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EXHIBIT 99.1
TAILWIND FINANCIAL INC.
CHARTER OF THE AUDIT COMMITTEE
OF THE BOARD OF DIRECTORS
The board of directors (the "BOARD") of Tailwind Financial Inc., a Delaware
corporation (the "COMPANY") hereby establishes the Audit Committee of the Board
with the following purpose, authority, powers, duties and responsibilities.
I. PURPOSE
The purpose of the Audit Committee is to represent and assist the Board of
the Company in its general oversight of the Company's accounting and financial
reporting processes, audits of the financial statements, and internal control
and audit functions by reviewing: the financial reports and other financial
information provided by the Company to any governmental body or the public; the
Company's systems of internal controls regarding finance, accounting and legal
compliance that management and the Board have established; and the Company's
auditing, accounting and financial reporting processes generally. Consistent
with this function, the Audit Committee should encourage continuous improvement
of, and should foster adherence to, the Company's policies, procedures and
practices at all levels. The Audit Committee's primary duties and
responsibilities are to:
o Serve as an independent and objective party to monitor the Company's
financial reporting process, audits of financial statements and internal
control system;
o Review and appraise the audit efforts of the Company's independent
registered public accounting firm (the "INDEPENDENT AUDITOR") and
internal finance department; and
o Provide an open avenue of communication among the Independent Auditor,
financial and senior management, the internal finance department, and
the Board.
The Audit Committee members are not required to be professional accountants
or auditors and their functions are not intended to duplicate or to certify the
activities of management and the Independent Auditor, nor can the Audit
Committee certify that the Independent Auditor is "independent" under applicable
rules. The Audit Committee serves a board level oversight role where it oversees
the relationship with the Independent Auditor, as set forth in this charter,
receives information and provides advice, counsel and general direction, as it
deems appropriate, to management and the Independent Auditor, taking into
account the information it receives, discussions with the Independent Auditor,
and the experience of the Audit Committee's members in business, financial and
accounting matters.
The Audit Committee will primarily fulfill its responsibilities by carrying
out the activities enumerated in Section III.
II. MEMBERSHIP AND STRUCTURE
The Audit Committee consists of at least three directors determined by the
Board to meet the director and audit committee member independence requirements
and financial literacy requirements of the American Stock Exchange, Inc.
("AMEX"), subject to any compliance grace periods permitted by AMEX. At least
one member of the Audit Committee must be financially sophisticated and an audit
committee financial expert, as determined by the Board, pursuant to the
requirements of AMEX and Item
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401(h) of Regulation S-K, as amended, and no Audit Committee member may have
participated in the preparation of the financial statements of the Company or
any of the Company's current subsidiaries at any time during the past three
years. Appointment to the Audit Committee and the designation of any Audit
Committee members as "audit committee financial experts" shall be made on an
annual basis by the full Board.
Meetings of the Audit Committee shall be held at such times and places as
the Audit Committee shall determine, including by written consent, on a
quarterly basis. When necessary or appropriate, the Audit Committee shall meet
in executive session outside of the presence of any senior officer of the
Company. The Chair of the Audit Committee shall report on activities of the
Audit Committee to the full Board. In fulfilling its responsibilities, the Audit
Committee shall have authority to delegate its authority to subcommittees, in
each case to the extent permitted by applicable law.
III. RESPONSIBILITIES
The Audit Committee:
o is directly responsible for the appointment, compensation, retention and
oversight of the work of the Independent Auditor (including the
resolution of disagreements between management and the Independent
Auditor regarding financial reporting). The Independent Auditor shall
report directly to the Audit Committee and have ultimate accountability
to the Audit Committee.
o reviews and updates this Charter of the Audit Committee, at least
annually, as conditions dictate.
o reviews and discusses with the Independent Auditor the written statement
from the Independent Auditor concerning any relationship between the
Independent Auditor and the Company or any other relationships that may
adversely affect the independence of the Independent Auditor consistent
with Independence Standards Board ("ISB") Standard 1, as it may be
modified or supplemented, and, based on such review, assesses the
independence of the Independent Auditor.
o reviews and discusses with the Independent Auditor annually the matters
required to be discussed by Statement on Audited Standards ("SAS") 71,
as it may be modified or supplemented.
o establishes policies and procedures for the review and pre-approval by
the Audit Committee of all auditing services and permissible non-audit
services (including the fees and terms thereof) to be performed by the
Independent Auditor, to the extent required by Section 202 of the
Sarbanes-Oxley Act.
o reviews and discusses with the Independent Auditor on a timely basis:
(a) its audit plans and audit procedures, including the scope, fees and
timing of the audit; (b) the results of the annual audit examination and
accompanying management letters; and (c) the results of the Independent
Auditor's procedures with respect to interim periods.
o reviews and discusses with the Independent Auditor on a timely basis:
(a) all critical accounting policies and practices used by the Company;
(b) alternative accounting treatments within generally accepted
accounting principles in the United States ("GAAP") related to material
items that have been discussed with management, including the
ramifications of the use of the alternative treatments and the treatment
preferred by the Independent Auditor; and (c) other material written
communications between the Independent Auditor and management, such as
any management letter or schedule of unadjusted differences.
