Actions taken in response to covenant violations, loss of
access to capital markets, loss of customers, and other consequences of
the restatement.
    If there are material developments related to the restatement,
companies should update this disclosure on a periodic basis during the
restatement process, particularly when quarterly or annual reports are
required to be filed, and provide full and complete disclosure within
the filing with the SEC that includes the restated financial
statements.
    Developed Proposal 3.4: The FASB or the SEC, as appropriate, should
develop and issue guidance on applying materiality to errors identified
in prior interim periods and how to correct these errors. This guidance
should reflect the following principles:
     Materiality in interim period financial statements must be
assessed based on the perspective of the reasonable investor.
     When there is a material error in an interim period, the
guidance on how to correct that error should be consistent with the
principles outlined in developed proposal 3.2.
    Based on prior restatement studies, approximately one-third of all
restatements involved only interim periods. Authoritative accounting
guidance on assessing materiality with respect to interim periods is
currently limited to paragraph 29 of APB Opinion No. 28, Interim
Financial Reporting.\46\ Differences in interpretation of this
paragraph have resulted in variations in practice that have increased
the complexity of financial reporting. This increased complexity
impacts preparers and auditors, who struggle with determining how to
evaluate the materiality of an error to an interim period, and also
impacts investors, who can be confused by the inconsistency between how
companies evaluate and report errors. We believe that guidance as to
how to evaluate errors related to interim periods would be beneficial
to preparers, auditors and investors.
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    \46\ Paragraph 29 of APB Opinion No. 28, Interim Financial
Reporting, states the following:
    In determining materiality for the purpose of reporting the
cumulative effect of an accounting change or correction of an error,
amounts should be related to the estimated income for the full
fiscal year and also to the effect on the trend of earnings. Changes
that are material with respect to an interim period but not material
with respect to the estimated income for the full fiscal year or to
the trend of earnings should be separately disclosed in the interim
period.
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    We have observed that a large part of the dialogue about interim
materiality has focused on whether an interim period should be viewed
as a discrete period or an integral part of an annual period.
Consistent with the view expressed at the outset of this section, we
believe that the interim materiality dialogue could be greatly
simplified if that dialogue were refocused to address two sequential
questions: (1) What principles should be considered in determining the
materiality of an error in interim period financial statements? and (2)
How should errors in previously issued interim financial statements be
corrected? We believe that additional guidance on these questions,
which are extensions of the basic principles outlined in developed
proposals 3.1 and 3.2 above, would provide useful guidance in assessing
and correcting interim period errors. We believe that while these
principles would assist in developing guidance related to interim
periods, additional work should also be performed to fully develop
robust guidance regarding errors identified in interim periods.
    We believe that the determination of whether an interim period
error is material should be made based on the perspective of a
reasonable investor, not whether an interim period is a discrete
period, an integral part of an annual period, or some combination of
both. An interim period is part of a larger mix of information
available to a reasonable investor. As one example, a reasonable
investor would use interim financial statements to assess the
sustainability of a company's operations and cash flows. In this
example, if an error in interim financial statements did not impact the
sustainability of a company's operations and cash flows, the interim
period error may very well not be material given the total mix of
information available. Similarly, just as a large error in annual
financial statements does not determine by itself whether an error is
material, the size of an error in interim financial statements should
also not be necessarily determinative as to whether an error in interim
financial statements is material.
    We believe that applying the principles set forth above would
reduce restatements by providing a company the ability to correct in
the current period immaterial errors in previously issued financial
statements and as a practical matter obviate the need to debate whether
the interim period is a discrete period, an integral part of an annual
period, or some combination of both.
    We also note that these principles will provide a mechanism, other
than restatement, to correct through the current period a particular
error that has often been at the center of the interim materiality
debate--a newly discovered error that has accumulated over one or more
annual or interim periods, but was not material to any of those prior
periods.

III. Judgment

III.A. Background

Overview
    Judgment is not new to the areas of accounting, auditing, or
securities regulation--the criteria for making and evaluating judgment
have been a topic of discussion for many years. The recent increased
focus on judgment, however, comes from several different developments,
including changes in the regulation of auditors and a focus on more
``principles-based'' standards--for example, FASB standards on fair
value and IASB standards. Investors will benefit from more emphasis on
``principles-based'' standards, since ``rules-based'' standards (as
discussed in chapters 1 and 2) may provide a method, such as through
exceptions and bright-line tests, to avoid the accounting objectives
underlying the standards. If properly implemented, ``principles-based''
standards should improve the information provided to investors while
reducing the investor's concern about ``financial engineering'' by
companies using the ``rules'' to avoid accounting for the substance of
a transaction. While preparers appear supportive of a move to less
prescriptive guidance, they have expressed concern regarding the
perception that current practice by regulators in evaluating judgments
does not provide an environment in which such judgments may be
generally respected. This, in turn, can lead to repeated calls for more
rules, so that the

standards can be comfortably implemented.
    Many regulators also appear to encourage a system in which
preparers can use their judgment to determine the most appropriate
accounting and disclosure for a particular transaction. Regulators
assert that they do respect judgments, but may also express concerns
that some companies may attempt to inappropriately defend certain
errors as ``reasonable judgments.'' Identifying standard processes for
making judgments and criteria for evaluating those judgments, after the
fact, may provide an environment that promotes the use of judgment and
encourages consistent evaluation practices among regulators.
Goals of Potential Guidance on Judgments
    The following are several issues that any potential guidance
related to judgments may help address:
    a. Investors' lack of confidence in the use of judgment--Guidance
on judgments may provide investors with greater comfort that there is
an acceptable rigor that companies follow in exercising reasonable
judgment.
    b. Preparers' concern regarding whether reasonable judgments are
respected--In the current environment, preparers may be afraid to
exercise judgment for fear of having their judgments overruled, after
the fact by regulators.
    c. Lack of agreement in principle on the criteria for evaluating
judgments--The criteria for evaluating reasonable judgments, including
the appropriate role of hindsight in the evaluation, may not be clearly
defined and thus may lead to increased uncertainty.
    d. Concern over increased use of ``principles-based'' standards--
Companies may be less comfortable with their ability to implement more
``principles-based'' standards if they are concerned about how
reasonable judgments are reached and how they will be assessed.
Categories of Judgments That Are Made in Preparing Financial Statements
    There are many categories of accounting and auditing judgments that
are made in preparing financial statements, and any guidance should
encompass all of these categories, if practicable. Some of the
categories of accounting judgment are as follows:
    1. Selection of accounting standard.
    In many cases, the selection of the appropriate accounting standard
under GAAP is not a highly complex judgment (e.g., leases would be
accounted for using lease accounting standards and pensions would be
accounted for using pension accounting standards). However, there are
cases in which the selection of the appropriate accounting standard can
be highly complex.
    For example, the standards on accounting for derivatives contain a
definition of a derivative and provide scope exceptions that limit the
applicability of the standard to certain types of derivatives. To
evaluate how to account for a contract that has at least some
characteristics of a derivative, one would first have to determine if
the contract met the definition of a derivative in the accounting
standard and then determine if the contract would meet any of the scope
exceptions that limited the applicability of the standard. Depending on
the nature and terms of the contract, this could be a complex judgment
to make, and one on which experienced accounting professionals can have
legitimate differing, yet acceptable, opinions.
    2. Implementation of an accounting standard.
    After the correct accounting standard is identified, there are
judgments to be made during its implementation.
    Examples of implementation judgments include determining if a hedge
is effective, if a lease is an operating or a capital lease, and what
inputs and methodology should be utilized in a fair value calculation.
Implementation judgments can be assisted by implementation guidance
issued by standards-setters, regulators, and other bodies; however,
this guidance could increase the complexity of selecting the correct
accounting standard, as demonstrated by the guidance issued on
accounting for derivatives.
    Further, many accounting standards use wording such as
``substantially all'' or ``generally.'' The use of such qualifying
language can increase the amount of judgment required to implement an
accounting standard. In addition, some standards may have potentially
conflicting statements.
    3. Lack of applicable accounting standards.
    There are some transactions that may not readily fit into a
particular accounting standard. Dealing with these ``gray'' areas of
GAAP is typically highly complex and requires a great deal of judgment
and accounting expertise. In particular, many of these judgments use
analogies from existing standards that require a careful consideration
of the facts and circumstances involved in the judgment.
    4. Financial Statement Presentation.
    The appropriate method to present, classify and disclose the
accounting for a transaction in a financial statement can be highly
subjective and can require a great deal of judgment.
    5. Estimating the actual amount to record.
    Even when there is little debate as to which accounting standard to
apply to a transaction, there can be significant judgments that need to
be made in estimating the actual amount to record.
    For example, opinions on the appropriate standard to account for
loan losses or to measure impairments of assets typically do not
differ. However, the assumptions and methodology used by management to
actually determine the allowance for loan losses or to determine an
impairment of an asset can be a highly judgmental area.
    6. Evaluating the sufficiency of evidence.
    Not only must one make a judgment about how to account for a
transaction, the sufficiency of the evidence used to support the
conclusion must be evaluated. In practice, this is typically one of the
most subjective and difficult judgments to make.
    Examples include determining if there is sufficient evidence to
estimate sales returns or to support the collectability of a loan.
Levels of Judgment
    There are many levels of judgment that occur related to accounting
matters. Preparers must make initial judgments about uncertain
accounting issues; the preparer's judgment may then be evaluated or
challenged by auditors, investors, regulators, legal claimants, and
even others, such as the media. Therefore, in developing potential
guidance, differences in role and perspective between those who make a
judgment and those who evaluate a judgment should be carefully
considered. Guidance should not make those who evaluate a judgment re-
perform the judgment according to the guidance. Instead, guidance
should provide clarity to those who would make a judgment on factors
that those who would evaluate the judgment would consider while making
that evaluation.
Hindsight
    The use of hindsight to evaluate a judgment where the relevant
facts were not available at the time of the initial release of the
financial statements (including interim financial statements) is not
appropriate. Determining at what point the relevant facts were known to
management, or should have been

