Developments of Note
SEC Proposes Amendments to its Auditor Independence Requirements
The SEC proposed amendments (the "Proposed Amendments") to modernize its rule governing auditor independence, that is, Rule 2-01 of Regulation S-X. The SEC has announced that it will hold a hearing on the Proposed Amendments on July 26, 2000. Comments on the Proposed Amendments are expected to be due no later than September 25, 2000.
The Proposed Amendments would make three fundamental changes to the current rule. First, they reduce the number of employees of the audit firms and members of their families whose investments in, or other financial relationships with, an audit client would compromise the independence of the audit firm. Generally, only those audit partners and employees who work on the audit or who are in a position to influence the audit, and their immediate families, could not hold investments in, or have impermissible (as described below) financial relationships with, the audit
