Tag Archives: Economy

2nd day of protest at McDonald’s shareholders meeting

Protesters set up tents on the street as they demonstrate outside the McDonald's headquarters calling for higher wages and improved working conditions in the Chicago suburb of

By Justin Madden

OAK BROOK, Ill. (Reuters) – Hundreds of protesters rallied outside McDonald’s Corp headquarters as shareholders on Thursday approved executive compensation and voted down a slate of shareholder resolutions, including those involving political contributions and antibiotic use in meat production.

The picketers are part of a national “Fight for $15” movement that, along with an improving job market, has spurred pay raises at major employers such as Wal-Mart Stores Inc and McDonald’s, though not to the level demanded by protesting workers and supporters.

McDonald’s, the world’s biggest fast-food chain, last summer increased average worker pay to almost $10 per hour. But those raises were limited to just a fraction of all McDonald’s restaurant workers in the United States because franchisees operate almost 90 percent of the chain’s 14,000 domestic locations.

Protesters called on Chief Executive Officer Steve Easterbrook, the architect of a turnaround plan that is gaining traction with help from a sales boost from all-day breakfast, to share the higher profits with all McDonald’s workers rather than just executives and shareholders.

Workers seeking pay of at least $15 per hour and the right to unionize, and their supporters, have protested at the company’s annual meeting for years. Their actions this week prompted McDonald’s to temporarily close its Oak Brook, Illinois, headquarters for the third year in a row.

“This comes down to holding McDonald’s accountable for keeping workers in poverty,” said Naquasia LeGrand, 24, who traveled 15 hours on a chartered bus from North Carolina, where she makes $8.15 an hour as a McDonald’s swing manager.

Angel Mitchell, a McDonald’s worker from Chicago, spent a rain-soaked night camping out at the company’s headquarters.

“We cook and serve those all-day breakfasts that are making McDonald’s millions and millions, but we can’t feed our own families without turning to food stamps,” Mitchell said.

McDonald’s says it cannot tell its franchisees how to pay their employees. The issue is the subject of a closely watched case before the National Labor Relations Board.

“At McDonald’s, we take seriously our role in helping strengthen communities,” providing many with their very first job, spokeswoman Lisa McComb said by email on Wednesday as protests kicked off.

The “Fight for $15” campaign is backed by the Service Employees International Union and also includes people who work in home care, child care, airports and higher education.

(Additional reporting by Lisa Baertlein in Los Angeles, Editing by Peter Henderson and Lisa Von Ahn)

Oil tops $50, lifts commodity stocks

Visitors looks at an electronic board showing the Japan's Nikkei average at the Tokyo Stock Exchange i

By Nigel Stephenson

LONDON (Reuters) – Brent crude oil topped $50 a barrel for the first time in nearly seven months on Thursday, lifting commodity and energy-related shares in Europe and Asia, though worries about U.S. interest rates and signs of slowdown in China limited gains.

Oil’s rise took it to levels more than 80 percent above January’s 12-year lows and was fueled in part by a weaker dollar, which fell against the Japanese yen.

European shares edged higher, led by the basic resources and oil and gas sectors. The pan-European FTSEurofirst 300 index rose 0.1 percent, pushing on from a four-week high hit on Wednesday. The STOXX 600 basic resources index rose 2.6 percent. Oil and gas added 0.4 percent.

Wall Street looked set to open with modest gains, according to index futures.

Within Europe, gains of 0.5 percent in Germany’s DAX index and 0.4 percent in France’s CAC 40 were offset by losses of 0.6 percent in Spain’s IBEX and 0.3 percent in Italy’s FTSE MIB index.

Japan’s Nikkei rose 0.1 percent, giving up earlier gains as the yen firmed, while MSCI’s broadest index of Asia-Pacific shares outside Japan was up 0.4 percent.