known,\47\ can be difficult, particularly for regulators who are often
evaluating these circumstances after substantial time has passed.
Therefore, the use of hindsight should only be used based on the facts
reasonably available at the time the annual or interim financial
statements were issued.
---------------------------------------------------------------------------

    \47\ We believe that those making a judgment should be expected
to exercise due care in gathering all of the relevant facts prior to
making the judgment.
---------------------------------------------------------------------------

Form of Potential Guidance
    We believe that there are many different ways that potential
guidance on judgment could be provided. To be successful, however, we
believe that guidance on judgment should not eliminate debate, nor be
inflexible or mechanical in application. Rather, the guidance should
encourage preparers to organize their analysis and focus preparers and
others on areas to be addressed; thereby improving the quality of the
judgment and likelihood that regulators will accept the judgment. Any
guidance issued should be designed to stimulate a rigorous, thoughtful
and deliberate process rather than a checklist-based approach for
making and evaluating judgments.
    One potential way to accomplish the goals we set forth earlier as
well as to guard against the potential that such guidance would develop
into a checklist-based approach is for the SEC to formally state its
approach to evaluating judgments. As discussed earlier in this report,
one of the major concerns surrounding the use of judgment is the
possibility of a regulator ``second guessing'' the reasonableness of a
judgment after the fact. We believe that a primary cause of this
concern is a lack of clarity and transparency into the process the SEC
uses to evaluate the reasonableness of judgments. The SEC has
articulated its policies in the past with success. Examples of previous
articulations of policy by the SEC include the ``Seaboard'' report
(October 23, 2001) relating to the impact of a company's cooperation on
a potential SEC enforcement case and the SEC's framework for assessing
the appropriateness of corporate penalties (January 4, 2006). We
believe that a statement of policy could implement the goals we have
articulated and therefore recommend that the SEC and the PCAOB issue
statements of policy describing how they evaluate the reasonableness of
accounting and auditing judgments.
The Nature and Limitations of GAAP
    Some have suggested that potential judgment guidance for the
selection and implementation of GAAP be a requirement to reflect the
economic substance of a transaction or be a standard of selecting the
``high road'' in accounting for a transaction. We agree that
qualitative standards for GAAP such as these would be desirable and we
encourage regulators and standards-setters to move financial reporting
in this direction. However, such standards are not always present in
financial reporting today and we cannot recommend the articulation of
such standards in an SEC statement of policy without anticipating a
fundamental long-term revision of GAAP--a change that would be beyond
our purview and one that would not be doable in the near- or
intermediate-term.
    For example, there is general agreement that accounting should
follow the substance and not just the form of a transaction or event.
Many believe that this fundamental principle should be extended to
require that all GAAP judgments should reflect economic substance.
However, reasonable people disagree on what economic substance actually
is, and many would conclude that significant parts of current GAAP do
not require and do not purport to measure economic substance (e.g.,
accounting for leases, pensions, certain financial instruments and
internally developed intangible assets are often cited as examples of
items reported in accordance with GAAP that would not meet many
reasonable definitions of economic substance).
    Similarly, some would like financial reporting to be based on the
``high road''--a requirement to use the most preferable principle in
all instances. Unfortunately, today a preparer is free to select from a
variety of acceptable methods allowed by GAAP (e.g., costing inventory,
measuring depreciation, and electing to apply hedge accounting are just
some of the many varied methods allowed by GAAP) without any
qualitative standard required in the selection process. In fact, a
preferable method is required to be followed only when a change in
accounting principle is made, and a less preferable alternative is
fully acceptable absent such a change.
    We believe that adopting a requirement that accounting judgments
reflect economic substance or the ``high road'' would require a
revolutionary change not achievable in the foreseeable future. Our
suggestion that the SEC issue a statement of policy relating to its
evaluation of judgments could and we believe would enhance adherence to
GAAP, but it cannot be expected to correct inherent weaknesses in the
standards to which it would be applied.

III.B. Developed Proposals

    We have developed the following proposal:
    Developed Proposal 3.5: The SEC should issue a statement of policy
articulating how it evaluates the reasonableness of accounting
judgments and include factors that it considers when making this
evaluation. The PCAOB should also adopt a similar approach with respect
to auditing judgments.
    The statement of policy applicable to accounting-related judgments
should address the choice and application of accounting principles, as
well as estimates and evidence related to the application of an
accounting principle. We believe that a statement of policy that is
consistent with the principles outlined in this developed proposal to
cover judgments made by auditors based on the application of PCAOB
auditing standards would be very beneficial to auditors. Therefore, we
propose that the PCAOB develop and articulate guidance related to how
the PCAOB, including its inspections and enforcement divisions, would
evaluate the reasonableness of judgments made based on PCAOB auditing
standards. The PCAOB statement of policy should acknowledge that the
PCAOB would look to the SEC's statement of policy to the extent the
PCAOB would be evaluating the appropriateness of accounting judgments
as part of an auditor's compliance with PCAOB auditing standards.
    We believe that it would be useful if the SEC also set forth in the
statement of policy factors that it looks to when evaluating the
reasonableness of preparers' accounting judgments.
The Concept of Judgment in Accounting Matters
    Judgment, with respect to accounting matters, should be exercised
by a person or persons who have the appropriate level of knowledge,
experience, and objectivity and form an opinion based on the relevant
facts and circumstances within the context provided by applicable
accounting standards. Judgments could differ between knowledgeable,
experienced, and objective persons. Such differences between reasonable
judgments do not, in themselves, suggest that one judgment is wrong and
the other is correct. Therefore, those who evaluate judgments should
evaluate the reasonableness of the judgment, and should not base their
evaluation on whether the judgment is different from the opinion that
would have been reached by the evaluator.

    We have listed below various factors that we believe preparers
should consider when making accounting judgments. The SEC may want to
take these factors into account in developing its statement of policy.
We also believe that a suggestion by the SEC that preparers should
carefully consider these factors when making accounting judgments would
be beneficial in not only increasing the quality of judgments, but also
in making sure that the SEC and preparers will be able to more
efficiently resolve potential differences during the SEC's review of
preparer's filings. The mere consideration by a preparer of these
factors in a SEC statement of policy would not prevent a regulator from
asking appropriate questions about the accounting judgments made by the
preparer or asking companies to correct unreasonable judgments,
however. In fact, there is no guarantee that the preparer's
consideration of the SEC's suggested factors articulated in a statement
of policy would result in a reasonable judgment being reached. Rather,
the statement of policy should be designed to encourage preparers to
organize their analysis and focus preparers and others on areas that
would be the focus of the SEC's review, thereby improving the quality
of the judgment and likelihood that regulators will accept the
judgment. We encourage the SEC to seek to accept a range of alternative
reasonable judgments when preparers make good faith attempts to reach a
reasonable judgment. A preparer's failure to follow the SEC's suggested
factors in its statement of policy, however, would not imply that the
judgment is unreasonable.
    We would expect that, in the evaluation of judgments made using the
factors that are cited below, the focus would be on significant matters
requiring judgment that could have a material effect on the financial
statements taken as a whole. We recognize that the facts and
circumstances of each judgment may indicate that certain factors are
more important than others. These factors would have a greater
influence in an evaluation of the reasonableness of a judgment made by
a preparer.
Factors to Consider When Evaluating the Reasonableness of a Judgment
    While we believe that the SEC should articulate the factors that it
uses when evaluating the reasonableness of a judgment, we believe that
the statement of policy would be even more useful to preparers if the
SEC also made suggestions for ways in which accounting judgments could
be made.
    We believe that accounting judgments should be based on a critical
and reasoned evaluation made in good faith and in a rigorous,
thoughtful and deliberate manner. We believe that preparers should have
appropriate controls in place to ensure adequate consideration of all
relevant factors. Factors applicable to the making of an accounting
judgment include the following:
    1. The preparer's analysis of the transaction, including the
substance and business purpose of the transaction;
    2. The material facts reasonably available at the time that the
financial statements are issued;
    3. The preparer's review and analysis of relevant literature,
including the relevant underlying principles;
    4. The preparer's analysis of alternative views or estimates,
including pros and cons for reasonable alternatives;
    5. The preparer's rationale for the choice selected, including
reasons for the alternative or estimate selected and linkage of the
rationale to investors' information needs and the judgments of
competent external parties;
    6. Linkage of the alternative or estimate selected to the substance
and business purpose of the transaction or issue being evaluated;
    7. The level of input from people with an appropriate level of
professional expertise; \48\
---------------------------------------------------------------------------

