Monthly Archives: August 2002

August 11, 2002

The media continues to track the potential conflicts of interest posed by the SEC’s Chairman and the four new Commissioners. The Washington Post recently ran a lengthy article detailing the potential conflicts posed by the new Commissioners at

August 9, 2002

The transcript from Wednesday’s program is now available at

August 8, 2002

The SEC just issued its 4th set of FAQs on the certifications that are required for the 947 companies under its Order. It only comprises two new FAQs – and its at

August 8, 2002

The FASB agreed yesterday to explore requiring all companies to disclose more prominently the impact of stock options on earnings – rather then just recommend uniform standards for companies that have voluntarily agreed to disclose this impact. Over 30 companies have volunteered in the past few weeks, including Citigroup who announced its intentions yesterday.

A Washington Post article on this topic is at

August 6, 2002

The SEC just issued supplemental information regarding the Section 16 reports that get accelerated by Sarbanes-Oxley on August 29th. The release is at

The SEC is encouraging electronic filing of these forms – and will allow insiders to file them in free-text format – rather than the tables in the forms themselves – so long as the order of the information is the same. This is a big accomodation – as EDGAR isn’t set up to easily accept tables yet.

August 5, 2002

Regarding 906 certifications, if a company files its Form 10-Q and the certification is not evident from the filing – that does not necessarily mean that it was not submitted under the Sarbanes-Oxley Act. The company may have submitted it as correspondence – which would not be publicly available.

Of course, filing it as part of the 10-Q might not be a bad idea – otherwise, the media and investors may jump to the conclusion that the company was unable – or unaware – to make the submission.

Late Friday, the SEC posted its proposal relating to certifications for analysts at

August 2, 2002

The SEC has just posted on its web site, Release No. 34-46300 with proposed rules to implement Section 302 of the Sarbanes-Oxley Act of 2002 – its at

The Release discusses the differences with the SEC’s own proposals for certification. The comment period for the 302 rules and the SEC’s own rules remains August 19. The Release points out that because of the short time period for the 302 rules, it will not be able to consider comments filed after Aug 19, and urges parties to try to get comments in before the 19th.

The SEC distinguishes Section 906 as something different from the rules under 302, and as something in effect now. Set forth below is the Release’s footnote on Section 906:

“Section 906 of the Sarbanes-Oxley Act of 2002 adds new Section 1350 to chapter 63 of title 18 of the United States Code. Section 1350 requires a written statement to accompany all periodic reports filed with us that contain financial statements. This release does not relate to Section 906 of the Act, which, by its terms, is effective on enactment of the Act, July 30, 2002.”

A few more companies have made 10-Q filings with the 906 certifications, including Cigna, PSE&G and State Street.

August 1, 2002

The NYSE just announced its final listing standards regarding corporate governance reform (subject to SEC approval). The press release provides a table regarding some – but not all – of what the standards will look like after receiving SEC approval.

This information is extracted from the press release and is available at

August 1, 2002

Understandably, there is a lot of confusion right now about CEO/CFO certifications as the Sarbanes-Oxley Act of 2002 has added two more layers – and the SEC is coming out with new guidance about its original requirements almost daily.

Before the Act, the SEC had issued an Order requiring CEOs and CFOs of 947 companies to submit certificates to the SEC secretary on paper. Most of those companies are required to submit this certificates on or before August 14th. A few days ago, the SEC strongly recommended that these certifications also be filed on a Form 8-K (since they arguably are material nonconfidential information that should be widely dissimenated under Regulation FD).

The new Act has two provisions that also require certifications from CEOs and CFOs – these apply to ALL public companies. Section 302 of the Act directs the SEC to adopt rules within 30 days requiring certifications as to various matters in annual and quarterly reports. Companies need not comply with Section 302 until the SEC rules are adopted.

Section 906 of the Act also deals with certification by adding a new Section 1350 to the U.S. criminal statutes which requires each periodic report containing financial statements filed with the SEC to be accompanied by a written statement by the CEO and CFO. In contrast to Section 302, the Section 906 requirement is effective IMMEDIATELY and, therefore, is required for all 10-Qs and 10-Ks (so the 947 companies already subject to the SEC’s Order must make two separate certifications at the time of filing their next 10-Q (or 10-K in the case of companies with a June 30 year-end). Companies not covered by the SEC’s Order are still required to comply with the new Section 906 requirement).

There still are a number of open legal issues relating to the new Section 906 – one of which is what it should look like. The SEC is expected to address these issues soon. Until then, please note that General Electric filed a 10-Q yesterday and created its own form of certification filed in an Exhibit 99. This exhibit is at

There are a number of great law firm client memos on this topic in the SEC Reform Portal under “Certifications under Sections 906 and 302” at