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20 out of 900+ have complied, with 11 days to rub.

  1. Carls

    2,839 Posts.

    I lifted this from the CBS Market Watch Newsletter.
    Could be some interesting times, excuses and results in the wind as August 14th draws near.
    Enjoy the weekend,

    "Thom Calandra's StockWatch e-newsletter".

    They'll swear by it
    SEC order for sworn statements will rattle stock market

    By Thom Calandra, CBS.MarketWatch.com
    Last Update: 10:36 AM ET Aug 2, 2002
    SAN FRANCISCO (CBS.MW) -- Investors will play the waiting game on the 900-plus companies asked to sign off on their financial statements by the middle of this month.

    The SEC issued an order last month requiring that chief executives and chief financial officers of 947 of the country's largest companies pledge under oath and in a sworn statement that their companies' financial statements are truthful and accurate. Their deadline is roughly Aug. 14. The list of those who have signed thus far is at 20 and includes Federal Express (FDX), Qualcomm (QCOM) and Amazon.com (AMZN).

    Investors, looking for a reason to eject their 2 1/2-year-old portfolios of losing stocks, will wonder whether their select executives will comply with the SEC order. Barraged by pictures of former WorldCom executives shuttled away by husky federal agents to arraignment in court, investors are suffering their fair share of jangled nerve-ends these days.

    Not helping is news of a deepening SEC accounting probe at AOL Time Warner (AOL). That probe already has spooked investors in media companies.

    The SEC order on chief executives and their financial officers applies to all American companies with yearly sales of $1.2 billion and more. The SEC order requires sworn statements from the CEOs and CFOs on their most recent quarterly reports, or proxy statements. The top executives are asked under oath to state that their reports held no "untrue statement of a material fact" or "omitted to state a material fact."

    The top executives are also asked to certify that an independent panel of the board, usually the audit committee, reviewed the financial statement. The sworn statements are due on the first date when the company's quarterly or annual report is due to be filed -- on or after Aug. 14. So the waiting period for investors could extend into late summer for those companies with later reports.

    Lawyers, of course, will argue that the SEC order, which is pursuant to the Securities Exchange Act of 1934, leaves some wiggle room for executives, who get to add the phrase "to the best of my knowledge." Those versed in corporate law are bound to assert that few executives will challenge the order, or refuse to sign it.

    Still, companies can decide to fill in the boilerplate form provided by the SEC, or submit their own version. Those that submit their own versions, prepared by legal counsel, will receive intense scrutiny from investors and analysts.

    Washington politics may come into play, too. Many of the 37 members of the Senate and House intelligence committees reportedly are telling the FBI they will refuse requests for lie-detector tests that probe leaks of classified information after the Sept. 11 attacks on American soil. The country's Fortune 1000 executives are bound to be exploring their options, as well.

    To be sure, investors could be consoled by the fact that executives are willing to come clean under the requirements of the SEC order. But that's not likely in the current climate of corporate finger-pointing. Just the fact that executives need to submit sworn statements is a red mark on America's stock market culture.

    Christopher Johnson at Schaeffers Investment Research says that in the run-up to Aug. 14, investors are likely to wonder about more "skeletons in the closet" from America's biggest companies. See: More speed bumps for investors.

    Stock market technicians such as Johnson, a senior quantitative analyst, often look for catalysts that could increase stock market volatility. Regardless of the outcome of the Aug. 14 order, investors can expect greater turbulence, with several giant reversals of those Dow-400-plus days that briefly graced the front pages of daily newspapers across the country.

    The SEC order, the idea of SEC chief Harvey Pitt, acknowledges that "the purpose of the Commission's investigation is to provide greater assurance to the Commission and to investors that persons have not violated, or are not currently violating, the provisions of the federal securities laws governing corporate issuers' financial reporting and accounting practices."

    The SEC also acknowledges in the language of the order that the sworn statements will be used as a kind of fact-finding mission on behalf of the "protection of investors." The exercise in sworn statements could lead to the SEC recommending legislation on the issue of accounting practices at publicly traded companies.

    Kevin Lane, chief analyst at Technimentals Research in New York, doesn't expect the SEC witch/wizard hunt to influence the entire market. "I am sure it will create some isolated events with individual (companies) but may not affect the market as a whole. It should be more case by case," says Lane.

    Given that some of these companies, the country's largest, are bound to be among the most widely held stocks in America, even individual blow-ups are cause for concern. Let the hunt begin.

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