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Sarbanes-Oxley News & Developments
First Case Enforcing the Certification Provisions Against an Issuer under Sarbanes-OxleyThe SEC settled with Rica Foods Inc. (RCF) and two of its officers for their alledged failure to properly certify company financial statements.
> > Rica Foods Inc.,CEO Calixto Chaves and CFO Gina Sequeira consented to an order permantely barring them from further securities laws violations. All settled without admitting to or denying SEC allegations.
According to the SEC, Rica Foods submitted an annual report Jan. 13th that purported to contain a green light from the outside auditor for the company, Deloitte & Touche. In reality Deloitte had not approved Rica Foods with a signed audit report, and company financial statements containing material classification errors per the SEC.
Rica Foods was notified by the SEC in February that the agency planned to recommend a civil injuctive action against the company alleging certain securities laws violations.
The certification under the Sarbanes-Oxley Act (SOX) requires top executives to give their word that company financial statements are reliable and prepared according to generally accepted accounting principles. The SEC said despite the lack of a signed audit report, CEO Chaves abd CFO Sequeira personally certified the annual report that the financial statements were fair and accurate.
The SEC did not warrant barring Chaves and Sequeira from acting as officers of a public company, but under the final order Chaves must pay a $25,000 civil penalty.
The Sarbanes-Oxley Act (SOX) also allows for criminal punishment against certifying officers if they violate the certification requirements.
Source: Hoovers news article
Published:2003-08-18
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