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Are SEC disclosures worth the cost?

Article Abstract:

The Securities and Exchange Commission (SEC) has developed a proposal which would require a management report on internal control to be included in the annual reports and 10-Ks of SEC registrants. The proposal would require four disclosures from the management of a business: a description of management's responsibilities for maintaining an internal control system directly related to financial reporting; a description of management's responsibilities for the financial statements; a management assessment of the functionality of the internal control system; and a management response to any important internal control suggestions. Firms may find, however that there are significant costs associated with complying with the proposal including: costs associated with the impact of the proposal on outside audit fees; costs associated directly with complying with the proposal; and costs associated with the interpretation of disclosures by users of financial statements.

Corporation reports, Company reports

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Can controllers avoid legal problems?

Article Abstract:

The Securities and Exchange Commission (SEC) can file a criminal indictment, sue for an injunction, or institute administrative proceedings against companies suspected of fraudulent accounting and financial reporting practices. Recent rulings have shown that financial officers cannot plead that they were 'just following orders' if charged with accounting improprieties. Financial officers can protect themselves legally by avoiding misstatements of fact, and not giving in to pressure from superiors to misstate the facts (actions are brought for making false statements, not for making honest mistakes). Controllers should also bear in mind that cover-ups are worse than the original acts. Contrary to the notion that SEC actions are 'slaps on the wrist,' an SEC investigation actually creates a great deal of anxiety and damages professional reputations.

Business ethics

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A manager's guide to avoiding insider trading liability

Article Abstract:

An employee of a firm is considered an insider by the Securities and Exchange Commission if the employee knows material information about his or her company that has not yet been released to the public. 'Material information' is data likely to affect the market price of a company's stock when disclosed to the public. Insider trading is an illegal act that consists of either: buying or selling inside information, or trading securities on the basis of inside information. Company insiders should refrain from trading securities unless all pertinent information about the company has been disclosed to the public. The company should never release misleading information and should avoid releasing incomplete information. Public corporations should establish a formal policy against insider trading.

Security and commodity exchanges, Regulation misc. commercial sectors, Prevention, Disclosure (Securities law), Insider trading in securities, Insider trading (Securities), Securities law

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