It would be difficult to tell which received more news coverage last week. The fact that some 700 publicly-traded companies were required to certify their financial results by Aug.14, or that just two days later marked the 25th anniversary of Elvis’ untimely exit.
But I guess it all depends where you stand. Or how much of an investment you have in either.
If you’re enjoying a stroll down Beale Street in Memphis, the fact that AOL Time Warner chief Richard Parsons and hundreds of others in his capacity reluctantly and oh-so carefully signed on the dotted line, may seem unimportant compared with the throngs gathered at the gates of Graceland — replete with candles and ornate form-fitting white jumpsuits.
But, if your name is on the dotted line attesting to the accuracy of your company’s financial statements, those C-level executives (chief executives, CFOs etc.) had better have "Suspicious Minds" before affixing their signatures to those documents.
It’s not exactly like changing your mind after signing a contract for aluminum siding and suddenly realizing you live in a stucco house.
In June the Securities and Exchange Commission issued the rule that required some 947 companies to certify their respective financial statements. About 700 of those were mandated to adhere to the Aug. 14 deadline based on their fiscal years.
The rules carries rather Draconian penalties for fudging figures and subsequently lying about them – like on the order of 20 years in prison and $5 million in fines.
To no one’s surprise, such concerns as WorldCom were in the process of conducting, ahem, massive accounting reviews (presumably to sidestep the "Jailhouse Rock") but unfortunately, was not able to meet the deadline.
No doubt, many of the companies who failed to file on time or require extensions, will have to restate earnings. However, you probably will not find a rank-and-file investor anywhere in the country including those mourning in Memphis who would argue the merits of having management swear to the authenticity of their financials.
Executives, whose financial statements will come back to haunt them, won’t be crooning "Heartbreak Hotel," anytime soon, but rather will be wearing baggy orange jumpsuits while guests at the "Crowbar Hotel."
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