Page:Full Disclosure Appendix, Eighteen Major Cases.djvu/34

 Appendix. Eighteen Major Cases

1. The Securities Act is codified at 15 U.S.C. §§78a et seq. For a detailed account of these events, see Seligman, 1995, pp. 41–42. 2. Quoted in Seligman, 1995, p. 71. 3. We discuss this evolution in detail in Chapter 5. 4. Seligman, 1995, pp. 431–437. 5. FASB was governed and financed by the new Financial Accounting Foundation, a non-profit organization whose trustees were nominated by five leading accounting organizations (though still elected by the board of the Association of International Certified Public Accountants, AICPA). Task forces drawn from a spectrum of interested groups as well as a broad-based advisory council gave FASB broader accountability. Unlike the previous board, its seven members held full-time positions and did not have other business affiliations. Soon after the board began operation, the SEC issued a policy statement recognizing its opinions as authoritative. Pacter, 1985, pp. 6–10. See also Seligman, 1995, pp. 452–466 and 554. 6. Pacter, 1985, pp. 10–18; Seligman, 1995, pp. 555–557. 7. One response was the Securities Investor Protection Act of 1970. It produced new SEC disclosure rules that required broker-dealers to give notice when new capital was insufficient or records were not current. Seligman, 1995, pp. 451–465. 8. The scandal led to the 1977 Corrupt Practices Act, which required companies to maintain new accounting controls to assure that transactions were authorized by management. This additional transparency was designed to discourage illegal transfers. Seligman, 1995, pp. 539–549. 9. Seligman, 1995, pp. 549–550. 10. See http://www.sec.gov/pdf/handbook.pdf. Commission chairman Arthur Levitt emphasized the importance of constant vigilance to produce clear and