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By Some Measures, US Corporate Transparency Lags Behind China, Russia

May 2014 In order to have efficient markets, stakeholders must have access to clear and accurate data and related disclosures that allow for insight and interpretation of that data.  The Western world has long touted the importance and benefits of such corporate transparency and has numerous organizations and government agencies tasked with defining appropriate practices [...]

Investor-Related Regulation, Other|

Artificial Intelligence Can Be Used To Identify Authorship And Authenticity Of Evidence

December 2013 A recent academic article by the Stanford Technology Law Review demonstrates how machine learning and natural language processing techniques can be used to identify authorship.  Machine learning, a technique developed in the field of artificial intelligence, typically uses computer algorithms to “learn” patterns in large datasets, and then can use such patterns to identify [...]

Current Events, Other|

Instead Of More Taxes, How About Enforcing The Taxes All Ready Passed?

November 2013 The Obama Administration continues to not enforce a tax penalty contained in a May 2007 law.  Based on current estimates contained in a recent report (Reference Number: 2013-40-123 – hereinafter the “Report”) by the Treasury Inspector General for Tax Administration (TIGTA), the unenforced law involves around $1.5 billion annually.  The TIGTA Report and [...]

Government Deficits, Other|

PCAOB Chinese Agreement Will Not Provide Needed Transparency Into Chinese Stocks

June 2013 In order to address ongoing concerns with transparency into the underlying financials of Chinese companies, the Public Company Accounting Oversight Board (PCAOB) recently announced that it entered into a Memorandum of Understanding (MOU) with the China Securities Regulatory Commission (CSRC) and the Ministry of Finance (MOF). While this is an important step forward, [...]

Investor-Related Regulation, Other|

SEC Inspection of Credit Rating Agencies Shows Drastic Change Needed

January 2013 Credit rating agencies (more formally known as Nationally Recognized Statistical Rating Organizations or “NRSROs”) provide ratings which are used for a variety of regulatory purposes and purport to provide information regarding the relative safety of various investment instruments.  The agencies have been under attack for what seems like forever, notably for collecting huge [...]

Investor-Related Regulation, Other|

Electoral College Statistics Demonstrate That Change Is Both Necessary And Feasible

November 2012 It is time to eliminate the Electoral College.  Voters prefer the popular vote, and the reason for adopting the Electoral College initially is no longer consistent with modern views.  The information in this article identifies that this is politically practical.  Each presidential election draws great attention to the Electoral College. The perennial question [...]

Current Events, Other|

Recent IMF Economic Report Provides New & Alternative Solutions To The “Fiscal Cliff”

November 2012 The so-called “fiscal cliff” dominates current American news.  Almost everyone agrees that the federal government deficit needs to be reduced, and the vast majority agrees that some tax increase is needed for at least part of the solution.  However, the current debate is focused entirely on the income tax, and how the “rich” [...]

Government Deficits, Other|

Major Spending Changes For Middle Age and Soon-To-Retire Americans In The Last Twenty Years

October 2012 Last week, the National Center for Policy Analysis issued a study that compared spending by Americans in the two decades before their classic retirement age of 65 years, and compared this information to what existed twenty years ago.  The study used the Bureau of Labor Statistics’ Consumer Expenditure Survey. Here is a summary [...]

Other, Personal Financial Advice|

The US Fiscal Cliff Is Not The Biggest Challenge

October 2012 Current news reports and commentary provide daily insight into the challenges that will occur if Congress and the President are unable to reach agreement regarding a combination of tax increases, spending cuts, and increased debt ceilings before the end of 2012.  But an even bigger story is not being reported. Last week, in [...]

Government Deficits, Other|

Because Of Its Government, U.S. Continues Its Recent Drop In Global Competitiveness Ranking

October 2012 The World Economic Forum is a Swiss non-profit foundation founded in 1971 that is best known for its annual worldwide and regional meetings of business leaders, political leaders, and scholars to discuss pressing international issues.   The organization is primarily funded by around 1000 member companies, who are primarily large multinational firms from around [...]

