Securities And Exchange Commission Registrants Research Articles

Trusts and Trust Law in Thailand

Abstract Trusts in Thailand trace back to the late 19th century, influenced by the Bowring Treaty of 1855. Initially under English common law, the Thai Civil and Commercial Code of 1935 restricted the establishment of trusts. However, regulations evolved, with the Securities and Exchange Commission (SEC) proposing legislation in 2007 to facilitate trust transactions, particularly REITs and Infrastructure Trusts. Governed by Section 1686 of the Civil and Commercial Code and SEC regulations, REITs and Infrastructure Trusts cater to real estate and infrastructure investments. Despite past constraints, Thailand’s trust landscape now emphasizes regulatory frameworks for transparency, investor protection, and market competitiveness, potentially opening to private investors.

Environmental Awareness of Enterprises through Their Disclosure Magnitude: UK and US Evidence

In the absence of a validly mandatory public policy and a meaningful conceptual framework, corporate environmental disclosure practices have been diverse (Matthews, 1993). In other words, the lack of a single generally accepted standard in which environmental reports can be developed, akin to that of financial reporting principles, is one of the reasons for this undoubted dissimilarity in environmental reporting practices. However, there are imperative requirements relating to environmental information disclosure in many developed countries, for example, environmental related information is required in the Business Review in accordance with s.417 of the Act (Great Britain. Companies Act 2006) in the UK and the US Securities and Exchange Commission (SEC) has developed rules governing disclosure of environmental liabilities, in relation to Items 101, 103, 303 and 503(c) in SEC Regulation S-K (SEC, 2008). The former is rather vague as it is not underpinned by a robust speculative structure, whereas the latter has only focussed on the disclosure of financial information that is environmentally related despite the non-financial nature of predominant environmental information. In response to these, the International Accounting Standards Board (IASB) and The International Sustainability Standards Board (ISSB) has very recently issued the foundational standards, which are IFRS S1 and IFRS S2, to steer corporate sustainability-related disclosures worldwide. The former inaugurally provide general conceptual foundations and the latter has primarily pointed on climate risks and opportunities. The other dimensions are forsaken to line up sometimes in the future. Keywords: Environmental Information Disclosure, Environmental Reporting, Disclosure Quantity, UK, US

Proved Reserves Revisions: How Reliable Are They?

Summary This paper incorporates the findings of our previous publication (Morales and Lee 2022) and identifies, isolates, and quantifies elements in the annually disclosed proved reserves revisions that should not be considered technical or economic revisions. This has resulted in significantly different technical and economic revisions compared to those simplistically and directly derived using a common interpretation of the Financial Accounting Standards Board (FASB) Topic 932-235-50-5 (a) definition. We have assessed the reliability and comparability of the updated technical revisions when used to judge the reasonable certainty of the underlying proved reserves. We have carried out the analysis separating the proved reserves into developed and undeveloped. To derive a realistic data set to generate the updated technical and economic revisions, we reviewed more than 1,000 annual reports (10K and 20F Forms) and more than 600 comment letters from 141 companies filing annual reports to the Securities and Exchange Commission (SEC) during the period 2010–2020, extracting the information related to annual reserves changes and explicitly focusing on the disclosed revisions of previous estimates (RPE). We present evidence showing that the approach followed is robust and more reliable than the simple approach where technical revisions are estimated by simply subtracting the disclosed revisions due to price effects from the disclosed revisions in annual reports. The root causes for the significant differences between the simplistic approach and the one presented in this paper are mainly due to (1) including annual reserves changes due to nontechnical or economic factors as technical revisions, (2) using different interpretations of SEC and FASB regulations, and (3) not providing critical disaggregation information needed to estimate technical, economic, or other types of revisions correctly. Without proper consideration of these issues, the derived technical and economic revisions from disclosed data can be significantly distorted, affecting any conclusions derived. The annual average changes in technical revisions during a representative period, if correctly estimated, can provide an indication of both overstated and understated certainty of proved reserves estimates, which can impact a company’s relative valuation, asset impairment, internal depreciation, profit/loss, standardized measure, unit development costs, and other indicators based on proved reserves, making the reliability of the technical revisions and their actual upward or downward movements of paramount importance. We also highlight the significant different root causes driving the major differences between developed and undeveloped reserves in their annual technical revisions. The results indicate that for some companies that provide most of the information required for proper analysis, the certainty level of their disclosed developed and undeveloped proved reserves points toward an apparent overestimation of historically disclosed proved reserves. Our analysis shows the dubious quality and lack of reliability and comparability of the disclosed proved reserves revisions and highlights the limited value of existing guidance and current practices. We provide evidence that calls for FASB and SEC to provide complementary guidance in critical areas that currently limit the value, reliability, and comparability of the proved reserves revisions disclosed.

