SEC seeks clearer reporting

Public companies would have to tell investors more quickly about significant corporate events and their top officers would have to certify quarterly and annual reports under rules proposed yesterday by the federal Securities and Exchange Commission (SEC).

The two proposals, part of a larger reform effort by federal regulators to enhance corporate reporting, are aimed at addressing criticisms that current disclosure rules allowed Enron to hide its true financial condition from investors.

Enron filed for bankruptcy in December amid revelations that financial partnerships helped hide debt and inflate profits, forcing the company to restate earnings from 1997 on.

The first rule the SEC agreed to propose would expand the list of significant corporate events that would require filing of so-called 8K disclosure forms and would shorten the filing deadline to two days. Companies now have five to 15 days to notify the SEC of significant events.

The expanded list contains 13 new 8K disclosure items, including the termination or reduction of a business relationship with a customer of significant financial value, a change in a rating-agency decision and movement of a company's securities from one national stock exchange to another.

The other proposed rule would require chief executives and chief financial officers of public companies to verify that they have read their company's quarterly and annual reports and that the reports give a complete and accurate account of the company's finances.

Top executives who violated this rule could face fraud charges under existing securities laws.

"I don't think this should be a problem for a well-managed company," SEC Commissioner Cynthia Glassman said. "I'm hoping we won't get a lot of comments saying this is a problem because that would be indicative of something else."

The public will have 60 days to comment on the rules before the SEC votes on whether to adopt them.