Government Deficits, Other|

New FINRA Rules Expand Liability To Customers

August 2012 The Financial Industry Regulatory Authority (FINRA) proposed and the SEC approved FINRA Rule 2090 (Know Your Customer) and FINRA Rule 2111 (Suitability) as part of the process of developing the consolidated FINRA rulebook. These new rules became effective this month. As with their predecessor rules, failure to comply with these expanded requirements will [...]

Current Events, Other|

IMF Report Tells The U.S. What It Apparently Cannot Figure Out For Itself

January 2012 The International Monetary Fund (IMF) recently released a report entitled “United States Sustainability Report”.  The report is part of a series addressing certain countries that the IMF identifies as having significant economic challenges that are not sustainable. There is nothing in the report that is jaw dropping.  Nevertheless, with all the political wrangling [...]

Current Events|

Avoid Investments Using Significant Non-GAAP Financial Measures

May 2012 In 2003, in response to Sarbanes-Oxley requirements, the Securities Exchange Commission (SEC) adopted Regulation G and Item 10(e) of Regulation S-K.  These regulations concern financial reporting that is not in accordance with Generally Accepted Accounting Principles (GAAP).  Generally, Regulation G requires a reconciliation of the GAAP and Non-GAAP measures.  In January 2010, the [...]

Other, Personal Financial Advice|

Are The Baby Boomers Willing To Take A Hit To Protect Their Children & Grandchildren?

May 2012 Young people are the casualties of Congress’s unwillingness to address Social Security. Assuming politicians can get agreement that something needs to done about Social Security funding at all, the responses generally indicate that significant benefit cuts cannot occur for those that are in, or nearing, retirement.  It takes a lifetime to prepare for [...]

Current Events|

SEC Regulations Will Get New Economic Scrutiny

April 2012 The Securities Exchange Commission (SEC) is paying much greater attention to economic cost-benefit analysis in its rule making activities.  Private concerns wishing to alter the SEC’s rulemaking should consider using economic analysis and rationale in their comments to a greater extent than previously. What the Republicans could not accomplish legislatively when Dodd-Frank was [...]

Current Events|

Ignore Investments that Rely On The JOBS Act’s Loosened Requirements

April 2012 With President Obama’s signature, the Jumpstart Our Business Startups Act, also known as the JOBS Act, is now law.  The law raced through Congress with bipartisan support.  Practically every investor advocate and investment regulator is aghast. The law promises to assist start-up firms by significantly reducing or eliminating financial regulatory requirements.  The law [...]

Current Events|

TARP Receives Another Unflattering Report

March 2012 In March 2012, the Government Accountability Office (GAO) issued a report on TARP’s Capital Purchase Program (CPP).  The report described this Troubled Asset Relief Program (TARP) component as follows: “The U.S. Department of the Treasury invested almost $305 billion in 707 financial institutions as part of the government’s efforts to help stabilize U.S. [...]

Current Events|

CBO Issues Interesting Budget & Spending Projections

February 2012 On the last day of January 2012, the Congressional Budget Office (CBO) issued its budget and spending projections for the federal government covering the next ten years.  The 167-page report is full of economic and spending charts and statistics that a firm like Fulcrum finds entirely fascinating.  Recognizing that the level of detail [...]

Current Events|

TARP’s Inspector General Reports A Reality Different Than The Public’s Perception

February 2012 The Special Inspector General of the Troubled Asset Relief Program (SIGTARP) has the statutory duty to conduct, supervise and coordinate audits and investigations of any actions taken under the Troubled Asset Relief Program.  SIGTARP just issued a report to Congress, dated January 26, 2012. SIGTARP summarizes its responsibilities and related accomplishments as follows: [...]

Current Events|

Torturing Ourselves With Repetition And Complexity In Accounting Disclosure

November 2011 Accounting firm KPMG and the Financial Executives Institute sponsored a study of the complexity in U.S. financial reporting. Aptly entitled “Disclosure Overload and Complexity: Hidden in Plain Sight”, the report found that there was ample reason for changes in accounting disclosures. This is hardly a revelation to anyone involved with either preparing this [...]

