Compliance Regulations and Guidance Affecting your Industry

This Act regulates the organization of companies, including mutual funds, that engage primarily in investing, reinvesting, and trading in securities, and whose own securities are offered to the investing public. The regulation is designed to minimize conflicts of interest that arise in these complex operations. The Act requires these companies to disclose their financial condition and investment policies to investors when stock is initially sold and, subsequently, on a regular basis. The focus of this Act is on disclosure to the investing public of information about the fund and its investment objectives, as well as on investment company structure and operations. It is important to remember that the Act does not permit the SEC to directly supervise the investment decisions or activities of these companies or judge the merits of their investments. 

FINDINGS AND DECLARATION OF POLICY

(a) Upon the basis of facts disclosed by the record and reports of the Securities and Exchange Commission made pursuant to section 30 of the Public Utility Holding Company Act of 1935, and facts otherwise disclosed and ascertained, it is hereby found that investment companies are affected with a national public interest in that, among other things—

(1) the securities issued by such companies, which constitute a substantial part of all securities publicly offered, are distributed, purchased, paid for, exchanged, transferred, redeemed, and repurchased by use of the mails and means and instrumentalities of interstate commerce, and in the case of the numerous companies which issue redeemable securities this process of distribution and redemption is continuous;

(2) the principal activities of such companies-investing, reinvesting, and trading in securities-are conducted by use of the mails and means and instrumentalities of interstate commerce, including the facilities of national securities exchanges, and constitute a substantial part of all transactions effected in the securities markets of the Nation;

(3) such companies customarily invest and trade in securities issued by, and may dominate and control or otherwise affect the policies and management of, companies engaged in business in interstate commerce;

(4) such companies are media for the investment in the national economy of a substantial part of the national savings and may have a vital effect upon the flow of such savings into the capital markets; and

(5) the activities of such companies, extending over many States, their use of the instrumentalities of interstate commerce and the wide geographic distribution of their security holders, make difficult, if not impossible, effective State regulation of such companies in the interest of investors.  

(b) Upon the basis of facts disclosed by the record and reports of the Securities and Exchange Commission made pursuant to section 30 of the Public Utility Holding Company Act of 1935, and facts otherwise disclosed and ascertained, it is hereby declared that the national public interest and the interest of investors are adversely affected—

(1) when investors purchase, pay for, exchange, receive dividends upon, vote, refrain from voting, sell, or surrender securities issued by investment companies without adequate, accurate, and explicit information, fairly presented, concerning the character of such securities and the circumstances, policies, and financial responsibility of such companies and their management;

(2) when investment companies are organized, operated, managed, or their portfolio securities are selected, in the interest of directors, officers, investment advisers, depositors, or other affiliated persons thereof, in the interest of underwriters, brokers, or dealers, in the interest of special classes of their security holders, or in the interest of other investment companies or persons engaged in other lines of business, rather than in the interest of all classes of such companies’ security holders;

(3) when investment companies issue securities containing inequitable or discriminatory provisions, or fail to protect the preferences and privileges of the holders of their outstanding securities;

(4) when the control of investment companies is unduly concentrated through pyramiding or inequitable methods of control, or is inequitably distributed, or when investment companies are managed by irresponsible persons;

(5) when investment companies, in keeping their accounts, in maintaining reserves, and in computing their earnings and the asset value of their outstanding securities, employ unsound or misleading methods, or are not subjected to adequate independent scrutiny;

(6) when investment companies are reorganized, become inactive, or change the character of their business, or when the control or management thereof is transferred, without the consent of their security holders

(7) when investment companies by excessive borrowing and the issuance of excessive amounts of senior securities increase unduly the speculative character of their junior securities; or

(8) when investment companies operate without adequate assets or reserves. It is hereby declared that the policy and purposes of this title, in accordance with which the provisions of this title shall be interpreted, are to mitigate and, so far as is feasible, to eliminate the conditions enumerated in this section which adversely affect the national public interest and the interest of investors.

 To know more about: - Investment Company Act of 1940

In October 2009 the Federal Trade Commission (FTC) released its final Guides Concerning the Use of Endorsements and Testimonials in Advertising. The Guides revise the FTC's initial guidelines published in 1980, providing advertisers and spokespeople with insight on how to keep their endorsement and testimonial advertisements in compliance with the FTC Act, particularly in light of new issues posed by the emergence of social media. The Guides took effect on December 1, 2009.
 

The International Financial Reporting Standards or IFRS are a set of financial reporting standards, interpretations and framework issued by the International Accounting Standards Board (IASB). The accounting standards that comprise part of the IFRS are known as the International Accounting Standards (IAS) that were issued by the board of the International Accounting Standards Committee (IASC).

IFRS 7 sets out the requirements for disclosures in financial instruments.

The International Financial Reporting Standards or IFRS are a set of financial reporting standards, interpretations and framework issued by the International Accounting Standards Board (IASB). The accounting standards that comprise part of the IFRS are known as the International Accounting Standards (IAS) that were issued by the board of the International Accounting Standards Committee (IASC).