Chinese shares fell more than 1 percent at one point, with the CSI300 index touching its lowest since March 11 after data on Thursday showed profits at state-owned firms fell 8.4 percent year-on-year in the first four months of 2016, while debts rose 18 percent. However, a late rally saw the index close 0.2 percent higher.

Brent, the international benchmark oil price, rose as high as $50.35 a barrel, its highest since early November, in the wake of data showing a sharper-than-expected fall in U.S. crude stocks last week.

U.S. crude last traded at $49.90, up 34 cents.

“Geopolitical issues in West Africa and the Middle East, supply outages, increased demand and maybe a touch of a weaker dollar have all helped push prices higher,” said Jonathan Barratt, chief investment officer at Sydney’s Ayers Alliance.

He added, however, that the rally would not last as the higher prices would bring U.S. shale oil back on to the market.

In currency markets, the yen rose 0.2 percent to 110 per dollar and the euro was up 0.3 percent at $1.1182.

“Stuck in a corridor is a good word for the yen at the moment,” said Geoffrey Yu, a strategist with the UBS in London.

“For Japan the question is what will we see next from them to ensure that the yen can stay weak.”

The greenback hit a two-month high against a basket of currencies on Wednesday, and is on a roll after minutes of the Federal Reserve’s latest policy meeting and comments from Fed officials hinted that an interest rate rise could be imminent.

The cost of hedging against big swings in sterling over the next month hit seven-year highs on Thursday, according to options set to mature just after Britain’s June 23 referendum on European Union membership.

LOOKING TO YELLEN

Investors are looking to a speech by Fed Chair Janet Yellen on Friday for more clues to the rate outlook.

Yields on two-year U.S. Treasuries hit 10-week highs around 0.94 percent on Wednesday. They last stood at 0.91 percent down 1 basis point on the day.

German 10-year yields, the benchmark for euro zone borrowing costs, rose about 2 bps to 0.17 percent.

The market is already turning to next Thursday’s European Central Bank policy meeting, at which it will unveil new growth and inflation forecasts.

Higher oil prices have helped lift a gauge of long-term inflation expectations often cited by the ECB – the five-year, five-year breakeven rate EUIL5Y5Y=R> – above 1.5 percent, though this remains below the ECB’s inflation target of near 2 percent.

(Additional reporting by Hideyuki Sano in Tokyo, Anirban Nag and Alistair Smout in London; Editing by Toby Chopra)

U.S. jobless claims fall more than expected

A job seeker listens to a recruiter from the Federal Bureau of Prisons at a health care job fair sponsored by the Colorado Hospital Association in Denver

WASHINGTON (Reuters) – The number of Americans filing for unemployment benefits fell more than expected last week, moving back to near cycle lows as the labor markets remain healthy and the economy regains momentum after stumbling in the first quarter.

Initial claims for state unemployment benefits declined 10,000 to a seasonally adjusted 268,000 for the week ended May 21, the Labor Department said on Thursday. Claims for the prior week were unrevised.

Economists polled by Reuters had forecast initial claims falling to 275,000 in the latest week. Claims have now been below 300,000, a threshold associated with a strong job market, for 64 straight weeks, the longest stretch since 1973.

While the two consecutive weeks of decline helped to unwind some of the jump in claims between late April and early May, the trend in jobless claims has become less favorable.

The four-week moving average of claims, considered a better measure of labor market trends as it irons out week-to-week volatility, rose 2,750 to 278,500 last week.

Economists blame a range of factors for the recent spike in claims, including the different timing of school spring breaks, which often makes it difficult to adjust the data. An ongoing strike by Verizon workers as well as possible disruptions to manufacturing activity in the wake of recent earthquakes in Japan have also been cited.

Economists expect the strike by the about 40,000 Verizon employees will hurt May payrolls because they would be considered unemployed as they would not have received a paycheck during the survey period. The government will release its closely watched employment report next Friday.

A Labor Department analyst said there were no special factors influencing last week’s claims data and only claims for Wyoming had been estimated.

