Securities Industry Commentator by Bill Singer Esq

GUEST BLOG: [In]Securities: Puff!: The SEC Slays DRGN by Aegis Frumento Esq (BrokeAndBroker.com Blog

Statement on Agreement Governing Inspections and Investigations of Audit Firms Based in China and Hong Kong by SEC Chair Gary Gensler

Ex-Bank Branch Manager Sentenced for Embezzlement (DOJ Release)

Chippewa Valley Financial Advisor Sentenced to 84 Months for Fraud Scheme (DOJ Release)

SEC Charges Infrastructure Company Granite Construction and Former Executive with Financial Reporting Fraud (SEC Release)

SEC Charges Promoter of California Cannabis Company with Fraud (SEC Release)

SEC Obtains Court Order to Enforce Investigative Subpoenas for Production of Documents by GP Capital Group, Inc. and Its President, Shannon W. Illingworth (SEC Release)

SEC Charges Industrial Gas Companies and Former Executives with Fraud (SEC Release)

SEC Adopts Pay Versus Performance Disclosure Rules (SEC Release)

Late Summer Sunshine: Statement on the Adoption of Pay Versus Performance by SEC Commissioner Caroline A. Crenshaw

Statement on Pay versus Performance by SEC Commissioner Jaime Lizárraga

Neither Pay nor Performance by SEC Commissioner Hester M. Peirce

Statement on the Final Rule Related to Pay Versus Performance by SEC Commissioner Mark T. Uyeda

SEC Charges Texas-Based Technology Company and Its CEO with Fraud for False Statements and Misappropriation of Investor Funds (SEC Release)

CFTC Orders Chicago Trader to Pay $100,000 for Spoofing in Natural Gas and RBOB Futures (CFTC Release)

FINRA Censures and Kovack Securities for Short-Term Mutual Fund Trading

In the Matter of Kovack Securities In., Respondent (FINRA AWC)

10Cir Reinstates in Part La'Tonya Ford's Retaliation /Hostile Work Environment/Constructive Discharge Claims Against Jackson National (BrokeAndBroker.com Blog)

Former Ameriprise Rep Files Lawyer Malpractice Complaint After Losing FINRA Promissory Note Arbitration (BrokeAndBroker.com Blog)

Today, the Public Company Accounting Oversight Board (PCAOB) signed a Statement of Protocol with the China Securities Regulatory Commission (CSRC) and the Ministry of Finance of the People's Republic of China governing inspections and investigations of audit firms based in China and Hong Kong.

This agreement marks the first time we have received such detailed and specific commitments from China that they would allow PCAOB inspections and investigations meeting U.S. standards. The Chinese and we jointly agreed on the need for a framework. We were not willing to have PCAOB inspectors travel to China and Hong Kong unless there was an agreement on such a framework. In light of the time required to conduct these inspections and investigations, inspectors must be on the ground by mid-September if their work has any chance to be successfully completed by the end of this year.

Make no mistake, though: The proof will be in the pudding. While important, this framework is merely a step in the process. This agreement will be meaningful only if the PCAOB actually can inspect and investigate completely audit firms in China. If it cannot, roughly 200 China-based issuers will face prohibitions on trading of their securities in the U.S. if they continue to use those audit firms.

Why do these inspections and investigations matter? It's a privilege for foreign issuers to access our markets - the largest, deepest, most liquid markets in the world. Investors in U.S. markets should be protected - and have trust in a company's financial numbers - regardless of whether an issuer is foreign or domestic. Further, if foreign issuers want access to our public capital markets, they must be on a level playing field with U.S. firms.

More than 50 jurisdictions have complied with the requirements that the PCAOB inspect and investigate audit firms of U.S.-listed companies, regardless of where the audit firm is based. Two have not: China and Hong Kong.

China-based issuers, however, have continued to access U.S. markets while not complying with the basic bargain of the Sarbanes-Oxley Act, enacted on a bipartisan basis 20 years ago this past July: If you want to issue public securities in the U.S., the registered public accounting firms that audit your books have to be subject to inspections and investigations by the PCAOB. When foreign issuers seek access to U.S. capital markets, they must abide by the same rules regarding auditing as our domestic issuers. These rules include a requirement that the PCAOB have the ability to inspect all audit work papers - standard, engagement-specific documentation of the audit work related to an issuer's financial statements and the quality of the audit.

Congress recently reaffirmed the requirement for complete inspections and investigations under the Holding Foreign Companies Accountable Act of 2020 (HFCAA), which amended Sarbanes-Oxley. Under the HFCAA, if the PCAOB is "unable to inspect or investigate completely"[1] registered public accounting firms located in foreign jurisdictions, issuers that use those firms for three consecutive years face prohibitions on their securities trading in the U.S. - in this case, roughly 200 companies based in China.

This agreement announced today brings specificity and accountability to effectuate Congress's intent. It provides the standards against which to judge whether auditors of Chinese issuers have complied with the requirements of U.S. law, including PCAOB auditing standards. I thank Congress for their attention to these important matters. In particular, Chinese authorities have committed to four critical items:

First, in accordance with the Sarbanes-Oxley Act, the PCAOB has independent discretion to select any issuer audits for inspection or investigation;

Second, the PCAOB gets direct access to interview or take testimony from all personnel of the audit firms whose issuer engagements are being inspected or investigated;

Third, the PCAOB has the unfettered ability to transfer information to the SEC, in accordance with the Sarbanes-Oxley Act; and

Fourth, PCAOB inspectors can see complete audit work papers without any redactions. On this last item, the PCAOB was able to establish view only procedures - as it has done in the past with certain other jurisdictions - for targeted pieces of information (for example, personally identifiable information).  

Going forward, will our markets include China-based issuers? That still is up to our counterparts in China. It depends on whether they comply with the requirements of U.S. law, as detailed in the framework.

Either way, I look forward to ensuring key investor protections in our markets - with China-based issuers, if this framework is followed; or without China-based issuers, if it is not.

Though much work remains to ensure compliance, I would like to thank our counterparts at the CSRC and the Ministry of Finance for the productive discussions to date.

