Federal Issues

    Extraterritorial Private Rights of Action, also known as F-Cubed Litigation 

    Section 929Y of the Dodd-Frank Wall Street Reform and Consumer Protection Act stated that the Securities and Exchange Commission (SEC) “shall solicit public comment and thereafter conduct a study” on whether the holding of the Supreme Court decision in Morrison v. National Australia Bank, Ltd. limiting private liability under Section 10(b) of the Securities Exchange Act of 1934 to alleged fraud “in connection with the purchase or sale of a security listed on an American stock exchange, and the purchase or sale of any other security in the United States,” should remain in force or should be overturned to allow for a private cause of action to be extended extraterritorially to securities claims against foreign domiciled companies, brought by foreign-domiciled claimants who purchased their shares on foreign exchanges, (“F-cubed litigation”). In essence, the United States Supreme Court held in Morrison that shareholders who purchase or sell securities on non-U.S. exchanges cannot participate in class action lawsuits brought by plaintiffs’ lawyers in U.S. courts. 

    The Dodd-Frank law granted extraterritorial jurisdiction to the SEC and Department of Justice for fraudulent conduct in the U.S. that is connected to a foreign securities transaction.  However, in response to pressure from U.S. plaintiff’s lawyers to fully overturn Morrison, Congress also authorized the SEC to study overturning Morrison to allow for an extraterritorial private right of action. 

    The accounting profession contends the holding in Morrison is an important limitation on the scope of U.S. lawsuits and a reaffirmation that the securities laws are only meant to be applied within the territorial jurisdiction of the United States. 

    The SEC comment period for the Morrison study closed on February 18, 2011, and the accounting profession filed comments in opposition to the creation of an extraterritorial private right of action. 

    The SEC released a staff report in April 2012.  The study was not subject to a vote by the SEC commissioners and does not represent the views of any of the commissioners.  Importantly, the report does not endorse legislative action and is inconclusive in its recommendations.  The accounting profession believes that the absence of a clear recommendation makes it very difficult for plaintiffs to use the report as a platform for attacking the Morrison decision and seeking legislative change.

    Resources

    Copy of Legislation

    A copy of the law is available on the Library of Congress's THOMAS website.  The law, and all major Congressional actions leading to passage, are available by using the advanced search function and searching for H.R. 4173 by bill number under the 111th Congress.

    Accounting Profession Submission to SEC

    February 18, 2011 Letter to SEC from seven accounting firm networks commenting on SEC's upcoming study in accordance with Section 929Y of Dodd Frank Act.

    Staff Contact

    Brady King
    Director, Congressional Affairs
    202.434.9263
    bking@aicpa.org

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    Federal Legislative and Regulatory Issues

    Federal Law This page highlights the advocacy issues in which the Congressional & Political Affairs Team is advocating on behalf of the profession, and also those issues that the team has recently followed.
    Published on October 28, 2014

    Congressional and Political Affairs Advocacy

    Overview The AICPA monitors and advocates on legislative and other matters that affect the accounting profession. Working with state CPA societies and other professional organizations, the AICPA provides information to and educates federal, state and local policymakers regarding key issues.
    Published on October 22, 2014

    Accounting Partnership Retirement Practices

    Article In letters to members of the Equal Employment Opportunity Commission (EEOC), the American Institute of CPAs (AICPA) has asked commissioners to reject staff appeals to investigate and litigate against accounting firms regarding partner retirement provisions
    Published on October 21, 2014

    Preserving the Cash Basis Method of Accounting for CPA Firms

    Article The AICPA is opposed to certain provisions included in tax reform proposals that would limit the availability of the cash basis method of accounting.
    Published on September 29, 2014

    Cash Accounting Bipartisan Letter to the House of Representatives

    Legislative Letters
    Published on September 11, 2014

    Cash Accounting Senate Letter

    Legislative Letters
    Published on August 07, 2014

    XBRL

    Article Extensible Business Reporting Language (XBRL) used in financial and other reporting allows for easier access to more transparent information.  AICPA supports legislative proposals to utilize XBRL by companies, Federal agencies and recipients of Federal funds.
    Published on May 20, 2014

    Camp Letter On Cash Basis April 25, 2014

    Legislative Letters The American Institute of CPAs (AICPA) voices strong opposition to draft legislation that would limit the use of the cash method of accounting for pass-through entities and personal service corporations.
    Published on May 08, 2014

    Convergence of International and US Accounting Principles and IFRS

    Article International Financial Reporting Standards (IFRS) set by the International Accounting Standards Board (IASB) in London is a response to worldwide demand from regulators, investors, businesses, and auditing firms for a single set of high-quality, globally-accepted accounting standards.
    Published on April 17, 2014

    AICPA Letter to SEC on Proposed Regulation Crowdfunding

    Comment Letter AICPA comments on the SEC's proposed new Regulation Crowdfunding under the Securities Act of 1933 and the Securities Exchange Act of 1934 to implement the requirements of Title III of the JOBS Act as published in SEC File No. S7-09-13.
    Published on February 06, 2014

    Jan 2014 - AICPA Statement for the Record regarding Conferences and Travel

    Article AICPA provided a Statement for the Record to the Senate Homeland Security and Government Affairs Committee in  response  to the hearing held on January 14, 2014 entitled, "Examining Conference and Travel Spending Across the Federal Government."
    Published on January 28, 2014

    Cash Basis Letter to Senate Finance Committee from Associations-Jan7-2014

    Legislative Letters Cash Basis Letter to Senate Finance Committee dated Jaunary 7, 2014 from American Council of Engineering Companies, American Dental Association, American Farm Bureau Federation, American Institute of Architects, American Institute of CPAs and S Corporation Association.
    Published on January 22, 2014

    Municipal Advisors

    Issue Brief The AICPA generally supports the SEC’s proposed rules as a means to strengthen investor protections in the municipal securities market.  The AICPA is concerned, however, because the proposed rule would require that accountants performing customary and usual accounting services would be required to register as municipal advisors.
    Published on January 07, 2014

    ERISA Fiduciary Definition - Appraisers of Employee Stock Ownership Plans

    Article The AICPA believes that the U.S. DOL should implement rules that would require appraisers of ESOPs to meet minimum qualification requirements, including holding relevant credentials and training, and comply with applicable professional valuation standards.
    Published on December 30, 2013

    Take Action Legislation Affecting ESOP Appraisers

    Article The AICPA urges FVS section members to seek congressional support of legislation to fix DOL fiduciary proposal on ESOP appraisers S. 273/HR 2041.
    Published on September 18, 2013

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