Coffee, Gorman, and UCLA Law School professor Stephen Bainbridge -- who was the first to suggest that Wal-Mart might have a SOX problem link.reuters.com/pyr77s -- all said that the CEO and CFO certifications and internal controls responsibility could tempt the government. The Justice Department has so far brought only one criminal SOX false certification case, against former Healthsouth CEO Richard Scrushy, who was acquitted on the charge. (The SEC has brought "dozens" of false certification enforcement actions, according to a spokesman.)
Bainbridge said, however, that prosecutors have been handed the Wal-Mart case "on a silver platter by the New York Times," and may feel obliged to make an example of the executives who signed off on the company's filings. "At a bare minimum, there are disclosure problems," Bainbridge said. ...
Bainbridge pointed out that Wal-Mart's first line of defense to SOX allegations will be to argue that the alleged Mexican bribery was not material so it didn't have to be disclosed. Back in 2005 and 2006, as the company was investigating the allegations, there was no Justice Department or SEC case to report to shareholders, and the company's final report concluded there was no bribery. "You could imagine people saying, ‘We don't have to disclose,'" said Bainbridge. "You don't have a certification case unless you have an underlying disclosure case." (He believes it would be simpler for the SEC to assert a controls case against the corporation.)
via www.reuters.com
Reuter's great legal reporter Alison Frankel is on the job.