I would like to thank my colleagues at the SEC and the PCAOB for their diligent work on these matters, including:

• YJ Fischer, Paul Munter, Natasha Guinan, Kathleen Hutchinson, Matthew Greiner, Paul Gumagay, Megan Barbero, Elizabeth McFadden, Melissa Hodgman, Tejal Shah, and LaShawn Latson of the SEC; and
• Chair Erica Williams, Board member Kara Stein, Board member Anthony Thompson, Board member Duane DesParte, Board member Christina Ho, Omid Harraf, George Botic, Karen Dietrich, Alan Lo Re, Beth Hilliard Colleye, and Juliann Ravas of the PCAOB.

[1] See S.945 - Holding Foreign Companies Accountable Act, available at https://www.congress.gov/bill/116th-congress/senate-bill/945/text.

[L]umpkin was employed as a branch manager at a BBVA bank in Gadsden.  Between January 2017 and June 2020, Lumpkin stole at least $184,250.00 from BBVA accounts associated with a deceased customer and her daughter. To do so, she prepared and approved debit tickets authorizing the transactions, which were purportedly signed by the deceased customer's daughter. The defendant then withdrew the funds from those accounts and converted them to her own use.

Shillin worked as a financial advisor with clients throughout the Chippewa Valley and beyond.  He pleaded guilty to a three-part wire fraud scheme in which he (1) misled his clients by telling them that they owned shares of pre-IPO stock in high-profile companies such as Space-X and Palantir; (2) misled his clients into believing they had long-term care insurance policies when they did not; and (3) misled his clients into believing they were eligible for tax benefits when they were not.  As the scheme unraveled, Shillin used fraudulent collateral to obtain two bank loans in the aggregate amount of $462,000 to continue the scheme. 

At sentencing, Judge Peterson emphasized the need to impose a sentence for this "pretty horrifying crime" that reflected the suffering that Shillin inflicted on his victims.  Based on the record at sentencing, Judge Peterson called Shillin "resolutely dishonest" and a "very selfish person."  He rejected Shillin's argument that Shillin lied in a misguided attempt to make his clients feel good, but instead stated that Shillin "lied to make [himself] feel good."  Judge Peterson noted that the victims should not feel bad about being defrauded because they were defrauded by a "highly skilled manipulator" who had "vast experience in deceit."

The Securities and Exchange Commission today charged Granite Construction, Incorporated and its former Senior Vice President, Dale Swanberg, with fraud for inflating the financial performance of the major subdivision Swanberg managed. In 2021, Granite restated its financial statements from 2017 through 2019 to correct revenue and profit margin errors allegedly caused by Swanberg's misconduct. The company agreed to pay $12 million to settle the SEC's charges.

In separate administrative proceedings, the company's former CEO, James H. Roberts, and former CFOs, Laurel Krzeminski and Jigisha Desai, while not charged with misconduct, agreed to return more than $1.4 million, $327,000, and $176,000, respectively, in bonuses and compensation to Granite. These clawbacks were made pursuant to Section 304 of the Sarbanes-Oxley Act (SOX), which requires executives to reimburse certain compensation when an issuer is required to restate its financials as a result of misconduct.

. . .

The SEC's complaint against Swanberg alleges that, beginning in 2017, he faced demands within Granite to turn around the flagging performance of his group and to improve its financial metrics. Swanberg and his group, however, allegedly encountered significant increases in expected costs for their construction projects that, if recorded, would have decreased the group's earned revenues. The complaint alleges that Swanberg, when faced with these competing demands, orchestrated a scheme to manipulate profit margins and improperly defer the recording of expected costs to hide the group's flagging performance. The scheme allegedly unraveled in mid-2019 when several construction projects neared completion and Swanberg could no longer defer recognition of the cost increases.

. . .

The SEC's complaint against Granite is premised on Swanberg's alleged misconduct. The complaint credits Granite with self-reporting to the Commission and undertaking remediation by, among other things, redesigning its internal accounting controls and policies and procedures to increase the transparency and accuracy of expected costs for construction projects. Without admitting or denying the SEC's findings, Granite agreed to be enjoined from violating Section 10(b) of the Securities Exchange Act of 1934 and other provisions of the securities laws, and to pay a civil penalty of $12 million. The proposed judgment is subject to court approval.

The SEC's complaint against Swanberg, which was filed in federal district court in the Northern District of California, charges him with violating the antifraud and other provisions of the federal securities laws and seeks disgorgement plus prejudgment interest, civil penalties, and an officer and director bar, among other relief.

[F]rom about July through December 2018, Arkells sold approximately $477,500 worth of C3 securities to six retail investors through material misrepresentations and omissions regarding C3's business. Specifically, the complaint alleges that Arkells falsely told investors that C3 had received a $30 million capital infusion from a third party. It also alleges that Arkells disseminated documents created by Steele Smith to investors that contained falsehoods and financial projections that had no basis in reality. Arkells allegedly knew or was reckless in not knowing that the statements were false, as he was allegedly aware that C3 had no business operations, manufacturing facility, products, or current revenue. Arkells allegedly received approximately $66,205 in commissions for misleading investors.

The complaint also alleges that Arkells was not registered as a broker or dealer and sold unregistered shares of C3 securities.

[T]ne SEC is investigating whether GP Capital Group and Illingworth violated the antifraud and registration provisions of the federal securities laws. The filing alleges that, among other things, since at least May 2020, Illingworth and GP Capital Group have solicited investors to enter into sale-leaseback agreements for shipping containers used for cannabis cultivation, promising investors a 20% or 12% annual return. The SEC's filing also states that GP Capital Group and associated persons may have acted as unregistered broker-dealers in the solicitation and sale of securities.

As stated in the SEC's filing, SEC staff served both GP Capital Group and Illingworth in July 2021 with investigative subpoenas requiring the production of certain documents. According to the filing, however, GP Capital Group and Illingworth failed to comply with the subpoenas despite numerous extensions by the SEC staff.

The SEC's application sought a court order directing GP Capital Group and Illingworth to comply fully with the subpoenas. Following a hearing, the court ordered the respondents to produce non-privileged responsive documents to the Commission's subpoena no later than August 31, 2022. The court order also states that in the event GP Capital Group and Illingworth do not produce the documents by that date, the Court will promptly hold a civil contempt hearing and entertain any application for sanctions filed by the Commission. The SEC is continuing its fact-finding investigation and, to date, has not concluded that any individual or entity has violated the federal securities laws.

