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What is a Financial Disclosure?
Malcolm Tatum
Malcolm Tatum
Financial disclosure is a broad term that is used to describe the process of providing public access to financial information. Public officials are often required to make disclosures of this type. This includes both elected officials and individuals who are running for public office. Most countries have disclosure laws that govern the process of when and how an individual or entity should make disclosure of financial information, especially when this disclosure is considered important for making decisions that impact other people.
The main purpose of disclosure regulations is to make sure there is no abuse of the public confidence taking place, and that there are no apparent conflicts of interest between the financial holdings of a public official and the responsibilities that the official is entrusted to carry out. The range of documents that are required as part of the financial disclosure vary from one country to another. However, it is not unusual for such documents as annual tax returns, general banking information, and public disclosure of properties owned as well as any investment activity to be made available for public scrutiny.
Along with public officials, people who work in the financial sector are also subject to laws regarding financial disclosure. Because professionals working in a bank or a brokerage are privy to a great deal of information before it is provided to the general public, there is always the chance that someone will use this insider information to gain financially from that data. By requiring financial disclosure on at least an annual basis, it is much easier to identify any situations where some sort of abuse of proprietary information took place and take any legal action deemed appropriate.
In the event that an individual or other entity fails to comply with financial disclosure regulations put in place by the state or national government, an investigation will usually ensue. If the failure to disclose information is found to be intentional, there is a good chance that a charge of disclosure fraud will be filed. Penalties for this type of activity can include heavy fines as well as some time spent in prison.
In the financial world, most brokers and others who are responsible for managing the resources of clients are required to file annual disclosure statements. In the United States, this process is often structured to comply with provisions put in place by the National Association of Securities Dealers, commonly known as the NASD. By structuring state and federal financial disclosure laws to include the provisions of existing NASD disclosure protocols, the government helps to support the Association in its attempts to police its own members and maintain a high level of integrity and ethics within the profession.
Malcolm Tatum
After many years in the teleconferencing industry, Michael decided to embrace his passion for trivia, research, and writing by becoming a full-time freelance writer. Since then, he has contributed articles to a variety of print and online publications, including SmartCapitalMind, and his work has also appeared in poetry collections, devotional anthologies, and several newspapers. Malcolm’s other interests include collecting vinyl records, minor league baseball, and cycling.
Learn more...
Malcolm Tatum
After many years in the teleconferencing industry, Michael decided to embrace his passion for trivia, research, and writing by becoming a full-time freelance writer. Since then, he has contributed articles to a variety of print and online publications, including SmartCapitalMind, and his work has also appeared in poetry collections, devotional anthologies, and several newspapers. Malcolm’s other interests include collecting vinyl records, minor league baseball, and cycling.
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![Financial institutions must make certain information available to the public at all times.]()
By: PefkosFinancial institutions must make certain information available to the public at all times.
Discussion Comments
I am glad that these programs are doing this. I also want to say that banks by law have to have a sign designating which area of the bank is set aside for investments.
The banking representatives has to also disclose that the investment vehicle is not FDIC insured and can lose value. They also have to have a sign that states this as well so that people cannot sue the bank because they made a poor investment choice.
Sometimes they offer the disclosure in the beginning of their presentation and sometimes they offer it in the end of their presentation. I know because I used to audit banks to see if this was being done.
Cupcake15 -I think that it is interesting to note how the senators earned their money, but sometimes it is important to look at the senatorial financial disclosure report to learn how the campaign was funded.
I think that this is important because the bigger donors tend to be the most influential and you wonder how this affects the senator’s stance on various issues.
I also think that the financial disclosures regarding securities are very important. For example, on most financial investment programs the panelists have to disclose if they own a particular holding that they are urging people to invest in.
This allows the viewer to determine if there is a financial gain for the panelist or if the panelist is merely citing an opinion.
Also, financial shows always offer a disclaimer at the end of the programming to let you know that the information offered on the show was an opinion and that they should look at many other sources in order for making their investment decisions.
This official financial disclosure allows the public to trust the program because they are being as candid as possible.
It is really interesting to look at the United States Senate financial disclosure information that is put out by the press.
For example, in the last Presidential election with Obama and John Mc Cain there was some interesting information regarding their debts and investments. For instance, John Mc Cain and his wife had over $250,000 in credit card debt and he earned a yearly pension of about $58,000.
Although the financial position of their wives is not required, It was noted that Cindy Mc Cain earned income of a lot more than $6 million dollars. They also reported that their combined assets exceed $25 million dollars and some estimates put it closer to $40 million dollars.
Obama reportedly earned about $4 million dollars from the proceeds of his book sales and set aside a college fund for his two children in excess of $100,000. In addition, he set aside $1 million and opened a money market account with that money.
Obama also reported that he just finished paying off his and his wife’s student loan debt.
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