Securities And Exchange Commission 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.

FETILDA: An Evaluation Framework for Effective Representations of Long Financial Documents

In the financial sphere, there is a wealth of accumulated unstructured financial data, such as the textual disclosure documents that companies submit on a regular basis to regulatory agencies, such as the Securities and Exchange Commission (SEC). These documents are typically very long and tend to contain valuable soft information about a company’s performance that is not present in quantitative predictors. It is therefore of great interest to learn predictive models from these long textual documents, especially for forecasting numerical key performance indicators (KPIs). In recent years, there has been a great progress in natural language processing via pre-trained language models (LMs) learned from large corpora of textual data. This prompts the important question of whether they can be used effectively to produce representations for long documents, as well as how we can evaluate the effectiveness of representations produced by various LMs. Our work focuses on answering this critical question, namely the evaluation of the efficacy of various LMs in extracting useful soft information from long textual documents for prediction tasks. In this paper, we propose and implement a deep learning evaluation framework that utilizes a sequential chunking approach combined with an attention mechanism. We perform an extensive set of experiments on a collection of 10-K reports submitted annually by US banks, and another dataset of reports submitted by US companies, in order to investigate thoroughly the performance of different types of language models. Overall, our framework using LMs outperforms strong baseline methods for textual modeling as well as for numerical regression. Our work provides better insights into how utilizing pre-trained domain-specific and fine-tuned long-input LMs for representing long documents can improve the quality of representation of textual data, and therefore, help in improving predictive analyses.

Holding Foreign Insiders Accountable

Whereas corporate insiders at U.S.-listed, U.S.-domiciled companies must disclose their stock sales electronically within two business days on Form 4, the U.S. Securities and Exchange Commission (SEC) exempts insiders at U.S.-listed, foreign-domiciled companies from this requirement. Instead, these “foreign insiders” report their sales on a paper form mail-filed with the SEC. Using a unique data set compiled from digitized versions of thousands of paper forms, we examine the stock sales of foreign insiders and compare their trading to that of their U.S. counterparts. Consistent with a lack of public scrutiny facilitating opportunism, we show that foreign insiders’ stock sales are highly opportunistic and opportunistic trading is concentrated in companies that are domiciled in nonextradition countries beyond the reach of U.S. legal authorities: specifically, Russia and China. The average stock sale by foreign insiders affiliated with companies domiciled in these countries is more than four times larger than that of U.S. insiders and occurs prior to stock price declines of at least −18%. In our sample, we estimate that insiders at these companies have traded to avoid losses of more than $9 billion. Collectively, our results suggest that corporate insiders associated with Chinese and Russian companies listed on U.S. exchanges trade in a highly opportunistic and abusive manner. The SEC’s decision to exempt these insiders from Form 4 reporting requirements prevents much needed public scrutiny of their trading and, in turn, prevents market forces from disciplining their trading. This paper was accepted by Suraj Srinivasan, accounting. Funding: We thank our schools and the Dean’s Research Fund at Wharton for financial support. Supplemental Material: The data files are available at https://doi.org/10.1287/mnsc.2022.02131 .

Accounting fraud detection using contextual language learning

Accounting fraud is a widespread problem that causes significant damage in the economic market. Detection and investigation of fraudulent firms require a large amount of time, money, and effort for corporate monitors and regulators. In this study, we explore how textual contents from financial reports help in detecting accounting fraud. Pre-trained contextual language learning models, such as BERT, have significantly advanced natural language processing in recent years. We fine-tune the BERT model on Management Discussion and Analysis (MD&A) sections of annual 10-K reports from the Securities and Exchange Commission (SEC) database. Our final model outperforms the textual benchmark model and the quantitative benchmark model from the previous literature by 15% and 12%, respectively. Further, our model identifies five times more fraudulent firm-year observations than the textual benchmark by investigating the same number of firms, and three times more than the quantitative benchmark. Optimizing this investigation process, where more fraudulent observations are detected in the same size of the investigation sample, would be of great economic significance for regulators, investors, financial analysts, and auditors.

