and its employees,” Kurt Glaubitz, a spokesman, said in an e-mailed statement yesterday, adding that the charges are “outrageous.”

The 3,000-barrel slick at Chevron’s $3.6 billion Frade project in November occurred at a time Brazil is increasing scrutiny of deep-water drilling following the 2010 Macondo spill in the U.S. Gulf of Mexico. Both Chevron and Transocean said the charges are “without merit.”

“We strongly disagree with the indictment,” Transocean Corporate Communications Director Guy Cantwell said in an e-mail today. “We will vigorously defend our company, our people, our reputation and our quality of services.”

Chevron, the second-biggest U.S. oil company by market value, suspended production in Brazil last week after identifying a second leak at the Frade area.

For more, click here.

Japan Regulator Seeks Court Approval to Raid AIJ, Officials Say

Japan’s securities watchdog is seeking approval from a Tokyo court to search AIJ Investment Advisors Co.’s premises to deepen a two-month probe, two government officials with knowledge of the matter said.

Securities and Exchange Surveillance Commission personnel may raid AIJ offices as early as tomorrow as investigators seek evidence showing the extent of the involvement of brokerage ITM Securities Co., the officials said, declining to be identified since the matter is private. The regulator will also disclose some details about how AIJ invested the funds, one of the officials said.

AIJ, based in Tokyo, was suspended for a month ending tomorrow after it couldn’t account for most of the 185.3 billion yen ($2.2 billion) it managed for clients as of March 2011. The SESC is probing whether AIJ President Kazuhiko Asakawa hid assets in secret bank accounts, one of the officials said. The watchdog will tomorrow report the latest figures for AIJ’s cash holdings, deposits and assets held in Cayman Island-registered investment funds, the official said, without providing specific details of the results of the investigation.

Two phone calls to AIJ’s office in Tokyo were directed to an automated recording that didn’t take messages. Toshiharu Mashita, a spokesman for the FSA, declined to comment.

For more, click here.

M.D. Sass Participated in Tax Lien Sale Being Probed by U.S.

M.D. Sass Investors Services Inc., a closely held manager of more than $5 billion, participated in an auction of New Jersey tax liens that has come under the scrutiny of U.S. antitrust investigators probing rigged sales.

A representative of M.D. Sass, whose tax-lien funds have as much as $110 million in assets, was among seven bidders vying for liens in the New Jersey borough of Newfield, according to records of a March 5, 2007, auction. Three people associated with the seven bidders pleaded guilty to antitrust charges and are cooperating with prosecutors. The Justice Department subpoenaed records of the auction on Feb. 15. M.D. Sass hasn’t been accused of wrongdoing.

The U.S. records request comes amid a widening probe into rigged liens sales in New Jersey. Since August, five men have pleaded guilty to conspiracy charges. The guilty pleas were to an overall conspiracy and not to the particular auction in Newfield, 35 miles south of Philadelphia.

Units of Royal Bank America, which operates branches in Pennsylvania and New Jersey, co-owned lien-buying firms with one of the men admitting guilt. The units are subjects of the probe, regulatory filings show. Royal Bank America is a unit of Royal Bancshares of Pennsylvania Inc.

“M.D. Sass companies have no comment on any activity or investigation that may be under way at the Department of Justice,” Mark Rotert, a lawyer for the New York-based firm, said in an e-mail.

The firm says on its website that it is “committed” to complying with antitrust laws.

Gina Talamona, a Justice Department spokeswoman, declined to comment on the U.S. investigation.

For more, click here.

Nomura Said to Be Involved in Insider-Trading Case Tied to Inpex

Nomura Holdings Inc., Japan’s largest brokerage, was involved in an insider-trading case connected to Inpex Corp.’s 2010 share sale, according to a person with knowledge of the matter.

Chuo Mitsui Asset Trust & Banking Co. obtained non-public information from an employee of one of the lead underwriters on Inpex’s offering, Japan’s Securities and Exchange Surveillance Commission said in a statement March 20.

“Nomura expresses its regret, and will continue to cooperate fully in the investigation,” the Tokyo-based securities firm said in a statement on its website, without explicitly confirming its role in the case. Nomura was a global coordinator on the 507 billion yen ($6 billion) sale.

Japanese regulators have been studying trading surrounding equity offerings, responding to criticism from investors who allege leaks on financing plans are eroding confidence in the stock market. The case follows the Financial Services Agency’s suspension of AIJ Investment Advisors Co. after more than $2 billion in its pension-fund assets was found to be missing.

