September 22, 2005

SEC Acts on 404/Proposes New Accelerated Filer Definitions & Deadlines

In the “Hot Box” on the home page of, we promptly posted notes shortly after yesterday’s SEC’s open Commission meeting (Chair Cox’s 1st meeting – a 3 hour doozy) – these notes are more extensive than the following bullet points:

Smaller Companies – A company that is not an “accelerated filer” can now wait to comply with the internal control over financial reporting requirements until their first fiscal year ending on or after July 15, 2007.

Foreign Private Issuers – The delay above includes foreign private issuers that don’t meet the definition of “accelerated filer.” Note that a foreign private issuer that is an “accelerated filer – a concept never before applied to FPIs – will stay on its current course to comply with 404 for fiscal years after July 15, 2006.

Large Accelerated Filers – A new category of issuers was proposed: “Large Accelerated Filers,” who would be issuers that meet the current definition of “accelerated filer,” except that their public float is $700 million or more. As proposed, Large Accelerated Filers would need to file their 10-Ks within 60 days after fiscal year-end and their 10-Qs within 40 days after quarter end, for year-ends after December 15, 2005. See the notes for a discussion of the overlap between WKSIs and LAFs.

Accelerated Filers – Companies that meet the traditional definition of “accelerated filer” will still need to comply with 404, but it is proposed to give them 75 days as the deadline for their 10-Ks and 40 days for their 10-Qs (and to modify exiting of accelerated filer status by permitting an accelerated filer whose public float has dropped below $25 million to file an annual report on a non-accelerated basis for the same fiscal year that the determination of public float is made).

Here is the SEC’s press release regarding its actions. There is a short 30-day comment period for the proposals.

Correction About the NASD’s “New Issue” Rule Amendments

Last Thursday, I blogged that the amendments to Rule 2790 would become effective Monday, September 19th – I was wrong! I forgot about the SEC’s Release No. 34-52209A issued August 22nd that made the Rule 2790 amendments effective upon announcement by the NASD in a Notice to Members to be published no later than 60 days following SEC approval. The effective date will be not more than 30 days following publication of the Notice to Members according to the amended order. It doesn’t appear that a Notice to Members has yet been issued, which means the old rule is still in effect at this time. Thanks to Eric Graham of Goodwin Procter for the heads up!

Fraud Prevention and Management

In this podcast, Jim Persing, a former lawyer who is now a life coach, delves into how to deal with an employee engaged in fraudulent conduct, including:

– Are companies seeing more cases of fraud and questionable ethics?
– When discovered, how do companies typically deal with the employee and the related issues, particularly if the employee is valued and productive?
– What are the pros and cons to these actions from the company’s perspective?
– Could the company turn to an unbiased outsider to help? How?
– What monitoring would be needed? What if it doesn’t work – then what?