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o reviews and discusses with the Independent Auditor on a timely basis the
Independent Auditor's judgments as to the quality, not just the
acceptability, of the Company's accounting principles, financial
reporting processes, both internal and external, and such further
matters as the Independent Auditor presents to the Audit Committee under
GAAP.
o discusses with the Company's officers and the Independent Auditor
quarterly earnings press releases, including the interim financial
information and other disclosures included therein, reviews the year-end
audited financial statements and "Management's Discussion and Analysis
of Financial Condition and Results of Operations" and, if deemed
appropriate, recommends to the Board of Directors that the audited
financial statements be included in the Company's Annual Report on Form
10-K for the year.
o reviews and discusses with the Company's officers and the Independent
Auditor various topics and events that may have significant financial
impact on the Company or that are the subject of discussions between the
Company's officers and the Independent Auditors.
o reviews and discusses with the Company's officers the Company's major
financial risk exposures and the steps the Company's officers have taken
to monitor and control such exposures.
o reviews and approves related-party transactions.
o reviews and discusses with the Independent Auditor and the Company's
officers: (a) the adequacy and effectiveness of the Company's internal
controls (including any significant deficiencies and significant changes
in internal controls reported to the Audit Committee by the Independent
Auditor or management); (b) the Company's internal audit procedures; and
(c) the adequacy and effectiveness of the Company's disclosures controls
and procedures, and management reports thereon.
o reviews annually with the Company's officers the scope of the internal
audit program, and reviews annually the performance of both the internal
audit group and the Independent Auditor in executing their plans and
meeting their objectives.
o reviews the use of auditors other than the Independent Auditor.
o establishes procedures for (i) the receipt, retention and treatment of
complaints received by the Company regarding accounting, controls, or
auditing matters, and (ii) the confidential, anonymous submission by
employees of the Company of concerns regarding questionable accounting
or auditing matters.
o establishes policies for the hiring of employees and former employees of
the Independent Auditor.
o establishes regular and separate systems of reporting to the Audit
Committee by each of management and the Independent Auditor regarding
any significant judgments made in management's preparation of the
financial statements and the view of each as to the appropriateness of
such judgments.
o following completion of the annual audit, reviews separately with each
of management and the Independent Auditor any significant difficulties
encountered during the course of the audit, including any restrictions
on the scope of work or access to required information.
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o reviews any significant disagreement among management and the
Independent Auditor in connection with the preparation of the financial
statements.
o reviews with the Independent Auditor and management the extent to which
changes or improvements in financial or accounting practices, as
approved by the Audit Committee, have been implemented. (This review
should be conducted at an appropriate time subsequent to implementation
of changes or improvements, as decided by the Audit Committee.)
o ensures that management has the proper review system in place to ensure
that Company's financial statements, reports and other financial
information disseminated to governmental organizations and the public
satisfy legal requirements.
o reviews activities, organizational structure, and qualifications of the
internal finance department.
o reviews, with the Company's counsel, legal compliance matters, including
corporate securities trading policies.
o reviews, with the Company's counsel, any legal matter that could have a
significant impact on the Company's financial statements.
o publishes the report of the Audit Committee required by the rules of the
United States Securities and Exchange Commission to be included in the
Company's annual proxy statement.
o when appropriate, designates one or more of its members to perform
certain of its duties on its behalf, subject to such reporting to or
ratification by the Audit Committee as the Audit Committee shall direct.
o performs any other activities consistent with this Charter of the Audit
Committee, the Company's By-laws and governing law, as the Audit
Committee or the Board deems necessary or appropriate.
IV. ADVISORS; FUNDING
The Audit Committee shall have the authority to retain independent legal
counsel and independent accountants and other advisors as it deems necessary and
appropriate to carry out its duties and responsibilities hereunder. The Company
shall provide appropriate funding, as determined by the Audit Committee, for (i)
payment of compensation to the Independent Auditor employed by the Company to
render or issue an audit report or to perform other audit, review or attest
services of the Company and the advisors referred to in the immediately
preceding sentence employed by the Audit Committee and (ii) payment of ordinary
administrative expenses of the Audit Committee that are necessary or appropriate
in carrying out its duties.
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