October 23, 2018

Frankendodd

Deloitte Hedge Fund Adviser Threatens Soros Won’t Be the Last

When George Soros announced he was essentially shuttering Soros Fund Management and his infamous Quantum fund after almost a decade of declining new client money, you could almost hear the jaws drop around the world. But one person was not surprised: Ellen Schubert, chief adviser to Deloitte’s hedge fund practice.

“Soros won’t be the last,” Schubert told investment website AdvisorOne this week. “Hedge fund managers generally are very smart people who have usually enjoyed what they were doing.”

Earlier in the year, Schubert actually described Soros’ new strategy pretty well when she shared a new trend among startup hedge funds; bypassing clients that aren’t friends or family to avoid hitting the mandatory SEC registration requirement for funds managing a minimum of $150 million.

When Bloomberg told us Soros was out, they made Dodd-Frank sound like a dirty word writing “There’s a two-word explanation for closing what was once one of the world’s biggest hedge funds and consistently one of the best-performing — with returns of about 30 percent annually in its first 30 years: Dodd-Frank.”

How many more hedge fund managers will follow Soros’ lead? And how many of them could blame Dodd-Frank for their departures from other people’s money?

Soros’ fund was exempt from rules that require private investment advisers to register with the SEC but those exemptions will not be an option come March 2012. Which could or could not have something to do with Soros’ decision, though that’s doubtful given the fact this decision has been in the making since 2000.

The UK Invites the PCAOB Over for Tea (and Some Audit Probing)

Convergence may not be that far off after all, here it is 2011 and now we finally have U.S. and U.K. audit harassment agencies working together to share information and polish up that whole bit about protecting investor confidence in capital markets. It may or may not have something to do with the collapse of Lehman Brothers (personally I think the paranoid mistrust in foreign accounting systems – or perhaps just ours – goes back a tad more than that) but soon enough the PCAOB will have an in (after at least one failed attempt) and get a chance to harass inspect foreign firms. We anticipate that this announcement will bring it with it a fantastic new acronym so we can all keep track of who is who.

The Public Company Accounting Oversight Board today entered into a cooperative agreement with the Professional Oversight Board in the United Kingdom to facilitate cooperation in the oversight of auditors and public accounting firms that practice in the two regulators’ respective jurisdictions.

This agreement provides a basis for the resumption of PCAOB inspections of registered accounting firms that are located in the United Kingdom and that audit, or participate in audits, of companies whose securities trade in U.S. markets. The PCAOB previously conducted inspections in the United Kingdom with the POB from 2005 to 2008, but has been blocked from doing so since that time.

Acting PCAOB Chairman Daniel L. Goelzer welcomed the arrangement, which will lay the foundation for the PCAOB and POB to work together to promote public trust in the audit process and investor confidence in capital markets.

The PCAOB can thank the Dodd-Frank WSCRA which amended SOX to permit the PCAOB to share information with foreign audit agencies under certain conditions.

In light of this event, we’re wondering what happens when the two work together sharing “information.” Does it get a brand new acronym that celebrates this new dawn in inter-obnoxious-regulatory-gossiping (IORG) or does it become a hybrid acronym like the Public Professional Company Oversight^2 Board Board or PPCO^2BB? Surely we can do better.

Party at the PCAOB DC office this evening to celebrate, bring your own acronym suggestions and IFRS pocket guide.

See also:
The PCAOB Is Finally Invited to Europe’s Financial Statement Party [JDA]

PCAOB Wants Broker-Dealers to Pony Up for the Privilege of Increased Enforcement

Yesterday, Caleb shared the details on a tentative new plan hatched by Dodd-Frank that would require nonpublic brokers and dealers to open their doors to that special brand of attention known as PCAOB inspections. We also learned that if the PCAOB gets their way, those special little broker-dealers will be asked to pony up the cash for the privilege of getting PCAOB patdowns.


Via Business Week:

The Public Company Accounting Oversight Board may require the biggest U.S. broker-dealers to pay more than $1 million a year to fund auditor inspections required under the Dodd-Frank Act.

PCAOB board members voted unanimously Tuesday to seek comment on the proposal, which would create a mechanism for raising the $15 million needed to perform reviews dictated by the financial- regulation overhaul enacted in July.

Unlike audit firms, of which 97% of the littler ones get constantly pestered by the PCAOB while the big boys get their boxes checked and can hit the ranges by noon for cocktail hour on the putting green, the new funding requirement would only affect 14 percent of broker-dealers large enough to meet the PCAOB’s tentative net-capital requirements.

These fees would account for seven percent of the PCAOB’s total funding, guesstimated terminally-acting PCAOB chair Dan Goelzer.

PCAOB board member Bill Gradison is sure that the PCAOB is serious about identifying issues and doing its job protecting the public or whatever the hell it is they are there to do. That means no working things out as they go, I suppose. He swears the interim inspection program is not “just a learning experience for the PCAOB” and “could have consequences for the firms involved.” That’s if anyone finds anything fishy, I am guessing.