According to the SEC's complaint, Taronis Tech (from at least January 2019 to March 2020) and Taronis Fuels (from at least February 2020 to November 2020), and their former CEO, Scott Mahoney, issued materially false and misleading press releases touting agreements and relationships with customers that did not exist or were exaggerated. In addition, Mahoney and Taronis Fuels' former CFO, Tyler Wilson, created fake and backdated orders, which resulted in Taronis Fuels improperly recognizing revenue for fake unit sales in the second and third quarters of 2020. From July to November 2020, Taronis Fuels raised approximately $30 million from investors in private placements, while making representations and warranties that its financial statements in SEC filings were prepared in accordance with Generally Accepted Accounting Principles (GAAP). In an April 2021 filing, Taronis Fuels disclosed that its previously issued financial statements for the year ended December 31, 2019 and for each of the interim quarterly periods in fiscal 2020 should not be relied upon, for reasons including errors in revenue recognized from sales and under-reporting of cost of goods sold.

The SEC's complaint, filed in the U.S. District Court for the Middle District of Florida, charges Taronis Tech, Taronis Fuels, Mahoney, and Wilson with violating Section 10(b) of the Securities Exchange Act of 1934 ("Exchange Act") and Rule 10b-5 thereunder. It further charges Taronis Tech and Taronis Fuels with violating Exchange Act Sections 13(a) and Rules 12b-20, 13a-11, and13a-13 thereunder; Taronis Tech with violating Exchange Act Rule 13a-1 thereunder; and Taronis Fuels with violating Section 17(a) of the Securities Act of 1933 (the "Securities Act") and Sections 13(b)(2)(A) and 13(b)(2)(B) of the Exchange Act and Rule 12b-25 thereunder. The complaint also alleges that Mahoney and Wilson violated Section 17(a) of the Securities Act; aided and abetted Taronis Fuels' violations of Sections 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Rules 12b-20 and 13a-13 thereunder; and have control person liability under Section 20(a) of the Exchange Act for Taronis Fuels' violations of Sections 10(b), 13(a), 13(b)(2)(A), and 13(b)(2)(B) of the Exchange Act and Rules 10b-5, 12b-20, and 13a-13 thereunder. Additionally, the complaint charges Mahoney and Wilson with violating Exchange Act Section 13(b)(5) and Rules 13a-14, 13b2-1, and 13b2-2 thereunder, and Section 304 of the Sarbanes-Oxley Act of 2002 (SOX). Finally, the complaint alleges that Mahoney aided and abetted Taronis Tech's violations of Section 13(a) of the Exchange Act and Rules 12b-20 and 13a-11 thereunder and has control person liability under Section 20(a) of the Exchange Act for Taronis Tech's violations of Sections 10(b) and 13(a) of the Exchange Act and Rules 10b-5, 12b-20, and 13a-11 thereunder.

Taronis Fuels has consented, without admitting or denying the Commission's allegations and subject to court approval, to be permanently enjoined from violating the charged provisions of the federal securities laws and has agreed to pay disgorgement in the amount of $4,876,023, plus prejudgment interest in the amount of $231,877.50, for a total of $5,107,900.50, to be paid within one year pursuant to a payment plan.

Mahoney has consented to a bifurcated settlement, without admitting or denying the Commission's allegations and subject to court approval, under which he will be enjoined from violating the charged provisions of the federal securities laws, pay a $150,000 civil penalty to be paid within one year pursuant to a payment plan, and be subject to five-year bars prohibiting him from acting as an officer or director of a public company and from participating in an offering of penny stock. The court will determine whether disgorgement and prejudgment interest should be ordered against Mahoney and whether he should reimburse Taronis Fuels pursuant to Section 304(a) of SOX.

The SEC is seeking permanent injunctions and civil money penalties against Taronis Tech and Wilson. In addition, the SEC is seeking disgorgement of ill-gotten gains with prejudgment interest and an officer-and-director bar against Wilson, and to have Wilson reimburse Taronis Fuels pursuant to Section 304(a) of SOX.

Specifically, the amendments require registrants to provide a table disclosing specified executive compensation and financial performance measures for their five most recently completed fiscal years. With respect to the measures of performance, a registrant will be required to report its total shareholder return (TSR), the TSR of companies in the registrant's peer group, its net income, and a financial performance measure chosen by the registrant. Using the information presented in the table, registrants will be required to describe the relationships between the executive compensation actually paid and each of the performance measures, as well as the relationship between the registrant's TSR and the TSR of its selected peer group. A registrant will also be required to provide a list of three to seven financial performance measures that it determines are its most important performance measures for linking executive compensation actually paid to company performance. Smaller reporting companies will be subject to scaled disclosure requirements under the rules.

Today the Commission adopted a rule that provides investors with information about how corporate executives are paid. That is, quite simply, it. This rule does not regulate the way companies incentivize their executives, but rather the disclosures that companies are required to make about such compensation. More specifically, Pay Versus Performance disclosures give investors insight into how performance measures impact executive compensation, in order to allow investors to better understand how boards pay their company executives

Congress enacted Section 14(i) of the Exchange Act and other executive compensation reforms as part of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010.[1] Those provisions, among other things, provide disclosure into an area that had inadequate transparency. The Global Financial Crisis of 2007-2008 put the lack of transparency into stark relief, as executives received multimillion-dollar pay packages for short-term gains that contributed to disastrous results.[2] After hearing testimony on the matter, the Senate Banking Committee issued a report that quoted an adage coined by Louis Brandeis, 'sunlight is the best disinfectant."[3]

Those words encapsulate a simple and powerful idea that governs much of our securities markets: transparency is cleansing and improves markets for both companies and investors. Transparency can be directed into areas of opaqueness as needed, it helps prevent fraud, and is a key feature of our markets, which have become the gold standard of capital markets across the globe.[4] Louis Brandeis published that famous adage in the early 20th century.[5] Yet, nearly a century later, the Senate Banking Committee found those words, and the driving principle behind them, pertinent and captured them on the legislative record in deliberating on and passing into law Dodd-Frank.

Our markets evolve and innovate, often quickly, however, even amidst change, the principle behind Brandeis's words hold true and is evergreen. Different types and categories of disclosure become more important as our economy, financial markets, and market practices change and evolve.[6] Adjusting, calibrating, and adding those needed disclosures is one of the core functions of the SEC.

Today, we have finalized a rule aimed at achieving that transparency in regards to executive pay.[7] It was initially proposed in 2015, and in the intervening seven years since the proposal commenters have had the ability to carefully consider how executive pay and performance have evolved, and then comment on what information is useful to investors given the history and development of pay practices.

