SEC Warns Companies On Y2K Disclosure - Aug 4 '98
By John Borland, TechWeb
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Securities and Exchange Commission is sending letters this week to executives at more than 9,000 public companies, warning them to start disclosing more details about their year 2000 computer preparations. The request is part of the SEC's effort to give investors more information on industry's readiness when the dates of computer systems turn over for the millennium. The hope is that it will ward off a stock market free fall.
The SEC letter follows last week's release of guidelines spelling out how much year 2000 information must be included in quarterly financial statements.
"Time is short," said SEC chairman Arthur Levitt in his letter. "Because the lack of information regarding your preparations for the year 2000 could seriously undermine the confidence investors place in your company, it is imperative that you provide thorough, meaningful disclosure on this topic."
Although a majority of public companies have begun including year 2000 issues in their financial reports, most fail to discuss specific plans, timetables, or costs, said a recent SEC report.
Regulators, along with a growing number of market analysts, are worried anxious investors will pull out of the stock market in droves next year if they don't have more information on companies' preparation.
SEC officials said companies could face fines if they deliberately conceal a lack of preparation. But few cases are likely to go that far, a commission spokesman said. "What's more likely to happen is we would send a report back and ask them to address these issues," said SEC spokesman Duncan King. "It would depend on the egregiousness of the act."
The new guidelines take effect Tuesday, and will be applied to financial documents for fiscal quarters that ended in late July.
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