The Sarbanes-Oxley Act requires chief executive and financial officers to put their liberty on the line when they attest to their companies’ financial statements. The safest way to do that: back up those attestations all the way down the line. Such “sub-certifications” from lower-level employees are not required by Sarbanes; only chief executive and financial […]
Martinek Paul J.
Posted inFrom the Archive
Poor Risk Assessments Can Be Biggest Risk Of All
In an era of unparalleled corporate oversight, senior executives and corporate boards know all too well that assessing risk is an integral part of their compliance obligations—but many companies still leave themselves exposed by failing to identify, address and disclose the myriad potholes that may pop up in a given business, experts say. Harrington Larry […]
Posted inRegulatory Enforcement
Bad Controls Put Company On SEC Hot Seat
In what is believed to be the first case of its kind, an Indiana manufacturer settled charges with the Securities and Exchange Commission earlier this month that poor internal controls led to five years of sloppy accounting and a restatement that nicked company financial reports by $16 million. The Feb. 9 settlement with Cummins Inc., […]
Posted inRegulatory Enforcement
Suit Against PCAOB Aims To Clock SOX
The Sarbanes-Oxley Act has long wrapped up executives in a cloak of frustration. Now a high-powered legal challenge to the Public Company Accounting Oversight Board wants to unravel the whole thing. At issue is the very constitutionality of the PCAOB, and whether it wields so much influence over public commerce that its members should be […]
Posted inRegulatory Enforcement
DoJ Bait & Switch Probe Tactic Under Fire
The Securities and Exchange Commission may need to reconsider how it coordinates investigations with the Department of Justice in light of a recent decision by a federal judge throwing out criminal securities fraud charges due to the too-cozy relationship between the SEC and DOJ. Judge Ancer Haggerty of the U.S. District Court in Oregon wrote […]
Posted inRegulatory Enforcement
High Court Ponders State-Level Class Action On Securities
Securities law streaked across the stage of the U.S. Supreme Court earlier this month, as lawyers argued in front of the justices about whether certain state securities-fraud class action suits are still valid despite a 1998 federal law intended to curb such disputes at the state level. The case, Merrill Lynch v. Dabit, is the […]
Posted inRegulatory Enforcement
Overseas, A Change In Tune For Whistleblowers
A federal appeals court has sounded the first sour note for overseas employees who blow the whistle on corporate fraud: The Sarbanes-Oxley Act does not protect them from retaliation. Earlier this month, the 1st Circuit Court of Appeals ruled that a citizen of Argentina who worked for a subsidiary of U.S.-based Boston Scientific Corp. could […]
Posted inRegulatory Enforcement
Delaware Ruling Questions Established Merger Procedures
A recent Delaware Chancery Court decision raises questions about several well-established merger transaction procedures that prior court rulings had viewed favorably. In the case, In re TeleCommunications Inc. Shareholders Litigation, the court allowed a challenge to a 1998 merger between TCI and an AT&T subsidiary to go to trial, citing “genuine issues” about whether the […]
Posted inRegulatory Enforcement
Cases Highlight Dangers In D&O Insurance Gaps
T hree recent federal court decisions have sent a sharp reminder that corporate directors and officers must all hang together figuratively—or insurers might force them to all hang together legally. In all three cases, one person’s false statement invalidated director and officer insurance protecting everyone else on the board. The decisions underscore the need for […]
Posted inBoards & Shareholders
Effort To Stop Majority Vote Proposals Blocked By SEC
The Securities and Exchange Commission dealt a serious blow this month to corporations trying to exclude from the proxy statement shareholder calls for majority election of directors. On Jan. 5, the Commission denied a no-action request by Hewlett-Packard Co., which sought permission to omit from its proxy a shareholder proposal asking that majority election be […]
