2.1: Regulations and Standards

Investors are protected by regulations that strengthen corporate and fund governance and adhere to high quality financial reporting standards worldwide.

Other Information:

Supporting Initiatives:1. Accounting Profession Oversight: The SEC will work closely with the Public Company Accounting Oversight Board on regulation of the accounting profession and the promulgation and interpretation of auditing standards.2. Investment Management Industry Regulation: The agency will complete and monitor the results of rulemaking initiatives that will promote mutual fund investor rights. These rules would, among other things:a. Provide mutual fund investors with more information about fees and expenses,including fund transaction costs, sales load breakpoints, point-of-sale information about brokers’ fees and other items, and the reasons why the board of directors approved the fund’s advisory contract and fees;b. Require that fund fees and expenses be presented in dollars as well as percentages; c. Provide more frequent disclosure of fund portfolio investments and additional information about the portfolio manager’srelationship with the fund;d. Establish a code of ethics for investment advisers;e. Prohibit funds from using brokerage commissions to pay broker-dealers for selling fund shares; f. Combat late trading, market timing, and selective disclosure abuses in the mutual fund industry; and g. Explore alternatives for possible hedge fund manager oversight.3. Corporate and Fund Governance Rules: The SEC will complete rulemaking activities that strengthen corporate and fund governance practices by:a. Enhancing shareholder access to the proxy process, and bolstering the disclosure requirements related to shareholder proxy access; b. Enhancing independence of the chairs and other members of mutual fund boards of directors; c. Expanding interpretive guidance regarding critical disclosure requirements such asmanagement’s discussion and analysis of financial condition and results of operations, and d. Enhancing SRO efforts to strengthen marketgovernance.4. Global Accounting Standards: The agency supports ongoing convergence initiatives between the Financial Accounting Standards Board and the International Accounting Standards Board to enhance the quality of financial reporting worldwide. The SEC also will support ongoing efforts to improve audit standards and mechanisms for their oversight worldwide.5. Accounting Studies: The SEC will follow up on recommendations from the staff study and report on the Adoption by the United States Financial Reporting System of a Principles-Based Accounting System, and complete a report for the President and Congress on the use of, and financial reporting for, off-balance sheet transactions and the special purpose entities used to facilitate such transactions.

Indicator(s):

Indicator:1

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