Is The SEC’s Mark To Market Interpretation A PR Stunt?

Stephen Bainbridge thinks that the there is much less than meets the eye when he looks the SEC’s interpretation of FASB Statement 157, the enormous fair value accounting rule.

“When an active market for a security does not exist, the use of management estimates that incorporate current market participant expectations of future cash flows, and include appropriate risk premiums, is acceptable,” the SEC said.

Bainbridge thinks that’s already allowed under the rules.

“Existing interpretations of FASB Statement 157 already clearly permit the use of mark to model valuation with respect to Level 2 and 3 assets. So what’s new here? Looks like PR to me,” he writes.

So is this just another reach for relevancy by an increasingly marginalized SEC?

NOW WATCH: Money & Markets videos

Want to read a more in-depth view on the trends influencing Australian business and the global economy? BI / Research is designed to help executives and industry leaders understand the major challenges and opportunities for industry, technology, strategy and the economy in the future. Sign up for free at research.businessinsider.com.au.

Tagged In

clusterstock-us