Foreign corrupt practices act violations and enforcement

Purpose This study aims to examine the determinants of Foreign Corrupt Practices Act (FCPA) violations and consequences of FCPA enforcements. Design/methodology/approach This paper uses publicly available data from Compustat, I/B/E/S and Thomson Reuters databases, combined with Securities and Exchange Commission (SEC) and Department of Justice (DOJ) cases, to extract insights on FCPA violations and enforcements using econometric approaches. Findings The main determinants of FCPA violations appear to be firm size, multinational structure, country corruption and Sarbanes-Oxley Act control weaknesses. Traditional misreporting risks (F-score and M-score) do not predict FCPA violations. This study discovers significant differences between FCPA violations by motivation, as in, sale generation, rent extraction or cost evasion. Bribes motivated by sale generation or rent extraction are partially driven by the extent of the firm’s global operations, whereas bribes motivated by cost evasion relate to internal influences. This study also finds that enforcement is more salient for criminal violations (DOJ enforcement), compared to civil violations (SEC enforcement). Research limitations/implications This research provides new insights into the determinants of FCPA violations while underscoring the need for effective measures to combat bribery and promote ethical business practices. This research contributes to the ongoing efforts to curtail bribery, offering valuable insights into the characteristics of firms more likely to engage in bribery and contexts in which these activities occur. It provides critical implications for regulatory bodies, highlighting the differential responses of firms to varying types of enforcement, namely, criminal versus civil, as the authors observe greater decreases in internal control weaknesses following DOJ enforcement compared to SEC enforcement. Practical implications For enforcement agencies, the findings underscore the importance of rigorous criminal enforcement against FCPA violations, highlighting the improved control environments prompted by DOJ actions. Managers will find this research relevant, as it demonstrates that a firm’s entry into international markets substantially elevates the risk of its representatives engaging in bribery with foreign officials. In addition, the results are of interest to regulators, revealing that the underlying motivations driving a firm’s activities can significantly alter the factors to consider that might lead to an FCPA violation. Originality/value This paper is the original work of the authors and explores the determinants and consequences of FCPA violations and enforcement actions since 2002. To the best of the authors’ knowledge, it is the first to explore bribe determinants by their motive and documents industry-wide benefits arising from criminal enforcement.

XBRL reporting in firms with data breach incidents

AbstractThe Securities and Exchange Commission (SEC) adopted new rules mandating that firms disclose cybersecurity incidents and risk management procedures for inline XBRL reporting, highlighting the regulator's concern about firms’ response to data breaches. In this study, we examine whether firms use XBRL strategically to hinder external stakeholders from understanding the impact of announced data breaches. We find that firm XBRL filing complexity increases following data breaches. Further investigation suggests that the increased XBRL complexity is concentrated on financial statement note tags instead of financial statement tags. The findings imply that firms with data breach incidents are likely to increase XBRL reporting complexity to mitigate stock market reactions. We also find that analysts following moderate the relationship between the data breach and XBRL reporting timeliness. These findings provide empirical evidence about XBRL reporting changes after data breach incidents and contribute to cybersecurity literature and XBRL filing regulation.

CFO Accounting Expertise and SEC Comment Letter Process

In this study, we explore the expanded role of chief financial officers (CFOs) in facilitating corporate disclosure by examining how their accounting expertise influences the resolution process of Securities and Exchange Commission (SEC) comment letters issued on 10-K reports. Using CFO professional profile data collected extensively through EDGAR, Lexis-Nexis, and several online searches, we find that CFO accounting expertise improves the resolution of SEC comment letters by reducing the remediation costs and the likelihood of unfavorable resolution outcomes. We also show that the effect of CFO accounting expertise is more pronounced when the CFO’s involvement in the resolution process is greater, and the SEC comment letter includes comments on accounting topics. Our findings are robust to a battery of robustness tests. Overall, this study highlights the importance of CFOs’ role and function in regulatory compliance. JEL codes: G14; G30; M40; M41; M48

