Divining 1994 derivatives disclosures: ten banks

Article Abstract:

The Financial Accounting Standards Board's Statement of Financial Accounting Standards No. 119 regarding disclosures of derivative instrument holdings has improved the accounting treatment of these instruments, but dividing derivatives into trading and other-than-trading instruments would achieve much-needed simplification. Trading instruments would be disclosed under earnings, and non-trading instruments would show up in a separate equity account. Review of ten banks' accounting treatment of derivatives demonstrates the limitations of Statement No. 119.

Banking industry, Analysis, Accounting and auditing, Disclosure statements (Accounting)

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The wreck of the Mary B or to sue or not to sue - that is the question (and if to sue, class, derivatives or both)

Article Abstract:

Shareholders and their attorneys face a confusing dilemma when considering class or derivative actions, as illustrated by the hypothetical example of the MBB Industries. MBB's growth in 1980's is due to the guidance of investment banker FGL, who steers MBB into a junk bond offering, an expensive lease in a FGL-owned building, and other questionable activities. After the 1987 crash, the company collapses and is forced to restructure, while angry shareholders contemplate legal action against MBB, and possibly FGL.

Securities industry, Humor and anecdotes

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Managing risk of derivatives - recent developments affecting dealers and end-users

Article Abstract:

Risk management is a relevant concern for both dealers engaging in the sale of derivative instruments and end-users of derivatives. Dealers must be aware of the different forms of risk that arise in holding derivatives to effectively communicate those risks to investors. Officers and directors must be aware of the risks faced when a company invests in derivatives or uses them to engage in hedging. Implementing internal controls is essential to proper derivative risk management.

Methods, Planning, Risk management

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