March 10, 2020

SEC Asks DC Employees to Work From Home

In what may be a sign of things to come for many of us, The Washington Post reports that last night, the SEC asked employees in its DC headquarters to work from home in response to concerns that an employee may have contracted the coronavirus:

The Securities and Exchange Commission on Monday asked employees at its D.C. headquarters to stay away from the office because of a potential coronavirus case, becoming the first major federal employer to turn to telework to avoid the spreading virus.

The announcement from the agency, which is charged with monitoring the financial markets, came after a day of turmoil on Wall Street, with the Dow Jones industrial average falling more than 2,000 points. The agency‘s notice, which was emailed shortly after 8 p.m., required employees working on the ninth floor of its office to stay home and encouraged all others to do the same.

While the SEC may be the first federal agency to ask employees to telecommute, a number of U.S. businesses have also implemented work from home policies for some employees in response to the outbreak. Many others are adopting contingency plans that contemplate doing the same. For instance, last night my law firm sent out an email directing everyone to take their laptop computers home each night, in case the decision was made to implement a work from home policy for personnel at one or more of our offices.

Coronavirus: Will Business Interruption Insurance Pick Up Some of the Tab?

Many companies are looking into whether forced closures resulting from the coronavirus outbreak are covered under their business interruption policies. This Stroock memo delves into that question, and it turns out – as usual when it comes to coverage issues – the answer is pretty complicated. But the bottom line is don’t bet on it. Here’s an excerpt from the intro:

With COVID-19 disrupting global supply chains and sales, businesses are losing income and incurring additional expenses as a result of the disruption. There likely will be an increase in insurance claims against insurance policies offering business interruption and/or contingent business interruption coverage. Whether the claims are covered will depend on the terms and conditions of the insurance policy and the circumstances of the loss.

One of the largest independent claim managers has cautioned that “successful claims under business interruption coverage for infection are not common.” Indeed, there are no reported cases in the United States regarding business interruption coverage in connection with human infectious disease epidemics or pandemics. However, commerce has never been as global as it is today.

The memo does a good job summarizing the various types of policies that provide business interruption insurance and the way in which they’ve been interpreted by the courts. After reading it, I think it’s fair to say that any company that seeks to recover under a business interruption policy should be prepared for a long and uncertain fight.

Auditor Refreshment: Every 87 Years Like Clockwork. . .

A recent Audit Analytics blog noted that Brown Forman recently changed its outside auditors for the first time in 87 years, and also pointed out that since 2018, there were only two other S&P 500 companies to change auditors after a longer tenured engagement. GM parted ways with Deloitte after 100 years, and DuPont de Nemours ended its relationship with that same firm after 113 years.

That raises the larger question of just how long have S&P 500 companies used the same auditors? The blog lays that out too, with a chart showing the frequency distribution of auditor tenure in 10-year increments. While only 38 companies have auditors with tenures exceeding 80 years, 94 companies – or nearly 20% of the S&P 500 – have had the same auditor firm for more than 50 years. More than half of the S&P 500 (265 companies) have had the same auditor for more than 20 years.

John Jenkins