SEC issues guidance on disclosure of European sovereign debt exposures

On January 6, the SEC’s Division of Corporation Finance issued disclosure guidance relating to public company reporting of direct and indirect exposures to the debt of certain European countries. The SEC staff communicated its views in “CF Disclosure Guidance: Topic No. 4, European Sovereign Debt Exposures,” which can be viewed at In the new guidance, the staff expresses concern that disclosures about the nature and extent of European sovereign debt risk incurred by U.S. and non-U.S. bank holding companies and other financial institution registrants have been inconsistent in both substance and presentation. The staff provides specific recommendations as well as some general observations on how companies can enhance the disclosures to promote comparability in reporting. The guidance should be taken into account by non-financial institution registrants as well as financial institutions that have material exposure to the European debt crisis, as the staff cautions that, in light of the current circumstances in Europe, the SEC’s “principles-based item requirements may call for more detailed disclosure” on this topic by any affected registrants.

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