Recent SEC Rule Proposals to Enhance Corporate Disclosure

July 31, 2002 Advisory

In its continued effort to improve corporate reporting and ensure accurate and timely disclosure in the wake of the Enron collapse, the Securities and Exchange Commission has proposed rules that would require corporations to provide additional information more quickly to shareholders and require a company's top executives to personally certify corporate results. These rule changes will affect every public company. According to SEC Chairman Harvey Pitt, these changes, if adopted, should give investors "a greater sense of comfort" about investing in public companies. These proposed rules follow the SEC's proposals in April and May that would accelerate the due dates for quarterly and annual reports, impose new obligations to report insider transactions and require companies to provide extensive additional disclosures in the management's discussion and analysis ("MD&A") section of annual reports regarding "critical accounting policies" used in the preparation of their financial statements. Each of the following proposals is still pending and no final action has been taken. The SEC anticipates that some or all of these proposals will be adopted in the fall of 2002.