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ARTICLE · 25 FEBRUARY 2011

Regulators Scrutinize Disclosure of Litigation-Related Costs

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In the wake of the financial crisis, banks and other financial institutions are facing increased litigation exposure. Federal regulators are pushing for additional, more detailed disclosure of that exposure in annual and quarterly filings.

United StatesLitigation, Mediation & Arbitration
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Article by John J. Tharp, Jr. , Joseph De Simone and Robert E. Entwisle

Originally published February 18, 2011

Keywords: regulators, disclosure, litigation-related costs, FASB, SEC, losses, reserve amounts

In the wake of the financial crisis, banks and other financial institutions are facing increased litigation exposure. Federal regulators are pushing for additional, more detailed disclosure of that exposure in annual and quarterly filings. In particular, the Financial Accounting Standards Board (FASB) and the Securities and Exchange Commission (SEC) are focusing on disclosure of estimates of potential losses and reserve amounts. 

In July 2010, the FASB proposed more stringent rules for the disclosure of litigation-related contingencies. This proposal was met with opposition from some groups, including the Association for Corporate Counsel (ACC), which expressed concern that expanded disclosure could actually lead to higher settlement costs, potential

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