Arthur Andersen & Co. Thrice Petitioned the SEC to Reform GAAP, 1954–1965

ABSTRACTThe aim of this historical account is to set forth the background behind the three petitions that Arthur Andersen & Co. submitted to the Securities and Exchange Commission (SEC) between 1954 and 1965—two rejected and one accepted—to reform GAAP for SEC registrants. This is the first time that the two rejected petitions have been published in the literature.

The Role of Academic Research in SEC Rulemaking: Evidence from Business Roundtable v. SEC

ABSTRACTTo shed light on the role that academic research plays in Securities and Exchange Commission (SEC) rulemaking, this paper examines the SEC's patterns of consumption of academic research from 2007 through 2017. We show how the Business Roundtable v. SEC ruling in 2011 increased consideration given to academic research during SEC rulemaking. We find that after the ruling, the SEC cites more papers in its proposed rules and, in particular, more papers that illustrate the costs of regulation. This change in academic citations results in fewer negative comment letters on proposed SEC regulations. We survey academics whose research was cited by the SEC, and the majority respond that the SEC's description of their work is completely or mostly accurate. When we survey general academics, their average rating of the SEC's accuracy is lower, although the rating improves regarding specific SEC quotes citing academic research. Although there is still room for a more substantive discussion of research, having a higher standard of cost‐benefit analysis leads to a more balanced discussion of academic research.

The Role of Academic Research in SEC Rulemaking: Evidence from Business Roundtable v. SEC

To shed light on the role that academic research plays in Securities and Exchange Commission (SEC) rulemaking, this paper examines the SEC's patterns of consumption of academic research from 2007 through 2017. We show how the Business Roundtable v. SEC ruling in 2011 increased consideration given to academic research during SEC rulemaking. We find that after the ruling, the SEC cites more papers in its proposed rules and, in particular, more papers that illustrate the costs of regulation. This change in academic citations results in fewer negative comment letters on proposed SEC regulations. We survey academics whose research was cited by the SEC, and the majority respond that the SEC's description of their work is completely or mostly accurate. When we survey general academics, their average rating of the SEC's accuracy is lower, although the rating improves regarding specific SEC quotes citing academic research. Although there is still room for a more substantive discussion of research, having a higher standard of cost-benefit analysis leads to a more balanced discussion of academic research.

Future trends in the international Reporting Codes based on SEC's Regulations SK-1300

SYNOPSIS In June 2016, the US Securities and Exchange Commission (SEC) 'proposed a revision to its disclosure requirements-related guidance under the Securities Act and Exchange Act for properties owned or operated by mining companies'. On 31 October 2018, the SEC released its adopted final rules for property disclosures for mining registrants - 'Modernization of Property Disclosures for Mining Registrants'. The amendments are aimed at providing investors with a more comprehensive understanding of a registrant's mining properties, which should help them make more informed investment decisions. The new rules replace the SEC's Industry Guide 7 as of January 1, 2021. This paper investigates how the new subpart 1300 of Regulation S-K may affect future updates to the Committee for Mineral Reserves International Reporting Standards (CRIRSCO) International Reporting Template, as well as international Reporting Codes. Critical changes such as the reporting of Mineral Resources exclusive of Mineral Reserves are discussed, the impact of third-party reporting regarding reducing Section 11 liability is considered, as is the trend of utilizing multiple qualified persons for technical reports. This paper highlights areas in the CRIRSCO and international Reporting Codes that may require consideration by Qualified and Competent Persons providing technical report summaries and Competent Persons Reports (CPRs). Keywords: SEC, 1300 of Regulation S-K, international Reporting Codes, CRIRSCO, Qualified/Competent Person, mineral reporting.

