SEC bans bullying of corporate auditors

The U.S. Securities and Exchange Commission on Thursday unanimously voted to ban corporate managers from exercising improper influence over auditors reviewing a company's books.

The commission also voted to require companies to file reports of legal trading in company stock by corporate insiders more quickly to the SEC and to the public.

Both rules were called for by the Sarbanes-Oxley corporate and accounting reforms adopted last summer by Congress amid a rash of accounting scandals like those at Enron Corp., WorldCom Inc., Tyco International Ltd. and elsewhere.

Their swift passage by 5-0 votes moves the market-regulating SEC closer to completing implementation of the many rules and regulations mandated by Sarbanes-Oxley.

The new insider trading rules require electronic reporting to the SEC within two days and rapid Internet posting of corporate insiders' stock transactions where possible, as well, to make it easier and quicker to see who's buying and selling.

Chief executives, board directors and anyone holding 10 percent or more of a company's outstanding shares will be affected by the rule, regulators said.

The ban on strong-arming auditors was given preliminary SEC approval in mid-October. The rule prohibits corporate officers, directors or anyone acting under their direction “to fraudulently influence, coerce, manipulate or mislead the auditor” of a company's books.

The ban on auditor coercion was not viewed as a major extension of the commission's existing powers, said SEC staff.

But SEC Commissioner Cynthia Glassman said the measure would help raise awareness in corporate America about what is permissible and what is not when dealing with auditors.

Related Articles

Back to top button
Stay up to date
Don't miss out on the latest industry news and articles
Stay up to date
Don't miss out on the latest industry news and articles
You are Subscribed!
Your subscriptions means a lot to us.
Don't miss out on the latest Industry news
You are Subscribed!