    \48\ In many cases, input from professional experts would
include consultation with a preparer's independent auditors or other
competent external parties, such as valuation specialists, actuaries
or counsel.
---------------------------------------------------------------------------

    8. The preparer's consideration of known diversity in practice
regarding the alternatives or estimates; \49\
---------------------------------------------------------------------------

    \49\ If there is not diversity in practice, it would be
significantly harder to select a different alternative.
---------------------------------------------------------------------------

    9. The preparer's consistency of application of alternatives or
estimates to similar transactions;
    10. The appropriateness and reliability of the assumptions and data
used;
    11. The adequacy of the amount of time and effort spent to consider
the judgment.
    When considering these factors, it would be expected that the
amount of documentation, disclosure, input from professional experts,
and level of effort in making a judgment would vary based on the
complexity, nature (routine versus non-routine) and materiality of a
transaction or issue requiring judgment.
    Material issues or transactions should be disclosed appropriately.
We note that existing disclosure requirements should be sufficient to
generate \50\ transparent disclosure that enables an investor to
understand the transaction and assumptions that were critical to the
judgment. The SEC has provided in the past, and should continue to
consider providing, additional guidance on existing disclosure
requirements to encourage more transparent disclosure. In addition,
when evaluating the reasonableness of a judgment, regulators should
take into account the disclosure relevant to the judgment.
---------------------------------------------------------------------------

    \50\ Existing disclosure requirements would include the guidance
on critical accounting estimates in the Commissions Release No. 33-
8350 ``Commission Guidance Regarding Management's Discussion and
Analysis of Financial Condition and Results of Operations, the
Commissions Release No. 33-8040 ``Cautionary Advice Regarding
Disclosure About Critical Accounting Policies'' and Accounting
Principles Board Opinion No. 22 ``Disclosure of Accounting
Policies''. We also encourage the SEC to continue to remind
preparers of ways to improve the transparency of disclosure, such as
through statements like the Sample Letter sent to Public Companies
on MD&A Disclosure Regarding the Application of SFAS 157 (Fair Value
Measurements) issued by the Division of Corporation Finance in March
2008.
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    Documentation--The alternatives considered and the conclusions
reached should be documented contemporaneously. The lack of
contemporaneous documentation may not mean that a judgment was
incorrect, but would complicate an explanation of the nature and
propriety of a judgment made at the time of the release of the
financial statements.

Exhibit D

SEC Advisory Committee on Improvements to Financial Reporting

Delivering Financial Information Subcommittee Update

May 2, 2008 Full Committee Meeting

I. Introduction

    The SEC's Advisory Committee on Improvements to Financial Reporting
(Committee) issued a progress report (Progress Report) on February 14,
2008.\51\ In chapter 4 of the Progress Report, the Committee discussed
its work-to-date in the area of delivering financial information
including its developed proposals relating to XBRL tagging of financial
information and improved use of corporate Web sites and its future
considerations relating to disclosure of key performance indicators,
improved quarterly press release disclosures and timing, and the
inclusion of executive summaries in public company periodic reports.
---------------------------------------------------------------------------

    \51\ Refer to Progress Report at http://www.sec.gov/rules/other/
2008/33-8896.pdf.
---------------------------------------------------------------------------

    Since the issuance of the Progress Report, the delivering financial
information subcommittee (Subcommittee IV) has deliberated further the
areas of improved use of

corporate Web sites, disclosure of key performance indicators, improved
quarterly press release disclosures and timing and inclusion of
executive summaries. This report represents Subcommittee IV's latest
thinking, including its consideration of input received through comment
letters and received orally at the March 14, 2008 Committee meeting in
San Francisco and subsequent Subcommittee meeting with industry
participants. Subject to further public comment, Subcommittee IV will
recommend the following preliminary hypotheses to the full Committee
for its consideration in developing the final report, which it expects
to issue in July 2008.

II. XBRL

    In the Progress Report, the Committee issued a developed proposal
regarding XBRL (developed proposal 4.1). Refer to the Progress Report
for additional discussion of this developed proposal. At the Committee
meeting on March 14, 2008 held in San Francisco, the Committee received
oral and written input from market participants regarding the XBRL
developed proposal. The Subcommittee understands the SEC has scheduled
an open meeting on May 14, 2008 to consider whether to propose
amendments to provide for corporate financial statement information to
be filed with the SEC in interactive data format, and a near- and long-
term schedule therefore. Subcommittee IV proposes no revisions at this
time to the developed proposal.

III. Use of Corporate Web Sites

    In the Progress Report, the Committee issued a developed proposal
regarding the use of corporate Web sites and the development of uniform
best practices regarding corporate Web site use by industry
participants (developed proposal 4.2). Refer to the Progress Report for
additional discussion of this developed proposal. The Committee heard
additional input from industry participants, including newswire
services, reporting companies, investors, and securities lawyers
regarding the developed proposal as part of the comments received on
the Progress Report. The Subcommittee heard from companies and
investors about the value of corporate Web site disclosures as an
additional, though not exclusive, means of providing information to the
market in a timely manner available to all persons. Subcommittee IV
proposes no significant revisions at this time to the developed
proposals regarding corporate Web sites and industry developed best
practice guidelines.

IV. Disclosures of KPIs and Other Metrics To Enhance Business Reporting

Preliminary Hypothesis 1

    The SEC should encourage private sector initiatives targeted at
best practice development of company use of Key Performance Indicators
(KPIs) in their business reports. The SEC should encourage private
sector dialogue, involving preparers, investors, and other interested
industry participants, such as consortia that have long supported KPI-
like concepts, to generate understandable, consistent, relevant and
comparable KPIs on an industry-specific and relevant activity basis.
The SEC also should encourage companies to provide, explain, and
consistently disclose period-to-period company-specific KPIs. The SEC
should consider reiterating and expanding its interpretive guidance
regarding disclosures of KPIs in MD&A and other company disclosures.
    The Committee should further acknowledge the useful work of those
consortia that endeavor to go beyond the limited scope of the
Committee's recommendation to provide an overall structure which
provides a linking of financial and KPI indicators into a seamless
whole.
Background
    As the Committee noted in the Progress Report, enhanced business
reporting and key performance indicators (KPIs) are disclosures about
the aspects of a company's business that provide significant insight
into the sources of its value. The Enhanced Business Reporting
Consortium,\52\ has stated that the value drivers for a business ``can
be measured numerically through KPIs or may be qualitative factors such
as business opportunities, risks, strategies and plans--all of which
permit assessment of the quality, sustainability and variability of its
cash flows and earnings.'' KPIs include supplemental non-GAAP financial
reporting disclosures that proponents have stated can improve
disclosures by public companies. Such KPIs also may include non-
financial measures. KPIs are leading indicators of financial results
and intangible assets that are not necessarily encompassed on a
company's balance sheet and can provide more transparency and
understanding about the company to investors. Proponents of the use of
KPIs note that they are important because they inform judgments about a
company's future cash flows--and form the basis for a company's stock
price. Managers and boards of directors of companies use KPIs to
monitor performance of companies and of management. Market participants
and the SEC have identified KPIs as important supplements to GAAP-
defined financial measures.
---------------------------------------------------------------------------

    \52\ The Enhanced Business Reporting Consortium was founded by
the AICPA, Grant Thornton LLP, Microsoft Corporation, and
PricewaterhouseCoopers in 2005 upon the recommendation of the AICPA
Special Committee on Enhanced Business Reporting. The EBRC is an
independent, market-driven non-profit collaboration focused on
improving the quality, integrity and transparency of information
used for decision-making in a cost-effective, time efficient manner.
---------------------------------------------------------------------------

