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When regulators in 2004 went after Fannie Mae for failing to adhere to requirements of FAS 133, much of Corporate America considered itself on the spot as well: Five years after the adoption of the accounting standard that determines how U.S. companies report hedging activities, here was a high-profile derivative user being nailed for what had become a relatively common interpretation of the rule. How many others would be tripped up by 133? In fact, another 230 companies or so–including high-profile names such as Ford Motor Co. and Bank of America Corp.–have faced similar challenges. All of this made companies pause, and even backtrack a bit. But it was not until January when behemoth General Electric Co., with its best-practices treasury, fell victim to 133 that the potential scale of Corporate America’s problems was brought home. “For a lot of people, it was a case of, if a company as savvy and sophisticated as GE–the originator of Six Sigma–is getting this wrong, then is everyone below GE also getting it wrong?” suggests Jiro Okochi, CEO of derivatives risk management software firm Reval.com Inc. “I think it was a bit of an eye-opener.”

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