Text, tone, and legal language: Analyzing mutual fund disclosure sentiment

AbstractMutual fund disclosures must include information about a fund's strategies and risks to comply with the letter of the law. But funds should also honor the spirit of Securities and Exchange Commission (SEC) regulations, including informing ordinary investors. Disclosure language creates impressions that can be just as important as the content. But evaluating these soft aspects of disclosures is hard. In this article, we propose using disclosure tone—how positive or negative the language is—to empirically capture these impressions. This measure provides an additional tool to assess compliance with the spirit of disclosure laws. Building on finance research on company disclosures, we develop customized dictionaries specific to mutual fund disclosures. We then introduce a novel sentiment‐scoring framework that generates transparent sentence‐ and disclosure‐level scores for our sample of 164,602 mutual fund summary prospectuses (497k) from 2010 to 2020. Our descriptive analysis validates our dictionary by showing meaningful and statistically significant differences across disclosure sections, fund type, and time. Funds' statements of their principal risks are more negative (and uniformly so) across time than funds' descriptions of their investment strategies. We further explore these relationships using a fixed‐effects regression model. These analyses reveal statistically significant relationships between mutual fund disclosure tone and fund attributes, performance, and disclosure characteristics. These relationships are consistent with SEC requirements that anchor risk discussions in more negative language than strategy discussions. The findings also highlight the role of legal language in setting the overall disclosure tone. Our context‐sensitive approach provides a path to regulate compliance more effectively with both the letter and the spirit of the law. Our framework, which we have made publicly available, provides a robust tool to allow researchers and regulators to assess not only what funds say, but how they say it.

Loan-Level Disclosure and the Convenience Yield of Asset-Backed Securities

ABSTRACT We examine the impact of transparency on the convenience yield of AAA-rated asset-backed security (ABS) tranches. AAA tranches of ABS are commonly held by investors to manage financial liquidity and therefore enjoy a price premium beyond what is determined solely by the expected monetary payoff (i.e., convenience yield). The Securities and Exchange Commission (SEC) requires ABS issuers to provide monthly disclosures about the performance of the underlying individual loans for ABS issued after November 23, 2016 to improve transparency. We document that AAA tranches of ABS experience a significant increase in price volatility after the loan-level disclosure mandate. As a result, the use of these tranches as collateral for short-term funding and their convenience yield decrease significantly after the increased disclosure. Our collective evidence highlights an important unintended consequence of increased transparency in the ABS market; it diminishes the pledgeability of long-term safe assets. Data Availability: Data are available from the public sources cited in the text. JEL Classifications: G14; G23; M48.

Big Players Pivot in Response to Regulatory Pressures

_ Early January brought with it significant changes in the environmental side of the oil and gas industry. ExxonMobil and Chevron, the two largest US oil producers, announced they will exit California, and the Biden administration froze LNG export approvals. After 50 years of producing oil in California, ExxonMobil will take a $2.5 billion writedown of the value of some of its California properties to be recorded in its fourth-quarter earnings. The company said the decision is primarily related to its Santa Ynez operations off the coast of Santa Barbara. Its US Securities and Exchange Commission (SEC) filing said, “While the Corporation is progressing efforts to enable a restart of production, continuing challenges in the state regulatory environment have impeded progress in restoring operations.” After the Refugio oil spill in May 2015 (approximately 100,000 gal), resulting from a leak from a pipeline owned by Plains All American Pipeline, ExxonMobil acquired the damaged asset in October 2015. Just a few months before the purchase, the Santa Barbara County Board denied ExxonMobil’s request to truck its oil produced off the coast of Gaviota to its Las Flores Canyon processing facility and on to refiners located in Pentland, California. Seeking an alternative, ExxonMobil planned to replace two stretches of the 112-mile corroded pipeline for transit of its oil. Met with opposition to replace the damaged pipeline and denied permission to repair and restart production at the site (halted since 2015), ExxonMobil is now selling the Santa Ynez operation to Sable Offshore, a blank-check company created in 2020. The company will loan Sable the money for the purchase of its three offshore production platforms, pipeline, and onshore processing facility. Sable’s agreement with ExxonMobil requires production to be started by early 2026 or the assets and liabilities revert to ExxonMobil. Chevron, headquartered in San Ramon, California, will write down $3.5 billion to $4 billion in assets, citing its home state’s regulations that “have resulted in lower anticipated future investment levels.” The company intends to continue operating its oil fields and related assets. In the SEC filing, Chevron wrote it also will incur fourth-quarter charges related to decommissioning of US Gulf of Mexico assets that have reached the end of their productive lives. The company sold some of those assets, but US law stipulates that previous owners may be responsible for those costs if the current owner declares bankruptcy. Chevron wrote it’s “probable” that it may see such costs. January closed with another unexpected announcement on 26 January. The Biden administration paused decisions on permits to export LNG to non-free trade agreement countries to review current projects seeking approvals. US Energy Secretary Jennifer Granholm stated, “We must review export applications using the most comprehensive, up-to-date analysis of the economic, environmental, and national security considerations.” She added that this was not a ban on exports and would not affect already authorized exports, which when combined with existing plants, total 48 Bcf/D. “Within this decade another 12 Bcf/D of US export capacity already authorized and under construction will come online,” Granholm said. While environmental impact (greenhouse gas emissions including CO2 and methane) was one of the reasons for the decision, along with market, economic, national security, and energy security, Granholm pointed out that facilities totaling 22 Bcf/D of capacity have been approved but have not yet started construction. This capacity, combined with existing infrastructure, is “more than enough to make the US a ‘behemoth’ in the LNG field,” according to Holland & Knight in an analysis dated 29 January. The international law firm said this raises the question of whether further development of LNG facilities could hurt US citizens as higher percentages of produced gas are exported. “This line of thinking follows the historical rhetoric on this issue as domestic users of natural gas want to ensure their feedstock price is stable. To support those claims, recent studies have concluded that ‘higher LNG exports create a tighter domestic natural gas market (all else held equal), increasing domestic natural gas prices.’” Could unintended consequences of these recent announcements rear up in the future? And could they be a behemoth for the US or global markets? For Further Reading Growth in 2022 US LNG Liquefaction Capacity Hits Top of the Charts by Pat Davis Szymczak, SPE Oil and Gas Facilities.