    The Committee understands that investment professionals concur that
investors are very interested in non-financial information as a way to
better understand the businesses they invest in. They recognize that
financial reports provide an accounting of past events and a current
view of the financial condition of the company. The financials are
viewed as an end-of-process result delivered as a combination of market
conditions and company business strategies, processes and execution.
The financials are, by their nature, not necessarily forward-looking
indicators. Of interest to many investors from a business reporting
standpoint is information regarding the fundamental drivers of the
business and metrics used to give evidence as to how the business is
being managed in the environment it finds itself in. Financial
reporting captures some aspects of this but not all and, in fact,
financial statements are not currently designed to provide a broader
picture of the company and its operations.
    From a corporate preparer standpoint, management uses KPIs as key
metrics with which to direct the company as part of the strategic
planning process both in terms of goal setting and as a way to provide
analysis and feedback. In that regard the degree to which companies are
comfortable sharing these metrics with shareholders, communication
would be greatly enhanced. By its very nature such communication would
increase the fundamental transparency of the business. Numerous prior
studies have shown that greater transparency on the part of
corporations reduces the company's cost of capital and no doubt
improves market efficiency.
    Recognizing this, the SEC encourages extensive discussion of the
condition of the business in the MD&A. The SEC, in its 2003 MD&A
Interpretive Release, stated ``[o]ne of the principal objectives of
MD&A is to give readers a view of the company through the eyes of
management by providing both a short- and long-term analysis of the
business. To do this, companies should `identify

and address those key variables and other qualitative and quantitative
factors which are peculiar to and necessary for an understanding and
evaluation of the individual company'.'' In this regard, the SEC noted
the importance of disclosures of key performance measures--``when
preparing MD&A, companies should consider whether disclosure of all key
variables and other factors that management uses to manage the business
would be material to investors, and therefore required. These key
variables and other factors may be non-financial, and companies should
consider whether that non-financial information should be disclosed.''
The SEC went on to state that ``[i]ndustry-specific measures can also
be important for analysis, although common standards for the measures
also are important. Some industries commonly use non-financial data,
such as industry metrics and value drivers. Where a company discloses
such information, and there is no commonly accepted method of
calculating a particular non-financial metric, it should provide an
explanation of its calculation to promote comparability across
companies within the industry. Finally, companies may use non-financial
performance measures that are company-specific.'' \53\
---------------------------------------------------------------------------

    \53\ SEC, Commission Guidance Regarding Management's Discussion
and Analysis of Financial Condition and Results of Operations,
Securities Act Release No. 33-8350 (December 19, 2003) (2003 MD&A
Interpretive Release).
---------------------------------------------------------------------------

    This discussion is intended to give information about the business
in a way that is consistent with the manner in which the business is
run.
Discussion
    The Subcommittee's hypothesis extends beyond a narrow definition of
financial reporting to business reporting more generally. The
Subcommittee has been evaluating whether public companies should
increase their voluntary disclosure of financial and non-financial
performance measures or indicators, such as KPIs. The Subcommittee has
examined the current practices of public companies and notes that many
companies are already disclosing some company-specific KPIs in their
periodic reports filed with the SEC or in other public statements, but
these company-specific measures may not necessarily be consistently
reported by companies from period-to-period, are not necessarily well-
defined, and may not be commonly used by other companies in the same
industry so that they lend themselves to comparisons between and among
companies. Therefore, as part of its review of KPI disclosure, the
Subcommittee has evaluated the kinds of KPIs that should be made
available, in what format, and whether they should be consistently
defined over time. The Subcommittee has found that various groups,
within and outside industries, are working on developing industry-
specific and activity-specific KPIs in order to improve comparability
of companies on an industry basis.
    In developing its preliminary hypothesis on KPIs and other possible
metrics to enhance business reporting, the Subcommittee consulted with
industry members and others who have been working on this subject. As a
result of these discussions and its evaluation of other materials, the
Subcommittee preliminarily believes that further exploration of the use
of KPIs and other metrics by public companies would be constructive.
    Accordingly, for KPI reporting to be most effective and improve
user understanding, the Subcommittee is considering that the full
Committee recommend that companies should consider the following to
improve KPI disclosures.\54\
---------------------------------------------------------------------------

    \54\ The Subcommittee notes that the SEC has provided guidance
as to some of these matters as well in its 2003 MD&A Interpretive
Release as discussed above. The SEC noted that ``[t]he focus on key
performance indicators can be enhanced not only through the language
and content of the discussion, but also through a format that will
enhance the understanding of the discussion and analysis.''
---------------------------------------------------------------------------

     Understandability--The Subcommittee believes that a given
KPI term, such as ``same store sales,'' would be most useful in
evaluating the relevant industry or activity if it had a standard
agreed definition in the industry. For that reason, as part of its
preliminary hypothesis, the Subcommittee notes that the SEC should
explore ways to encourage private initiatives in various industries for
the development of standard KPI definitions. It is presumed that there
would be some terms that would be macro in nature that companies from
all industries would make use of and thus would be activity-based, but
it is assumed that many KPI terms would be industry-specific. Once a
term has been defined by industry, the SEC and other global regulators
should work with industry to support the use of such term in periodic
and other company reports, with such modified or additional disclosures
as the SEC and other global regulators deem necessary or appropriate.
Companies should be encouraged to use such industry-defined terms and
to disclose any differences in their use of terms from any industry-
defined and accepted definition. Companies would still have the freedom
to use whatever terms they wished in describing their businesses but
would be expected to make clear any differences between their
definitions and those that have been industry defined.
     Consistency--Whether or not a company uses an industry-
defined term for its KPI disclosures, the KPI that is used should be
reported consistently from period-to-period. Any changes in the
definition of a KPI should be disclosed, along with the reasons for the
change. KPIs should be reported not just for the current period but for
prior periods as well so that investors can assess the company's
development from period-to-period or year-to-year.
     Relevancy--KPI that are disclosed should be important to
an understanding and tracking of the business or business segments for
which they are used and should align with how reporting companies run
their business.
     Presentability--When companies disclose KPIs in their
reports and other releases, they should make clear to ordinary
investors that the information is intended to provide information about
the business of the company that is separate from and supplemental to
the financial statements. This could either be done in a separate KPI
section in MD&A or in subsections of parts of the MD&A, such as the
general business discussion or the discussion by business segment.
Segment reporting of KPIs, given the logical connection to business
line activities, could be very useful. The inclusion of tabular
presentations showing current and prior periods should be seriously
considered.
     Comparability--Encouraging companies to use industry-
defined KPI's would enable investors to compare companies within and
across industries and would also be quite useful at the industry
segment level. Once industry-defined KPIs are available, the
Subcommittee would hope that investor interest would encourage
companies to use commonly defined KPI terms.
    The Subcommittee has heard that some companies may be hesitant
about increased disclosure of KPIs because of concern that disclosure
of these metrics may compromise competitive information.\55\ Neither
the Subcommittee nor investors want companies to give away the ``crown
jewels.'' The Subcommittee has also heard questions about the validity
of many of such competitive harm claims, particularly where information
is widely known within a particular

industry. The Subcommittee has heard that there is already so much
information about companies that disclosure of unique competitive
information would be rare. Nevertheless, the Subcommittee preliminarily
believes that if a particular KPI could require the disclosure of
competitively important information, the affected company could decline
to disclose it.
---------------------------------------------------------------------------

    \55\ The Subcommittee also heard a question as to the liability
treatment of KPIs.
---------------------------------------------------------------------------

    In an ideal disclosure system, non-financial and financial
indicators and elements would be presented within a cohesive framework
that combines KPIs and other indicators with GAAP data and text
discussion in order to create a complete picture of a company. At this
time, the Subcommittee believes that having the Committee propose to
mandate or suggest such an organized structure is outside the scope of
what the Subcommittee is evaluating, might be premature and
inappropriate for a regulator or standard setter, possibly being too
prescriptive.
    Rather, the Subcommittee's preliminary hypothesis believes that the
SEC should encourage an industry driven initiative with significant
investor involvement to develop best practices that companies could
follow in developing and disclosing KPIs. Just as financial reporting
standards and the recently developed XBRL taxonomy may improve business
reporting by creating standardized language, the Subcommittee believes
the development of a KPI dictionary, developed on an industry basis but
also allowing for company-specific definitions, also could provide
valuable information to investors.
    Thus, the Subcommittee has developed a preliminary hypothesis that
is based on a number of industry-driven initiatives, with significant
investor involvement, to develop best practices and common definitions
for KPIs that companies could follow in disclosing KPIs. The hypothesis
suggests that companies, investors, and business reporting consortiums
should work together to develop industry-wide and activity-specific
KPIs that conform to uniform or standard definitions, as well as
company-specific KPIs. These KPIs should then be disclosed in a
company's periodic reports, as well as other disclosure formats such as
earnings releases. The hypothesis suggests that the KPIs:
     Be clearly and consistently defined to allow investors
understanding of the meanings of the KPIs;
     Be disclosed, as relevant, on a company and/or segment
basis; and
     Permit cross-company and cross-industry comparisons.
    The Subcommittee does not believe that the mandatory reporting of
KPIs is desirable at this time. Instead, the Subcommittee believes that
the Committee should consider encouraging the SEC to promote the
development of commonly recognized and defined KPIs by industry groups.
Integration With Other Proposals
    The Subcommittee preliminarily believes that the formalization of
KPI disclosures through commonly recognized definitions, will enhance
the benefits that will come from other proposals from the Committee.
For example, disclosing KPIs on company Web sites would allow investors
and other users of the reported information to gain an improved
understanding of the prospects for a company and could lead to better
capital market pricing.