The claims report showed the number of people still receiving benefits after an initial week of aid rose 10,000 to 2.16 million in the week ended May 14. The four-week average of the so-called continuing claims increased 8,500 to 2.15 million.

The continuing claims data covered the period during which the government surveyed households for May’s unemployment rate.

The four-week average of continuing claims fell 6,000 between the April and May survey periods. That suggests little change in the unemployment rate, which was at 5.0 percent in April.

(Reporting By Lucia Mutikani, Editing by Andrea Ricci)

Almost half of Americans would struggle to pay emergency expenses

Federal Reserve building in Washington

WASHINGTON (Reuters) – Almost half of American families say they would struggle to pay for emergency expenses and those with a high school degree or less are most likely to say their well-being has declined, according to a Federal Reserve survey released on Wednesday.

The annual survey, in its third year, takes the pulse on the financial situation of U.S. families, which has been a key issue ahead of this year’s presidential election.

It found that Americans with a bachelor’s degree or higher were “by far” most likely to say that they are doing OK financially or living comfortably and report an improvement in their finances over the past year.

Roughly one third of U.S. adults have achieved at least a bachelor’s degree.

Among those with a high school degree or less, about one in five respondents said their well-being had improved over the past year, approximately the same number who responded their situation had declined, the Fed said.

A large swathe of Americans struggling with stagnant wages and fewer middle-class jobs have fueled the presidential campaigns of presumptive Republican nominee Donald Trump and Democratic candidate Bernie Sanders.

“Despite some signs of improvement overall, 46 percent say they would struggle to meet emergency expenses of $400, and 22 percent of workers say they are juggling two or more jobs,” said Federal Reserve Board Governor Lael Brainard in a statement.

Only 23 percent of respondents said they expected their income to be higher in the year after the survey, down from 29 percent at the time of the prior survey.

Lower-income, black and Hispanic families still disproportionately said they faced financial challenges, the survey showed.

The Fed added that while overall the financial well-being of Americans had continued to improve, the “many pockets of consumers who display elevated levels of financial stress and who are at risk for financial disruption in the case of further economic hardships remain a concern.”

Among the positives were fewer Americans reporting going without medical care because they could not afford it.

Eighteen percent of respondents also said they or their families had some form of financial hardship over the past year, a 6 percentage point improvement from 2014.

Definitions of financial hardship included the loss of a job, a cut in work hours, health emergency or foreclosures and evictions.

The survey was taken in October and November last year and tallied up the responses of 5,695 people, the Fed said.

(Reporting by Lindsay Dunsmuir and Howard Schneider; Editing by Andrea Ricci)

Alberta wildfire singes companies beyond energy sector

An aerial view of Highway 63 south of Fort McMurray, Alberta. Canada, shows smoke from the wildfires

By Euan Rocha and Allison Lampert

TORONTO/MONTREAL (Reuters) – The wildfire that has ravaged northern Alberta and cut Canadian crude output by 25 percent is set to crimp corporate earnings beyond the oil patch, especially hitting the rail and hospitality sectors.

The fire, which has caused an estimated $50 million a day in lost production for oil sands companies near the evacuated city of Fort McMurray, has also caused pain to large companies that serve the sector and smaller ones catering to thousands of industry workers.

Canadian National Railway Co  has said it ran a freight train to Fort McMurray for the first time since May 3. It typically operates three trains a week to the city.

Separately, the Bank of Canada came out with a more hawkish statement on Wednesday on how the economy will be hurt by damage from the wildfires. The central bank said the wildfire disaster will shave 1.25 percentage points off economic growth in the second quarter.

“The wildfires in Alberta continue to delay oil production restarts, weighing on petroleum product shipments tied to the region,” said Susquehanna rail analyst Bascome Majors.

The effect on Canadian National and Canadian Pacific Railway Ltd results will be limited since crude-by-rail accounts for a relatively small part of their revenues, Majors said.

