(The news featured below is a selection from the news covered in the Federal Securities Law Reporter, which is distributed to subscribers of SEC Today.)

Commissioners Speak at Practising Law Institute Conference

SEC Chairman Christopher Cox and all four commissioners spoke at the Practising Law Institute's "SEC Speaks" conference in Washington, D.C. Cox promoted the use of eXtensible Business Reporting Language in financial statements. Cynthia Glassman highlighted SEC requirements that should be reassessed and Paul Atkins called for a survey of how the SEC implements its enforcement power. Roel Campos discussed shareholder nominations for directors and Annette Nazareth talked about the SEC's policy on penalties. The conference featured panel discussions on issues in investment management, accounting, enforcement, corporation finance, market regulation and judicial and legislative developments.

Cox also announced at the conference that he has asked the staff to move ahead with a study of the levels of protection provided to retail customers of financial service providers. The study will address the issues raised in the SEC's rulemaking initiative known as "certain broker-dealers deemed not to be investment advisers."  The SEC will soon announce how the study will be conducted.

Glassman said the mutual fund disclosure regime needs a top-to-bottom, full scale review to identify the most useful disclosure for investors and the best way of presenting it. She said that such an initiative is underway and expressed her hope that investors will provide input through focus groups and other means. Glassman highlighted three older requirements that she believes could use a fresh look, including the rules relating to private offerings, the use of the number of recordholders in determining whether a company is public and the regulatory regimes of investment advisers and broker-dealers. She called for the reassessment of Sarbanes-Oxley Act section 404, the mutual fund proxy voting rules and hedge fund adviser registration.

Atkins said that the SEC should listen to others' views about its relatively new enforcement powers and questioned whether the agency's enforcement attorneys use the amount of penalties as a measure of their own performance. He wondered whether junior staffers view pump-and-dump schemes as a poor career investment, opting instead for cases involving big dollar penalties. Atkins suggested that it may be worthwhile to consider rewarding staff members who are willing to pursue microcap cases.

Campos noted that nothing has happened in the last two years to rectify shareholders' difficulties in nominating directors. He saw the SEC's 2003 shareholder access proposal as a very middle-of-the-road approach and hopes the Commission will find an opportunity to revisit it. Nazareth reviewed the SEC's guidance on corporate penalties and commended Cox for taking on the initiative.

Investment Management

During the panel discussion on current issues in investment management, assistant director Hunter Jones reviewed the SEC's proposed amendments to the recently adopted redemption fee rule. The proposal, dated February 28, is intended to clarify the operation of the rule and to reduce the number of intermediaries with which funds must negotiate information-sharing agreements. The proposal addresses a number of issues that came to the SEC's attention after the rule was adopted. The comment period is open until April 10.

Former commissioner Harvey Goldschmid, a law professor at Columbia, asked about the status of the staff's point-of-sale initiative. Susan Wyderko, the acting director of the Division of Investment Management, said it is a very important initiative and the staff continues to work on it. Associate director Barry Miller said that after the first three-year period of disclosure reviews under the Sarbanes-Oxley Act, the major issues have crystallized. The staff focuses on financial statements, management's discussion of fund performance, risks, filing history and the application of new rules. The reviews present a huge increase in the staff's work, according to Wyderko.