(The news featured below is a selection from the news covered in the Federal Securities Report Letter, which is distributed to subscribers of the Federal Securities Law Reports.)

Commission Proposes Changes to CEO, CFO Certification Rules

The SEC proposed rule and form amendments to require issuers to provide the executive certifications required by Sections 302 and 906 of the Sarbanes-Oxley Act as exhibits to the periodic reports to which they relate. Section 302 requires the certifications be "in" each quarterly or annual report filed or submitted under Exchange Act Section 13(a) or 15(d), while Section 906 certifications must "accompany" such reports if they contain financial statements.

Section 302 Certifications

Currently, the certifications must appear immediately after the signature block at the end of each reports. The SEC stated that because the certifications are part of the text of the report, investors are not able to easily access the certifications through the EDGAR system. The agency stated also that the Commission staff must review the actual text of a quarterly or annual report to confirm that the certifications have been filed.

By requiring the filing of the certifications as an exhibit to the relevant periodic, according to the SEC, investors using third-party databases to access filings should be able to locate the Section 302 certifications more easily and efficiently. In addition, the agency noted that the staff would be able to search a periodic report more quickly to verify that the required certifications have been included in the report and to review the certifications. The SEC stated that "we do not propose in this release to modify any other substantive aspect of the certification requirements under Exchange Act Rules 13a-14 and 15d-14," and noted in particular that the consequences for failing to file a required certification or making a false or misleading certification would not be affected by the proposed amendments.

Section 906 Matters

Section 906 of the Sarbanes-Oxley Act contains a certification requirement that is separate and distinct from the certification requirement mandated by Section 302, and includes criminal penalties for a knowingly or willfully false certification. Under this section, the certifications must "accompany" a periodic report to which they relate, as compared to the Section 302 requirement that the certifications be included "in" the periodic report. As proposed, issuers would be required to "furnish," rather than "file," the Section 906 certifications with the Commission. According to the SEC, these certifications would therefore not be subject to liability under Exchange Act Section 18. The certifications would also not be subject to automatic incorporation by reference into an issuer's Securities Act registration statements, which are subject to Section 11 liability. The SEC urged issuers to submit the Section 906 certifications as exhibits to periodic reports pending the adoption of final rules. Comments are due to the SEC within 45 days from the date of publication in the Federal Register.

¨ Release No. 33-8212 will be published in a forthcoming REPORT.