SEC Exempts Two Reports From CEO & CFO Certification

With the threat of criminal prosecution, millions in fines and possible jail time facing them for signing off on corporate reports they know to be false, CEOs and CFOs have been leaving nothing to chance. They can breathe a little easier now that two reports have been taken off the list of those requiring their certification.

The Securities and Exchange Commission staff announced last week at a corporate lawyer’s conference that employee benefit plan reports and reports known as 8-Ks will be exempt from certification by top corporate officers.

The certification process was incorporated into the 2002 Sarbanes Oxley Act, a sweeping mandate to clean up corporate America. The report certification part of the bill was included at the insistence of Sen. Joe Biden (D-DE) who wanted to send a message that the buck stops at the top.

The bill requires corporate officers to certify their reports to the Justice Department and the SEC. Statements by Biden this summer touched off confusion about whether the 8-Ks would be included among those that must be certified. According to Dow Jones, 8-Ks are used by companies “to announce everything from new products to bankruptcy,” and the SEC received more than 40,000 of them last year.

“The staff of the SEC and the Justice Department, in consultation with their representatives on the corporate fraud task force, have concluded that the criminal certification requirements of Sarbanes-Oxley don't apply to current reports on form 6-K or 8-K, or employee benefit plan reports on form 11-K," SEC corporation finance division director Alan Beller said in a telephone interview with Dow Jones Newswires on Friday.

Dow Jones reported that an official announcement about the change is expected and will be presented as a memo to federal prosecutors.

"It's the right decision," Dial Corp. general counsel Christopher Littlefield told Dow Jones.


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