V. Improved Quarterly Press Release Disclosures and Timing

Preliminary Hypothesis 2

    Industry groups, including the National Investor Relations
Institute, FEI, and the CFA Institute should update their best
practices for earnings releases. Such updated best practices guidance
should cover, among other matters, the type of information that should
be provided in earnings releases and the need for investors to receive
information that is consistent from quarter to quarter, with an
explanation of any changes in disclosures from quarter to quarter.
Further, the best practices guidance should consider recommending that
companies include in their earnings releases the income statement,
balance sheet and cash flow tables, locate GAAP reconciliations in
close proximity to any non-GAAP measures presented, and provide more
industry and company specific key performance indicators.
    The SEC should consider reinforcing its view that disclosures in
connection with earnings calls posted on company Web sites should be
maintained and available on such sites for at least 12 months.
Background
    As noted in the Progress Report, the quarterly earnings release,
often the first corporate communication about the result of the quarter
just ended, is viewed as an important corporate communication. This
communication often receives more attention than the formal Form 10-Q
submission which often occurs a week or two later.
    The quarterly earnings release is not currently required to contain
mandated information other than that required by the application of
Regulation G to the presentation of non-GAAP measures and the antifraud
provisions of the federal securities laws. Industry groups have
previously coordinated in developing best practices for reporting
companies to follow in preparing their earnings releases. In addition,
under SEC rules, companies must furnish earnings releases to the
Commission on a Form 8-K. Investors and other market participants have
expressed concern about the matters relating to earnings releases,
including consistency of information provided in such releases, the
timing of such releases in relation to the filing of the applicable
periodic report, and the inclusion of earnings guidance in such
earnings releases.
Discussion
    The Subcommittee has been examining a number of issues relating to
the earnings release, including with regard to its consistency,
understandability, timeliness, and the continued public availability of
earnings conference calls. The Subcommittee had an opportunity to
discuss the quarterly earnings release and these related matters with
investor and company representatives. In addition, the Subcommittee
considered the consistent provision of income statement, balance sheet
and cash flow tables in the quarterly earnings release as well as the
positioning and prominence of GAAP and non-GAAP figures, GAAP
reconciliation, the consistent placement of topics, and clear
communication of any changes to accounting methods or key assumptions.
The Subcommittee viewed the goal for the earnings release to be a
consistent, reliable communication form that all investors can easily
navigate.
    The Subcommittee also briefly discussed the advisability of
requiring the issuance of the earnings releases on the same day that
the periodic report (e.g., Form 10-Q) is filed, in contrast to the
current practice in which the earnings release often is issued before
the periodic report is filed. The Subcommittee heard from company and
investor representatives in this regard and took note of the comments
that the SEC received in connection with a prior request for comment to
tie the filing of the quarterly report to the issuance of an earnings
release. The Subcommittee understood that the practices of companies in
this regard may differ depending on the size of the company and the
company's own disclosure practices. For example, the Subcommittee
understands that some large companies issue their earnings release at
the same time as the filing of

their quarterly reports. The Subcommittee also heard that smaller
companies tended to wait to issue their earnings releases so that their
news would not be eclipsed by news of larger and more well followed
companies. While investors noted an interest in having the earnings
release issued at the same time as the Form 10-Q is filed to avoid
duplication of effort in analyzing the company's disclosures,
representatives of companies and others expressed concern about the
effect of delays in disclosing material non-public information about
the quarter or year end. Investors also expressed concern regarding the
trading of company stock by executives after the issuance of the
earnings release but before the filing of the Form 10-Q and questioned
whether executives could be prohibited from engaging in trading until
after the Form 10-Q was filed.
    The Subcommittee determined not to include a preliminary hypothesis
that would change current market practice regarding the issuance of
earnings releases but would suggest that, instead, the SEC monitor
company practices in regard to the timing of the earnings release in
relation to the filing of the relevant periodic report with the SEC.
    The Subcommittee also heard concerns that companies were not
keeping their earnings calls and related information posted on their
Web sites for more than one quarter after the call, thus making
quarterly comparisons difficult. The Subcommittee noted that the SEC
had suggested that companies keep their Web site disclosures regarding
GAAP reconciliations for non-GAAP measures presented on earnings calls
available on their Web sites for at least a 12-month period and the
Subcommittee's preliminary hypothesis would suggest that the SEC
reiterate this guidance.\56\
---------------------------------------------------------------------------

    \56\ See SEC Conditions for Use of Non-GAAP Measures, Exchange
Act Release No. 34-47226 (Jan. 22, 2003).
---------------------------------------------------------------------------

    The Subcommittee briefly discussed the practices of some companies
in providing earnings guidance or public projections of next quarter's
earnings by company officials, since some believe that this practice is
an important underlying source of reporting complexity and other
accounting problems. The Subcommittee also discussed the provision of
annual guidance that may be updated quarterly. The Subcommittee does
not intend to continue its evaluation of quarterly earnings guidance or
to suggest any preliminary hypothesis regarding the provision of
quarterly earnings guidance at this time because it notes that many
others are evaluating the issues arising from the provision of
quarterly earnings guidance.

VI. Use of Executive Summaries in Exchange Act Periodic Reports

Preliminary Hypothesis 3

    The SEC should mandate the inclusion of an executive summary in the
forepart of a reporting company's filed annual and quarterly reports.
The executive summary should provide summary information, in plain
English, in a narrative and perhaps tabular format of the most
important information about a reporting company's business, financial
condition, and operations. As with the MD&A, the executive summary
should be required to use a layered approach that would present
information in a manner that emphasizes the most important information
about the reporting company and include cross-references to the
location of the fuller discussion in the annual report. The requirement
for the executive summary should build on the company's MD&A overview
and essentially be principles-based, other than a limited number of
required disclosure items such as:
     A summary of a company's current financial statements;
     A digest of the company's GAAP and non-GAAP KPIs (to the
extent disclosed in the company's 10-Q or 10-K);
     A summary of key aspects of company performance;
     A summary of business outlook;
     A brief description of the company's business, sales and
marketing; and
     Page number references to more detailed information
contained in the document (which, if the report is provided
electronically, could be hyperlinks).
Background
    Reporting companies are not currently required to include any type
of summary in their periodic reports, although a summary of the company
and the securities it is offering is a line-item disclosure in
Securities Act registration statements. Companies, therefore, are
familiar with the concept of summarizing the important aspects of their
business and operations at the time they are raising capital. The
Subcommittee has heard that retail investors find it difficult at times
to navigate through a company's periodic reports, including its Form
10-K annual report. The Subcommittee has been evaluating the use of an
executive summary in the forepart of a company's annual and quarterly
Exchange Act reports to facilitate the ready delivery of important
information to investors by providing them a roadmap of the disclosures
contained in such reports.
Discussion
    The Subcommittee has been exploring a requirement to include an
executive summary in reporting company annual and quarterly Exchange
Act reports (Forms 10-K and 10-Q). The Subcommittee has met with
investor and company representatives as well as securities counsel. The
Subcommittee understands that a summary report prepared on a stand-
alone basis would not necessarily provide investors with information
they need in a desired format and that investors would not use such a
summary. However, the Subcommittee understands that an executive
summary included in the forepart of an Exchange Act periodic report may
provide investors, particularly retail investors, with an important
roadmap to the company's disclosures located in the body of such a
report.\57\ The executive summary in the Exchange Act periodic report
would provide summary information, in plain English, in a narrative and
perhaps tabular format of the most important information about a
reporting company's business, financial condition, and operations. As
with the MD&A, the executive summary would use a layered approach that
would present information in a manner that emphasizes the most
important information about the reporting company and include cross-
references to the location of the fuller discussion in the annual
report.
---------------------------------------------------------------------------

    \57\ Such reports generally are posted on company Web sites as
well so that the executive summaries would be electronically
available with hyperlinks to the more detailed information in the
relevant report.
---------------------------------------------------------------------------

