SEC order brings accountability home to top executives

Hang up your dancing shoes, boys; it's time to pay the piper.

That's the message behind the June 28 order from the Securities and Exchange Commission that essentially strips top executives of the corporate shield against personal liability.

In the wake of Enron, WorldCom, et al., SEC Order No. 4-460 requires that chief executive and chief financial officers at 945 companies must personally certify in writing, under oath and for publication that their most recent reports filed with the SEC are complete and accurate.

Officers who make false statements will face personal liability.

In the sworn statement, officers must attest that their company's most recent periodic reports are truthful and complete, or explain why such a statement would be incorrect.

Officers cannot make the statement jointly. Each principal executive officer and principal financial officer must provide a separate written statement, and those statements will be made public.

The move, which SEC Chairman Harvey Pitt called "an unprecedented step to help restore investor confidence," affects companies with reported annual revenues in excess of $1.2 billion. That's everyone from Abercrombie & Fitch and Ace Hardware to Xerox and Zale.

In other words, the buck or the exaggeration thereof stops here.

In many cases, it is top executives who have reaped the lion's share of benefits from their companies' activities. Now they will have their share of accountability.

The principal executive and financial officers are required to file their written statements with the commission no later than the close of business on the first date that their company is required to file a form 10-K or Form 10-Q with the SEC on or after Aug. 14.

The statements will apply to:

the company's most recent annual report on Form 10-K filed with the SEC;

all of the company's reports on Form 10-Q, all reports on Form 8-K and all definitive proxy materials filed with the commission subsequent to the filing of the most recent 10-K; and

any amendments to any of the above.

Look for more restatements, more stock fluctuations and some major power shifts in August.