The perils of not disclosing “known trends”

Description

Abstract: A recent SEC enforcement action against the CEO and CFO of a public company illustrates the importance of disclosing bad news in a company’s SEC filings. The two executives were charged with causing their company to violate SEC reporting regulations by failing to adequately disclose serious risks to the company’s liquidity and capital resources. This article reviews why the respondents’ inadequate disclosures resulted in their each agreeing to pay civil penalties without admitting or denying the SEC’s findings.