Canadian National said crude oil represented just over 1 percent of car loadings in the first quarter. Canadian Pacific’s crude shipments have fallen 70 percent, 87 percent and 77 percent, respectively, over each of the last three weeks, according to company data.

With the combination of the wildfire and weak commodity prices challenging the railroads, Seaport Global Securities noted that the latest weekly data showed Canadian crude-related rail shipments fell 35 percent from last year and total Canadian rail volumes slid 18.6 percent.

Parts of the hospitality sector will also be hurt.

The Blacksand Executive Lodge owned by Horizon North Logistics Inc, a provider of camps and lodges for oil sands workers, was completely destroyed by the fire.

Temple Hotels Inc, which owns and operates 29 hotels, has nearly one-third of its properties in Fort McMurray. Analysts said near-term earnings will be hurt due to the fire, though they noted it could benefit when reconstruction begins.

Losses for property insurers like Intact Financial Corp and Aviva Plc AV. are likely to be capped, wrote Wells Fargo analyst Elyse Greenspan, who expects the largest share of the losses to fall on European reinsurers and Everest Re Group Ltd.

She noted that estimates pointed to overall insured losses topping out at close to $7 billion.

The fire has also crippled small business owners in Fort McMurray as only a trickle of its 90,000 evacuated residents will begin to return in early June.

“It’s really challenging for us right now. Even if we reopen, what sort of business will we get?” said Joycelyn Reece-Reid, co-owner J’s Fashions. “All I know is business just won’t be like it was for maybe quite a few years.”

Chad Gergley, who owns a wellness clinic and a yogawear business in the city, said 25 percent of his employees do not intend to return since they have either lost their homes or been forced to find jobs elsewhere.

“On top of a revenue hit that businesses in town are taking, we’re taking a people hit with employees scattering,” he said.

The eventual rebuilding will boost construction activity, but will take time and is unlikely to result in sustained growth, said ATB Financial Chief Economist Todd Hirsch, who believes many small businesses may never return.

“Even though there may be a positive lift to GDP, there’s absolutely nothing economically positive about this fire,” he said.

(Reporting by Euan Rocha in Toronto and Allison Lampert in Montreal; Editing by Jeffrey Benkoe)

U.S. states stung by tumble in April of Income tax revenue

A car passes a sign advertising tax return services in Falls Church, Virginia

By Karen Pierog

CHICAGO (Reuters) – U.S. state personal income taxes tumbled in the key revenue month of April due to lower investment returns from weaker equities and energy prices in 2015, a Reuters analysis of state data found.

This April, personal income tax (PIT) revenue fell by an average of 9.88 percent compared to the same month last year in the 32 U.S. states and Puerto Rico for which Reuters has data.

Taxes on wages and investment income are a top revenue source for the 43 states that collect it. April is the most important revenue month because it contains the tax filing deadline and the tendency of taxpayers who owe money to wait until the last minute to pay.

Personal income taxes make up slightly more than a third of states’ total general fund revenue, and sales taxes comprise roughly another third.

Collections have been volatile in recent years, including 2013’s “April Surprise,” which delivered unexpectedly high revenues to states as taxpayers sold investments to dodge an increase in federal taxes.

Collections plunged in April 2014 then rebounded last year with the help of a robust stock market.

In 2015, the U.S. benchmark S&P 500 stock index lost 0.7 percent compared with a 11.4 percent gain in 2014.

“The kinds of income that are kind of driving this are particularly capital gains related to the stock market. If you had to find a No. 1 culprit, that’s it,” said Don Boyd, Director of Fiscal Studies at the Rockefeller Institute of Government in Albany, New York.

News of falling revenue comes as most states are nearing the end of fiscal 2016 and the beginning of fiscal 2017, leading some to turn to temporary measures to plug budget holes, Boyd said.

John Hicks, executive director of the National Association of State Budget Officers in Washington, said the 20 percent growth rate in the tax in April 2015 from a year earlier set “an extremely high bar.”

