§7261 — Title 15 Commerce and Trade | U.S. Code

Summary

The Commission must issue final rules no later than 180 days after July 30, 2002. The rules will make sure any pro forma financial information in reports or public releases is not misleading and is reconciled with the issuer’s financial statements under generally accepted accounting principles (GAAP). Within 1 year after the off-balance-sheet disclosure rules required by section 78m(j) take effect, the Commission must finish a study of filings to find how much off-balance-sheet activity exists (assets, liabilities, leases, losses, and use of special purpose entities) and whether GAAP shows the economics of those transactions clearly to investors. Within 6 months after the study is done, the Commission must send a report to the President and specified Congressional committees giving estimates of those amounts, the role of special purpose entities, whether accounting rules are transparent, whether GAAP requires consolidation when the issuer bears most risks and rewards, and any recommendations to improve reporting.

Title 15, §7261

Commerce and Trade — Source: USLM XML via OLRC

(a)

(b)Not later than 180 days after July 30, 2002, the Commission shall issue final rules providing that pro forma financial information included in any periodic or other report filed with the Commission pursuant to the securities laws, or in any public disclosure or press or other release, shall be presented in a manner that—

(1)does not contain an untrue statement of a material fact or omit to state a material fact necessary in order to make the pro forma financial information, in light of the circumstances under which it is presented, not misleading; and

(2)reconciles it with the financial condition and results of operations of the issuer under generally accepted accounting principles.

(c)(1)The Commission shall, not later than 1 year after the effective date of adoption of off-balance sheet disclosure rules required by section 78m(j) of this title, complete a study of filings by issuers and their disclosures to determine—

(A)the extent of off-balance sheet transactions, including assets, liabilities, leases, losses, and the use of special purpose entities; and

(B)whether generally accepted accounting rules result in financial statements of issuers reflecting the economics of such off-balance sheet transactions to investors in a transparent fashion.

(2)Not later than 6 months after the date of completion of the study required by paragraph (1), the Commission shall submit a report to the President, the Committee on Banking, Housing, and Urban Affairs of the Senate, and the Committee on Financial Services of the House of Representatives, setting forth—

(A)the amount or an estimate of the amount of off-balance sheet transactions, including assets, liabilities, leases, and losses of, and the use of special purpose entities by, issuers filing periodic reports pursuant to section 78m or 78o of this title;

(B)the extent to which special purpose entities are used to facilitate off-balance sheet transactions;

(C)whether generally accepted accounting principles or the rules of the Commission result in financial statements of issuers reflecting the economics of such transactions to investors in a transparent fashion;

(D)whether generally accepted accounting principles specifically result in the consolidation of special purpose entities sponsored by an issuer in cases in which the issuer has the majority of the risks and rewards of the special purpose entity; and

(E)any recommendations of the Commission for improving the transparency and quality of reporting off-balance sheet transactions in the financial statements and disclosures required to be filed by an issuer with the Commission.

Editorial Notes

Codification Section is comprised of section 401 of Pub. L. 107–204. Subsec. (a) of section 401 of Pub. L. 107–204 amended section 78m of this title.

§7261 Disclosures in periodic reports

Summary

Title 15, §7261

Notes & Related Subsidiaries

Editorial Notes

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