For example, in 2010, more pay was based solely on financial measures such as profitability, revenues, and measures of cash flow.[8] But, as several commenters noted, the underlying performance measures that are used to determine executive pay in today's market for executive compensation encompass a broader mix - both quantitative and qualitative; financial and nonfinancial. [9] Further, roughly 70% of executive pay plans consider nonfinancial measures, and these can include employee engagement, customer service, and safety.[10] Investors and other stakeholders commented on this rule to assert that a complete picture of executive pay and performance would include disclosure of both financial and nonfinancial measures used by a registrant to pay executives.[11]

In response to comments and developments in market practice, the final Pay Versus Performance rule made a change from what was proposed to permit companies to include nonfinancial performance measures in a list of their three to seven "most important" measures[12] and also disclose such measures in a table as they see fit.[13] By contrast, financial measures are required to be disclosed if companies are linking pay and performance to them. It remains to be seen whether companies will make sufficient disclosures to investors through permissive inclusion of nonfinancial measures versus requiring disclosure on the same footing as financial measures. We will have to make that determination over time, as we see if there is adequate sunshine and visibility into executive compensation packages and the measures used in them. Today's rule is an important first step that I am pleased to see the Commission take.

I would like to thank the staff in the Office of the Chief Accountant, Office of the General Counsel, the Division of Corporation Finance, the Division of Economic and Risk Analysis, and the Chair's office for all of their work. I would also like to thank John Byrne and Jennifer Zepralka from the Division of Corporation Finance for their dedication, expertise, and engagement with my office on this rulemaking.

[1] Section 953(a) of Dodd-Frank added section 14(i) to the Exchange Act. See Pub. L. No. 111-203, 124 Stat. 1376 (2010).

[2] See, e.g. Protecting Shareholders and Enhancing Public Confidence by Improving Corporate Governance: Testimony before the Subcommittee on Securities, Insurance, and Investment of the U.S. Senate Committee on Banking, Housing, and Urban Affairs, 111th Congress, 1st session, (2009) (Testimony of Ms. Ann Yeger) ("Failures of board oversight, of enterprise risk, and executive pay were clear contributors to this crisis. In particular, far too many board structured and approved executive pay programs that motivated excessive risk-taking and paid huge rewards..."); Jenny Anderson, Chiefs' Pay Under Fire at Capitol, N.Y. Times (Mar. 8, 2008) ("The [House] hearing shed some light on how Wall Street's compensation philosophy may have contributed to the mortgage boom. Corporate board and compensation committees agreed to lucrative plans that gave executives strong incentives to take big risks.")

[3] See Report of the Senate Committee on Banking, Housing, and Urban Affairs, S. 3217, S. Rep. No. 111-176, at 135 (2010) ("As U.S. Supreme Court Justice Louis Brandeis noted, 'sunlight is the best disinfectant.' Transparency of executive pay enables shareowners to evaluate the performance of the compensation committee and board in setting executive pay, to assess pay-for-performance links and to optimize their role of overseeing executing compensation...").

[4] Changing and evolving markets require modern and updated disclosures. See, e.g., Jay Clayton, Chairman, Sec. & Exch. Comm'n, Remarks to the Economic Club of New York (Sept. 9, 2019) ("Last month's proposal to modernize core disclosure requirements also recognizes the significant changes that have taken place in our economy in the last thirty years, including that (i) firms vary widely-again, one size does not fit all-and (ii) intangible assets, and in particular human capital, often are a significant driver of long-term value in today's global economy. In 1988, the largest 500 U.S. companies had a ratio of intangible assets to market capitalization of 8.5 percent-that ratio was 29.7 percent in 2018.").

[5] See Louis D. Brandeis, Other People's Money - Chapter V (1914). At the time of the quote, Louis Brandeis had not yet been appointed to the Supreme Court.

[6] See, e.g., supra note 5; Modernization of Regulation S-K Items 101, 103, and 105, 85 FR 63726 (Oct. 8, 2020).

[7] The SEC first proposed this rule in 2015. See Pay Versus Performance, 80 FR 26329 (July 6, 2015). The comment period was then re-opened six months ago to provide all interested parties and stakeholders additional opportunity to comment. See Reopening of Comment Period for Pay Versus Performance, 87 FR 5939 (Mar. 4, 2022).

[8] See, e.g., Pay Versus Performance, Release No. 34-[] at Section V.B.3 (adopted Aug. 24, 2022) [hereinafter "the Release"]; Davis Polk & Wardwell, Comment Letter on Pay Versus Performance (Mar. 4, 2022) (The increased prevalence of nonfinancial metrics (including environmental, social and governance ("ESG")-related metrics and operational metrics, such as customer satisfaction) since the enactment of Dodd-Frank- in 2010 and the release of the 2015 Proposed Rules demonstrates that companies' pay programs evolve over time, often in response to shareholder feedback.").

[9] See, e.g., Council of Institutional Investors, Comment Letter on Pay Versus Performance (Feb. 24, 2022); Ceres Accelerator for Sustainable Capital Markets, Comment Letter on Pay Versus Performance (Mar. 4, 2022); Professor George Georgiev, Comment Letter on Pay Versus Performance (March 8, 2022).

[10] See Boris Groysberg, Sarah Abbott, Michael R. Marino, & Metin Aksoy, Compensation Packagees That Actually Drive Performance, Harv. Bus. R. (Jan. - Feb. 2021) ("Seventy percent of the [the 250 largest S&P 500 firms studied by FW Cook] also use nonfinancial (both strategic and individual) metrics. . ."). This article goes on to note that 33% of companies with formulaic annual incentives incorporate a performance modifier that can adjust payouts up or down by anywhere from 5% to much more meaningful 5%; and that these modifiers are often based on nonfinancial metrics such as safety, customer service, and employee engagement. See id.

[11] See supra note 9.

[12] See Release at Section II.D.3.

[13] See Release at Section II.F. ("registrants will be permitted to include additional compensation and performance measures, or additional years of data, in the newly required table").

Today, the Commission adopted a rulemaking implementing key Dodd-Frank Act transparency provisions that give shareholders the ability to assess whether executive compensation is tied to corporate performance. I commend SEC Chair Gary Gensler for advancing this important priority that makes executive pay more accountable to shareholders.

With these vital reforms, investors will gain critical tools to make informed decisions on their investments and on their advisory votes on executive compensation. Combined with other Dodd-Frank Act financial stability provisions, this rulemaking will reduce the likelihood of future taxpayer bailouts.