Analysis of Anti-Retaliation Provisions of the Dodd-Frank Act in Relation to Foreign Whistleblowers

Given the increasing globalization of corporations and the interest of Congress in increasing the incentives for whistleblowing as shown in the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 (hereinafter Dodd-Frank Act or Act), the absence of significant anti-retaliation protection for foreign whistleblowers is of concern. The Supreme Court has ruled that it will not extend United States security laws to extraterritorial jurisdictions in Morrison v. National Australia Bank thereby limiting the ability of foreign whistleblowers to participate in the anti-retaliation provisions of the Dodd-Frank Act. The paper will first review the whistleblowing and anti-retaliation provisions of the Act before addressing whether the lack of these protections for foreign whistleblowers could undermine the effectiveness of the Act in relation to possible infractions by foreign corporation registrants with the Securities and Exchange Commission (SEC). The paper cites data regarding the number of foreign whistleblower reports, foreign corporation SEC registrants, and enforcement proceedings of the Public Company Accounting Oversight Board (PCAOB) to provide a basis for the conclusions reached.

The SEC brings its first enforcement action under the identity theft red flags rule

PurposeTo explain the significance of the first enforcement action under the Identity Theft Red Flags Rule by the US Securities and Exchange Commission (SEC), which was announced on September 26, 2018.Design/methodology/approachExplains how the SEC’s order not only cites violations of the Safeguards Rule under Regulation S-P (a staple of SEC cybersecurity enforcement actions against broker-dealers and investment advisers) but also is the SEC’s first enforcement action for a violation of the Identity Theft Red Flags Rule under Regulation S-ID, which requires certain SEC registrants to create and implement policies to detect, prevent and mitigate identity theft.FindingsCybersecurity policies and procedures must match business risks and change as business risks change.Originality/valuePractical guidance from experienced cybersecurity and privacy lawyers.

SEC Regulation S-K and Board Diversity

In an attempt to address a lack of diversity on corporate boards, the Securities and Exchange Commission (SEC) passed a rule in 2010, requiring firms to disclose whether they consider diversity in the director nomination process, and if so, how the policy’s effectiveness is assessed. The rule does not define the term diversity, leaving it up to each firm to offer its own interpretation. We examine the rule’s effectiveness and find that some firms fail to comply with the rule and do not discuss whether diversity is a factor that is considered in director hiring. Among compliant firms, the most common definitions of diversity are experiential (skills, experience, knowledge) rather than socio-demographic (gender, race, age, geographic background, and representation). We also compare board diversity between compliant and non-compliant firms and do not find differences in the hiring of diverse candidates (women and minorities) as directors following the rule’s introduction, suggesting limited success. Our findings, which are especially salient as the SEC currently considers revising the rule, highlight the importance of adopting a formal definition of the term “diversity” and instituting stricter diversity disclosure guidelines.

Liability of Foreignness: The Impact of Elimination of the Reconciliation Requirement on International Asset Allocation by U.S. Investors

ABSTRACTIn 2007, the Securities and Exchange Commission (SEC) eliminated the 20-F requirement to reconcile IFRS financial disclosures to U.S. GAAP. We find that this change in SEC regulation is associated with an overall decrease in the international asset allocation of U.S. institutional investors in European Union (E.U.) firms that are cross-listed on U.S. stock exchanges. We also find that U.S. mutual fund investors were more likely to invest in firms in countries with greater levels of investor protection and higher global visibility in the post-elimination period. A learning effect (measured as the length of time a firm is cross-listed on a U.S. stock exchange) is not, however, associated with U.S. institutional ownership. These results are robust to tests involving removal of OTC ADRs, firm-level controls, country controls, and financial controls resulting from the elimination of the 20-F reconciliation. Our results suggest that the increased information processing costs were not offset by information preparation cost savings. Our results indicate that the elimination of the 20-F reconciliation of IFRS to U.S. GAAP resulted in a loss of valuable information for U.S. institutional investors and thereby resulted in a divestment in cross-listed E.U. firms.