Evolving trends in corporate auditing: A systematic review of practices and regulations in the United States

This systematic review delves into the dynamic landscape of corporate auditing in the United States, examining the historical underpinnings, current practices, and regulatory frameworks that shape this critical aspect of corporate governance. Corporate auditing stands as a linchpin in fostering financial transparency, ensuring accountability, and bolstering investor confidence. Over time, auditing practices have evolved in response to the intricacies of modern business, technological advancements, and the ever-changing regulatory environment. The review begins with an exploration of the importance of corporate auditing, emphasizing its crucial role in maintaining financial integrity and safeguarding the interests of stakeholders. The evolution of auditing practices unfolds as a narrative of adaptation and innovation, reflecting the need for auditors to navigate complex economic landscapes. Traditional methodologies, long considered the foundation of assurance services, are scrutinized in the context of their historical development and contemporary relevance. A significant focus is dedicated to emerging trends in corporate auditing, with a particular emphasis on technology-driven transformations. The integration of artificial intelligence, machine learning, and data analytics reshapes the audit landscape, providing auditors with powerful tools to enhance efficiency and accuracy. Additionally, the review explores the advent of remote auditing practices, examining the impact of digitalization on audit methodologies, along with the challenges and opportunities associated with this paradigm shift. Environmental, Social, and Governance (ESG) considerations emerge as a pivotal aspect of contemporary corporate audits. The review investigates the growing importance of ESG factors, the incorporation of these considerations into auditing practices, and the broader implications for corporate accountability. Regulatory responses to these evolving trends are analyzed, encompassing updates from the Securities and Exchange Commission (SEC) and international influences on U.S. auditing standards. The abstract concludes by offering a forward-looking perspective, anticipating future developments in corporate auditing and highlighting the delicate balance between tradition and innovation in this critical domain of corporate governance.

Drivers of Blockchain Adoption in Dividend Distribution in the Nigerian Exchange Group

This research investigates the factors influencing the Adoption of Blockchain Technology for Dividend Distribution (ABT) within firms in the Nigerian context. Utilizing a survey-based approach with a sample of 182 respondents, the study employs a comprehensive set of predictors including Stakeholders' Perceptions (SP), Perceived Ease of Use (PEU), Perceived Usefulness (PU), Institutional Pressures (IP), and Regulatory Support (RS). Methodologically, the research addresses the issue of multicollinearity through Ridge Regression, offering a robust technique for more reliable estimates. Our findings reveal that SP, PEU, PU, and RS are significant positive drivers for ABT, while IP was not significant. Interestingly, the interaction of RS and SP was also significant, indicating a moderating effect. The research contributes to the theoretical landscape by highlighting the nuanced role of institutional and regulatory factors in technology adoption. On a practical level, the study suggests that policymakers, particularly the Securities and Exchange Commission (SEC) and the Nigerian Exchange Group (NGX), should reevaluate existing regulations to foster technology adoption. Moreover, stakeholders, such as the Association for the Advancement of the Rights of Nigerian Shareholders, should engage more in influencing positive perceptions. This study fills an important gap in the literature by being among the first to explore these dynamics within the African context, specifically focusing on dividend distribution.

