June 20, 2007

“Happy 5th Anniversary SOX! Sweet and Beautiful”

With the five-year anniversary of the Sarbanes-Oxley Act arriving next month, Dave and I thought we would use that memorable event to kick off our weekly vidcast series entitled “The Sarbanes-Oxley Report,” featuring “Billy Broc” Oxley and Dave “The Animal” Sarbanes.

The first installment is entitled “Happy 5th Anniversary SOX! Sweet and Beautiful” – and is only 15 seconds long. Future installments will tackle the tough issues of the day – and we eventually hope to interview guests (basically anyone game to wear a wig).

Here is a Quick Survey to consider after you review the video. Feel free to e-mail us your comments or story ideas. I’ve already heard “it just looks like two guys and a six pack”…

More Thoughts on the SEC’s IBM Enforcement Action

A few weeks ago, I blogged about a SEC enforcement settlement regarding IBM’s violation of the Form 8-K reporting requirements (and Rule 12b-20’s requirement) to disclose additional material information so as to make required statements not misleading.

One member notes: Do you think this case may have a chilling effect on voluntary 8-K filings? [See this new quick survey on earnings releases and earnings calls.] It seems to me that since IBM’s April 5, 2005 call was publicly webcast, it was already Regulation FD compliant – and thus, there was no requirement for IBM to file the transcript and slides on an 8-K. Voluntarily filing the slides on an 8-K when they didn’t have to seems to be what got IBM into trouble.

Another member notes: My view is that this was a tenuous case by the SEC; IBM told people the ’04 impact of stock comp expense in the call/their filings, told people ’05 would be lower, without quantifying, but people got confused and thought a chart was ’05 – not ’04 – even though reading the 10-K would have made clear these were the same numbers as ’04 and IBM had said ’05 will be lower! The only thing I’d fault IBM for is not calling analysts to make clear they misunderstood, but I’m not sure that should be the basis for an SEC action.

Kicking the Earnings Guidance Habit?

A few days ago, a coalition issued a set of recommendations in these Aspen Principles, including one that companies cease providing quarterly earnings guidance or projections. And this Associated Press article from a while back describes how fewer companies are providing earnings guidance – and then, ran this article describing how CFOs are eagerly awaiting the tipping point that will spell the death of earnings guidance altogether.

In our “Earnings Releases” Practice Area, we have posted a host of resources on earnings guidance, including a template for reporting quarterly earnings and this fine law firm memo.

Quick Survey: Earnings Releases and Earnings Calls

We have posted a quick survey on earnings releases and earnings calls.

There are some interesting questions posed in this survey. For example, the last one asks whether companies are posting their earnings call archives on iTunes or in the form of a “podcast.” Some companies are doing this, such as Johnson & Johnson.

– “Billy Broc” Romanek