Not all barrels are created equal: understanding the difference between standards of regulatory disclosure can impact your investment decisions

Petroleum industry stakeholders rely on estimates of petroleum reserves and resources as a cornerstone for making informed strategic investment decisions. Whether assessing a property or corporate target in a mergers and acquisitions process, seeking or providing equity or debt financing, developing upstream or downstream projects, engaging in sales contract negotiations or satisfying regulatory disclosure requirements, a clear understanding of the basis of these estimates is critical. Worldwide, several standards of resource estimation are widely accepted (Society of Petroleum Engineers Petroleum Resources Management System (SPE-PRMS), Securities and Exchange Commission (SEC) guidelines and Canadian Oil and Gas Evaluation Handbook (COGEH)) and disclosure requirements depend on the regulatory jurisdiction (i.e. Australia, Australian Stock Exchange (ASX) Listing Rules Chapter 5; USA, SEC Regulation S-K; Canada, NI 51-101). Understanding the differences in these standards is imperative for correctly assessing value, development potential and project risks. Focusing on Australia, the United States of America and Canada, this presentation identifies key differences in these standards, and the potential implications affecting your strategic investment decisions.

Improvements in SEC Economic Analysis Since Business Roundtable: A Structured Assessment

Several D.C. Circuit decisions that remanded regulations to the Securities and Exchange Commission (SEC) between 2005 and 2011 provide a natural experiment that permits researchers to identify the correlation between judicial review and the quality of regulatory agencies’ economic analysis and its use in regulatory decisions. Subsequent to the D.C. Circuit decisions, the SEC staff in 2012 issued new guidance for economic analysis. This paper offers a structured assessment of the economic analysis accompanying a sample of post-2012 SEC regulations, using the evaluation method developed for the Mercatus Center at George Mason University’s Regulatory Report Card. SEC economic analysis improved substantially following the 2012 guidance. Improvement occurred on all major elements that the SEC staff identified as important in its guidance: explanation of the justification for the rule, clear definition of the baseline against which to measure the rule’s economic impacts, identification and discussion of reasonable alternatives, and analysis of the benefits and costs of the proposed rule and the principal alternatives. The improvement occurred both on criteria that address “conceptual” economic analysis and on criteria that require quantification of benefits or costs to receive full credit. Although substantial room for improvement still exists, the court decisions appear to have motivated the SEC, in just a few years, to close the gap between the quality of its economic analysis and the average quality of economic analysis produced by executive branch agencies.

Economic consequences of SEC regulation pertaining to financial expert definition

This paper examines the economic effects of issue dates pertaining to the definition of audit committee financial expert regulation by the U.S. Securities and Exchange Commission (SEC) and discussion of the definition by news services on firms traded on U.S. equity exchanges. This research study uses the methodology of Zhang (2007) to extend DeFond, Hann and Hu (2005) and Krishnan and Visvanathan (2008) by using event dates previously untested to provide additional insights regarding SOX regulation and market perceptions of this required disclosure of voluntary appointment of financial experts to corporate audit committees. Using stock market returns, the findings from this study suggest that companies traded on U.S. capital markets and subject to SEC regulatory requirements experienced significant negative returns around SEC financial expert regulation event dates, while media disclosure events were mostly not significant. Also, larger firms were more negatively impacted than smaller firms by this new SOX requirement.