Current Events, Other|

IRS Continues To Mismanage Refundable Tax Credits

November 2011 The American Recovery and Reinvestment Act of 2009 (Section 1004 of the economic stimulus law) provides for a refundable tax credit known as the American Opportunity Tax Credit (AOTC).  The AOTC allows taxpayers to receive a credit for higher education expenses up to $4,000.  The first 40% of the qualified expenses is refundable, [...]

Current Events, Other|

Audit Report Discloses $4.2 Billion Annually Is Paid To Illegal Aliens Through A Refundable Tax Credit, With Practically No Offsetting Tax Revenues

September 2011   Undocumented workers in the United States received refundable tax credits totaling $4.2 billion in 2010, an amount which is dramatically higher than occurred previously.  An audit by the Treasury Inspector General for Tax Administration recommended changes in how these payments are made.   The IRS dismissed the recommendations, saying (without support) that they [...]

Current Events, Other|

Straight From The IMF The U.S. Is Broke

August 2010 Economists are known for their dry writing style. Consequently, International Monetary Fund (IMF) reports are difficult to read, and are largely ignored by most news agencies. For example, the evening news certainly did not report the understated IMF comment that “a larger than budgeted adjustment would be required to stabilize debt-to-GDP”. Nevertheless, if [...]

Government Deficits, Other|

Applying Investment Rules Increase Returns and Satisfaction

July 2011 Behavioral economics and finance use social and emotional factors to understand the limits of rationality in making economic decisions.  A recent survey by Barclays addressed techniques used by wealthy investors to increase both investment returns and their personal satisfaction.  The survey covered over 2000 net worth individuals across the world, all of whom [...]

Other, Personal Financial Advice|

401(k) Savings Calculator

401(k) Savings Calculator A 401(k) can be one of your best tools for creating a secure retirement. It provides you with two important advantages. First, all contributions and earnings to your 401(k) are tax deferred. You only pay taxes on contributions and earnings when the money is withdrawn. Second, many employers provide matching contributions to [...]

Other, Personal Financial Advice|

Simple Loan

Loan Amortization Enter your desired payment - and let us calculate your loan amount. Or, enter in the loan amount and we will calculate your monthly payment. You can then examine your principal balances by payment, total of all payments made, and total interest paid. Press the report button to see a monthly payment schedule. [...]

Other, Personal Financial Advice|

Plan Savings

Is your brokerage or insurance company offering you a free or low cost 401(k) using using 'Safe Harbor' or SIMPLE provisions?  If so your 'free' plan could be costing hundreds of thousands of dollars over a plan with vesting provisions.  This will help you calculate the savings, which can be used to improve your bottom [...]

Other, Personal Financial Advice|

Somber Yet Clear U.S. Financial Report Should Be Required Reading For All Citizens

March 2008 The U.S. federal government recently released “The Citizen’s Guide to the 2007 Financial Report of the United States Government”. This is the first time that the federal government has released this type of summary. It is remarkably candid and clear. It paints a picture that should have received greater attention already, and deserves [...]

Government Deficits, Other|

Keeping Track Of Federal Government Spending Is Supposedly Just Too Hard

March 2011 The Government Accountability Office (GAO) again reported that it “cannot render an opinion on the 2010 consolidated financial statements of the federal government, because of widespread material internal control weakness, significant uncertainties, and other limitations.” This has occurred for years. Although each year the federal government states improvements are being made, the bottom [...]

Government Deficits, Other|

The Ten Best Ways To Save Big

September 2012 There are plenty of ways to be thrifty. We do not mean to minimize Benjamin Franklin’s advice that “a penny saved is a penny earned”, but there are some ideas that have a much bigger impact. Here are the most important areas which are often neglected: Your career is your most important asset [...]

Other, Personal Financial Advice|

Moody’s And Bernanke Warn Of U.S. Budget Deficits And Related Credit Rating Problems

March 2010 In the beginning of February, Moody’s Investors Service warned that the triple-A sovereign credit rating of the United States would come under pressure unless either economic growth was greater than expected, or the nation’s budget deficit was reduced. Moody’s stated: “Unless further measures are taken to reduce the budget deficit further or the [...]

Government Deficits, Other|

How To Properly Prepare A Computer For Sale Or Donation

March 2011 New Jersey just released an audit report that showed that almost 80 percent of the used computers it was ready to auction off contained highly confidential information. The audit report summarized these findings as follows: “State agencies disposed of computer equipment without ensuring that data on the devices had been properly removed. Data [...]