    As noted in the Progress Report and as contemplated in the
Subcommittee's preliminary hypothesis, the goal of the executive
summary would be to help investors fundamentally understand a company's
businesses and activities through a relatively short, plain English
presentation. An executive summary in a periodic report may be most
useful if it includes high-level summaries across a broad range of key
components of the annual or quarterly report, rather than detailed
discussion of a limited number of variables. The executive summary
approach may be an efficient way to provide all investors, including
retail investors, with a concise overview of a company, its business,
and its financial condition. For the more sophisticated investor, an
executive summary may be

helpful in presenting the company's unique story which the
sophisticated investor could consider as it engages in a more detailed
analysis of the company, its business and financial condition.
    The executive summary in a periodic report should be brief, and it
might fruitfully build on the overview that the SEC has identified
should be in the forepart of the MD&A disclosure. The MD&A overview is
expected to ``include the most important matters on which a company's
executives focus in evaluating the financial condition and operating
performance and provide context.'' \58\ The executive summary should
build on the MD&A overview disclosure and include the following:
---------------------------------------------------------------------------

    \58\ See 2003 MD&A Interpretive Release above.
---------------------------------------------------------------------------

    1. A summary of a company's current financial statements;
    2. A digest of the company's GAAP and non-GAAP KPIs (to the extent
disclosed in the company's 10-Q or 10-K);
    3. A summary of key aspects of company performance;
    4. A summary of business outlook;
    5. A brief description of the company's business, sales and
marketing;
    6. Page number references to more detailed information contained in
the document (which, if the report is provided electronically, could be
hyperlinks).
    The Subcommittee's preliminary hypothesis provides that the
executive summary should be required to be included in the forepart of
a reporting company's annual or quarterly report filed with the SEC or,
if a reporting company files its annual report on an integrated basis
(the glossy annual report is provided as a wraparound to the filed
annual report), the executive summary instead could be included in the
forepart of the glossy annual report. If the executive summary was
included in the glossy annual report, it would not be considered filed
with the SEC. The Subcommittee understands that the inclusion of a
summary in the body of the periodic report should not give rise to
additional liability implications.

VII. Continued Need for Improvements in the MD&A and Other Public
Company Financial Disclosures

    The Committee noted in chapter 4 of the Progress Report that while
investors and other market participants believe that while there has
been some improvement in the MD&A disclosures since publication of the
SEC's interpretive release in 2003, significant improvement is still
needed. The Subcommittee evaluated the MD&A and other public company
disclosures in the context of its preliminary hypotheses regarding
disclosures of key performance indicators, earnings releases, and use
of executive summaries in periodic reports.

[FR Doc. E8-11276 Filed 5-21-08; 8:45 am]

BILLING CODE 8010-01-P


[Federal Register Volume 76, Number 245 (Wednesday, December 21, 2011)]
[Notices]
[Pages 79238-79239]
[FR Doc No: 2011-32541]

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SECURITIES AND EXCHANGE COMMISSION

[Release No. 34-65955; File No. SR-NYSEARCA-2011-90]

 Self-Regulatory Organizations; NYSE Arca, Inc.; Notice of Filing
and Immediate Effectiveness of Proposed Rule Change Adopting the Text
of Financial Industry Regulatory Authority Rule 5210, Which Prohibits
the Publication of Manipulative or Deceptive Quotations or
Transactions, as NYSE Arca Equities Rule 5210

December 14, 2011.
    Pursuant to Section 19(b)(1) of the Securities Exchange Act of 1934
(``Act''),\1\ and Rule 19b-4 thereunder,\2\ notice is hereby given that
on December 7, 2011, NYSE Arca, Inc. (``NYSE Arca'' or ``Exchange'')
filed with the Securities and Exchange Commission (``Commission'') the
proposed rule change as described in Items I and II below, which Items
have been prepared by the self-regulatory organization. The Commission
is publishing this notice to solicit comments on the proposed rule
change from interested persons.
---------------------------------------------------------------------------

    \1\ 15 U.S.C. 78s(b)(1).
    \2\ 17 CFR 240.19b-4.
---------------------------------------------------------------------------

I. Self-Regulatory Organization's Statement of the Terms of Substance
of the Proposed Rule Change

    The Exchange proposes to adopt the text of Financial Industry
Regulatory Authority (``FINRA'') Rule 5210, which prohibits the
publication of manipulative or deceptive quotations or transactions, as
NYSE Arca Equities Rule 5210. The text of the proposed rule change is
available at the Exchange, the Commission's Public Reference Room, and
http://www.nyse.com.

II. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

    In its filing with the Commission, the self-regulatory organization
included statements concerning the purpose of and basis for the
proposed rule change and discussed any comments it received on the
proposed rule change. The text of these statements may be examined at
the places specified in Item IV below. The Exchange has prepared
summaries, set forth in sections A, B, and C below, of the most
significant aspects of such statements.

A. Self-Regulatory Organization's Statement of the Purpose of, and
Statutory Basis for, the Proposed Rule Change

1. Purpose
    The Exchange proposes to adopt the text of FINRA Rule 5210, which
prohibits the publication of manipulative or deceptive quotations or
transactions, as NYSE Arca Equities Rule 5210.\3\
---------------------------------------------------------------------------

    \3\ See Securities Exchange Act Release No. 60835 (Oct. 16,
2009), 74 FR 54616 (Oct. 22, 2009) (SR-FINRA-2009-055). The
Exchange's affiliates, New York Stock Exchange LLC and NYSE Amex
LLC, are proposing to adopt a substantially similar rule.
---------------------------------------------------------------------------

Background
    On July 30, 2007, the National Association of Securities Dealers,
Inc. (``NASD''), and NYSE Regulation, Inc. (``NYSER'') consolidated
their member firm regulation operations into a combined organization,
FINRA, and entered into a Regulatory Services Agreement under which
FINRA agreed to perform certain regulatory functions of the Exchange on
behalf of the Exchange. On June 14, 2010, FINRA also assumed
responsibility for performing the market surveillance and enforcement
functions performed by NYSER. To facilitate FINRA's performance of
these enforcement functions and further harmonize the rules of FINRA
and NYSE Arca Equities, the Exchange is proposing to adopt the text of
FINRA Rule 5210.\4\ FINRA Rule 5210 prohibits members from publishing
or circulating, or causing to be published or circulated, any
communication that purports to report any transaction as a purchase or
sale of any security, unless such member believes that such transaction
was a bona fide purchase or sale of such security. The Rule also
prohibits members from publishing or circulating, or causing to be
published or circulated, any communication that purports to quote the
bid price or asked price for any security, unless the member believes
that such quotation represents a bona fide bid for, or offer of, such
security.
---------------------------------------------------------------------------

    \4\ For consistency with Exchange rules, the Exchange proposes
to change all references from ``member'' to ``ETP Holder.''
---------------------------------------------------------------------------

    The Exchange believes that the proposed rule change will strengthen
FINRA's ability to bring sanctions on behalf of the Exchange against an
ETP Holder for engaging in manipulative forms of quoting behavior, for
example, quote stuffing and layering. FINRA Rule 5210 (formerly NASD
Rule 3310 and IM 3310) \5\ was successfully used in the Acceptance,
Waiver and Consent announced in September 2010 by FINRA against
Trillium Brokerage Services and other individual Respondents.\6\ The
Exchange believes that the proposed rule change would augment FINRA's
ability on behalf of the Exchange to take action against manipulative
quoting behavior on the Exchange.
---------------------------------------------------------------------------

    \5\ See supra n. 4.
    \6\ See http://www.finra.org/web/groups/industry/@ip/<EMAIL_ADDRESS>---------------------------------------------------------------------------

2. Statutory Basis
    The proposed rule change is consistent with Section 6(b) of the
Securities Exchange Act of 1934 (the ``Act''),\7\ in general, and
furthers the objectives of Section 6(b)(5),\8\ in particular, in that
it is designed to prevent fraudulent and manipulative acts and
practices, to promote just and equitable principles of trade, to foster
cooperation and coordination with persons engaged in facilitating
transactions in securities, and to remove impediments to and perfect
the mechanism of a free and open market and a national market system.
Specifically, the Exchange believes that the proposed rule change would
provide an additional basis for bringing enforcement actions against
ETP Holders that engage in deceptive and manipulative quoting activity.
To the extent the Exchange has proposed changes that differ from the
FINRA version of the Rules, such changes are technical in nature and do
not change the substance of the FINRA Rule.
---------------------------------------------------------------------------

    \7\ 15 U.S.C. 78f(b).
    \8\ 15 U.S.C. 78f(b)(5).
---------------------------------------------------------------------------

B. Self-Regulatory Organization's Statement on Burden on Competition

    The Exchange does not believe that the proposed rule change will
impose

any burden on competition not necessary or appropriate in furtherance
of the purposes of the Act.