For more, click here.


Gensler Wants 50 Percent More CFTC Money for Dodd-Frank Work

The U.S. Commodity Futures Trading Commission, regulator of the $708 trillion global swaps market, needs a 50 percent budget increase to $308 million to meet its duties under the Dodd-Frank Act, said CFTC Chairman Gary Gensler.

Gensler said in remarks prepared for a Senate appropriations subcommittee hearing yesterday that the agency needs the funds because it is being asked to oversee the swaps markets, “which is eight times the size of the futures markets. And we need more referees to protect the players.”

Gensler, who wants to spend about a third of the requested budget -- $96.2 million -- on technology, said budget constraints have meant his agency has been able to meet only 57 percent of its performance targets, examining fewer derivatives clearing organizations than planned and creating a backlog of contract reviews.

The CFTC’s budget has been the focus of a debate between Democrats seeking additional resources and Republicans trying to reduce the agency’s spending as part of a broader effort to rein in deficits.

MF Global’s O’Brien Subpoenaed by Lawmakers for House Hearing

A U.S. House panel voted to subpoena MF Global Holdings Ltd. executive Edith O’Brien to testify at a March 28 hearing on the collapse of the New York-based futures brokerage and a $1.6-billion shortfall in customer funds.

The House Financial Services oversight and investigations subcommittee moved by voice vote yesterday at a meeting in Washington to compel testimony from O’Brien, who was identified by former MF Global Chief Executive Officer Jon S. Corzine as someone with knowledge of a transfer of funds from customer accounts before the company sought bankruptcy protection on Oct. 31.

In addition to O’Brien, two other MF Global executives -- North America chief financial officer Christine Serwinski and general counsel Laurie Ferber -- are also scheduled to appear, according to a person briefed on the matter who declined to be identified because the schedule isn’t public. Henri Steenkamp, the firm’s chief financial officer, is also scheduled to testify, the person said.

Cosgrove Says Uncertainty Remains About Health-Care Law

Delos Cosgrove, chief executive officer of Cleveland Clinic Health Systems, talked with Bloomberg’s Megan Hughes about President Barack Obama’s health-care law and its impact on the clinic.

The U.S. Supreme Court will hold three days of arguments next week to determine the fate of the Affordable Care Act, which would extend insurance to about 32 million people.

For the video, click here.

Tarullo Says Regulators Need to Weigh Volcker Rule Objections

Federal Reserve Governor Daniel Tarullo said U.S. regulators must weigh objections raised by banks and governments to restrictions on proprietary trading under the Dodd Frank Act overhauling financial supervision.

“U.S. regulators will need to carefully consider the concerns that have been raised and the broader international implications of the Volcker rule as we work to finalize our implementing rules,” Tarullo said in testimony he plans to deliver to the Senate Banking Committee today. The central bank released his comments yesterday.

The regulation, named for its original champion, former Fed Chairman Paul Volcker, is one of the most contentious provisions of the 2010 Dodd-Frank Act.

Officials from Canada, Japan, the U.K. and the European Banking Federation have said in letters to U.S. regulators that the measure would impede global liquidity and harm international cooperation.

Dodd-Frank requires that the ban on proprietary trading take effect by July 21, even if rule-making is still in progress.

Comings and Goings

Henneberry Leaves Orrick For Bingham, Law Firm Says

Edward (Ted) Henneberry has left Orrick, Herrington & Sutcliffe LLP and joined Bingham McCutchen LLP as a partner, according to a statement by Bingham yesterday.

Henneberry is a partner of the firm, Lauren M. Nyren, a spokesperson for the firm, said in an e-mailed statement.

Henneberry joins the firm’s Antitrust and Trade Regulation Practice Group and will work from the Washington and London offices of the firm, according to the statement. His practice focuses on antitrust and international competition law, “particularly on cross-border mergers,” the firm said in the statement.

Previously, Henneberry was a member of the Irish Competition Authority from 2003 to 2006, and was a Director of Mergers and Cartel Enforcement divisions, Bingham said in the statement.

To contact the reporter on this story: Carla Main in New Jersey at

To contact the editor responsible for this report: Michael Hytha at

Please upgrade your Browser

Your browser is out-of-date. Please download one of these excellent browsers:

Chrome, Firefox, Safari, Opera or Internet Explorer.