Other|

What Is The Fuss About “Net Neutrality?”

January 2011 The Federal Communications Commission (FCC) has long sought to impose rules requiring Internet Service Providers (ISPs) to continue to offer equal treatment to all traffic. You will be hearing more about this important issue. At the core of this dispute is lots of money. Not atypically, the numerous sound bites being reported by [...]

Current Events, Other|

Seven Biggest Retirement Mistakes

December 2012 As with most things in life, a few mistakes can dominate the final results achieved. Here are the most expensive common retirement financial mistakes to be avoided: Failing to build an adequate starting point – Sure, this one seems obvious, but no list would be complete without it. Albert Einstein said, "Compound interest [...]

Other, Personal Financial Advice|

Obama Commission Presents First Ideas On How To End The U.S. Government Financial Disaster

November 2010 In August 2010, we summarized an International Monetary Fund (IMF) report that concluded the U.S. is broke. Last week the Government Accountability Office (GAO) issued similar conclusions in its report on the Federal Government's Long-Term Fiscal Outlook. The report concludes: “GAO’s annual fall update of its long-term simulations underscores the need to address [...]

Government Deficits, Other|

Investing Made Easy

November 2012 The best-performing investment type varies from year to year, and is not easily predicted. For this reason, financial advisors uniformly suggest diversifying (or spreading) investments among different asset classes. Asset allocation refers to how an investor distributes investments between stocks, bonds, and other alternatives. Each of the major asset classes can be achieved [...]

Other, Personal Financial Advice|

PCAOB To Prevent Licensing Of Audit Firms From Certain Countries

October 2010 On October 7, 2010, the Public Company Accounting Oversight Board (PCAOB) announced it will start to refuse registration for auditors based in jurisdictions where American inspectors are not allowed to carry out inspections. This regulatory change will make it difficult on companies in these countries to use U.S. capital markets. The PCAOB’s change [...]

Investor-Related Regulation, Other|

SEC May End Brokerage Mandatory Arbitrations

October 2010 A little-known provision within the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 contains a provision that could dramatically impact how security investment disputes are resolved between brokers and their customers. The Securities and Exchange Commission (SEC) now has the power to remove mandatory arbitration language that is currently part of [...]

Investor-Related Regulation, Other|

Disastrous Predictions For State And Local Government Pensions

October 2010 This summer, a pair of university professors released a study regarding the size of state government pension obligations, and possible solutions to the enormous problems. In mid-October 2010, the professors released a similar study regarding local municipality obligations. Josjua Rauh of the Kellogg School and Robert Novy-Marx of the University of Rochester prepared [...]

Government Deficits, Other|

Common Sense Standard For When Litigation Holds Begin Provides An Earlier Requirement Than Is Often Used

September 2010  When should a litigation hold be initiated? Plenty of prior cases provide an impractical answer; namely, a litigation hold is triggered when litigation is reasonably foreseeable. This has been similarly described as when there is notice of a credible threat of litigation. With the benefit of 20/20 hindsight, opposing parties and courts provide [...]

Other|

DOL Issues Significant New Requirements For 401(K) Plans

August 2008 In late July, the U.S. Department of Labor (DOL) issued proposed regulations that require plan fiduciaries to disclose plan- and investment-related information for 401(k) plans and other participant-directed individual account plans. The regulations, which ran 31 pages in the Federal Register, require uniform disclosures intended to ensure that participants are (i) made aware [...]

Investor-Related Regulation, Other|

Change In “Accredited Investor” Definition Will Cause The Investor Pool For Private Financings To Shrink

August 2010 Issuers conducting private offerings of securities often rely on Regulation D as the exemption from the registration requirements of the federal Securities Act of 1933. When raising money, most hedge funds, private equity funds, and private real estate investment vehicles, as well as those arranging angel financing, generally restrict themselves to “accredited investors”. [...]

