“In a mad deadline rush, top executives from scores of large companies filed with federal securities regulators forms swearing that their latest financial results are accurate,” writes Michael Schroeder in today’s Wall Street Journal.

“Along the way, a handful of companies, including Household International Inc. and Bristol-Myers Squibb Co., decided to come clean on accounting problems that they had found. And some of the year’s most troubled firms, including Enron Corp. and WorldCom Inc., had to declare that they couldn’t satisfy the Securities and Exchange Commission’s requirements.”

“By Wednesday night, the SEC had processed a majority of filings from 695 companies required to meet the deadline. These companies’ chief executives and chief financial officers had to swear under oath to the accuracy of their latest quarterly financial results and other recent financial reports. As two agency staff members scrambled to log in all the last-minute submissions, it wasn’t immediately clear how many companies may have failed to meet the 5 p.m. EST deadline. Others may be planning to seek a five-day extension of the deadline, which can be requested through Thursday. The SEC order requiring the certification does not spell out what would happen to companies that miss the deadline.”

“The unprecedented exercise comes as a wave of company scandals and arrests of top executives have shaken the public’s confidence in American corporate governance. In a bid to help restore confidence and hold executives accountable, SEC Chairman Harvey Pitt ordered top executives in late June to attest personally to the accuracy of their companies’ results for the latest quarter and for preceding periods. Legislation signed last month by President Bush made the certification requirement permanent.”

“Investors have been watching the certification process as an indicator of whether there will be a fresh batch of company accounting problems on top of recent scandals at Enron and WorldCom, among others, that have weighed heavily on stock markets.”

“Indeed, in documents Enron filed with the SEC, the company’s interim CEO and CFO said they were not able to certify the company’s 2000 financial results or those for the first three quarters of 2001. The Houston energy company filed for bankruptcy court protection in December.”

“Overall, though, the deadline for certifications passed smoothly enough, and the process contributed to a late stock-market rally, as investors were relieved that they didn’t see any significant new bombshells bursting. The Dow Jones Industrial Average Wednesday rose 260.92 points, or 3.08%, to 8743.31, more than offsetting a sharp drop Monday. Still, the industrial average is down 13% since the beginning of the year.”

“Several companies already targeted by well-publicized SEC investigations had problems, declaring that they were unable to meet the filing requirements. Instead, they opted to explain why they couldn’t certify their data because they are doing their own broad accounting investigations that will take time. Among those companies: Qwest Communications International, CMS Energy Corp., Adelphia Communications Corp. and WorldCom. Because of their unusual circumstances, the companies aren’t expected to be penalized for being tardy.”