IAS 8 sets out the requirements for accounting policies, changes in accounting estimates and errors.

The International Financial Reporting Standards or IFRS are a set of financial reporting standards, interpretations and framework issued by the International Accounting Standards Board (IASB). The accounting standards that comprise part of the IFRS are known as the International Accounting Standards (IAS) that were issued by the board of the International Accounting Standards Committee (IASC).

IAS 7 sets out the requirements for statement of cash flows.

The International Financial Reporting Standards or IFRS are a set of financial reporting standards, interpretations and framework issued by the International Accounting Standards Board (IASB). The accounting standards that comprise part of the IFRS are known as the International Accounting Standards (IAS) that were issued by the board of the International Accounting Standards Committee (IASC).

IAS 1 sets out the requirements for presenting financial statements.

This UK Ministry of Justice issued guidance document describes the procedures which relevant commercial organisations can put into place to prevent persons associated with them from bribing (section 9 of the UK Bribery Act 2010).

By July 1, 2011 any commercial organization either formed in the UK or having a business interest in the UK has to comply with the UK Bribery Act 2010. The Act defines what constitutes a bribe, what sort of payments are acceptable or not and the penalties for violators.

The Foreign Corrupt Practices Act (FCPA) of 1977 was created to implement stricter regulations against bribery. The act also includes requirements for transparency in accountancy under the SEC Act.

Clause 49 of the Listing Agreement to the Indian Stock Exchange was added to the original agreement in 2000 by the Securities Exchange Board of India (SEBI). The clause was created to improve corporate governance of all companies listed in all Indian stock exchanges including the NSE and BSE. The clause was revised and SEBI issued the new guidelines in October 2004.

The Gramm–Leach–Bliley Act (GLB), also known as the Financial Services Modernization Act of 1999, was signed into law by President Bill Clinton and it repealed part of the Glass–Steagall Act of 1933. The Act opened up the market among banking, securities and insurance companies.

Congress passed the Bank Secrecy Act in 1970 as the first laws to fight money laundering in the United States. The BSA requires businesses to keep records and file reports that are determined to have a high degree of usefulness in criminal, tax, and regulatory matters. The documents filed by businesses under the BSA requirements are heavily used by law enforcement agencies, both domestic and international to identify, detect and deter money laundering whether it is in furtherance of a criminal enterprise, terrorism, tax evasion or other unlawful activity.

Purpose

This subpart is issued to assure that all national banks establish and maintain procedures reasonably designed to assure and monitor their compliance with the requirements of subchapter II of chapter 53 of title 31, United States Code, and the implementing regulations promulgated there under by the Department of Treasury at 31 CFR part 103.

Compliance procedures

On or before April 27, 1987, each bank shall develop and provide for the continued administration of a program reasonably designed to assure and monitor compliance with the recordkeeping and reporting requirements set forth in subchapter II of chapter 53 of title 31, United States Code, and the implementing regulations promulgated there under by the Department of Treasury at 31 CFR part 103. The compliance program shall be reduced to writing, approved by the board of directors and noted in the minutes.

Contents of compliance program

The compliance program shall, at a minimum

• Provide for a system of internal controls to assure ongoing compliance;
• Provide for independent testing for compliance to be conducted by bank personnel or by an outside party;
• Designate an individual or individuals responsible for coordinating and monitoring day-to-day compliance; and
• Provide training for appropriate personnel.

(Approved by the Office of Management and Budget under control number 1557-0180)

 Effective Date Jan. 27, 1987

 ComplianceOnline Webinars Related to Banking

Social Media in a Regulated Environment

IFRS VS GAAP: Essential Knowledge & Understanding

Webinar On IFRS Fixed Assets

The Federal Insurance Contributions Act (FICA) is a United States payroll (or employment) tax imposed by the federal government on both employees and employers to fund Social Security and Medicare federal programs that provide benefits for retirees, the disabled, and children of deceased workers. Social Security benefits include old-age, survivors, and disability insurance (OASDI).

Social Security payroll taxes are collected under authority of the Federal Insurance Contributions Act (FICA). The payroll taxes are sometimes even called "FICA taxes.”.

 In the original 1935 law the benefit provisions were in Title II of the Act (which is why we sometimes call Social Security the "Title II" program.) The taxing provisions were in a separate title, Title VIII. There is a deep reason for this, having to do with the constitutionality of the law (see discussion of the Constitutionality of the 1935 Act).  As part of the 1939 Amendments, the Title VIII taxing provisions were taken out of the Social Security Act and placed in the Internal Revenue Code. Since it wouldn't make any sense to call this new section of the Internal Revenue Code "Title VIII," it was renamed the "Federal Insurance Contributions Act."

So FICA is nothing more than the tax provisions of the Social Security Act, as they appear in the Internal Revenue Code.

