The civil fraud charges levied by the Securities and Exchange Commission against former Kmart chief executive officer Charles Conaway and former chief financial officer John McDonald are the latest sign that the SEC is keeping its promise to carefully scrutinize the disclosures made by companies in the Management’s Discussion and Analysis section of their periodic filings.
As a reminder of what the Commission expects—and what it won’t tolerate—in terms of MD&A disclosure, the SEC filed charges last week against Conaway and McDonald for misleading investors about Kmart’s financial condition in the months preceding the company’s January 2002 bankruptcy.
