Rich and Wealth

Antifraud Provisions (2)

The antifraud provisions are broad and, taken at face value, could be construed to include almost all forms of misstatement made by a company’s management, whether within or outside its financial statements. However, through case law, it has been demonstrated that to violate the antifraud provisions of the Securities Acts, a defendant must act with scienter—an intent to defraud. Consider, for example, an interpretation of the antifraud provisions found in an administrative proceeding involving Waste Management, Inc. (more…)

Antifraud Provisions

Antifraud Provisions
Financial reports are considered to be fraudulent when they violate the antifraud provisions of the Securities Acts. The antifraud provisions are contained in one section of the 1933 Act and one section and one rule of the 1934 Act. Section 17(a) of the Securities Act of 1933 states: (more…)

Generally Accepted Accounting Principles and the Securities and Exchange Commission (2)

In other instances, the SEC may refuse to accept an accounting standard established by the FASB, leading the FASB to reconsider and revise its position. For example, in 1962 the Accounting Principles Board (APB), a predecessor to the FASB, released a  standard calling for deferral of the investment tax credit, with recognition in income over the life of the related asset—the so-called deferral method.45 The SEC balked at this approach, preferring instead to see the investment tax credit recognized in income currently— the so-called flow-through method. The APB went along with the SEC and amended its standard, permitting both the deferral and flow-through methods.46 In another example, in 1977 the FASB released a standard (more…)

Generally Accepted Accounting Principles and the Securities and Exchange Commission

Section 13(b)(2)(B) states in part that internal controls in place should permit preparation of financial statements “in conformity with generally accepted accounting principles.” 43 The SEC has generally permitted the private sector, and since 1973, the Financial Accounting Standards Board, to develop accounting principles for use in the United States. Accounting principles developed by the FASB have the full support of the SEC. As such, the SEC does not play a major role in the development of accounting principles. (more…)

Financial Reporting and Disclosure Provisions (2)

Selected rules of the 1934 Act that are especially relevant for enforcement of accounting and reporting issues are Rule 12b-20, Additional Information, Rule 13b2-1, Falsification of Accounting Records, Rule 13a-1, Requirements of Annual Reports, and Rule 13a-13, Quarterly Reports on Form 10-Q and Form 10-QSB. The purpose of these rules is to clarify and sharpen the accounting and reporting requirements of the Securities Act. (more…)

Financial Reporting and Disclosure Provisions

Enforcement actions against companies and individuals involving financial reporting and disclosure issues typically focus on several sections and rules of the 1933 and 1934 acts. Given its ongoing disclosure requirements, key sections and rules of the 1934 Act are particularly prominent, especially three subsections from Section 13—Section 13(a), Section 13(b)(2)(A), and Section 13(b)(2)(B). (more…)

ENFORCING THE SECURITIES LAWS (3)

If, after an investigation, the staff of the division believes that a case can be made against a company or its management, authorization is sought to begin an administrative or judicial proceeding. Once the division gets authority to proceed, it typically will seek to reach a settlement with the targeted parties. If settlement talks are not fruitful, a hearing will be scheduled. Depending on the seriousness of the alleged wrongdoing and its technical nature, that hearing will be either an administrative proceeding in front of an administrative law judge or a civil hearing before a federal court judge. (more…)

ENFORCING THE SECURITIES LAWS (2)

Regular, periodic filings are required of all companies with more than 500 shareholders and $10 million in total assets, whether a company’s securities are listed and traded on a national exchange or not. Under section 13, Periodical and Other Reports, of the 1934 Act, three basic reports must be filed with the SEC: Form 10-K, an annual report, Form 10-Q, a quarterly report, and Form 8-K, a report filed to disclose major
events affecting the company such as a major acquisition, a change in control, or bankruptcy. 34 Financial (more…)

ENFORCING THE SECURITIES LAWS

Given the SEC’s heightened concern about the accuracy of financial statements filed with it, we deemed it appropriate to look more closely at how the SEC’s Division of Enforcement enforces the securities laws that govern financial reporting. In this section, we look closer at the securities laws themselves, including key sections and rules of the laws that deal with accounting issues and we examine the workings of the Division of Enforcement, including the penalties available to it in the event of noncompliance. (more…)

Situational Interview

“Suppose on your first day at work with us the telephone rings. It’s a call from an irate customer who is threatening to sue us unless we take back the equipment he bought from us and refund his money. What would you do?”

The situational interview is similar to a traditional interview, with some important differences. The situational interview is usually structured and makes use of a common assessment guide.

Questions are hypothetical and designed to elicit responses that provide a glimpse into a candidate’s thinking processes, personal values, creativity, and practical experience.

Plain English

Hypothetical Imaginary. Hypothetical interview questions attempt to discover how a candidate would act if a certain situation were to occur; both the question and the response are purely conjecture.

Hypothetical problems can also be given to candidates to analyze and solve as the interviewer (or interview team) looks on. This presents the opportunity to evaluate candidates as they attempt to solve problems that may actually occur on the job. Is the candidate completely befuddled by the problem? Has the candidate plunged headfirst into the problem only to offer a quick, simplistic solution? In wrestling with the problem, does the candidate demonstrate exceptional problemsolving
skills, including analyzing and strategizing a solution? Does the candidate offer reasoned responses that display a unique combination of imagination, courage, and creativity?

The fundamental problem with the situational interview is that it deals only with the hypothetical. You can’t assume that a candidate will be a highly creative problem solver on the job just because he or she solved a hypothetical problem in an interview.

Without a doubt, situational interviews provide some insight into the way a candidate thinks, feels, and acts. But they don’t provide you with the objective information necessary to help you make an informed hiring decision. For example, one of the most critical deficiencies of the situational interview is that you learn what a candidate could do in the hypothetical situation being discussed, instead of what that person has done in different but similarly challenging situations in the past.

Advantages: Situational interviews provide some insight into a candidate’s problem-solving skills, reasoning abilities, and creativity. They are interesting for the interviewer, and challenging for the candidate.

Disadvantages: By concentrating on the hypothetical, the interviewer never learns about how a candidate has actually behaved in the past when confronted with different but similarly challenging situations. Hypothetical solutions to hypothetical problems force a candidate to offer only conjecture about what could be done.

Taken From: 10 Minute Guide to Conducting a Job Interview