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Chief executives and CFOs have decided that if they have to put their necks on the line, they want to be joined by a few of their colleagues-including GCs. One well-publicized feature of the Sarbanes-Oxley Act, the new corporate governance law, is its demand that CEOs and CFOs must personally certify their companies’ financial reports. Even before Congress acted, the SEC decided this spring that it would require certification from the CEOs and CFOs of corporations with 2001 revenue of more than $1.2 billion. Almost 700 corporations filed certifications by August 14, the SEC’s deadline for companies that use the calendar year for reporting results. (The agency granted five-day deadline extensions to some companies.) Around 250 businesses that use fiscal-year reporting must file certifications on the first date they normally would be required to submit their annual or quarterly reports. Much of the challenge to meet those deadlines fell on in-house counsel, who had to develop a proc-ess for certifying results as quickly as possible, according to Daniel Kramer, a partner at New York’s Paul, Weiss, Rifkind, Wharton & Garrison, who specializes in complex securities litigation. And in a surprising and unexpected development, many businesses are providing backup to their chiefs by asking lower-level executives to sign internal certifications as well. That was certainly the case at Miami-based Ryder System Inc., says general counsel Vicki O’Meara. The company first identified a group of 18 senior executives with responsibility for preparing or overseeing financial data, including herself. O’Meara’s legal team then helped draft an internal certification that “tracks the requirement of the new law as well as the SEC request.” Once the document affirming the company’s financial results was finalized, “the 18 of us signed and notarized [it],” O’Meara says. Likewise at Philadelphia-based Comcast Corp., general counsel Arthur Block says that he and other officers signed an internal certification supporting the oaths inked by the company’s principal executive officer and co-principal financial officers. Block helped develop the internal supporting certifications; distributed documents for review; and arranged for review meetings with management, outside counsel, outside auditors, internal auditors, and the audit committee. At AMR Corp., general counsel Anne McNamara was one of several senior executives who took part in a due diligence session. According to corporate secretary Charles MarLett, the session also included the independent auditors, internal auditors, and controller for the Fort Worth-based parent of American Airlines. Plum Creek Timber Company, Inc. didn’t have to file a certification with the SEC, since its revenue falls below the agency’s threshold. But general counsel James Kraft says that the Seattle-based timber producer decided to institute new procedures anyway in response to the general cry for greater financial accountability. For the company’s quarterly report issued in August, division heads were required to certify their figures in writing. “The essence is the written communication,” he says. “It gives our CEO the factual basis to sign the documents in good faith.” Companies took the process seriously because any chief executive or CFO who falsely certifies company reports can be prosecuted, fined up to $5 million, and imprisoned for up to 20 years, SEC chairman Harvey Pitt has warned. The Sarbanes-Oxley Act is unclear on the penalty for not filing a certification. Kramer at Paul, Weiss speculates that any executive who fails to file could face SEC punishment, including potentially being barred from being an officer of a public company. “But the principal penalty is likely to be a market penalty,” he says. “The company’s stock will be punished.”

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