Investor-Related Regulation, Other|

Surprise! – U.S. Chamber Of Commerce Seeks More Government Control Over SROs

August 2011 A surprising call for additional government regulation occurs in a report entitled “The Unfinished Agenda”.  The U.S. Chamber of Commerce states that Congress should have (but did not) alter the existing regulation of so-called self-regulatory organizations (SROs) as part of its recent changes in financial regulation passed through the Dodd-Frank Act.  According to [...]

Investor-Related Regulation, Other|

Plan Sponsors Must Now Obtain Information About Usually “Hidden” Costs

July 2010 The Department of Labor (DOL) issued “interim final” fee disclosure regulations that apply to ERISA pension plans, including most notably 401(k) plans. The new regulation requires each plan service provider to disclose specified information in writing to the plan sponsor. The disclosed information includes: A description of the services to be provided; All [...]

Investor-Related Regulation, Other|

SEC Changes Short-Selling Rules

June 2007 Short selling is the practice of borrowing stock (usually from a broker-dealer or institutional investor), then selling it in anticipation that the stock price will go down. Because the short-seller has borrowed the stock, he benefits when the stock price declines, allowing the stock to be subsequently purchased (and the borrowed security returned) [...]

Investor-Related Regulation, Other|

SEC Takes Initial Measures To Avoid A Second Flash Crash. More Changes Are Coming

June 2010 The “flash crash” on May 6, 2010 is the biggest one-day intraday decline in Dow Jones Industrial Average history. The "flash crash" saw the Dow Jones Industrial Average plummet almost 1,000 points before partially recovering. Both the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission told a Senate banking committee [...]

Investor-Related Regulation, Other|

More Is Needed To Improve Credit Rating Agency Conclusions

June 2010 Ratings of debt instruments are an integral part of U.S. financial markets. Reliance on these ratings is increasing, but their reliability is pathetic. Practically every issuer involved in a major unexpected financial collapse received high ratings immediately before the failure. The most recent and important example involves the failed AAA-rated collateralized debt obligations [...]

Investor-Related Regulation, Other|

Employers Should Address Changing Law On Employee Privacy

April 2010 In re: Stengart v. Loving Care Agency, Inc., No. A-16-09 (N.J. Mar. 30, 2010), the New Jersey Supreme Court ruled in one of the first decisions on workplace computer privacy to reach the State Supreme Court level. Loving Care Agency is a provider of home-care nursing and health services. Marina Stengart was an [...]

Other|

SEC Proposes Limitations On Hedge And Private Equity Funds’ Money-Raising Activities

January 2007 The United States Securities and Exchange Commission (SEC) proposed new rules designed to limit investors who could participate in hedge funds and other pooled investment vehicles such as private equity funds. The new proposals respond to the ruling in Goldstein v. SEC (451 F.3d 873, D.C. Cir. 2006), which struck down the SEC's [...]

Investor-Related Regulation, Other|

Affluent Should Consider Roth Conversions In 2010

October 2009 Starting in 2010, taxpayers at any income level can convert regular IRAs to Roth accounts. Roth accounts have easy-to-understand advantages and disadvantages. Roth advantages include tax-free income and no required minimum distributions. But, taxes must be paid on all initial contributions to a Roth account, including immediate additional taxation on conversions from a [...]

Other, Personal Financial Advice|

Litigation: NASD Proposes Modified Arbitration Rules

May 2006 This month, the National Association of Securities Dealers (NASD) filed with the Securities and Exchange Commission (SEC) changes to its Code of Arbitration Procedure.  The changes are intended to simplify and reorganize the language/rules. The proposal makes the following changes: Divides the current Code into three separate codes: the Customer Code, the Industry [...]

Current Events, Other|

Investment Calculator – Should You Sell Before New Capital Gains Rate Increases Occur?

September 2008  One of the differences between the presidential candidates is their tax policies. Current tax rates arise from two pieces of legislation supported by and signed into law by President Bush during his first term, as follows: The Economic Growth and Tax Relief Reconciliation Act of 2001 lowered ordinary income tax rates for individuals. [...]

Other, Personal Financial Advice|

When Combined, Two Studies Predict The Near Collapse Of Employer-Provided Health Coverage Under ObamaCare

June 2011   Two different reports by reputable consulting firms each conclude that more than half of employers will eliminate or change their existing health care plans. The two reports focus on entirely different reasons for the predicted changes. Because of the combined effects of the two reported challenges, there will be few employer-paid health [...]

