SEC’s Schapiro shows little interest in Cox’s pet projects

April 28, 2009

When he was chairman of the Securities and Exchange Commission, Christopher Cox got slammed by many for failing to protect investors during the worst financial crisis since the Great Depression, including missing Bernie Madoff’s massive Ponzi scheme. Now, to add insult to injury, his successor is showing little interest in his pet projects concerning corporate disclosure and accounting standards, and questioning whether at least one of them is even appropriate.

Cox’s interest in forcing listed companies to file financial reports using technology that makes it easier for investors to read and analyze the data became almost an obsession during his time at the SEC from August 2005 until this past January. Indeed, the SEC voted through a rule to require 500 of the largest public companies to begin filing their reports with the technology known as XBRL, or extensible business reporting language, by the middle of this year, with the rest instructed to comply over the following two years.

It is just about the last costly requirement companies want to hear about as they fight for their survival through these doom-laden times. Indeed, in the results of a national survey of CFOs and senior comptrollers conducted by accountants Grant Thornton LLP, that was issued last week, 64 percent of public companies said they had no plans to use XBRL despite the SEC mandate.

Now, they may be getting some relief from new SEC head Mary Schapiro. She made it abundantly clear that XBRL was very low down her priority list when she spoke at the Reuters Global Financial Regulation Summit on Tuesday, and she hinted that the SEC might allow for delays in compliance, though she didn’t know if that would be necessary. “I don’t mean to be dismissive of it in any way — it’s just not one of my highest priorities,” she said.

Even worse, unlike Cox she has little interest in promoting the initiative, though she does acknowledge it could become a useful tool. “I’ve only given I think three speeches and I don’t think those letters (XBRL) have slipped into into any of them,” she said.

Another Cox initiative was the decision to allow companies to use their websites and blogs to release market-sensitive information, and in some cases avoid normal distribution channels, such as BusinessWire, which is part of Warren Buffett’s Berkshire Hathaway Inc, and PRNewswire, a division of United Business Media Plc.

Schapiro said she had “a little bit of a visceral reaction” to the idea that investors might have to go and look for the information rather than getting it through a broader distribution, though said she would need to study the question more. She also noted that even now some investors don’t have easy access to the Web.

Just to rub it in, Schapiro also said that the SEC would be seeing whether Cox’s original roadmap for a possible move to international accounting standards in the U.S., possibly by 2014, still made sense given the cost of conversion and the current state of the economy.

It looks like Cox’s list of achievements in his time at the SEC may be about to get shorter.

5 comments

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[...] Reading in Reuters that SEC head Mary Schapiro …made it abundantly clear that XBRL was very low down her priority list when she spoke at the Reuters Global Financial Regulation Summit on Tuesday, and she hinted that the SEC might allow for delays in compliance, though she didn’t know if that would be necessary. “I don’t mean to be dismissive of it in any way — it’s just not one of my highest priorities,” she said. [...]

That is amazingly short-sighted! A comprehensive XBRL approach, such as the Dutch Taxonomy Project could cut companies’ reporting costs 25%, give companies an important new real-time data management tool to help them operate more efficiently, and — perhaps most important in the short run — help rebuild public confidence in both government regulation and corporate integrity. This is a serious threat to the Obama Administration’s transparency initiatives!
W. David Stephenson
author “Democratizing Data to transform government, business & daily life” (to be released later this year)

Lame. Get with the program Schapiro.

Posted by MC_Secular | Report as abusive

With regard to SEC head Mary Schapiro’s “visceral reaction” to the idea that investors might have to go and look for the information rather than getting it through a broader distribution via services such as Business Wire here are some additional issues to consider that impact investors and reporters(fair disclosure-I’m employed by Business Wire):

Currently, financial wires such as Reuters, algorithmic trading systems, financial information services used by professional money managers, and information services used by individual investors, rely on news fed to them, simultaneously, by commercial newswires.

Services like Business Wire create a level playing field by breaking material news, simultaneously, to a wide range of audiences via multiple platforms and technologies. That way, nobody has to go on a fishing expedition to locate market-moving company news. “We always need the table—it helps us on speed, it helps us to be fair,” said Reuters editor Martin Howell.

Company websites, blogs and social media can play a new and important supplementary role but they shouldn’t be used as a substitute for broad, simultaneous disclosure. Press releases via Business Wire provide a document of record, directly from a company to all their shareholders regardless of where they get their news.

For nearly 50 years, Business Wire has been committed to using technology to advance transparency in the full, free and simultaneous delivery of material news in the service of public companies, media, investors, information services, web sites and other platforms.

Our blog post on the practice of omitting earnings data from distributed press releases (notice-and-access) is located at: http://businesswired.wordpress.com/2009/ 02/05/earnings-tables-needed-in-press-re leases-say-market-participants/

We can be reached at: http://www.businesswire.com/portal/site/ home/contact/

–Tom Becktold, Sr. Vice President, Business Wire

Schapiro prepared to do doodley-squat to protect individual investors against hedgefunds like Golden Sacks.

Same old…

Posted by jim | Report as abusive

I applaud Ms. Sharpiro’s practical views that this is not the time to “mandate” technology on cash strapped businesses. As an author of the EBRC business plan that promotes XBRL, this was to be a “voluntary” program for those who see it as having a cost/benefit for their businesses. That was the intent from the beginning and is the best way to introduce any technology…this is not China with a mandatory “one-way” roadmap. Great Job SEC:)
Not to mention, that certain organizations, like the accounting profession, are dominating these conversations and forcing their “agenda with a profit” on the rest of us. While there is promise to XBRL, that is not the only technology solution and we like competition in USA. The IFRS should also be a voluntary program as many prefer GAAP over the watered down IFRS.

Posted by Susan M. Hinds, President & CEO Strategic Mangement Harmony, LLC | Report as abusive