Analysis of the clearing mechanism of capital markets of USA, the regulations in the derivative segment, major hiccups in the last 10 years and a comparison of sectoral performance and expected performance in the near future

A crucial component of any financial market is the clearing system. It is the method used to match and settle deals, assuring the protection of all parties engaged in a transaction. The Securities and Exchange Commission (SEC) in the United States regulates the clearing system for the stock market, while the Commodity Futures Trading Commission (CFTC) regulates the clearing system for the commodity market. In response to changes in the market and hazards, the laws governing the derivatives sector have changed throughout time. Derivative markets have been subject to much more regulation since the 2008 financial crisis. This occurred as a result of the perception that derivatives had a significant role in the crisis. In the past ten years, there has been some fluctuation in the stock market's and commodities market's sectoral performance in the United States. The S&P 500 index has increased in value by more than double, signaling generally positive stock market performance. The commodity market, on the other hand, has been more erratic, with some commodities, like gold and oil, seeing huge price changes. In the short future, it is difficult to predict how the stock market and commodities markets will perform. While some analysts predict that the stock market will continue to do well, others think a correction is almost due. The commodities market is predicted to be unstable as well, with prices influenced by a variety of variables such as supply and demand, economic expansion, and geopolitical developments. This research paper will examine the clearing system for the US stock and commodities markets, the rules governing the derivatives market, significant setbacks during the past ten years, and a comparison of recent sector performance and anticipated performance. The ramifications of these discoveries for the future of the financial markets will also be covered in the discussion.

Integrating ESG in a Managerial Accounting Class

Among organizations and businesses, there has been a growing global attention on companies’ approach to climate change and sustainable development. Concurrently, the United States, Securities and Exchange Commission (SEC) has announced the intent to require publicly traded companies to disclose information on climate-related risks (SEC, 2022), signaling a need for carbon emission reporting integrated with financial statements. Accounting practitioners and educators are thus concerned with accounting students’ preparedness in developing skillsets that will meet the current demands for integrated reporting of climate-related and other sustainability or ESG mitigation measures (AAA, 2023). Despite this growing concern, few accounting cases address sustainability/ESG management. This case requires students to use data analysis to estimate the cost-benefit analysis across three variable costing budgets in a production cycle of a manufacturing plant while integrating the estimation of carbon emissions attributed to a number of products produced and sold. Students could synthesize relevant information on ESG issues related to production and make decisions on sustainable approaches to inventory production.

The Effects of Uncertainty Disclosures on REIT Returns

We examine the relationship between uncertainty-related disclosures in annual filings and market returns of REITs. We search annual filings (10-K) of Real Estate Investment Trusts (REITs) with the Securities and Exchange Commission (SEC) for uncertainty words. We then form rolling portfolios of REITs based on occurrences of uncertainty words in annual filing and track the returns. Our main finding is that there are no statically significant abnormal returns to these REIT portfolios. This supports the notion that the stock market is efficient in quickly incorporating any new information revealed in annual reports when the information becomes available.

Principles based accounting standards, audit fees and going concern: evidence using advanced machine learning

