X

Thank you for sharing!

Your article was successfully shared with the contacts you provided.
The Securities and Exchange Commission on Wednesday issued its most detailed look yet of its new corporate disclosure rules, which call for filings of financial statements to be made faster and to be broader in scope. The SEC’s timing in unveiling the proposals was purposeful as well, coming not only in the middle of a week heavy with hearings on Enron Corp. in Washington, D.C., but also on the same day that the House revealed its own corporate disclosure reforms. The SEC’s proposal would provide accelerated reporting by companies of transactions by company insiders; accelerate filing by companies of their quarterly and annual reports; and expand the list of significant events requiring current disclosure on Form 8-K. The SEC also proposes to require companies to post their Exchange Act reports filed with the SEC simultaneously on their corporate Web sites and to require disclosure of critical accounting policies in the management discussion and analysis section of annual reports. “The steps we announce today represent only a beginning in the realization of an important regulatory agenda,” SEC Chairman Harvey Pitt said in a statement Wednesday. Meanwhile, Rep. Michael Oxley, R-Ohio, chairman of the House Financial Services Committee, and Rep. Richard Baker, R-La., introduced the “Corporate and Auditing Accountability, Responsibility, and Transparency Act,” or CARTA bill on Wednesday. Among other matters, the bill would require companies to provide more public information about their financial health in real time. Once Pitt became chairman in August, he made it immediately known that his task at hand was to improve the financial reporting and disclosure system. Then the Enron bankruptcy and ensuing scandal happened, leaving the agency open to criticism about its vigilance. In a show that the agency has its finger on the pulse of disclosure issues, the SEC rushed out a draft of its proposed rules Wednesday, even though Pitt and other officials have been talking them up since the Enron situation arose. The rules should be formally released in the next 30 to 60 days, followed by a comment period. Christi Harlan, an SEC spokeswoman, said the agency is optimistic that the rules could be enacted shortly. “They are fairly noncontroversial, and we’re hoping for a 30-day comment period,” she said. “This is a clear response to Enron,” said Frank R. Goldstein, a securities attorney at Sidley Austin Brown & Wood in Washington. “With everyone saying there were failures all around, and talk of corporate disclosure legislation [on Capitol Hill], the timing of the proposal is obviously one that is intended to create the impression, perhaps rightly so, that the commission is hard at work trying to deal with what has happened at Enron.” But while it’s obvious the regulator is battling to stay at the forefront of the securities reform debate, “the SEC is just announcing it’s going to do these things. They haven’t done it yet,” said John F. Olson, a securities attorney at Gibson, Dunn & Crutcher in Washington. “It’s commendable they are setting a timetable for themselves, but it’s mainly reaction by the commission to any congressional action,” he said. “This is part of the SEC’s effort to play a leading role in this.” As far as the proposal goes, “there are some things in here that are good, and there are some that may be difficult to accomplish,” he said. One sore spot for companies and their auditors will likely be the acceleration in dates for financial statements. According to the SEC proposal, annual reports would be due within 60 days after the end of a company’s fiscal year, instead of the current 90. Also, quarterly reports would be due within 30 days after the end of the quarter, instead of the current 45. The SEC said it anticipates other reform proposals, including those covering accounting standard-setting, regulation of the auditing processing and profession and corporate governance. On the latter, Pitt has asked the New York Stock Exchange and Nasdaq to review governance and listing standards, including officer and director qualifications, and the codes of conduct of public companies. Copyright (c)2002 TDD, LLC. All rights reserved.

This content has been archived. It is available exclusively through our partner LexisNexis®.

To view this content, please continue to Lexis Advance®.

Not a Lexis Advance® Subscriber? Subscribe Now

Why am I seeing this?

LexisNexis® is now the exclusive third party online distributor of the broad collection of current and archived versions of ALM's legal news publications. LexisNexis® customers will be able to access and use ALM's content by subscribing to the LexisNexis® services via Lexis Advance®. This includes content from the National Law Journal®, The American Lawyer®, Law Technology News®, The New York Law Journal® and Corporate Counsel®, as well as ALM's other newspapers, directories, legal treatises, published and unpublished court opinions, and other sources of legal information.

ALM's content plays a significant role in your work and research, and now through this alliance LexisNexis® will bring you access to an even more comprehensive collection of legal content.

For questions call 1-877-256-2472 or contact us at [email protected]

 
 

ALM Legal Publication Newsletters

Sign Up Today and Never Miss Another Story.

As part of your digital membership, you can sign up for an unlimited number of a wide range of complimentary newsletters. Visit your My Account page to make your selections. Get the timely legal news and critical analysis you cannot afford to miss. Tailored just for you. In your inbox. Every day.

Copyright © 2020 ALM Media Properties, LLC. All Rights Reserved.