Issuers who breathed a sigh of relief when the Securities and Exchange Commission recently extended the Sarbanes-Oxley Section 404 compliance date should keep in mind that—despite the stay of execution with respect to 404—they still must file certifications about their internal controls under Section 302 every quarter. Zecca “Quarterly certifications for Section 302 indicate, among […]
Martinek Paul J.
Posted inRegulatory Enforcement
‘Aftermarket’ Buyers Can’t Sue Over IPO Misstatements
A federal court has refused to make it easier for “aftermarket” purchasers of stock to sue over misstatements made in registration statements to the Securities and Exchange Commission in connection with an IPO. The Securities Act of 1933 allows “any person acquiring” shares issued pursuant to an untrue registration statement to sue for damages. That […]
Posted inFrom the Archive
’04 Insider Trades: Most Timely; Some Missed The Mark
A comprehensive review of Form 4 filings from 2004 indicates that the overwhelming majority of the 77,000-plus open-market transactions by insiders were reported to the Securities & Exchange Commission within the two-day period mandated by Sarbanes-Oxley—and that nearly 12 percent were filed on the same day of the transaction. But the data, collected by the […]
Posted inRegulatory Enforcement
Pendulum Swinging Against Defendants In 9th Circuit?
Two recent decisions by the largest federal circuit court in the country have some defense lawyers wondering if the pendulum is swinging against them in securities fraud suits. Until recently, the 9th Circuit—which includes California and a number of other western states—was considered the friendliest jurisdiction in the country for companies being sued by shareholders […]
Posted inRegulatory Enforcement
SOX Whistleblower Gets His Job Back, Plus Payment, Fees
The first whistleblower to prevail under The Sarbanes-Oxley Act of 2002 has now been awarded $175,000—including more than $100,000 in attorney fees—and has been ordered reinstated to his position as CFO of a small bank holding company. The whistleblower is entitled to get his job back even though it means that his successor will be […]
Posted inInternal Controls
SOX ‘Catch-22’: Certifying Controls Later Found Weak
Companies that previously certified “disclosure controls and procedures” under Section 302 of Sarbanes-Oxley may find themselves this year in the uncomfortable position of having internal control audits under Section 404 reveal material weaknesses–with regulators wondering why those flaws weren’t reported earlier. The SEC’s final rule implementing Section 302 of SOX requires company management to present […]
Posted inInternal Controls
Companies Changing Fiscal Year End To Buy 404 Time
In an effort to buy more time under Section 404 of Sarbanes-Oxley, Chordiant Software, Inc. recently announced that its board had voted to change the end of its fiscal year from Dec. 31 to Sept. 30, beginning with FY 2004. The move means that Chordiant will not have to comply with the Securities and Exchange […]
Posted inBoards & Shareholders
Three Certifications? Some Companies Going Beyond SOX
As most public company executives know, two sections of The Sarbanes-Oxley Act of 2002—Sections 302 and 906—require that principal executive and financial officers certify financial data in quarterly and annual reports. But according to a review of regulatory filings conducted by Raisch Financial Information Services in Newton, Mass., some companies have gone “above and beyond” […]
Posted inRegulatory Enforcement
Justices To Decide Proof Required In Securities Fraud Suits
The U.S. Supreme Court will soon decide what investors have to plead and prove in order to recover for securities fraud on a “fraud on the market” theory. The case, which was argued on Jan. 12, represents the first major securities issue to go before the justices in a decade. The plaintiffs want the court […]
Posted inEthics & Culture
Compliance Programs Critical Despite Ruling On Guidelines
The U.S. Supreme Court’s landmark decision eviscerating the mandatory nature of the federal sentencing guidelines should have no immediate affect on corporate compliance programs established under the sentencing standards, experts tell Compliance Week. On Jan. 12, a deeply divided Supreme Court ruled in United States vs. Booker that the guidelines that have governed all federal […]