He said that PIT withholding has been more stable for states than capital gains-related tax revenue.

“The underlying personal income information – even while we’ve been bouncing for the last few years – has still been on a slow, but increasing trend,” Hicks added.

MOST STATES SEE COLLECTIONS DECREASE

Louisiana had the most dramatic drop at 81.5 percent. The plunge was due to a change in the way Louisiana issues refunds as well as a fall in withholding collections because the last day of April fell on a Saturday.

This resulted in some revenue payments being deposited in May, according to Kizzy Payton, press secretary for the Louisiana Department of Revenue.

Louisiana – like North Dakota, where PIT collections fell 34.7 percent – is also feeling the sting from the struggling energy sector. Oklahoma, another key energy producing state, experienced an 18 percent drop in revenue in April.

New Jersey’s PIT revenue was down 14.8 percent, largely due to a decline in taxpayers’ investment income and the state’s tax structure, which relies on wealthy residents.

Oregon’s receipts came in a third lower than last year, mainly because excess state revenue during the previous year led to a surplus income tax credit on 2015 returns, said Bob Estabrook, spokesperson for the Oregon Department of Revenue.

Lower income tax rates led to revenue drops in Illinois, down 28.8 percent, and in Ohio, down 41.3 percent. But in Kansas, which slashed rates in 2013, revenue was up 23 percent.

Seven states – Alaska, Florida, Nevada, South Dakota, Texas, Washington and Wyoming – collect no income tax, and two – New Hampshire and Tennessee – only levy taxes on dividend and interest income, but not wages.

(Reporting by Karen Pierog; additional reporting by Hilary Russ, Robin Respaut, Rory Carroll and Edward Krudy; editing by Daniel Bases and G Crosse)

Wall Street rises more than one percent as bank, tech stocks jump

Traders work on the floor of the New York Stock Exchange (NYSE) in New York City, U.S.

By Tanya Agrawal

(Reuters) – U.S. stocks rose to their highest in the last seven sessions on Tuesday, helped by gains in technology and financial stocks.

The S&P financial sector got a big boost from a rise in banking stocks as investors speculated on the possibility of a June interest rate hike.

Bank of America, JPMorgan, and Citigroup,were all up more than 1.5 percent each.

Minutes of the Federal Reserve’s April meeting suggested a June rate hike had not been ruled out, surprising investors who had thought the Fed would stand pat until the end of the year.

“I think investors are becoming more comfortable with an early rate hike because even if the Fed does raise rates in June, it will remain extremely accommodative,” said Art Hogan, chief market strategist at Wunderlich Securities in New York.

“I think the Fed wants to recalibrate the market’s expectations regarding a hike.”

Several Fed officials struck hawkish tones in separate speeches on Monday, calling for two-three rate hikes in 2016 if supported by economic data.

Fed Chair Janet Yellen speaks on Friday.

Traders are now pricing in a 39 percent chance of a June hike, up from 4 percent last week, as inflation creeps toward the Fed’s 2 percent target rate and the labor market strengthens.

Data on Tuesday showed new U.S. single-family home sales surged to a more than eight-year high in April and prices hit a record high, offering further evidence of a pick-up in economic growth.

The Philadelphia Housing Index climbed to a one-month high after the data.

At 11:07 a.m. ET (1507 GMT) the Dow Jones industrial average was up 209.97 points, or 1.2 percent, at 17,702.9,  was up 26.04 points, or 1.27 percent, at 2,074.08 and the Nasdaq Composite was up 79.28 points, or 1.66 percent, at 4,845.06.

The S&P rose above its 50-day moving average for the first time in four days. The index has not closed above the closely watched metric in almost two weeks.

The gains were broad-based, with all 10 S&P sectors in the black. The technology index’s 1.65 percent rise led the advance.