ComplianceOnline Webinars Related to Insurance

Understanding the new NAIC (National Association of Insurance Commissioners) Model Regulation

To Download the summary of major changes to Federal Insurance Contributions Act (FICA).

The Federal Unemployment Tax Act (FUTA) provides for cooperation between state and federal governments in the establishment and administration of unemployment insurance. Under this dual system, the employer is subject to a payroll tax levied by the federal and state governments. The taxpayer is allowed a maximum credit of 5.4% against the Federal tax of 6.2%, provided that all payments were made to the state by the due date. Employers whose payments are received by the state after the due date are allowed 90% of the credit that would have been allowed had the payments been made on time. The FUTA Certification program is the method IRS uses to verify with the states that the credit claimed on the Form 940 and/or Schedule H was actually paid into the state’s unemployment funds. There are currently 53 participating agencies which encompass the 50 states, the District of Columbia, Puerto Rico, and the U.S. Virgin Islands.

The OCC, the Board, the FDIC, and the OTS (collectively, ‘‘the agencies’’) are adopting revisions to our rules implementing the Community Reinvestment Act (CRA). The agencies are revising the term ‘‘community development’’ to include loans, investments, and services by financial institutions that support, enable, or facilitate projects or activities that meet the ‘‘eligible uses’’ criteria described in Section 2301(c) of the Housing and Economic Recovery Act of 2008 (HERA), as amended, and are conducted in designated target areas identified in plans approved by the United States Department of Housing and Urban Development (HUD) under the Neighborhood Stabilization Program (NSP).

The Electronic Fund Transfer Act (EFTA) (15 USC 1693 et seq.) of 1978 is intended to protect individual consumers engaging in electronic fund transfers (EFTs). EFT services include transfers through automated teller machines, point-of-sale terminals, automated clearinghouse systems, telephone bill-payment plans in which periodic or recurring transfers are contemplated, and remotebanking programs.

The Board amended Regulation E to add § 205.17, prohibiting institutions from charging overdraft fees for ATM and point of sale (POS) transactions unless the consumer affirmatively consents (74 Fed. Reg. 59033 (Nov. 17, 2009) and 75 Fed. Reg 31665 June 4, 2010). The Board also added § 205.20 to restrict fees and expiration dates on gift cards, and to require that gift card terms be clearly stated (75 Fed. Reg. 16580 (April 1, 2010).

The Banking Regulation Act was passed as the Banking Companies Act 1949 and came into force wef 16.3.49. Subsequently it was changed to Banking Regulations Act 1949 wef 01.03.66. The Central Government, if on a representation made by the Reserve Bank in this behalf it is satisfied that it is expedient so to do, may by notification in the Official Gazette, suspend for such period, not exceeding sixty days, as may be specified in the notification, the operation of all or any of the provisions of this Act, either generally or in relation to any specified banking company.

Fair Credit Reporting Act includes the amendments to the FCRA set forth in the Consumer Credit Reporting Reform Act of 1996 (Public Law 104-208, the Omnibus Consolidated Appropriations Act for Fiscal Year 1997, Title II, Subtitle D, Chapter 1), Section 311 of the Intelligence Authorization for Fiscal Year 1998 (Public Law 105-107), the Consumer Reporting Employment Clarification Act of 1998 (Public Law 105-347), Section 506 of the Gramm-Leach- Bliley Act (Public Law 106-102), Sections 358(g) and 505(c) of the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act) (Public Law 107-56), and the Fair and Accurate Credit Transactions Act of 2003 (FACT Act) (Public Law 108-159).

This act promote the financial stability of the United States by improving accountability and transparency in the financial system, to end ‘‘too big to fail’’, to protect the American taxpayer by ending bailouts, to protect consumers from abusive financial services practices, and for other purposes.

The Dodd-Frank law tries to restructure US regulation to force regulators to consider institutions in the light of what they do - rather than what they nominally are. So AIG would be considered as a financial institution selling risky credit default swaps - rather than just an insurer. Plus, an asset bubble should be considered not in isolation but in terms of the impact it could have in other asset classes.

• Foreign banks operating federal branches or agencies shall operate under the same rights and privileges as national banks, subject to certain restrictions.
• With the approval of the Comptroller and the Board, a foreign bank with a branch or agency in one state (the home state) may establish and operate a federal branch or agency in another state (the host state) as allowed by host state law as permitted under Section 44 of the Federal Deposit Insurance Act.
• With the approval of the appropriate state regulator and the Board, a foreign bank with a branch or agency in one state (the home state) may establish and operate a state licensed branch or agency in another state (the host state) as allowed by host state law as permitted under Section 44 of the Federal Deposit Insurance Act.
• No federal or state licensed branch offices in the United States may recieve deposits of less than $100,000 unless the branch is an insured branch underSection 3(s) of the Federal Deposit Insurance Act.
• Subject to certain limitations, the Comptroller has all powers over foreign banks with branches or agencies in a state that it has over national banks operating in that state.