C. Self-Regulatory Organization's Statement on Comments on the Proposed
Rule Change Received From Members, Participants, or Others

    No written comments were solicited or received with respect to the
proposed rule change.

III. Date of Effectiveness of the Proposed Rule Change and Timing for
Commission Action

    The Exchange has filed the proposed rule change pursuant to Section
19(b)(3)(A)(iii) of the Act \9\ and Rule 19b-4(f)(6) thereunder.\10\
Because the proposed rule change does not: (i) Significantly affect the
protection of investors or the public interest; (ii) impose any
significant burden on competition; and (iii) become operative prior to
30 days from the date on which it was filed, or such shorter time as
the Commission may designate, if consistent with the protection of
investors and the public interest, the proposed rule change has become
effective pursuant to Section 19(b)(3)(A) of the Act and Rule 19b-
4(f)(6)(iii) thereunder.\11\
---------------------------------------------------------------------------

    \9\ 15 U.S.C. 78s(b)(3)(A)(iii).
    \10\ 17 CFR 240.19b-4(f)(6).
    \11\ 17 CFR 240.19b-4(f)(6). In addition, Rule 19b-4(f)(6)(iii)
requires the Exchange to give the Commission written notice of the
Exchange's intent to file the proposed rule change, along with a
brief description and text of the proposed rule change, at least
five business days prior to the date of filing of the proposed rule
change, or such shorter time as designated by the Commission. The
Exchange has satisfied this requirement.
---------------------------------------------------------------------------

    A proposed rule change filed under Rule 19b-4(f)(6) \12\ normally
does not become operative prior to 30 days after the date of the
filing. However, pursuant to Rule 19b4(f)(6)(iii),\13\ the Commission
may designate a shorter time if such action is consistent with the
protection of investors and the public interest.
---------------------------------------------------------------------------

    \12\ 17 CFR 240.19b-4(f)(6).
    \13\ 17 CFR 240.19b-4(f)(6)(iii).
---------------------------------------------------------------------------

    The Exchange has requested that the Commission waive the 30-day
operative delay. The Commission believes that waiver of the operative
delay is consistent with the protection of investors and the public
interest because such waiver will allow FINRA to more effectively carry
out its enforcement activities on behalf of the Exchange. Therefore,
the Commission designates the proposal operative upon filing.\14\
---------------------------------------------------------------------------

    \14\ For purposes only of waiving the 30-day operative delay,
the Commission has considered the proposed rule's impact on
efficiency, competition, and capital formation. See 15 U.S.C.
78c(f).
---------------------------------------------------------------------------

    At any time within 60 days of the filing of such proposed rule
change, the Commission summarily may temporarily suspend such rule
change if it appears to the Commission that such action is necessary or
appropriate in the public interest, for the protection of investors, or
otherwise in furtherance of the purposes of the Act.

IV. Solicitation of Comments

    Interested persons are invited to submit written data, views, and
arguments concerning the foregoing, including whether the proposed rule
change is consistent with the Act. Comments may be submitted by any of
the following methods:

Electronic Comments

     Use the Commission's Internet comment form (http://www.sec.gov/rules/sro.shtml); or
     Send an email to<EMAIL_ADDRESS>Please include
File Number SR-NYSEARCA-2011-90 on the subject line.

Paper Comments

     Send paper comments in triplicate to Elizabeth M. Murphy,
Secretary, Securities and Exchange Commission, 100 F Street NE.,
Washington, DC 20549-1090.

All submissions should refer to File Number SR-NYSEARCA-2011-90. This
file number should be included on the subject line if email is used. To
help the Commission process and review your comments more efficiently,
please use only one method. The Commission will post all comments on
the Commission's Internet Web site (http://www.sec.gov/rules/sro.shtml). Copies of the submission, all subsequent amendments, all
written statements with respect to the proposed rule change that are
filed with the Commission, and all written communications relating to
the proposed rule change between the Commission and any person, other
than those that may be withheld from the public in accordance with the
provisions of 5 U.S.C. 552, will be available for Web site viewing and
printing in the Commission's Public Reference Room, 100 F Street NE.,
Washington, DC 20549, on official business days between the hours of 10
a.m. and 3 p.m. Copies of the filing also will be available for
inspection and copying at the principal office of the Exchange. All
comments received will be posted without change; the Commission does
not edit personal identifying information from submissions. You should
submit only information that you wish to make available publicly. All
submissions should refer to File Number SR-NYSEARCA-2011-90 and should
be submitted on or before January 11, 2012.

    For the Commission, by the Division of Trading and Markets,
pursuant to delegated authority.\15\
---------------------------------------------------------------------------

    \15\ 17 CFR 200.30-3(a)(12).
---------------------------------------------------------------------------

Kevin M. O'Neill,
Deputy Secretary.
[FR Doc. 2011-32541 Filed 12-20-11; 8:45 am]
BILLING CODE 8011-01-P


[Federal Register: January 6, 2010 (Volume 75, Number 3)]
[Notices]
[Page 860-862]
[DOCID:fr06ja10-37]

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ENVIRONMENTAL PROTECTION AGENCY

[EPA-HQ-OPP-2009-0777; FRL-8806-3]

Maneb; Notice of Receipt of a Request to Voluntarily Cancel a
Pesticide Registration of a Certain Product

AGENCY: Environmental Protection Agency (EPA).

ACTION: Notice.

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SUMMARY: In accordance with section 6(f)(1) of the Federal Insecticide,
Fungicide, and Rodenticide Act (FIFRA), as amended, EPA is issuing a
notice of receipt of a request by the registrant to voluntarily cancel
their registration of a product containing the pesticide maneb. The
request would terminate the last maneb technical product registered for
use in the United States. EPA intends to grant this request at the
close of the comment period for this announcement unless the Agency
receives substantive comments within the comment period that would
merit its further review of the request, or unless the registrant
withdraws their request within this period. Upon acceptance of this
request, any sale, distribution, or use of the product listed in this
notice will be permitted only if the sale, distribution, or use is
consistent with the terms as described in the final order.

DATES: Comments must be received on or before February 5, 2010.

ADDRESSES: Submit your comments, identified by docket identification
(ID) number EPA-HQ-OPP-2009-0777, by one of the following methods:
     Federal eRulemaking Portal: http://www.regulations.gov.
Follow the on-line instructions for submitting comments.
     Mail: Office of Pesticide Programs (OPP) Regulatory Public
Docket (7502P), Environmental Protection Agency, 1200 Pennsylvania
Ave., NW., Washington, DC 20460-0001.
     Delivery: OPP Regulatory Public Docket (7502P),
Environmental Protection Agency, Rm. S-4400, One Potomac Yard (South
Bldg.), 2777 S. Crystal Dr., Arlington, VA. Deliveries are only
accepted during the Docket Facility's normal hours of operation (8:30
a.m. to 4 p.m., Monday through Friday, excluding legal holidays).
Special arrangements should be made for deliveries of boxed
information. The Docket Facility telephone number is<PHONE_NUMBER>.
    Instructions: Direct your comments to docket ID number EPA-HQ-OPP-
2009-0777. EPA's policy is that all comments received will be included
in the docket without change and may be made available on-line at
http://www.regulations.gov, including any personal information
provided, unless the comment includes information claimed to be
Confidential Business Information (CBI) or other information whose
disclosure is restricted by statute. Do not submit information that you
consider to be CBI or otherwise protected through regulations.gov or e-
mail. The regulations.gov website is an ``anonymous access'' system,
which

means EPA will not know your identity or contact information unless you
provide it in the body of your comment. If you send an e-mail comment
directly to EPA without going through regulations.gov, your e-mail
address will be automatically captured and included as part of the
comment that is placed in the docket and made available on the
Internet. If you submit an electronic comment, EPA recommends that you
include your name and other contact information in the body of your
comment and with any disk or CD-ROM you submit. If EPA cannot read your
comment due to technical difficulties and cannot contact you for
clarification, EPA may not be able to consider your comment. Electronic
files should avoid the use of special characters, any form of
encryption, and be free of any defects or viruses.
    Docket: All documents in the docket are listed in the docket index
available at http://www.regulations.gov. Although listed in the index,
some information is not publicly available, e.g., CBI or other
information whose disclosure is restricted by statute. Certain other
material, such as copyrighted material, is not placed on the Internet
and will be publicly available only in hard copy form. Publicly
available docket materials are available either in the electronic
docket at http://www.regulations.gov, or, if only available in hard
copy, at the OPP Regulatory Public Docket in Rm. S-4400, One Potomac
Yard (South Bldg.), 2777 S. Crystal Dr., Arlington, VA. The hours of
operation of this Docket Facility are from 8:30 a.m. to 4 p.m., Monday
through Friday, excluding legal holidays. The Docket Facility telephone
number is<PHONE_NUMBER>.