A key factor driving the 2008 global financial crisis was the stark misalignment of incentives that led executives to take excessive, catastrophic risks. Congress initially addressed this problem by directing the U.S. Treasury Secretary to subject all recipients of taxpayer-assistance to executive compensation restrictions as a condition of such assistance.

The Dodd-Frank Act then addressed the absence of a disclosure standard by requiring the Commission to undertake today's rulemaking, which will now bring much-needed transparency, comparability, and clarity into the relationship between executive compensation and a company's financial performance.

Today's action is the culmination of years of dedication and hard work by the Commission staff, particularly in the Division of Corporation Finance, the Office of the Chief Accountant, the Office of the General Counsel, and the Chair's Office. They have demonstrated an unwavering commitment to fair and transparent markets.

Section 953(a) of the Dodd-Frank Act[1] requires the Commission to adopt rules mandating public companies to describe clearly the relationship between compensation the company actually paid to its executives and the company's financial performance.[2] Today's rulemaking will elicit costly, complicated, disclosure of questionable utility. Accordingly, I am unable to support this rule.

Unprincipled prescription

The Commission should engage in principles-based rulemaking to efficiently implement Congress's directive without unnecessary additions. Rather than following the statute to craft a workable, practical rule, the Commission instead adopts an unnecessarily complicated rule.

Dodd-Frank § 953(a) anticipates a principles-based approach to eliciting disclosure about the relationship between actual executive compensation and company performance, as multiple commenters recognized.[3] The statute mandates a "clear description" of executive compensation's relationship to performance. A principles-based approach would have allowed companies to provide a "clear description" of the pay-performance relationship tailored to their circumstances. Even the Commission's 2015 Pay Versus Performance Proposal acknowledged that this requirement was not supposed to be "overly-prescriptive" and that the requirement could be met in "many ways."[4] The Commission has not chosen a sensible way.

Today, the Commission adopts a sweeping and complex prescriptive approach that is not required under the statute. The Commission's rule is a mish-mash of prescribed elements, including:

• five years of executive compensation and company performance data;[5]
• a complicated formula for determining compensation "actually paid" to the executive officers, including some metrics that most companies ordinarily would not calculate;
• average compensation paid to all other named executive officers, regardless of whether their pay is tied to performance;
• the company's total shareholder return ("TSR"), peer group TSR, the company's net income, and a company-selected financial performance measure; and
• a separate tabular list of at least three (unless the company uses fewer than three) and up to seven performance measures, which may include non-financial performance measures.
  
  

Before adding on to what Congress required, the Commission should have done the analysis to show that the benefits generated by the add-ons would outweigh the costs. We did not do that here.

Unclear benefits

The Commission acknowledges that today's rulemaking will not produce major benefits. The adopting release predicts that the new mandate will generate "incremental information" with "limited" added value compared to already available information.[6] Thus, the rulemaking's primary benefit is in changing how "the information is presented," not in requiring disclosure of "any significant new underlying informational content."[7] As commenters have noted,[8] most public companies (but not small issuers) already have a detailed Compensation Discussion and Analysis in their proxy statement, which covers "all material elements" of the company's executive compensation.[9]

The primary benefit of the rulemaking is in the new presentation of information that generally is already disclosed elsewhere and the comparability the Commission hopes the tabular presentation will produce. But, the fundamental variation across companies' compensation practices and the underlying assumptions some of the disclosures necessitate will render the new presentation anything but clear and comparable.

The Commission's tabular approach masks the variety of approaches companies take to linking pay and performance. As one commenter argued, over-standardization could "mislead shareholders by providing an artificial comparison of pay with performance that does not match a company's actual business model or the structure of its compensation program."[10] Moreover, the table includes measures that may not be relevant for a particular company, which will be useless at best and confusing at worst for investors.[11]

The Commission admits that, among companies and investors, there "continues to be no consensus around the best approach to analyzing the alignment of pay and performance. . . ."[12] The variety is evident in the comments, which advocate a wide range of approaches to capturing the relationship between compensation and performance. Comment letters questioned the relevance of TSR, peer group TSR, and net income as measures of performance, and suggested other measures. As mentioned in the reopening release, a staff review of 20 Fortune 500 companies identified "over 100 unique [company] performance measures, almost all of which were company-specific or adjusted measures."[13]

In addition to different approaches to measuring company performance, the rule will require companies to make a number of assumptions in calculating executive compensation. Specifically, calculations around fair value of equity awards and pension-based compensation involve assumptions that will reduce the clarity and comparability of the table.

Clear costs

While not providing meaningful benefits, the Commission's rulemaking will be costly for public companies and their shareholders. The repackaged compensation metrics, SEC-prescribed performance calculations, and the added Inline XBRL tagging requirements will cost companies time, attention, and money. These costs will inevitably get passed on to shareholders. Small companies, whose unique concerns the Commission could have better accommodated, likely will face disproportionate costs. Other drivers of cost include the need to:

• engage in complex calculations to determine executive compensation "actually paid," such as for equity and options awards;
• implement the rule quickly; the rulemaking is effective for any fiscal years ending December 16, 2022, or later;
• supplement the overly simplistic mandated disclosures with corrective disclosures; and
• identify the company's "most important" performance measure, a difficult task for many companies that take nuanced approaches to compensation.[14]
  
  

Of greater concern than the specific compliance costs, this rulemaking could distort how public companies compensate executives and how investors evaluate companies' compensation decisions. Shining a spotlight on specific performance measures could drive compensation decisions instead of simply informing investors about how companies make those decisions. Companies may feel compelled to tie their executive pay to the prescribed financial performance measures or to incorporate non-financial performance measures, such as environmental, social, and governance metrics. The highlighting of particular metrics also might influence how investors analyze the relationship between pay and performance. A principles-based approach would have enabled us to follow one commenter's wise counsel to "leave judgements as to how to incentivize executives to compensation committees and how to evaluate company performance to investors."[15]

Conclusion

When Congress instructs the Commission to act, we should do so. Congress told us over a decade ago to adopt a pay versus performance rule. I would have supported a principles-based rulemaking that efficiently implemented Congress's directive without unnecessary additions. A simple rule would have accomplished what Congress asked us to do, but with each iteration of this rule, it has gotten more complicated and less useful to the investors it is supposed to serve. In response to commenters' concerns about our originally proposed prescriptive, one-size-fits-all approach, the Commission added new mandated elements.

