This is a good question posed by a number of members yesterday in the wake of the SEC’s action against Siebel. The issue is that disclosure controls are supposed to be designed so that “information required to be disclosed by the issuer in the reports that it files or submits under the Act (15 U.S.C. 78a et seq.) is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms.”
As Ron Mueller points out, before this action, it could have been argued perhaps that Reg FD does not require an Exchange Act filing in order to comply; but that an 8-K is only a safe harbor and the rule can be satisfied by other methods.
But in Paragraph 22 of the complaint against Siebel, the SEC sets forth its theory – that an 8-K is required under FD, and the rule says it’s only not required if disclosure is made through another channel. So the SEC essentially argues that a company needs to have the disclosure controls in place to determine whether there is an FD event that requires disclosure, and determining whether to satisfy the obligation by an 8-K or press release is then only a matter of disclosure implementation.
It seems like a odd first case for disclosure controls, particularly when the SEC is alleging that the FD disclosure was an intentional disclosure. The upshot is that you should ensure that your disclosure controls deal with Reg FD and the fact that you may need to make a disclosure as well as a determination as to the method of dissemination.
FASB May Delay Options Expensing
Yesterday, it was widely reported that FASB Chair Bob Herz was acknowledging that option expensing might be delayed from the beginning of 2005 to 2006 (and the SEC’s Chief Accountant was urging the delay). The rationale was that companies had their hands full this year with implementing more stringent internal controls.
Announcing the Arrival of Julie Hoffman!
I’m excited about our latest hire, Julie Hoffman who worked on the aircraft carrier when she was in Corp Fin back in the day – then worked at Latham & Watkins and Squire Sanders.
Julie will be blogging for me next week, when I am mired in Boston at the annual conference for the American Society of Corporate Secretaries. Julie can be reached at firstname.lastname@example.org.