Oil reversed early losses to turn positive, as investors awaited crude oil inventory data from the United States that was expected to show a shrinking supply overhang. [O/R]

Toll Brothers shares were up 5.4 percent at $28.55 as the company’s quarterly revenue beat expectations.

Twitter fell as much as 4.8 percent to a record low at $13.72 after brokerage MoffetNathanson downgraded the company’s stock to “sell” from “neutral”.

Advancing issues outnumbered decliners on the NYSE by 2,351 to 549. On the Nasdaq, 2,090 issues rose and 515 fell.

The S&P 500 index showed 25 new 52-week highs and one new low, while the Nasdaq recorded 66 new highs and 18 new lows.

(Reporting by Tanya Agrawal; Editing by Anil D’Silva)

UK would lose at least half million jobs if vote to leave EU

A British Union flag flutters in front of one of the clock faces of the 'Big Ben' clocktower of The Houses of Parliament in central London

EASTLEIGH, England (Reuters) – Britain would lose at least half a million jobs within two years of a vote to leave the European Union and a fall in the value of the pound would push up inflation sharply, finance minister George Osborne said on Monday.

With a month to go until Britain holds its European Union membership referendum, Osborne said workers’ earnings, when adjusted for inflation, would be almost 3 percent lower in two years’ time, equivalent to a pay cut worth almost 800 pounds a year for someone working full time on the average wage.

Osborne was speaking as the finance ministry published a new report on the short-term implications of an “Out” vote.

(Writing by William Schomberg, editing by Kate Holton)

Fed’s Bullard: rates too low for too long, risky

St. Louis Fed President James Bullard speaks about the U.S. economy during an interview in New York February 26, 2015.

By Elias Glenn

BEIJING (Reuters) – U.S. interest rates being kept too low for too long could cause financial instability in future and stronger market expectations for a rate rise are “probably good”, St. Louis Federal Reserve President James Bullard said on Monday.

A relatively tight labor market in the United States may also exert upward pressure on inflation, raising the case for higher interest rates, Bullard added.

His comments come as financial markets have increased expectations for a U.S. interest rate hike in June or July and a range of policymakers are now stating that a rise is firmly on the table for the next policy meeting in June.

“I do worry that keeping rates too low for too long could feed into future financial instability even if it doesn’t look like we’re in that situation today,” Bullard, a voting member of the Fed’s policy-setting committee, told reporters.

Market assessment for a Fed rate rise had been close to zero, and the idea it has come off zero is “probably good”, he said. “It does depend on the data and it’s certainly not 100 percent, but it’s not zero either. Some probability in between is the right thing to think at this point.”

Bullard said the U.S. labor market was performing well and global headwinds that had partly prevented the Federal Reserve from raising rates again may have waned.

The Federal Open Market Committee has laid out a data-dependent “slow normalization” of rates, he said, thereby the nominal policy rate would gradually rise over the next several years provided the economy evolves as expected.

“Labor markets are relatively tight. This may put upward pressure on inflation going forward,” he said. “This is an important factor supporting the FOMC view on the expected path of the policy rate.”

Expectations for a June rate hike rose last week following minutes from the central bank’s April policy meeting released on May 18 that showed Fed officials felt the U.S. economy could be ready for another interest rate increase.

A possible British exit from the European Union in a vote next month will not affect the Fed’s upcoming decision on rates, Bullard said.

“Even if it’s a vote to exit the EU, the next day nothing happens, because you have two years of negotiation during which new trade arrangements have to be set up,” he said. “I also see the probability of an exit vote has fallen somewhat lately.”

Some policymakers at the April meeting had said they were concerned financial markets could be roiled by Brexit or by China’s exchange rate policies.

In deciding whether to raise rates, the Fed looks for improvement in the economy and jobs, and evidence inflation is moving toward its 2 percent target.

The Fed last month kept its target overnight interest rate in a range of 0.25 percent to 0.50 percent. It raised interest rates in December after keeping them near zero for nearly a decade to help the economy recover from a steep recession.

