SEC speeds deadline for company reports
By Matt Krantz
USA Today
Looking to provide more transparency into companies' financials, the Securities and Exchange Commission voted yesterday to require executives to file their books faster and include more information in them.
Among the changes: Companies get just 60 days from the end of the year and 35 days from the end of the quarter to submit financial statements, down from 90 days and 45 days previously. Companies must adhere to the rule gradually over three years.
The deadline is being sped up at a tough time. Regulators already are forcing companies to add more detail to their books, and executives must sign off on the numbers or face jail time.
"There are pressures to do more and more due diligence and (follow) more complex accounting rules," said Brian Lane, partner at law firm Gibson Dunn & Crutcher. "And (now) there's a shorter time to do it."
The reforms will cause major changes, such as:
• Faster financial reporting. Investors have relied on financial press releases for months before the official SEC-filed results were disclosed. But press releases often omit key facts contained in the filings. Speeding up the deadline closes this gap.
Companies such as Dell Computer, Charles Schwab and ChevronTexaco say accounting rules are getting so complex, they need the time. Others say rushing will add risks and costs.
The rule affects only companies with $75 million or more worth of stock in public hands.
• More details about insider sales. Companies must disclose in two days when an executive buys or sells stock. Previously the deadline was 40 days after a transaction to inform investors.
Investors will have to brace for a flood of information. As part of its rule, the SEC closed a loophole exempting some transactions between executives and the company that allegedly was abused by Enron management.
That means investors must wade through many more insider-trading filings, including some that may have nothing to do with the executive's feelings on the company.
