| Sarbanes Oxley and Basel ii
Legal Risks | |
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A. Sarbanes Oxley and Legal Risk | |
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Sarbanes Oxley, Basel ii and the Legal Risk:
Compliance LLC Research Project
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...
Read more about Sarbanes Oxley and Legal Risk
Sarbanes Oxley, Basel ii and the Legal Risk:
Compliance LLC Research Project
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