Current Events, Other|

Want More Employment? Small Business Asks Government To Just “Get Out Of The Way”

July 2011 With unemployment rates stubbornly over 9%, U.S. employment is topmost on practically everyone’s mind.  Generally, the American economy is barely adding more jobs than is needed simply to keep pace with normal labor force growth. Small business is an important element in any employment growth.  According to the federal government (as compiled by [...]

Current Events, Other|

Residential Real Estate Declines Become Quite Large …And Are Still Growing

June 2009 The value of residential real estate held by households totaled $22.5 trillion in 2007. By comparison, the market capitalization of domestic equities was $19.9 trillion, and $29.7 trillion for domestic stocks and bonds, respectively. The decline in the value of residential real estate remains ominous. Because comparisons in the value of real estate [...]

Current Events, Other|

Nevada Attempts To Capitalize On California’s High Taxes

June 2010 Nevada is running another series of advertisements which attempt to woo California’s businesses to their state. Advertisements released this last week mock California legislators by showing them as a monkey (actually an orangutan to be more precise). Here are two of them: The current ads prey on vulnerability identified in a recent survey [...]

Current Events, Other|

Bernanke’s Press Conference Dished Out Plenty Of BS

May 2011 Federal Reserve Chairman Ben Bernanke held the first-ever news conference by a Federal Reserve Chairman. The move was an obvious effort to calm financial markets after a string of unsettling news. Some of the questions asked during this Q&A session were actually quite good; others were merely softballs. Financial markets generally took the [...]

Current Events, Other|

Study Addresses Electronic Storage Best Practices

May 2008 The prestigious Advanced Practices Council (a unit within the Society of Information Management) recently released a report entitled “Information Lifecycle Management Concepts, Practices and Values". The report is based on a year-long study of 345 IT and storage managers. It provides worthwhile insights for anyone endeavoring to develop better electronic storage practices. Why [...]

Other|

U.S. Trading On Foreign Exchanges Will Become Easier

April 2008 If regulators are able reach a "mutual recognition" agreement, it would mark a radical shift in how international markets are overseen. The Securities and Exchange Commission (SEC) currently requires foreign trading firms to comply with its rules even though they are fully supervised in their home market. Consequently, a foreign exchange conducting business [...]

Investor-Related Regulation, Other|

Some Common Notions Of American Income & Wealth Are Wrong

March 2011 Listening to certain political commentaries, one is led to believe that the “rich” are getting richer, while the “poor” are getting poorer. These same commentators tell us that income mobility in the United States generally does not occur. In this context, the “rich” are perceived as a relatively fixed group, consisting of someone [...]

Current Events, Other|

FCC Moves Closer To Opening White Space

February 2011 On January 26, 2011, the FCC designated nine companies to act as database administrators for licensing television white space. The FCC noted that it favored the database model for future frequency licensing. This topic has not been widely reported. Although there are many steps still to be taken, this may be the most [...]

Current Events, Other|

Three States Act As Guinea Pigs In Budget Turmoil

January 2011 The federal deficit’s unsustainable levels have received significant media attention. Less attention has been paid to similar large problems the states face. However, almost every state (46 to be exact) struggled to close budget shortfalls for the current fiscal year (which begins July 1 in most states). A policy analyst at the Center [...]

Government Deficits, Other|

How to Redact Electronic Files

August 2006   Redaction (hiding information) of documents is needed to (i) protect legal privileges, (ii) protect information that is outside a discovery request, and (iii) avoid display of social security, birth date, and other personal data that is protected by law (due to identity theft risks). Redacting documents with a thick black marker does [...]

Other|

Affluent Get Big Benefit From the Roth 401(k)

March 2006   Effective January 1, 2006, a Roth 401(k) option is available.  This Roth 401(k) option does not have the income limitations that have previously prevented use of Roth IRAs by affluent persons.  Employers with an affluent work force (such as law firms) should definitely be offering this option. Roth contributions, unlike pre-tax deferrals, [...]

Other, Personal Financial Advice|