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Compliance Could Snare Skeptics

A key deadline in the new world of regulatory compliance goes into effect in two weeks. And if you think you're above it all, you may be joining Martha in Connecticut.

Beginning August 23, companies will have about one-third of the 15 days they now have in which to disclose significant events to the Securities and Exchange Commission (SEC).

Within four days of the following kinds of "trigger" events, a company will need to file a Form 8K with the SEC -- or risk fines and even jail time:

  • any significant new business agreement or debt obligation;
  • staff severance payments;
  • decision to de-list from a public exchange or failure to satisfy a rule for a continued listing;
  • determination by a company or its auditor that its financial reports are unreliable and need to be restated; and
  • significant reduction in value of a commercial asset such as goodwill or securities.

    Large public companies also face a November 15 deadline for full compliance with Sarbanes-Oxley (see Another Reason to Hate Compliance).

    So is all this just another bureaucratic pain in the storage system? No, the experts say. Reducing the time for disclosure puts a greater emphasis on a public company's ability to manage and retrieve its important financial documents. And the stakes are high: CEOs and CFOs can face big-time penalties for failing to comply with Sarbanes-Oxley or meet auditors requests fast enough.

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