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Full SEC Letter Demanding Repo 105 Disclosures From Financial Firm CFOs
Dear Chief Financial Officer:
We are currently reviewing your Form 10-K for fiscal year ended__. In our effort to better understand the decisions you made in determining the accounting for certain of your repurchase agreements, securities lending transactions, or other transactions involving the transfer of financial assets with an obligation to repurchase the transferred assets, we ask that you provide us with information relating to those decisions and your disclosure.
With regard to your repurchase agreements, please tell us whether you account for any of those agreements as sales for accounting purposes in your financial statements. If you do, we ask that you:
- Quantify the amount of repurchase agreements qualifying for sales accounting at each quarterly balance sheet date for each of the past three years.
- Quantify the average quarterly balance of repurchase agreements qualifying for sales accounting for each of the past three years.
- Describe all the differences in transaction terms that result in certain of your repurchase agreements qualifying as sales versus collateralized financings.
- Provide a detailed analysis supporting your use of sales accounting for your repurchase agreements.
- Describe the business reasons for structuring the repurchase agreements as sales transactions versus collateralized financings. To the extent the amounts accounted for as sales transactions have varied over the past three years, discuss the reasons for quarterly changes in the amounts qualifying for sales accounting.
- Describe how your use of sales accounting for certain of your repurchase agreements impacts any ratios or metrics you use publicly, provide to analysts and credit rating agencies, disclose in your filings with the SEC, or provide to other regulatory agencies.
- Tell us whether the repurchase agreements qualifying for sales accounting are concentrated with certain counterparties and/or concentrated within certain countries. If you have any such concentrations, please discuss the reasons for them.
- Tell us whether you have changed your original accounting on any repurchase agreements during the last three years. If you have, explain specifically how you determined the original accounting as either a sales transaction or as a collateralized financing transaction noting the specific facts and circumstances leading to this determination. Describe the factors, events or changes which resulted in your changing your accounting and describe how the change impacted your financial statements.
For those repurchase agreements you account for as collateralized financings, please quantify the average quarterly balance for each of the past three years. In addition, quantify the period end balance for each of those quarters and the maximum balance at any month-end. Explain the causes and business reasons for significant variances among these amounts.
In addition, please tell us:
Whether you have any securities lending transactions that you account for as sales pursuant to the guidance in ASC 860-10. If you do, quantify the amount of these transactions at each quarterly balance sheet date for each of the past three years . Provide a detailed analysis supporting your decision to account for these securities lending
transactions as sales.
Whether you have any other transactions involving the transfer of financial assets with an obligation to repurchase the transferred assets, similar to repurchase or securities lending transactions that you account for as sales pursuant to the guidance in ASC 860. If you do, describe the key terms and nature of these transactions and quantify the amount of the transactions at each quarterly balance sheet date for the past three years.
Whether you have offset financial assets and financial liabilities in the balance sheet where a right of set off - the general principle for offsetting - does not exist. If you have offset financial assets and financial liabilities in the balance sheet where a right of set off does not exist, please identify those circumstances, explain the basis for your presentation policy, and quantify the gross amount of the financial assets and financial liabilities that are offset in the balance sheet. For example, please tell us whether you have offset securities owned (long positions) with securities sold, but not yet purchased (short positions), along with any basis for your presentation policy and the related gross amounts that are offset. Finally, if you accounted for repurchase agreements, securities lending transactions, or other transactions involving the transfer of financial assets with an obligation to repurchase the transferred assets as sales and did not provide disclosure of those transactions in your
Management's Discussion and Analysis, please advise us of the basis for your conclusion that disclosure was not necessary and describe the process you undertook to reach that conclusion.
We refer you to paragraphs (a)(l) and (a)(4) of Item 303 of Regulation S-K.
As noted above, we seek to better understand the basis for your decisions and your disclosure. Please provide us with a written response to these questions within ten business days from the date of this letter or tell us when you will respond. Upon our review of your response to these questions, we may have additional comments that we will provide to you with any other comments we may have on your Form 10-K.
Please contact me if you have any questions.
Sincerely,
Senior Assistant Chief Accountant
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Dear SEC,
F**k you. The intelligence chief has allowed us to cook the books since 2006. Call the President if you wish answers to your questions.
Yours truly,
CFO of one of the TBTF banks.
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Intelligence Czar Can Waive SEC Rules Now, the White House's top spymaster can cite national security to exempt businesses from reporting requirementshttp://www.businessweek.com/bwdaily/dnflash/may2006/nf20060523_2210.htm?campaign_id=rss_daily
911... "The Gift That Keeps On Giving."
Who wants to bet that we are about to see a flood of announcements regarding equity offerings from the recipients of these letters VERY SOON?
As a TBTF we've been instructed to delay any response until all gov't owned shares ahve been sold to the sucker public!
…In the interest of National Security, I am unable to provide the IRS with data pertaining to matters financial…Thank you, and please stop sending your junk mail to this address…
SEC gets to play both sides of the deal....
Sleeping cop
Bad cop
Try for the "good" image while really doing nothing.
Somehow the movie title, "The Blonde, the Bad, and The Sleeping," just doesn't <Make My Day>.
Love the MD&A of any set of reports. Always the most optimistic part. I wonder why!
Just trying to answer those questions could by default, make a criminal out of an Fin Officer. Talk about Big brother.
Dear Mary,
We have referred this to http://www.sec.gov/about/commissioner/cox.htm
Don't worry, these banks passed that rigorous stress test so i'm sure they aren't doing any of this stuff, the government told me so.
Very interesting timing. This letter goes out, the largest financials will try to give the answers, and Timmy front-runs the whole thing by dumping Citi shares. All on "pick off the Gentiles" day.
"How about a brochure highlighting our high net worth client wealth management services instead?"
More kabuki theater. Nothing is going to happen with this. More for the shit pile.
Where there is no fear, there is no regulatory compliance.
The SEC does not strike fear into the hearts of TBTF banks -- it's more like ...camraderie.
Oh, you can tell there is fear.
When the compliance department calls me, I sit up and take notice. When the SEC calls the TBTF CEO, he has the secretary put the call on hold and then leaves for a quickie with the mistress before dinner and drinks with the wife.
When is Dick Fuld and gang going to be disgorged from all their now known unlawful gains of Hundreds of millions if not billions made by "selling" their worthless company to the masses?
I was short and I was right, unfortunately my short position was squeezed out REPO 105 style because Dick Fuld wanted to stick it to me and others who were telling the truth about his company while he was out with his CFO's filing their lies.
I want as much of my money back as possible and Dick needs go to the big house for multiple life sentences in case humans discover immortality.
I am fairly young but the retirees and Lehman employees who lost everything need all their money back.
http://funy1.blogspot.com/2010/03/dick-fuld-please-advise-us-where-to.html
Dear SEC,
Shut up bitch.
Sincerely,
Goldman Sachs
Instead of putting on REPO 105 blinders, they should be trawling for all manner of off balance sheet crap.
F STREET TROOP:
http://williambanzai7.blogspot.com/2010/03/f-street-troop.html
REPO IN PEACE:
http://williambanzai7.blogspot.com/2010/03/repo-in-peace.html
Dear SEC,
We welcome your request for additional information and background; and would like to respond in the full spirit of compliance ............. through the medium of dance.
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