IMPLANTACIÓ DEL COMPOSTATGE CASOLÀ O COMUNITARI

1. SEC Adopts Rules To Establish Whistleblower Program

On May 25, 2011, the SEC adopted rules to create a whistleblower program that rewards individuals who provide the agency with high-quality tips that lead to successful enforcement actions. To be considered for an award, the whistleblower must voluntarily provide the SEC with original information that leads to a successful enforcement by the SEC of a federal court or administration act in which the SEC obtains monetary sanctions totaling more than $1 million. The following types of people are ineligible to claim a whistleblower award: (i) people with pre- existing legal or contractual duties to report to the SEC: (ii) attorneys who use information obtained through client engagements; (iii) people who obtain information illegally; (iv) foreign government officials; (v) people who learn the information in connection with the entity’s processes of identifying possible violations of law (such as through company hotlines); (vi) compliance and internal audit personnel and (vii) public accountants working on SEC engagements. However, compliance and internal audit personnel and public accountants will become eligible if (i) the whistleblower believes disclosure may prevent substantial injury, (ii) the whistleblower believes the entity is engaging in conduct that will impede the

investigation or (iii) 120 days have elapsed since the whistleblower reported it to his/her supervisors or 120 days have elapsed since the whistleblower received the information under circumstances indicating his/her supervisors were already aware of the information.

Under the new rules, the SEC will pay an award based on amounts collected in related actions brought by certain agencies based upon the same original information that led to a successful SEC action. Also, the rules protect against employment retaliation and make it unlawful for anyone to interfere with a whistleblower’s efforts to communicate with the SEC.

2. SEC Approves FINRA’s All-Public Arbitration Panel Rule

On February 1, 2011, the SEC approved the Financial Industry Regulatory Authority’s (FINRA) proposed rule that allows investors bringing claims against companies in FINRA arbitration to opt for an all-public arbitration panel. The new rule will increase transparency and flexibility in FINRA’s proceedings. The prior arbitration model allowed investors to choose a

85

panel of two public arbitrators and one nonpublic/industry-affiliated arbitrator. The amended rule, which applies to all investor cases where the potential arbitrators list has not yet been sent to the parties, provides investors the option of selecting a panel of all public arbitrators with no direct affiliation with FINRA.

3. SEC Approves Compensation Rules

On March 30, 2011, the SEC approved a rule that directs national securities exchanges and national securities associations to adopt listing standards with respect to compensation committees and compensation advisors. This rule stands in line with Section 952 of Dodd Frank, which requires the SEC to adopt disclosure rules concerning compensation consultants and conflicts of interest. Exchanges would be prohibited from listing entities that did not meet compensation committee and advisor requirements.

4. SEC Approves Rule Change for FINRA Arbitration Docs On April 4, 2011, the SEC granted accelerated approval to FINRA’s proposed rule change that amends the list of documents that securities firms and investors must produce in arbitration before FINRA. The changes will apply to FINRA’s discovery guide. The rule change cuts down the number of lists in the discovery guide from 14 to two. The two general lists include a list of documents for firms and associates, and another for customers. The

introduction to the discovery guide states that arbitrators may order production of documents not on either list and can decide that certain documents listed are not required to be produced.

5. SEC, CFTC Define Responsibility for Swap Coverage

On April 27, 2011, the SEC, along with the US Commodity Futures Trading Commission (CFTC), approved a joint set of rules that would better define swaps and would help the two agencies draw better jurisdictional lines. The rules establish which financial products are regulated as swaps under the Dodd-Frank Wall Street Reform and Consumer Protection Act. The rules provide for three categories: swaps, security-based swaps and mixed swaps. Swaps fall under the authority of the CFTC. Security-based swaps also fall under the authority of the CFTC, though the SEC holds some anti-fraud authority over them as well. Mixed swaps are to be governed by both agencies. Insurance, forwards, security forwards and standard commercial financial contracts do not fall within the definitions established by the new rule.

6. SEC Approves Facilities To Shine Light on Swap Trading

On February 2, 2011, the SEC unanimously approved the establishment of security-based swap execution facilities (SEFs) to make swap trading more transparent and fair. Currently, security-based swaps occur in the over-the-counter market. The new rules require the swaps to be traded on SEFs or an existing exchange. Under the new rules, SEFs would have to create an electronic trading platform that allows swap participants to see bids and quotes, similar to stock market order books.

86

7. SEC Inks Sweeping Hedge Fund Adviser Rules

On June 22, 2011, the SEC approved stringent new rules for advisers to hedge funds and other large private funds. The new rules impose comprehensive reporting requirements for hedge funds, private equity funds and other fund advisers with more than $150 million under management. Advisers to large hedge funds and private funds will now have to register with the SEC and provide the agency with information about the business operations, auditors and

brokers for the funds, as well as disclose conflicts of interest and investment strategies. Venture capital funds are exempted from the sweeping reporting requirements.

8. SEC Advances New Conduct Rules for Swap Markets

On June 29, 2011, the SEC voted to move forward with proposed rules under Title VII of the Dodd-Frank Act to establish business conduct standards for security-based dealers and participants. The proposed rules would require security-based swap dealers and participants to disclose to counterparties material information about their derivatives deals, including: material risks, characteristics, incentives, and potential conflicts of interest involved in security-based swap transactions. Security-based swap dealers and participants would also be required to establish a supervision infrastructure and communicate with counterparties in a “fair and balanced” manner. Additionally, the proposed rule would require security-based swap dealers and participants to designate a chief compliance officer to provide an annual compliance report.

