The SEC will convene a teleconference today of international securities regulators to "discuss urgent regulatory issues om the ongoing credit crisis."

According to the press release, the technical committee will consider "manipulative short selling" and "under-regulated or unregulated products."

With regard to the first, it will be interesting to see if we ever get some case history of what constitutes "manipulative short selling." To see just what the SEC deems to be manipulation, we'll have to wait and see what the enforcement cases show.

With regard to the second consideration, the international confab intends to "develop disclosure principles to promote transparency in OTC markets for derivatives and other financial instruments which will contribute to enhanced investor protection and mitigating systemic risk." Good idea there; late, though.

The interesting thing is the other matter to be considered: international accounting standards. The issue to address for the international regulators is to "ensure that the process of developing international accounting standards continues to take account of the interests of investors." That sounds like it could refer to the lack of independent funding of the IASB - or the dive the board had to take with regard to the fair value exception to achieve a "level playing field" (three of the more dangerous words in standard setting, by the way). In any case - it sounds like the SEC is being more cautious, at least superficially, in its pursuit of international accounting standards in the US. It could be invoking "investor interests" to give it a more graceful exit; it could weigh in the favor of the next administration if they don't like the idea. It's going to be an interesting transition at the SEC.

On Friday evening - the day before the G20 summit began in Washington - the SEC released the long-awaited roadmap for converting the United States financial reporting system to International Financial Reporting Standards.

The document will have a 90 day comment period, which will begin ticking once it's recorded in the Federal Register - and that will probably take place in less than two weeks. Say it's in the register one week from the day the SEC released it: that would put the comment period's end at February 19, 2009.

It's a proposal that will span two administrations - and we really don't have an idea how the new administration is going to view the proposal. When an SEC chair is named, it'll be clearer - and with the current market turmoil, you'd have to believe that President-elect Obama will not waste time on this choice.

A key premise in the 165-page document: the pause for deciding. While it's encouraging companies to take the option and apply IFRS to their own reporting before it becomes a requirement, the Commission has left itself the option to stop the convergence process in 2011. It will depend on the Commission is satisfied with progress toward achieving seven milestones related to:

• improvements in accounting standards;

• the accountability and funding of the IASC Foundation;

• the improvement in the ability to use interactive data for IFRS reporting;

• education and training relating to IFRS;

• limited early use of IFRS where this would enhance comparability for U.S. investors;

• the anticipated timing of future rulemaking by the Commission; and

• the implementation of the mandatory use of IFRS by U.S. issuers.

If it's satisfied with progress in the next three years, then the Commission will proceed with requiring U.S. issuers use IFRS beginning in 2014.

The declarations made at the G-20 summit will likely propel American companies down the IFRS road - so it will be critical for investors to pay attention to the roadmap. They might not like where they are at the end of the road. Some of the  declarations have very strong implications for accounting as we know it. An excerpt: 

Immediate Actions by March 31, 2009:

* The key global accounting standards bodies should work to enhance guidance for valuation of securities, also taking into account the valuation of complex, illiquid products, especially during times of stress.

* Accounting standard setters should significantly advance their work to address weaknesses in accounting and disclosure standards for off-balance sheet vehicles.

* Regulators and accounting standard setters should enhance the required disclosure of complex financial instruments by firms to market participants.

* With a view toward promoting financial stability, the governance of the international accounting standard setting body should be further enhanced, including by undertaking a review of its membership, in particular in order to ensure transparency, accountability, and an appropriate relationship between this independent body and the relevant authorities.

The election is over, and the national guessing game has begun about who will be the next Treasury secretary. Of course the attention is focused on the Treasury post: nothing is more urgent than instilling confidence in the financial system at this very moment, if any other post-election promises are to be fulfilled.

Much less focus has been placed on who will be the next SEC chairman, however. It's a given that current chairman Christopher Cox will be gone. His replacement's name, however, hasn't generated the same kind of speculative fervor as the replacement for Henry Paulson. Nevertheless, events continue to bubble at the SEC offices.

Last week, the SEC announced that John White, director of the Division of Corporation Finance, will be leaving the Commission at the end of the year. White has been a prime mover behind the SEC's plans to scrap GAAP and adopt international financial reporting standards (IFRS).

On Friday, Chairman Cox delivered a speech about international enforcement cooperation, and focused on the Commission's international efforts in subprime loan investigations. Though the topic was international in scope, there was nary a word about the forthcoming IFRS "roadmap."

Not everybody is so quiet about the pending arrival of the roadmap. Accountancy Age, a British trade journal, proclaimed that it would be released last Thursday or Friday. Maybe they're just slightly ahead of their time.