Market effects of SEC regulation of short-term borrowing disclosure

Purpose The purpose of this paper is to offer an alternative approach to measure the cost-benefit tradeoff, by analyzing stockholders’ reactions to the announcement and vote on the proposed rule. More specifically, the authors use event study methodology to investigate the stock price reaction on two key dates; that is, the announcement date and the voting date of the proposed short-term borrowing disclosure regulation, and argue that positive abnormal stock returns indicate that the expected benefits of the regulation outweigh the compliance costs. A negative reaction would indicate that, in the eyes of investors, the costs of compliance exceed the expected benefits. Design/methodology/approach The authors use event study analysis and apply the market model to equal-weighted portfolios of 2,450 financial and 3,985 non-financial US firms to calculate mean cumulative abnormal stock returns (MCARs, hereafter) on the announcement and voting dates. Then, the authors conduct mean difference tests on firm-level MCARs across three event windows, that is, (−30,−1), (0,+1) and (+2,+30), to confirm if the MCARs of financial firms are different from those of non-financial firms on both the announcement and the voting dates. Finally, robustness tests are performed with alternate benchmark, using value-weighted portfolios, for the market. Findings The authors find that the market reaction is positive and significant at the announcement date and negative and significant at the voting date of the proposed regulation of short-term borrowing disclosure regulation. Overall, the paper documents a positive market reaction, indicating the usefulness of the disclosure from the vantage point of users. Examining and comparing the results for various subsets, including commercial banks and saving institutions, bank holding companies, size quartiles, and exchange listed and OTC registrants, the authors find that a “one-size-fits-all” approach to regulation is undesirable. Originality/value This is first empirical study, to best of the authors’ knowledge, to explore stockholder reaction to a proposed, rather than an enforced, Securities and Exchange Commission (SEC) regulation and may contribute to the SEC’s final decision on the rule. Second, given a dissimilar reaction from investors of different firms, the results suggest that the SEC needs to reconsider its one-size-fit-all approach for the proposed rule. Finally, because the proposed disclosure would affect all SEC registrants, the economic implications of the findings are important not only for stockholders, but also for regulators, as they attempt to manage systematic risk and optimize the level of market intervention.

Book Review: Business Essentials for Strategic Communicators: Creating Shared Value for the Organization and Its Stakeholders, by Matthew W. Ragas and Ron Culp

Matthew W. Ragas and Ron Culp Business Essentials for Strategic Communicators: Creating Shared Value for the Organization and Its Stakeholders. Palgrave McMillan: New York, 2014. 211 pp.Competition for entry-level jobs in strategic communication will remain competitive, as more than 51,0 00 undergraduates are enrolled in public relations, advertising, and strategic communication programs in the United States. Business Essentials for Strategic Communicators provides a broad overview of the knowledge communications majors need to navigate the future of corporate communication.The first chapter describes the transformation of the public relations practitioner's role from that of technician responsible simply for shaping the company message to that of strategic advisor responsible for developing the message and influencing organizational decisions. Much of the chapter presents results of the authors' studies-including one sponsored by the Arthur W. Page Society. For example, 8 out of 10 corporate executives reported undergraduates lack essential knowledge despite the Commission on Public Relations Education's (CPRE) recommendation of undergraduate and graduate courses in accounting, economics, management, marketing, and finance.The ability to understand income statements, balance sheets, cash flow, and shareholder equity is requisite for success. Citing a study of salaries, the authors report MBAs earning higher salaries than professionals with master's degrees from strategic communication programs. The authors emphasize for the future strategic communicator, communications acumen is secondary to acumen. Chapter 1 concludes that business 101 is essential not only for corporate careers but also for nonprofit and government careers.Chapter 2 provides an overview of economics, the Federal Reserve, and key economic indicators. Ragas and Culp, professors at DePaul University in Chicago, explain that strategic communicators require a working knowledge of the consumer price index, currency exchange rates, U.S. treasury bond rates, Gallup's economic confidence index, and the Thomson Reuters/University of Michigan consumer sentiment index, as well as spending and forecasting trends in advertising and marketing like ZenithOptimedia and Nielsen.The importance of Wall Street and the financial and stock markets is covered in Chapter 3. The authors give the reader an overview of stock valuations and the impact of the securities and bond markets on the corporate bottom line. The chapter sketches the differences among the primary U.S. stock exchanges and explains initial public offerings and the role of the Securities and Exchange Commission (SEC) in financial communication with stakeholders. Chapter 3 concludes with a brief overview of exchanges in other countries and identification of the players in the financial markets including investment banks, federal and state regulators, institutional and individual investors, information intermediaries, and proxy advisers to name a few.Accounting and its role in corporate record keeping and reporting are the focus of the book's fourth chapter. Income statements, balance sheets, and cash flow statements are defined, and sample income statements and balance sheets are presented in the chapter's tables. Chapter 4 concludes with an explanation of financial valuation metrics such as market capitalization and price-to-earnings ratios. Each chapter concludes with key terms and discussion questions. A 22-page glossary appears at the end of the book.Strategic communicators need to understand corporate law and disclosure as well as the relationship between the company and the SEC. Chapter 5 presents a brief historical overview of SEC regulations for public companies and defines material information and insider trading. The overview also includes corporate disclosure theories and research and corporate disclosure channels including earnings conference calls and investment conferences. …

