Of the more than 300 companies that had filed as of Tuesday evening, from Ace Hardware to Yellow Corp., none had reported a need to restate its finances. The chief executive officers and chief financial officers of nearly 700 corporations are required to file sworn statements by Wednesday.
Among the CEOs filing statements on Tuesday: multibillionaire investor Warren Buffett, who vouched for the veracity of his Berkshire Hathaway Inc.'s 2001 annual report, its second-quarter report for this year and other financial statements. The company's chief financial officer, Marc Hamburg, also submitted a statement.
In response to a wave of accounting scandals, the Securities and Exchange Commission in late June ordered 947 companies — all with annual revenues exceeding $1.2 billion — to submit the sworn statements from their CEOs and chief financial officers.
CEOs and chief financial officers who falsely certify their company reports could be prosecuted and imprisoned, SEC Chairman Harvey Pitt has warned.
Imposed June 27 amid a wave of multibillion dollar accounting scandals ranging from Enron Corp. to WorldCom Inc., the SEC order was followed a month later by a raft of new laws for companies from Congress.
One of the laws makes CEO and CFO certification routine for all of the roughly 14,000 companies policed by the SEC, so law firms were advising their clients to get in the habit starting now.
Legal penalties for failure to meet the deadline, or for filing a certification that was mistaken or a lie, were not crystal clear. But the SEC said civil and criminal securities fraud laws would apply with possible fines and jail time.
A few companies were expected not to meet the deadline, such as bankrupt long-distance telephone and Internet traffic carrier WorldCom, which is restating its books after uncovering a $7.6-billion accounting fiasco in recent weeks.
The CFO of energy trader CMS Energy Corp. last week told investors he could not certify its books until they were restated to account for more than $4 billion worth of sham trades. Other energy trading groups, under a cloud since the collapse last fall of former Texas energy trading leader Enron, have expressed certification doubts, as well.
The U.S. administration had urged companies to file the executives' statements before they were due, saying that would reassure nervous investors by showing that most big corporations have been honest.
Despite the accounting debacles, "I still believe that the undergirding of American business is solid and based in integrity," Treasury Secretary Paul O'Neill said Monday in an interview with The Associated Press.
But companies may not have felt they would get a lot of public-relations mileage from filing the statements early, said David Becker, a former SEC general counsel who is now an attorney at Cleary Gottlieb Steen & Hamilton.
"Somebody for a day says, 'Gee, that's a standup company,"' Becker said. "I think it's more important to get it right."
The filings may reveal that some companies inflated earnings in earlier reports and are now revising them downward. The sworn statements from the CEOs and chief financial officers — beginning with "To the best of my knowledge" — are meant to vouch for the accuracy of reports for the quarter ended June 30 or any other second quarter for companies not on a calendar-year system.
New disclosures of irregularities could deepen anxiety among investors, who already have seen savings evaporate during more than two months of punishing losses on Wall Street.
Becker guessed that a small number of companies, maybe around 10 or so, could have problems.
The law firm Milberg Weiss, which has sued Enron, Arthur Andersen, WorldCom and other companies embroiled in accounting failures on behalf of shareholders, has dubbed Wednesday "Restatement Day."
The CEOs' statements mean Wall Street has been getting earnings reports that can be assumed to be clean.
The statements and earnings reports will be filed to the SEC on a rolling basis. Many of the 947 companies — those that use a calendar year for reporting results — must submit them by the close of business Wednesday. The rest, using fiscal-year reporting, need not file until later, on the first date they normally would be required to submit their annual or quarterly reports. They face staggered deadlines stretching from mid-September through December.