9. SEC Approves New Rules on Large-Trader Reporting

The SEC voted to approve Rule 13h-1 and Form 13H, which establish large-trader reporting requirements to identify market participants that conduct a substantial amount of trading activity and collect information on their trading. The large-trader rule will enhance the Commission’s ability to obtain information about the most active market participants by allowing it to identify the largest participants, collect data on their trading activity, reconstruct market events and bring enforcement actions.

The rule will require large traders to register with the SEC by filing Form 13(h), require large traders to provide broker-dealers the unique identification number assigned to them by the SEC and require large traders to provide additional identifying information to the commission upon request. The rule also addresses broker-dealers, requiring them to maintain and report information on transactions in large-trader accounts. It requires certain broker-dealers to monitor customers’ accounts for trading activity that exceeds the large-trader threshold.

10. SEC Advances Proposed Volcker Rule

The SEC approved a proposed rule that would restrict major banks’ proprietary trading activities. Under the proposed rule, bank holding companies and their subsidiaries would be barred from short-term proprietary trading of any security, derivative or other financial products intended only to benefit the company. The rule also bars banks from owning or sponsoring hedge or private equity funds.

The SEC also approved a rule requiring security-based swaps dealers and major market participants to register with regulators. Under the new rule, dealers in previously unregulated

87

security-based swaps would have to file registration forms with the SEC similar to those required by stock brokers. Security-based swap dealers would also have to guarantee that a senior officer was on hand and familiar with a firm’s financial, operational and compliance capabilities. Both rules are subject to a 90-day comment period.

11. SEC Locks In New Private Fund Reporting Rules

The SEC approved rules requiring hedge funds and private equity funds to turn over sensitive financial information to regulators. The final rule will require hedge funds and other private funds deemed to be systemically significant to file quarterly reports, known as Form PF. Those reports will be shared with the Financial Stability Oversight Council. Hedge fund

advisers managing at least $1.5 billion will have to turn over their aggregated exposures by asset class, geographical concentration and turnover by asset class within 60 days of the end of each quarter. Advisers will also have to turn over information showing the exposures, leverage, risk profile and liquidity for each individual hedge fund with a net asset value of at least $500 million. Managers of liquidity funds, including registered money market funds, with at least $1 billion in assets will be required to provide the types of assets in each of their funds’ portfolios, some information regarding the fund’s risk profile and compliance policies to regulators within 15 days of the end of each quarter under the rule. Large private equity fund advisers, having at least $2 billion in assets under management, will have 120 days from the end of each quarter to report on the leverage its portfolio companies have accrued, the use of bridge financing and the amount their funds have invested in financial institutions under the rule. Smaller private funds are required to report limited information about their funds’ size and leverage, investor types and concentration, liquidity and fund performance within 120 days of the end of each fiscal year. Smaller fund managers will also be required to report on their fund strategy, counterparty credit risk and use of trading and clearing mechanisms.

12. SEC Tightens Standards for Reverse Merger Listings

On November 9, 2011, the SEC approved rules aimed at tightening listing standards for companies that have listed on the US stock exchanges through reverse mergers. The rules will make it more difficult for companies, particularly those based in foreign jurisdictions, to list on US exchanges using the reverse merger process. The rules are intended to give investors easier access to financial reports issued by reverse-merger listed companies. The rules require

companies that file an initial public offering through a reverse merger process to complete a one- year seasoning period. The stocks will have to trade on the US over-the-counter market or on another regulated exchange either in the US or abroad following the reverse merger, and file all required reports with the SEC before they can trade on the New York Stock Exchange, Nasdaq or NYSE Amex. Reverse merger companies will also be required to maintain a minimum share price for 30 of the 60 trading days immediately prior to their listing application with one of the three exchanges, and for the same period prior to an exchange’s acceptance. The rule provides an exemption for companies that have filed at least four annual reports with the SEC since completing the process.

88

XVI. DEVELOPMENTS WITH THE PUBLIC COMPANY ACCOUNTING OVERSIGHT BOARD DURING 2011

A. SUMMARY OF DEVELOPMENTS DURING 2011

The Public Company Accounting Oversight Board (PCAOB) issued several releases and concluded some notable disciplinary proceedings in 2011. The PCAOB announced, for

example, that it has entered into cooperative agreements with audit regulators in the United Kingdom, Switzerland, Norway, the Netherlands, Israel, Taiwan and Dubai. The Sarbanes- Oxley Act had restricted such agreements, but the subsequent passage of the Dodd-Frank Wall Street Reform and Consumer Protection Act made such agreements possible again. The PCAOB also issued a research note concerning Chinese reverse mergers, a noteworthy development given that during the course of the study, PCAOB-registered accounting firms based in the United States audited 74 percent of reported reverse merger companies from the China region.1 In addition, the PCAOB published an alert to increase auditors’ awareness of risks when

performing audits of companies with operations in emerging markets, as well as an alert to assist auditors in identifying matters that may affect the risk of material misstatement in financial statements.

During 2011, the PCAOB also brought disciplinary proceedings against several persons and accounting firms. These included an order concerning several firms in India, imposing both equitable and monetary penalties based upon violations involving a billion-dollar overstatement of an issuer’s assets. The PCAOB also settled disciplinary orders against a former Ernst & Young partner and senior manager for their roles in providing misleading documents and information to inspectors and altering working papers. In addition, the PCAOB revoked the registration of, and imposed a civil monetary penalty upon, an Australian public accounting firm.