PurposeThe current study uses an advanced machine learning method and aims to investigate whether auditors perceive financial statements that are principles-based as less risky. More specifically, this study aims to explore the association between principles-based accounting standards and audit pricing and between principles-based accounting standards and the likelihood of receiving a going concern opinion.Design/methodology/approachThe study uses an advanced machine-learning method to understand the role of principles-based accounting standards in predicting audit fees and going concern opinion. The study also uses multiple regression models defining audit fees and the probability of receiving going concern opinion. The analyses are complemented by additional tests such as economic significance, firm fixed effects, propensity score matching, entropy balancing, change analysis, yearly regression results and controlling for managerial risk-taking incentives and governance variables.FindingsThe paper provides empirical evidence that auditors charge less audit fees to clients whose financial statements are more principles-based. The finding suggests that auditors perceive financial statements that are principles-based less risky. The study also provides evidence that the probability of receiving a going-concern opinion reduces as firms rely more on principles-based standards. The finding further suggests that auditors discount the financial numbers supplied by the managers using rules-based standards. The study also reveals that the degree of reliance by a US firm on principles-based accounting standards has a negative impact on accounting conservatism, the risk of financial statement misstatement, accruals and the difficulty in predicting future earnings. This suggests potential mechanisms through which principles-based accounting standards influence auditors’ risk assessments.Research limitations/implicationsThe authors recognize the limitation of this study regarding the sample period. Prior studies compare rules vs principles-based standards by focusing on the differences between US generally accepted accounting principles (GAAP) and international financial reporting standards (IFRS) or pre- and post-IFRS adoption, which raises questions about differences in cross-country settings and institutional environment and other confounding factors such as transition costs. This study addresses these issues by comparing rules vs principles-based standards within the US GAAP setting. However, this limits the sample period to the year 2006 because the measure of the relative extent to which a US firm is reliant upon principles-based standards is available until 2006.Practical implicationsThe study has major public policy suggestions as it responds to the call by Jay Clayton and Mary Jo White, the former Chairs of the US Securities and Exchange Commission (SEC), to pursue high-quality, globally accepted accounting standards to ensure that investors continue to receive clear and reliable financial information globally. The study also recognizes the notable public policy implications, particularly in light of the current Chair of the International Accounting Standards Board (IASB) Andreas Barckow’s recent public statement, which emphasizes the importance of principles-based standards and their ability to address sustainability concerns, including emerging risks such as climate change.Originality/valueThe study has major public policy suggestions because it demonstrates the value of principles-based standards. The study responds to the call by Jay Clayton and Mary Jo White, the former Chairs of the US SEC, to pursue high-quality, globally accepted accounting standards to ensure that investors continue to receive clear and reliable financial information as business transactions and investor needs continue to evolve globally. The study also recognizes the notable public policy implications, particularly in light of the current Chair of the IASB Andreas Barckow’s recent public statement, which emphasizes the importance of principles-based standards and their ability to address sustainability concerns, including emerging risks like climate change. The study fills the gap in the literature that auditors perceive principles-based financial statements as less risky and further expands the literature by providing empirical evidence that the likelihood of receiving a going concern opinion is increasing in the degree of rules-based standards.

A REVIEW OF SHARE REPURCHASES: SEC PROPOSALS AND NEW EXCISE TAX: A COMMENT ON OXNER

This article is a review of Oxner (2022), which discusses the proposals presented by the Securities and Exchange Commission (SEC) about share repurchases and insider trading, in addition to the comments made by the Commissioners and other participants. In addition, Oxner (2022) analyzes the possible consequences of the excise tax as well as the necessity for companies to legally reduce it. This article also makes suggestions for future research directions based on Oxner’s (2022) work.

Ripple effect: the SEC’s major questions doctrine problem

Objective: to elaborate a new standard for assessing the level of decentralization of cryptoassets in the USA.Methods: dialectical approach to cognition of social phenomena, allowing to analyze them in historical development and functioning in the context of the totality of objective and subjective factors, which predetermined the following research methods: formal-logical and sociological.Results: Crypto assets and blockchain technology have the potential to create unprecedented equitable access to financial institutions. Despite this potential, there is a robust debate regarding federal agencies' jurisdiction over the novel asset class. Without clear statutory guidelines, federal agencies have been forced to resolve this debate through the rulemaking process. However, agency rules regarding jurisdiction over crypto assets could be scrutinized by a reviewing court under the major questions doctrine. Once highly deferential to agency rules, the U.S. Supreme Court in recent terms has repeatedly struck down agency rules when an agency claims an unheralded power to regulate an issue of deep economic and political significance. The U.S. Securities and Exchange Commission (SEC) arguably claims such a power by interpreting most crypto assets to be "investment contracts" and thus under SEC jurisdiction. But although a decision on major questions doctrine grounds in the high-profile case SEC v. Ripple Labs, Inc. could help clarify how we classify crypto assets, it leaves many jurisdictional questions unanswered and could complicate the application of the SEC's disclosure regime to risky crypto asset offerings.Scientific novelty: This Note argues that Congress should pass the Lummis-Gillibrand Responsible Financial Innovation Act to create joint jurisdiction between the SEC and the Commodities Futures Trading Commission over most crypto asset offerings. This may help to balance consumer protection and innovation at the frontier of financial innovation. The author also endorses a new standard to evaluate whether a crypto asset is sufficiently decentralized to further clarify the SEC's role in regulating crypto asset offerings.Practical significance: the main provisions and conclusions of the article can be used in scientific, pedagogical and law enforcement activities when considering the issues related to the activity of the U.S. Securities and Exchange Commission.