Asadi: Renegade or Precursor of Who Is a Whistleblower Under the Dodd-Frank Act?

Whistleblowers have a long and honorable history. From Ralph Nader blowing the whistle on the hazards of GM’s Corvair in Unsafe at Any Speed1 in the 1960’s to Jeffrey Wigand in 1996 exposing the duplicity of the tobacco industry, whistleblowers have put conscience ahead of career and personal success to expose corporate fraud and wrongdoing. Not surprisingly, they have had to endure ridicule and ostracism as well as financial hardship. Legislation has sought to protect them from retribution, often with mixed success. The most recent legislative effort is the Dodd-Frank Wall Street Reform and Consumer Protection Act (Dodd-Frank) that allows whistleblowers to collect a bounty for the whistleblowing and also protects the whistleblower from retaliatory acts by his or her employer. One of the challenges currently dividing the courts is determining who should come within the protection of the legislation. The Fifth Circuit Court of Appeals, in Asadi v. GE Energy, interpreted the definition of “whistleblower” quite narrowly to encompass only those individuals who make information available directly to the Securities and Exchange Commission (SEC). This interpretation by the Fifth Circuit not only rejects the broader interpretation of SEC regulations, but is also inconsistent with the decisions of various district courts that have considered this question. Part I opens with a discussion of the requirements of “whistleblower” status under both the statutory language of Dodd-Frank and the accompanying SEC regulations. Part II reviews the Asadi decision and calls into question the soundness of the court’s decision to disregard SEC regulations. Part III explores the circumstances in which administrative regulations are entitled to deference and those situations in which they may be disregarded as an overreach of power. Part IV surveys several district court decisions that have interpreted the term “whistleblower” under Dodd-Frank. Part V argues that even public policy dictates that the courts should adopt a broad interpretation of “whistleblower” so as to provide maximum safeguards against fraud and abuse. The paper concludes that the Fifth Circuit in Asadi reached an incorrect result, and, therefore, that this renegade decision which advocates a narrow scope of whistleblower protection should be rejected in future judicial interpretations of who is a whistleblower.

Earnings Surprises in Analysts' Forecasts, Mandatory Disclosure, and Share Repurchases

This paper examines the impact of forecast errors and the mandatory disclosure of repurchase transactions required by 2003 Securities and Exchange Commission (SEC) regulations on share repurchases. We define forecast errors as the difference between analysts' forecasted earnings and actual earnings. We argue that firms with positive forecast errors imply greater information asymmetry, which may induce them to signal through share repurchases. We show that both the repurchase target and analysts' forecast revision are positively related to forecast errors. Furthermore, these associations are more pronounced in the low disclosure period (1989–2003) where greater information asymmetry between managers and outside investors is found, while increased transparency in the high disclosure period (2004–2006) leads to more significant improvement in long‐term performances for firms with positive forecast errors. The results are consistent with our expectations that the information asymmetry implied in forecast errors, along with a shock change from the introduction of the 2003 SEC regulation, affect both corporate and analysts' behaviour.