No matter - the situation at the SEC bears watching. Whoever is named to the top post may give a significant clue about the future of the Commission: will it be someone who can reinvigorate it so that it's leading those it regulates instead of mopping up a mess after it happens? Or will it be someone who will shepherd it into another agency that takes over its functions? Let's hope for the former and not the latter.

No trick, maybe all treat for financially distressed homeowners. On Halloween, news spread that JP Morgan Chase would work with homeowners holding about $70 billion of mortgages. While JP Morgan Chase didn't step into the subprime swamp when it was percolating, it inherited a large number of subprime loans from its acquisition of Washington Mutual - who wasn't shy at all about making bad loans.

Terrific idea - keep the loans whole, build customer loyalty, keep people in their houses and just maybe, help stabilize the real estate market. In short, do what you can to keep the economy going.

Investors can't help but wonder, though: what are the economic effects on the bank? They're going to give up something to keep the consumers whole. And you have to wonder about the effects that renegotiation may have on the status of any of those loans securitized by WaMu. While it's not a black-and-white area of securitization accounting in Statement 140, a renegotiation of loans in a securitization trust could be considered evidence that a genuine sale of loans never took place. To present a true picture of what exists, the sale would best be reversed with the loans being returned to the bank's balance sheet and the pass-through security being a part of the bank's debt.

There's a bye given by the SEC to such renegotiations however, from the Office of the Chief Accountant early in 2008. No need to worry about shareholder presentation of events as they exist; just move along folks, nothing to see here.

Nothing indicating yet that this is the route JP Morgan Chase is taking. It's noteworthy, though, if they spark a wave of renegotiations among other banks. One would hope that happens - but investors need to exercise skepticism about the genuineness of loan sales in securitizations. In any case, if the additional securitization disclosures proposed by the FASB for this year come to pass, investors would be best off by using them to estimate what leverage would look like in the absence of securitization sale accounting - whether or not there have been loan renegotiations.

A heads-up: I've written a piece in the Financial Times on standard-setter convergence - and why it's not the good idea that it once was.

It's a subscription-only publication (sorry).

I proposed that the IASB and FASB continue on a path of friendly competition for an indefinite period of time, rather than rushing into a politically-forced pseudo-convergence that resembles a takeover more than a merger. One point I didn't get to make because of space limitations: the US moves made in preparation for convergence should be reversed if the convergence movement is halted or at least postponed. Specifically, the FASB should revert to its seven-person constitution, as it was before convergence appeared imminent. There was never a convincing reason given for the five-person configuration, though it would have certainly been easier to merge fewer people onto the IASB.

I have no particular insight as to where the SEC is going on its convergence roadmap. One must presume that this has moved to the back burner as the events of October, the cruelest month, unfolded. (I don't care what T.S. Eliot said about April. He's wrong.) It would be hard to believe they could resume their magical thinking about convergence without considering the effects on independent standard setting - and what it could mean for US investors. Remember: the SEC is charged with serving and protecting US investors - not stock exchanges or consulting firms who would benefit from accounting standard changeovers. Financial institutions aren't the only ones who need to sober up after the October surprise. 

Last Thursday, SEC Chairman Christopher Cox took his turn on the hot seat before the Committee on Oversight and Government Reform United States House of Representatives. His testimony offered some interesting hints about where the SEC might be going - though they're a bit conflicted.

Cox argued that the SEC's strengths - a mandate for investor protection, rather than a supervisory role for institutions - made it the right regulator for the times. As he said, "if the SEC did not exist, Congress would have to create it." And he defended the SEC's turf against encroachment by others:

"Some have tried to use the current credit crisis as an argument for replacing the SEC in a new system that relies more on supervision than on regulation and enforcement. That same recommendation was made before the credit crisis a year ago for a very different, and inconsistent, reason: that the U.S. was at risk of losing business to less-regulated markets. But what happened in the mortgage meltdown and the ensuing credit crisis demonstrates that where SEC regulation is strong and backed by statute, it is effective — and that where it relies on voluntary compliance or simply has no jurisdiction at all, it is not."

That's a bit startling, in that the SEC has been vigorously pushing for a switch to international financial reporting standards. "Losing business to less-regulated markets" hasn't been cited by the SEC as a reason for the switch, but it's certainly been a concern of the exchanges for years. Now it seems the SEC wants to assert itself as the premier independent regulator. Not a bad idea.

One wonders if the SEC is having second thoughts about the idea of tossing GAAP aside. Nowhere in the testimony did Mr. Cox mention the IASB or international financial reporting standards, and the SEC has been dead silent on their proposed roadmap since the end of August.