Reliable Technologies Combine To Establish Reasonable Certainty for Reserves Estimates

_ This article, written by JPT Technology Editor Chris Carpenter, contains highlights of paper SPE 210358, “Establishing Reasonable Certainty for Reserves Estimates by Using a Combination of Reliable Technologies,” by Keshav Narayanan, SPE, Peter Gale, SPE, and J.P. Blangy, SPE, Woodside Energy, et al. The paper has not been peer reviewed. The Petroleum Resources Management System (PRMS) and many regulatory agencies require what is termed “reasonable certainty” for Proved Reserves estimates. The guidance provided by the PRMS or the US Securities and Exchange Commission (SEC) for establishing reasonable certainty is general in nature because of the difficulty in explicitly describing all possible scenarios and also allows leeway to use new technologies in the future. The complete paper addresses the complex challenge of establishing reasonable certainty in reserves and resource assessments and discusses how multiple reliable technologies may be used in concert to establish reasonable certainty for reserves estimates through the flexibility provided by the PRMS. Introduction The authors write that a common response to many questions seeking clarification on reserves-related matters is that “it depends.” Likewise, regarding the question of what constitutes reliable technology, the answer depends on the specific circumstances and the data being considered. The use of reliable technology as a method to improve certainty in the estimates of oil and gas reserves was formally recognized in the 2008 modernization of oil and gas reporting. The PRMS issued in 2007 and further updated in 2018 also recognized the use of appropriate technologies that can lead to more-reliable estimates of reserves. However, the SEC or the PRMS guidelines also seem to recognize that it might not be possible to prescribe a definitive approach that could work for any set of circumstances. They broadly describe the framework for what constitutes reliable technology and how it can be used to establish reasonable certainty. Operators have an obligation to use a scientific method to build a robust case to justify categorization of volumes. Previous Research Previous work reviewed how the industry, in the years from 2008 to 2016, had been using reliable technologies for reserves estimates and how industry practitioners were demonstrating and describing that these applications were consistent with the SEC and PRMS guidelines. The material surveyed by previous researchers can be grouped into the following broad themes: - Seismic applications, which establish water contacts downdip of well controls and explore how seismic amplitude processes can be relied on to improve probability of geologic success - Dynamic simulations, which investigate when reasonable certainty can be demonstrated when simulation models are used - Unconventional applications, which include how reasonable certainty should be established when booking proved, undeveloped reserves (PUD) away from well control - SEC comment letters, which can require registrant companies to more-clearly spell out the demonstration of reasonable certainty - Applications of multiple reliable technologies increase confidence in free-water level determined by use of pressure data or seismic amplitude shutoffs, seal-capacity analysis, well logs, pressure data, and seismic to support proved reserves estimates

A Grounded Theory Analysis of Civil and Administrative Cases Pursued by the Security and Exchange Commission

In the midst of the Great Depression, the U.S. government created the Securities and Exchange Commission (SEC) to help control questionable business practices and prevent future economic crises. The SEC remains responsible for the administration of securities laws and enforcement actions against violators but has increasingly gained enforcement capacities over its lifespan. This research uses a grounded theory approach to explore themes across the way the SEC proceedings against detected. Publicly available litigation releases available through the agency’s website are used. Overall, the SEC is observed to operate in a generally predictable and equitable manner in which most of those who are charged are ultimately sanctioned in some way. Particularly interesting interactions were observed between entities and sanctioning outcomes. 1