| Sarbanes Oxley and Basel
ii Legal Risks | |
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| A. Sarbanes
Oxley and Legal
Risk | |
What has asbestos, mesothelioma and the legal
risk to do with Sarbanes Oxley compliance?
Sarbanes Oxley
and Legal Risk Research project - Compliance LLC
A. Sarbanes
Oxley and Legal Risk
The Act imposes a number of new
disclosure requirements designed to enhance
visibility...
►Disclosure of financial information
prepared in accordance with (or reconciled to)
generally accepted accounting principles... that
reflect all material correcting adjustments that
have been identified by a registered public
accounting firm in accordance with GAAP and
applicable securities laws.
►Disclosure of
all material off-balance sheet transactions,
arrangements, contingent obligations and other
relationships with unconsolidated
entities.
►Disclosure
of codes of ethics for senior financial
officers and, if a code of ethics has not been
adopted, the reasons why the issuer has not done
so.
►Real-Time
Disclosure (§ 409). Under the Act, issuers will be
required to disclose to the public, in plain
English and on a “rapid and current basis,” such
additional information concerning material changes
in the issuer’s financial condition or results of
operations as the SEC determines, by rule, is
necessary or useful for the protection of
investors and in the public interest.
And... disclosure of
the legal risks...
Example: CISCO
LEGAL PROCEEDINGS
"Beginning on April 20, 2001, a
number of purported shareholder class action
lawsuits have been filed in the United States
District Court for the Northern District of
California against the Company and certain of its
officers and directors.
The lawsuits are essentially
identical, and purport to bring suit on behalf of
those who purchased the Company's publicly traded
securities between August 10, 1999 and April 16,
2001. Plaintiffs allege that defendants made false
and misleading statements, purport to assert
claims for violations of the federal securities
laws, and seek unspecified compensatory damages
and other relief. The Company believes the claims
are without merit and intends to defend the
actions vigorously.
In addition, beginning on April 23,
2001, a number of purported shareholder derivative
lawsuits have been filed in the Superior Court of
California, County of Santa Clara, against the
Company (as a nominal defendant), its directors
and certain officers. At least one purported
derivative suit has also been filed in the United
States District Court for the Northern District of
California, and another has been filed in the
Superior Court of California, County of San
Mateo.
The complaints in the various
derivative actions include claims for breach of
fiduciary duty, waste of corporate assets,
mismanagement, unjust enrichment and violations of
the California Corporations Code, seek
compensatory and other
damages, disgorgement and other
relief, and are based on essentially the same
allegations as the class
actions.
WE FACE CERTAIN
LITIGATION RISKS
We are a party to
lawsuits in the normal course of our
business.
Litigation
can be expensive, lengthy and disruptive to normal
business operations. Moreover, the results of
complex legal proceedings are difficult to
predict. An unfavorable resolution of a particular
lawsuit could have a material
adverse
effect
on our business, results of operations or
financial condition."
WHY CISCO and all
public companies explain things like that to the
public?
Because they speak
about profits... but they don't really know...
they are not sure... because of the legal
risks.
Perhaps, they will have to pay huge sums of money
after a court decision... It is also a cash flow
huge issue...
As CISCO clearly
said... "they seek compensatory and
other damages, disgorgement and other
relief" ... "we face certain litigation risks" ...
"We are a party to lawsuits in the normal course
of our business" "Litigation
can be expensive, lengthy and disruptive to normal
business operations. Moreover, the results of
complex legal proceedings are difficult to
predict. An unfavorable resolution of a particular
lawsuit could have a material adverse effect on
our business, results of operations or financial
condition."
So
clear...
What has asbestos, mesothelioma and the legal
risk to do with Sarbanes Oxley compliance?
Sarbanes Oxley
and Legal Risk Research project - Compliance LLC
Read
more about Sarbanes Oxley and Legal
Risk
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