I thank the staff across the Commission that worked on this rulemaking. As my comments reflect, implementing the Commission's desire for a prescriptive mandate was no easy task. In completing that task, the staff was not afforded the benefit of the depth of analysis and discussion a reproposal would have generated.[16] I particularly thank Jennifer Zepralka and her staff in the Office of Small Business Policy in the Division of Corporation Finance for volunteering for this difficult job. I greatly appreciate the conversations my staff and I had with the rulemaking team, including Tara Bhandari, who has a gift for explaining economics to non-economists.

[1] Pub. L. No. 111-203, 124 Stat. 1376 (2010) (Section 953(a)).

[2] 15 U.S.C. §78n(i) ("The Commission shall, by rule, require each issuer to disclose in any proxy or consent solicitation material for an annual meeting of the shareholders of the issuer a clear description of any compensation required to be disclosed by the issuer . . . .") (emphasis added).

[3] See Comment Letter of American Securities Association at 3, March 14, 2022, https://www.sec.gov/comments/s7-07-15/s70715-20119256-272166.pdf ("Adopting a principles-based standard that allows issuers to explain - in their own words and based upon their unique profile - how they align executive pay with performance will benefit investors. . . . This type of approach aligns with the explicit language and the intent of Section 953(a), which does not mandate the type of prescriptive tabular disclosure included in the 2015 Proposal and re-introduced in the Release."); Comment Letter of the Center on Executive Compensation at 5, March 4, 2022, https://www.sec.gov/comments/s7-07-15/s70715-20118673-271538.pdf (hereinafter "CEC 2022") ("The Commission acknowledged in the 2015 Proposal that Congress did not intend for the pay for performance rules to be 'overly-prescriptive and . . . Congress recognized that there could be many ways to disclose the relationship between executive compensation and financial performance of the registrant.'") (quoting Pay Versus Performance, Exchange Act Release No. 34- 74835, 80 Fed. Reg. 26,329, 26,330, May 7, 2015); Comment Letter of Davis Polk & Wardwell at 2-3, March 4, 2022, https://www.sec.gov/comments/s7-07-15/s70715-20118565-271456.pdf (hereinafter "Davis Polk 2022"); Comment letter of PNC Financial Services Group, Inc. at 2, July 6, 2015, https://www.sec.gov/comments/s7-07-15/s70715-52.pdf ("The statutory language of Section 953(a) itself seems to favor a principles-based disclosure approach making it clear that the disclosure should compare pay to overall financial performance. The statute requires the SEC to establish disclosure rules for issuers that will provide a "clear description" of compensation required to be disclosed under Item 402 of Regulation S-K. . . .). See also Pay Versus Performance at 10, August 25, 2022 (hereinafter "Release") ("Section 14(i) did not expressly prescribe the manner in which issuers would disclose the required information. . . .").

[4] 80 Fed. Reg. at 26,330 (quoted by CEC 2022 at 5).

[5] Smaller reporting companies need only provide three years of data.

[6] Release at 162 ("Lastly, we note that the required pay-versus-performance disclosure will provide some incremental information relative to the underlying informational content already available to the public in other formats, but that the extent of this information is limited.").

[7] Release at 165. See also Release at 9 ("Existing disclosures generally provide the necessary components to make these comparisons, including data required for calculations that aid in these comparisons, but doing so may be time-consuming and costly.").

[8] See, e.g., Comment letter from National Investor Relations Institute at 3, March 4, 2022, https://www.sec.gov/comments/s7-07-15/s70715-20118687-271549.pdf (hereinafter "NIRI 2022"); Comment Letter from Society for Corporate Governance at 7, March 10, 2022, https://www.sec.gov/comments/s7-07-15/s70715-20119081-271920.pdf (hereinafter "SCG 2022").

[9] 17 CFR § 229.402.

[10] See Comment Letter of Exxon Mobil Corporation at 3, June 23, 2015, https://www.sec.gov/comments/s7-07-15/s70715-17.pdf. See also NIRI 2022 at 2 ("The SEC's attempt at promulgating a 'one-size-fits-all' approach is likely to be ineffective, given the vastly different market and industry circumstances that shape the design of executive pay plans at U.S. public companies. Imposing very detailed requirements and a standardized data table that will force all companies to report their pay versus performance relationship using the same methodology will only obscure, rather than illuminate, executive pay design and practice.").

[11] See, e.g., Comment Letter of FedEx at 1, March 4, 2022, https://www.sec.gov/comments/s7-07-15/s70715-20118694-271568.pdf ("[R]equiring the disclosure of performance metrics other than those companies actually use in crafting their compensation programs fails to provide investors with any useful information regarding compensation or performance").

[12] Release at 129 ("As was the case at the time of the Proposing Release, there continues to be no consensus around the best approach to analyzing the alignment of pay and performance, and we do not have complete information about the approaches used by all investors.").

[13] Reopening of Comment Period for Pay Versus Performance, Exchange Act Release No. 34-94074 (Jan. 27, 2022), [87 FR 5751(Feb. 2, 2022)] at n. 14.

[14] See, e.g., Comment Letter of National Assoc. of Manufacturers at 3, March 4, 2022 ("[I]t may not be straightforward for companies to isolate which performance measure is the 'most' important given the diversity of metrics utilized and the often-complex way in which they impact executive compensation"), https://www.sec.gov/comments/s7-07-15/s70715-20118569-271458.pdf; Davis Polk 2022 at 4 ("Requiring registrants to identify one 'most important' measure may put companies in a very difficult position as they attempt to oversimplify complex compensation strategy. Companies will also face heightened and unwarranted scrutiny from investors and other stakeholders on only one, somewhat arbitrary, piece of the company's overall strategy.").

[15] SCG 2022 at 4.

[16] See, e.g., Comment Letter of U.S. Senators Richard Shelby and Patrick Toomey, February 1, 2022, https://www.sec.gov/comments/s7-12-15/s71215-20127847-289069.pdf.

Section 953(a) of the Dodd-Frank Wall Street Reform and Consumer Protection Act ("Dodd-Frank Act") requires the Commission to issue a rule requiring disclosure of information reflecting the relationship between executive compensation actually paid by a company and the company's financial performance.[1] Although this provision lacks a statutory deadline, it is unacceptable for more than twelve years to elapse before fulfilling a Congressional mandate.

