The American accounting firms say it is the reputation of the firm that matters, and that firm procedures assure quality.
The commission and the regulatory arm of NASD, which monitors securities firms and their employees, have requested documents related to the firms' procedures for rating companies and evaluating and paying analysts.
WALL STREET JOURNAL Ratings Agencies Questioned on MF Global | Representative Randy Neugebauer, chairman of the House financial services subcommittee on oversight and investigations, sent letters to the chief executive of Moody's Investors Service and the president of Standard & Poor's, seeking information about the firms' procedures for evaluating MF Global, The Wall Street Journal reports.
On the other hand, he suggests, while response teams "have to always inform top management," a firm management procedure is important, because top executives may "otherwise get involved where they shouldn't get involved" — on specific supply-chain or engineering issues, for instance.
A likely starting point would be a careful review of the firm's procedures for reviewing difficult accounting questions.
But in each of those cases, "the firm's procedures did not sufficiently address the identified risk".
The order stated that the firm's procedures were inadequate because they failed to restrict employee access to confidential customer data to persons who had a legitimate business need to know that information and did not monitor and analyze employee access to the use of the portals.
Mr. Cohen can avoid liability if he can establish that SAC had a system in place that "would reasonably be expected to prevent and detect, insofar as practicable, any such violation by such other person," and that there was no reasonable cause to believe the firm's procedures were not being complied with by the portfolio managers.
The complication rate for FIRM-PVI procedures (4.3%) was similar to controls (4.0%, P = 1) for both major and minor complications; no deaths were reported.