Impression Management and the Biasing of Executive Pay Benchmarks: A Dynamic Analysis

We study the selection of peers into compensation peer groups reported by U.S. corporations. Securities and Exchange Commission (SEC) regulation requires firms to report these peer groups which are used by investors and shareholders to benchmark the compensation of CEOs. Building on a novel, dynamic analysis of more than 1,400 compensation peer groups since 2006, this paper presents new evidence that compensation peer groups are biased upwards relative to neutrally chosen “natural” peer groups. This upward bias is masked by several factors including normative selection on other criteria than compensation and the strong negative relationship between bias and the percentile at the named peer group at which the CEO is compensated. We find that adjustments to compensation peer groups are often better explained as bias-maintaining impression management than as structural adjustments to align peer groups more closely with the normative principles for peer group selection. We also find that peer group bias cannot generally be explained away as a reward for CEO talent. Our research suggests that although the SEC regulation was intended to minimize rent extraction, it has given firms a tool to manage impressions of shareholders and justify excessive pay.

Undeveloped Reserves and the Five-Year Time Limit: Can Different Interpretations Coexist?

Summary A key element in determining a project's commercial maturity is the evidence of a firm intent to proceed with development within a reasonable time frame. The Petroleum Resource Management System (PRMS) (SPE 2007) recommends 5 years as a benchmark, although a longer time can be applied in some cases. The U.S. Securities and Exchange Commission (SEC) also provides specific guidance and requirements on undeveloped reserves and the 5-year-maturation time limit. Despite the apparent clarity in the PRMS and SEC regulations regarding project maturity, this paper describes actual examples in the public domain in which different levels of commercial maturity were introduced within a project for proved and probable reserves as a result of the 5-year time limit. This has resulted in projects with their proved reserves reclassified as probable reserves because they will not be developed within the 5-year time limit. This paper reviews SPE standards and SEC wording on commercial maturity requirements and the 5-year time limit, providing clarity on whether a project's recoverable volumes should be classified as reserves or contingent resources if its undeveloped reserves are not matured into developed reserves within 5 years of their first reporting, and specific circumstances for a longer maturation time frame do not exist. When referring to projects with proved undeveloped reserves falling outside the 5-year time limit, the SEC uses different wording throughout the Final Rule document issued in January 2009 (NARA 2009). This has resulted in apparently different interpretations of the requirements for projects to meet this criterion. On the basis of the wording used in SEC forms 10-K and 20-F, public disclosures seem to range from reporting only the projects with undeveloped reserves that have been continuously disclosed for 5 years or more in the annual filings, to reporting all projects that have been or will remain undeveloped for 5 years or more from the time of their first disclosure date. Given the wording in the SEC Final Rule, it is understandable that different interpretations of the regulations may emerge. This paper presents an analysis of the SEC language used in the Final Rule and related wording used in SEC comment letters from the last few years. Failing further clarity from the SEC, this analysis provides the authors' opinion on the clarity required to ensure consistency in the way the SEC 5-year rule should be interpreted and in the spirit of comparability among companies that provides the basis for the SEC requirement to report these undeveloped reserves as a separate item. Another area discussed in this paper relates to the wording used by the SEC regarding a project's undeveloped-reserves volumes (i.e., its undeveloped reserves in barrels of oil equivalent) and the potential different interpretations that the industry may give to the SEC Final Rule. A simple example is presented to provide clarity on the option that is most likely to meet the SEC requirements. Potential inconsistencies resulting from different interpretation are highlighted. The analysis and recommendations presented in this paper aim at creating consistent approaches leading to better comparability among oil and gas companies by use of an aligned interpretation of standards and requirements for reserves estimation, classification, categorization, and disclosure.