However, no provision of the Dodd-Frank Act exempts the Commission from having to comply with the Administrative Procedure Act.[2] Rather than taking the more appropriate route of re-proposing the pay versus performance rule with updated data and analysis, the Commission bypassed having an effective notice-and-comment process as required by the Administrative Procedure Act in favor of a procedural shortcut.[3]

The proposal to implement the Dodd-Frank Act's pay versus performance requirement was initially issued on April 29, 2015.[4] On January 27, 2022, the Commission reopened the comment period on the proposed rule ("Reopening Notice").[5]

The Reopening Notice did not update any economic analysis, benefits and costs discussion, or analysis required by the Paperwork Reduction Act[6] and the Regulatory Flexibility Act.[7] In contrast, the 2015 Proposal included nearly 34 pages of economic analysis assessing the impact of the proposed rule.[8] Thus, the public, in providing new comments on the rule, could only respond to a seven-year old economic analysis.

The use of stale information is particularly puzzling given the Commission's stated focus on obtaining robust economic data. As described in the Commission's 2022 Congressional Budget Justification, "[w]ith respect to rulemaking, the SEC continues to leverage its robust processes for obtaining public input and performing rigorous economic analyses of the agency's rules at both the proposal and adoption stages."[9]

Today's action also contradicts the Commission staff's guidance on economic analysis, which states that "[a]n economic analysis of a proposed regulatory action compares the current state of the world, including the problem that the rule is designed to address, to the expected state of the world with the proposed regulation (or regulatory alternatives) in effect."[10] The guidance further states that proposing releases should include "a discussion of any existing studies or data that bear on the proposal so that the public knows what studies or data we are relying on, can comment on it, and can provide additional data relevant to the topic."[11]

The failure to update the economic analysis in the 2015 Proposal is problematic because the data on the use of executive stock grants and stock options grants in that release was from 2010 and 2012, while other data on the vesting of options grants ranged from 1997-2008.[12] The Adopting Release, in contrast, includes economic analysis reflecting more recent trends in executive compensation from 2020.[13] Most notably, the 2020 data indicates a significant move away from the use of stock options and pension plans as a form of executive compensation. This recent data, had it been included in a re-proposal, could have served to better inform the views of the public.

In addition, the Reopening Notice proposed new regulatory alternatives. They included a tabular list of the five most important measures used by registrants to link compensation actually paid during the fiscal year to company performance, and a requirement to disclose company-specific measures rather than to permit optional disclosures. The Reopening Notice, however, did not provide any accompanying economic analysis or a review of the effect that such alternatives may have on smaller entities.[14]

One commenter stated that "the action taken by the SEC reads less like the 'reopening' of a comment period and more like a newly-issued rule proposal that should be subject to robust economic analysis by the SEC and a sufficient comment period for the public. If the SEC wishes to consider new regulatory mandates to implement Section 953(a) that were not included in the 2015 Proposal, it should issue a re-proposal with an updated economic analysis of the rule's potential consequences in accordance with the Administrative Procedure Act."[15]

The Adopting Release dismisses any concerns about the need to re-propose, asserting that the Reopening Notice discussed the potential benefits and costs of the additional disclosures even in the absence of a standalone economic analysis.[16] However, the Reopening Notice's approach of merely inquiring whether there are any developments since the 2015 Proposal that should affect the Commission's consideration of the rules is insufficient. Rather than relying on commenters to provide such information, the Commission should have gathered any known data and moved forward in the form of a re-proposal.[17] Moreover, given the short 30-day comment period, the public's ability to generate their own economic analysis was limited at best and illusory at worst.[18]

Given the known uncertainties with analyzing a complex economic issue such as executive compensation, the Commission should not compound such challenges by denying the public the ability to comment on more recent economic data, upon which the Commission relies in the Adopting Release. This process is especially important so as to mitigate the possibility of unintended consequences in already complex regulatory frameworks.

Finally, the analysis under the Paperwork Reduction Act likely dramatically understates the cost burden of complying with the final rule. The Commission estimates that outside professionals can be retained by issuers at an average cost of $400 per hour, based on "consultations with several issuers, law firms, and other persons."[19] The Commission first started using the $400 per hour in 2006 - over sixteen years ago - and it is not credible that the cost for professional legal advice has remained flat since that time.[20] This view is echoed by market participants. In 2014, in the context of the proposal implementing pay ratio disclosure under Section 953(b) of the Dodd-Frank Act, one commenter noted that "in its cost-benefit analysis the Commission explained that it used $400 per hour as an estimate for outside professionals, which is the rate it 'typically estimate[s] for outside legal services used in connection with public company reporting.' This assumption is severely underestimated according to the Center survey responses."[21]

In 2016, another commenter on a Commission release shed light on the actual compliance costs, noting that "[w]e reiterate a common complaint about the average professional fees the Proposing Release uses to estimate compliance costs in that those estimates are incredibly low. For example, the Proposing Release assumes that the cost of a professional services firm is $400 per hour. This figure may represent the going rate for junior employees at these firms, but it does not at all approach the $1,000 per hour or more that experienced partners and other senior employees of major law and accounting firms now regularly charge."[22]

Had the Commission re-proposed this rule for public comment after updating the stale data and economic analysis, I would have been open to supporting the adoption of a final rule. Unfortunately, the Commission selected a different path, one that I am unable to support today. I recognize that this decision was not made by the line staff in the Division of Corporation Finance, the Division of Economic and Risk Analysis, and the Office of the General Counsel. For their work and efforts over the past twelve years on pay for performance, I thank them.

[1] Pub. L. No. 111-203, Sec. 953(a), 124 Stat. 1841 (2010).

[2] 5 U.S.C. 551 et seq.

[3] Today's action creates an unfortunate precedent by suggesting that long-dormant proposals can simply be revived by re-opening the comment period. This approach raises questions as to whether the Commission might similarly attempt to finalize other proposals.

[4] Pay Versus Performance, Release No. 34-74835 (Apr. 29, 2015) [80 FR 26329 (May 7, 2015)] ("2015 Proposal"), available at https://www.sec.gov/rules/proposed/2015/34-74835.pdf.

[5] Reopening of Comment Period for Pay Versus Performance, Release No. 34- 94074 (Jan. 27, 2022) [87 FR 5751 (Feb. 2, 2022)] ("Reopening Notice"), available at https://www.sec.gov/rules/proposed/2022/34-94074.pdf.