(Writing by Kevin Yao; Editing by Jacqueline Wong)

Cyber security is the biggest risk facing financial system

U.S. Securities and Exchange Commission Chair Mary Jo White is interviewed at the Reuters Financial Regulation Summit in Washington, US May 17, 2016.

By Lisa Lambert and Suzanne Barlyn

WASHINGTON (Reuters) – Cyber security is the biggest risk facing the financial system, the chair of the U.S. Securities and Exchange Commission (SEC) said on Tuesday, in one of the frankest assessments yet of the threat to Wall Street from digital attacks.

Banks around the world have been rattled by a $81 million cyber theft from the Bangladesh central bank that was funneled through SWIFT, a member-owned industry cooperative that handles the bulk of cross-border payment instructions between banks.

The SEC, which regulates securities markets, has found some major exchanges, dark pools and clearing houses did not have cyber policies in place that matched the sort of risks they faced, SEC Chair Mary Jo White told the Reuters Financial Regulation Summit in Washington D.C.

“What we found, as a general matter so far, is a lot of preparedness, a lot of awareness but also their policies and procedures are not tailored to their particular risks,” she said.

“As we go out there now, we are pointing that out.”

White said SEC examiners were very pro-active about doing sweeps of broker-dealers and investment advisers to assess their defenses against a cyber attack.

“We can’t do enough in this sector,” she said.

Cyber security experts said her remarks represented the SEC’s strongest warning to date of the threat posed by hackers.

A former member of the World Bank’s security team, Tom Kellermann, who is now chief executive of the investment firm Strategic Cyber Ventures LLC, called it “a historic recognition of the systemic risk facing Wall Street.”

BROKEN WINDOWS

Under White, a former federal prosecutor, the SEC introduced an initiative called “broken windows” designed to crack down on small violations of SEC rules to deter traders and others from larger transgressions.

But critics have questioned whether the initiative, similar to one used by former New York City Mayor Rudy Giuliani in his crackdown on crime in the city, is an effective use of the agency’s limited resources.

The policy has been applied to instances of “rampant non-compliance” involving serious, significant rules, White said, noting that she considers the initiative a huge success.

For example, the SEC brought three groups of cases in a key area, the prohibition against short selling ahead of an IPO by individuals who then participated in the IPO, since 2013, she said. Each year, there have been fewer cases, with the most recent number at around 12, White said.

GAAP VS. NON-GAAP

Also on Tuesday, the SEC released guidance about how certain accounting practices could potentially mislead investors that White called “consequential.”

Companies are increasingly using non-Generally Accepted Accounting Principles, or non-GAAP, to report earnings, permitting them to back out certain expenses from earnings figures, such as non-cash costs. But critics say the practice can also mislead investors by creating a rosier picture of a company’s profits.

The SEC’s current rules allow companies to report with figures that do not comply with GAAP, as long as certain conditions are met and White said the guidance spells out those conditions, such as a requirement that “the GAAP measure has to be of equal or greater prominence than non-GAAP.”

Non-GAAP “is not supposed to supplant GAAP and obviously not obscure GAAP,” she said.

She declined to say if the SEC is considering enforcement actions against companies that might be misleading investors with non-GAAP, but noted the SEC would not hesitate to bring one if it uncovered an “actionable violation.”

For months now, the SEC has only had three commissioners, down from its full complement of five, and the U.S. Congress has stalled on confirming two nominees.

“We’re really functioning on all cylinders,” White said, ticking off a list of projects the commission has recently completed.

She added that, to comply with rules on meetings and disclosures, commissioners typically meet one-on-one.

“If there are only three of you, it’s shorter-circuited to some degree,” she said. “There are some advantages, too.”

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For other news from the Reuters Financial Regulation Summit, click on http://www.reuters.com/summit/FinancialRegulation16

(Additional reporting by Sarah N. Lynch)