(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.)

Pitt Says CEOs Will Certify Accuracy of Financial Statements

In order to reassure fraud-weary investors, the SEC will require the nation's largest companies to file a formal certification on the accuracy and completeness of their last annual reports. These certifications will be required to be provided by the time most companies file their next quarterly report. Officers who make false certifications face personal liability. In remarks to the Economic Club of New York, SEC Chairman Harvey L. Pitt also said that the Commission will soon propose giving independent audit committees the sole authority to hire, fire, and retain auditors. These rules will also vest in audit committees sole authority whether, when and how to hire outside auditors to perform non-audit services. Moreover, by mid-summer, the SEC will propose rules regarding auditor independence that could extend beyond independence rules approved in 2000 that take effect this August.

The certification order applies to companies with reported annual revenue of over $1.2 billion. The order requires the principal executive and financial officers of SEC-registered companies to each file with the Commission a sworn written statement in which the officer must personally attest that the company's most recent periodic reports are materially truthful and complete or explain why such a statement would be incorrect. The certifications will apply to the company's most recent annual report on Form 10-K, all of the company's quarterly reports, all reports on Form 8-K, and all definitive proxy materials filed with the Commission subsequent to the filing of the most recent Form 10-K, as well as any amendments to any of the above. The officers are not permitted to file joint statements. Each principal executive officer and principal financial officer must provide a separate written statement.