[6] 44 U.S.C. 3501 et seq.

[7] 5 U.S.C. 603(a).

[8] 2015 Proposal at 65.

[9] Fiscal Year 2022 Congressional Budget Justification and Annual Performance Plan, at 99, available at https://www.sec.gov/files/fy-2022-congressional-budget-justification-annual-performance-plan_final.pdf.

[10] Memorandum from the Division of Risk, Strategy, and Financial Innovation and the Office of the General Counsel, Current Guidance on Economic Analysis in SEC Rulemakings (Mar. 16, 2012), at 21, available at https://www.sec.gov/divisions/riskfin/rsfi_guidance_econ_analy_secrulemaking.pdf.

[11] Id. at 16.

[12] 2015 Proposal at n. 132 (the 2015 Proposal acknowledges the latter data may not reflect practices at the time the 2015 Proposal was published).

[13] Pay Versus Performance, Release No. 34-95607 (Aug. 25, 2022), at [92 and 134] ("Adopting Release"), available at https://www.sec.gov/rules/final/2022/34-95607.pdf

[14] Reopening Notice, at 5753-54.

[15] Letter from Tom Quaadman, Executive Vice President, Center for Capital Markets Competitiveness, U.S. Chamber of Commerce (Mar. 4, 2022), available at https://www.sec.gov/comments/s7-07-15/s70715-20118615-271493.pdf.

[16] Adopting Release, at n. 7.

[17] Reopening Notice at 28.

[18] The 2015 Proposal, on the other hand, provided a significantly more reasonable comment period of 60 days after publication in the Federal Register.

[19] Adopting Release, at n. 684.

[20] See Executive Compensation and Related Person Disclosure, Release No. 33-8732A (Aug. 29, 2006) [71 FR 53158, 53214 n. 574)] ("We recently have increased this hourly rate estimate to $400.00 per hour after consulting with several private law firms"). This concern about the understating of costs applies to many of the Commission's other proposals, including on climate-related disclosures for investors. See The Enhancement and Standardization of Climate-Related Disclosures for Investors, Release No. 33-11042 (Mar. 21, 2022) [87 FR 21334, 21458 n. 1061 (Apr. 11, 2022)].

[21] Letter from Timothy J. Bartl, President, and Henry D. Eickelberg, Counsel, Center on Executive Compensation (Sept. 26, 2014), available at https://www.sec.gov/comments/s7-07-13/s70713-1043.pdf. See Pay Ratio Disclosure, Release No. 33-9452 (Sept. 18, 2013) [78 FR 60559 (Oct. 1, 2013)]. The commenter further stated that "[m]ore than half of survey respondents reported external counsel costs of $700 or more, with 30 percent selecting $800 or more. [Dr. Stuart Gurrea and Dr. Jonathan Neuberger of Economists Inc.] estimate that changing this assumption, without making any other changes to cost estimates, would increase the Commission's estimated compliance costs by 75 percent."

[22] Letter from Michael W. Johnson, President and CEO, National Stone, Sand and Gravel Association (Sept. 26, 2016), available at https://www.sec.gov/comments/s7-10-16/s71016-54.pdf. See Modernization of Property Disclosures for Mining Registrants, Release No. 33-10098 (June 16, 2016) [81 FR 41651 (June 27, 2016)].

[F]rom August 2019 to September 2020, Aether and Wilson raised approximately $1.9 million from investors using materially false and misleading statements in offering materials and other written communications, regarding, among other things, the existence and amounts of prior investments, the use of investor assets, the deployment of the hardware to be used in Aether's primary business, and the existence of a significant customer relationship. As alleged, Wilson also misappropriated investor assets for himself and his family.

In 2015, former registered representative MK joined KSI. His Uniform Termination Notice for Securities Industry Registration (Form US) filed by a firm with which he was associated before KSI stated that he had been terminated earlier in 2015 for "accepting blank, signed forms from customers in violation of firm policy, short term trading in mutual funds and other customer account trading activity under firm review."²

From March 2015 to May 2017, while registered with KSI, MK engaged in a pattern of short-term trading of A share mutual funds in eleven accounts of eight customers, including five seniors. ³ MK bought and sold A share mutual funds in those accounts, using the proceeds from the sales to purchase one or more equities, and then selling the equities after a few months to repurchase A share mutual funds. In total, MK recommended over $2.1 million in A share mutual fund purchases to the eight Kovack customers after previously recommending sales to the same customers in the prior year. This activity caused the customers to incur unnecessary sales charges. During the instant investigation, KSI voluntarily made restitution to the affected customers. 

KSI's supervisory system was not reasonably designed to address short-term trading of A share mutual funds in brokerage accounts. KSI relied primarily on one person to conduct daily, manual reviews of trading activity in the accounts for all its registered representatives, which at the time numbered over 300. Such daily reviews were not reasonably designed to identify short-term mutual fund switches, which had purchases and sales months apart. KSI did not provide the trade reviewer with support staff to assist with manual trade reviews, or automated exception reports that could assist with a review for mutual fund switches.⁴ 

KSI also did not respond reasonably to red flags of unsuitable mutual fund trading in MK's customers' accounts. First, MK's Form US from his prior firm-which indicated that he had been terminated while under review for short term mutual fund trading-was a red flag that MK represented heightened risk for unsuitable mutual fund switching. However, the firm did not impose any heightened supervision of MK or the trading activity in MK's customers' accounts. In addition, in November 2016, the trade reviewer identified a short-term trade of A share mutual funds in a senior customer's account serviced by MK. The firm cancelled the trade, but it did not review MK's trading activity or take additional action to address the issue. As a result, additional unsuitable switches by MK occurred after November 2016. 

Therefore, Respondent violated FINRA Rules 3110 and 2010.

= = = = =

Footnote 2: MK was barred by FINRA in 2017 for his failure to cooperate in its investigation. 

Footnote 3: KSI customers could purchase mutual funds through their brokerage accounts or directly from the fund companies. The trading at issue herein involved purchases through brokerage accounts. 

Footnote 4: Although the trade reviewer did on occasion conduct a manual retrospective review to identify potential switches, his lookback period was only 30 days until mid-2016, when it was changed to 90 days and later to a longer period of time. Even after mid-2016, the firm's retrospective review was not reasonably designed to identify the switches in MK's customers' accounts, because of the trade reviewer's lack of resources, as noted above.

• Securities Industry Commentator
• Bill Singer