At a hearing of the House Committee on Financial Services, Mary Schapiro, Chairwoman of the Securities and Exchange Commission (the “SEC”), announced that the SEC is considering whether to enact new rules that would prevent financial institutions from using certain accounting methods to hide debt, or temporarily lower risk, immediately prior to releasing their SEC reports. Specifically, the SEC would impose enhanced disclosure requirements on financial institutions and would take a more definite stance on certain accounting methods being considered acts of “deception” under the SEC rules. For example, the SEC is considering expanding the requirement to disclose average debt balances on annual reports from bank holding companies to all financial institutions with such disclosure being required quarterly rather than annually.
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