FOR FURTHER INFORMATION CONTACT: Barbara Briscoe, Pesticide Re-
evaluation Division (7508P), Office of Pesticide Programs,
Environmental Protection Agency, 1200 Pennsylvania Ave., NW.,
Washington, DC 20460-0001; telephone number:<PHONE_NUMBER>; fax
number:<PHONE_NUMBER>; e-mail address<EMAIL_ADDRESS>
SUPPLEMENTARY INFORMATION:

I. General Information

A. Does this Action Apply to Me?

    This action is directed to the public in general, and may be of
interest to a wide range of stakeholders including environmental, human
health, agricultural advocates, the chemical industry, pesticide users,
and members of the public interested in the sale, distribution, or use
of pesticides. Since others also may be interested, the Agency has not
attempted to describe all the specific entities that may be affected by
this action. If you have any questions regarding the applicability of
this action to a particular entity, consult the person listed under FOR
FURTHER INFORMATION CONTACT.

B. What Should I Consider as I Prepare My Comments for EPA?

     1.  Submitting CBI. Do not submit this information to EPA through
regulations.gov or e-mail. Clearly mark the part or all of the
information that you claim to be CBI. For CBI information in a disk or
CD-ROM that you mail to EPA, mark the outside of the disk or CD-ROM as
CBI and then identify electronically within the disk or CD-ROM the
specific information that is claimed as CBI. In addition to one
complete version of the comment that includes information claimed as
CBI, a copy of the comment that does not contain the information
claimed as CBI must be submitted for inclusion in the public docket.
Information so marked will not be disclosed except in accordance with
procedures set forth in 40 CFR part 2.
    2. Tips for preparing your comments. When submitting comments,
remember to:
    i. Identify the document by docket ID number and other identifying
information (subject heading, Federal Register date and page number).
     ii. Follow directions. The Agency may ask you to respond to
specific questions or organize comments by referencing a Code of
Federal Regulations (CFR) part or section number.
    iii. Explain why you agree or disagree; suggest alternatives and
substitute language for your requested changes.
     iv. Describe any assumptions and provide any technical information
and/or data that you used.
    v. If you estimate potential costs or burdens, explain how you
arrived at your estimate in sufficient detail to allow for it to be
reproduced.
    vi. Provide specific examples to illustrate your concerns and
suggest alternatives.
    vii. Explain your views as clearly as possible, avoiding the use of
profanity or personal threats.
     viii. Make sure to submit your comments by the comment period
deadline identified.

II. Background on the Receipt of Requests to Cancel and/or Amend
Registrations to Delete Uses

    This notice announces receipt by EPA of a request from Drexel
Chemical Company to cancel a maneb product registration. In a letter
dated November 15, 2009, and an electronic mail message dated December
15, 2009, Drexel Chemical Company requested that EPA cancel the product
registration of the pesticide product identified in Table 1 of Unit
III.

III. What Action is the Agency Taking?

    This notice announces receipt by EPA of a request from a registrant
to cancel a maneb product registration. The affected product and the
registrant making the request are identified in Table 1 and Table 2 of
this unit.
    Under section 6(f)(1)(A) of FIFRA, registrants may request, at any
time, that their pesticide registrations be canceled or amended to
terminate one or more pesticide uses. Section 6(f)(1)(B) of FIFRA
requires that before acting on a request for voluntary cancellation,
EPA must provide a 30-day public comment period on the request for
voluntary cancellation. In addition, section 6(f)(1)(C) of FIFRA
requires that EPA provide a 180-day comment period on a request for
voluntary cancellation or termination of any minor agricultural use
before granting the request, unless:
    1. The registrant requests a waiver of the comment period, or
    2. The Administrator determines that continued use of the pesticide
would pose an unreasonable adverse effect on the environment.
    The maneb registrant has requested that EPA waive the 180-day
comment period. EPA will provide a 30-day comment period on the
proposed request.
    Unless a request is withdrawn by the registrant on or before 30
days of publication of this notice, or if the Agency determines that
there are substantive comments that warrant further review of this
request, an order will be issued canceling the affected registrations.
Once this cancellation is effective there will be no other registered
maneb manufacturing use products.

     Table 1.--Maneb Product Registration with Pending Requests for
                              Cancellation
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       Registration Number           Product Name           Company
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019713-00377                      Maneb Technical     Drexel Chemical
                                                       Company

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         Table 2.--Registrant Requesting Voluntary Cancellation
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            EPA Company Number                Company Name and Address
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019713-00377                                Drexel Chemical Company
                                            1700 Channel Avenue
                                            P.O. Box 13327
                                            Memphis, TN 38113

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IV. What is the Agency's Authority for Taking this Action?

    Section 6(f)(1) of FIFRA provides that a registrant of a pesticide
product may at any time request that any of its pesticide registrations
be canceled or amended to terminate one or more uses. FIFRA further
provides that, before acting on the request, EPA must publish a notice
of receipt of the request in the Federal Register. Thereafter,
following the public comment period, the Administrator may approve the
request.

V. Procedures for Withdrawal of Voluntary Cancellation

    Registrants who choose to withdraw a request for cancellation must
submit the withdrawal, in writing, to the person listed under FOR
FURTHER INFORMATION CONTACT, postmarked before February 5, 2010. This
written withdrawal of the request for cancellation will apply only to
the applicable FIFRA section 6(f)(1) request listed in this notice. If
the products have been subject to a previous cancellation action, the
effective date of cancellation and all other provisions of any earlier
cancellation action are controlling.

VI. Provisions for Disposition of Existing Stocks

    Existing stocks are those stocks of registered pesticide products
that are currently in the United States and were packaged, labeled, and
released for shipment prior to the effective date of the cancellation
action. EPA anticipates allowing sale, distribution, and use in the
cancellation order as described in Unit III.:
    1. The registrant will be allowed to sell or distribute existing
stocks of the maneb technical product identified in Table 1 of Unit
III., until February 10, 2010.
    2. The registrant will be allowed to use existing stocks to
formulate end-use products from the maneb technical product identified
in Table 1 of Unit III., until March 10, 2010.
    3. Persons other than the registrant may use the maneb end use
products until exhausted. Any use of existing stocks must be in a
manner consistent with the previously approved labeling for that
product.

List of Subjects

    Environmental protection, Pesticides and pests.

    Dated: December 23, 2009
Richard P. Keigwin, Jr.,
Director, Pesticide Re-evaluation Division, Office of Pesticide
Programs.

[FR Doc. E9-31282 Filed 1-5-10; 8:45 am]

BILLING CODE 6560-50-S


[Federal Register Volume 84, Number 151 (Tuesday, August 6, 2019)]
[Notices]
[Page 38283]
[FR Doc No: 2019-16782]

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DEPARTMENT OF HOMELAND SECURITY

Federal Emergency Management Agency

[Internal Agency Docket No. FEMA-4450-DR; Docket ID FEMA-2019-0001]

Mississippi; Amendment No. 1 to Notice of a Major Disaster
Declaration

AGENCY: Federal Emergency Management Agency, DHS.

ACTION: Notice.

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SUMMARY: This notice amends the notice of a major disaster declaration
for the State of Mississippi (FEMA-4450-DR), dated June 20, 2019, and
related determinations.

DATES: This amendment was issued July 26, 2019.

FOR FURTHER INFORMATION CONTACT: Dean Webster, Office of Response and
Recovery, Federal Emergency Management Agency, 500 C Street SW,
Washington, DC 20472,<PHONE_NUMBER>.

SUPPLEMENTARY INFORMATION: The notice of a major disaster declaration
for the State of Mississippi is hereby amended to include the following
area among those areas determined to have been adversely affected by
the event declared a major disaster by the President in his declaration
of June 20, 2019.

    Holmes County for Public Assistance.
    The following Catalog of Federal Domestic Assistance Numbers
(CFDA) are to be used for reporting and drawing funds: 97.030,
Community Disaster Loans; 97.031, Cora Brown Fund; 97.032, Crisis
Counseling; 97.033, Disaster Legal Services; 97.034, Disaster
Unemployment Assistance (DUA); 97.046, Fire Management Assistance
Grant; 97.048, Disaster Housing Assistance to Individuals and
Households In Presidentially Declared Disaster Areas; 97.049,
Presidentially Declared Disaster Assistance--Disaster Housing
Operations for Individuals and Households; 97.050 Presidentially
Declared Disaster Assistance to Individuals and Households--Other
Needs; 97.036, Disaster Grants--Public Assistance (Presidentially
Declared Disasters); 97.039, Hazard Mitigation Grant.

Pete Gaynor,
Acting Administrator, Federal Emergency Management Agency.
[FR Doc. 2019-16782 Filed 8-5-19; 8:45 am]
BILLING CODE 9111-23-P