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Re: The SEC's Dirty Secret (ENS)
Our organization was able to trigger an investigation into Waste Management
Inc. by filing a stock holder complaint. It didn't seem to matter that our
stock holder held only one share of stock...but the fact that the complaint
was filed by a stock holder seemed to be the irrefutable issue. It may
save time and legal expense to buy one share of stock from each of the
suspect companies and file a shareholder complaint. Shareholders seem to
have greater standing in these issues. Just a guess. E.M.T. O'Nan
> From: Tony Tweedale <firstname.lastname@example.org>
> To: Multiple recipients of list <email@example.com>
> Subject: Re: The SEC's Dirty Secret (ENS)
> Date: Thursday, August 21, 1997 9:28 AM
> >The SEC's Dirty
> >Posted to the web: Fri Aug 15 19:27:42 EDT 1997
> >By Donald Sutherland
> >WASHINGTON, DC, August 15, 1997 (ENS) -
> >Information on the environmental liabilities of
> >corporations is being withheld from investors
> >and from the general public, but little is being
> >done to bring light into these dark corners.
> >In February of 1997, three environmental
> >groups - Friends of the Earth, Citizen Action,
> >and the Sierra Club - sent a letter to the U.S.
> >Securities and Exchange Commission (SEC)
> >asking for an investigation of the
> >entertainment giant Viacom Inc. The groups
> >want the SEC, a federal government agency, to
> >look into why Viacom failed to disclose over
> >$300 million in Superfund liabilities at more
> >than 30 sites in the firm's 1995 SEC 10-K form
> >to stakeholders.
> >Susan Duffy, a spokeswoman for Viacom, told
> >the Wall Street Journal in March that the
> >environmental groups grossly exaggerated
> >Viacom's Superfund liabilities, but she
> >declined to give the actual accrued value of the
> >company's liabilities.
> >Viacom assumed the superfund liabilities of
> >Gulf & Western, which changed its name to
> >Paramount Communications in 1989, and was
> >acquired by Viacom in 1994.
> >To date, the SEC has yet to repond to the
> >request by the three environmental groups.
> >Financial researchers in the field of
> >environmental 10-K disclosure point out that
> >the Viacom case is by no means unique in the
> >U.S. stock market.
> >"Only once in the last twenty years has the SEC
> >enforced environmental GAAP in 10-K filing,"
> >said Martin Freedman, professor at the School
> >of Management at Binghamton University in
> >New York.
> >GAAP stands for Generally Accepted
> >Accounting Principles. While it is the SEC's
> >responsibility to enforce the GAAP, the
> >American Institute of Certified Public
> >Accountants (AICPA) and the Financial
> >Accounting Standards Board (FASB) are the
> >not-for-profit, membership organizations
> >which write the standards for accounting
> >models in the United States.
> >The GAAP arrangement is a government-private
> >partnership that is unique in the world. Most
> >governments control standards; but in the U.S.
> >the function is supposed to be covered by a
> >government-private partnership.
> >Martin Freedman and A.J. Stagliano, of the
> >College of Business and Administration at
> >Saint Joseph's University in Philadelphia, Pa, in
> >a 1996 report, randomly chose 26 firms from
> >the Environmental Protection Agency's list of
> >900 publicly traded potentially responsible
> >parties (PRPs) listed on the 1993 National
> >Priority List. The report found only 12 made
> >any sort of environmental expense/liability or
> >legal matter disclosure.
> >Freedman says his findings support previous
> >research studies which state that despite the
> >legal obligation to provide qualitative and
> >quantitative assessment of a firm's estimated
> >hazardous waste liabilities to stakeholders
> >many firms make "little or no disclosure
> >The National Environmental Policy Act of 1970,
> >the Comprehensive Environmental Response,
> >Compensation and Liability Act of 1980
> >(CERCLA), and the Superfund Amendments and
> >Reauthorization Act of 1986 have had a major
> >impact on businesses identified as PRPs.
> >The clean up of hazardous waste sites
> >mandated under these laws is estimated in the
> >hundreds of billions of dollars nationwide. But,
> >most potentially responsible parties have put
> >off paying the clean up costs with court
> >litigation that disputes the EPA's
> >But potentially responsibly parties who try to
> >defer costs by filing lawsuits are potentially
> >barking up the wrong tree. The national
> >environmental accounting requirements under
> >GAAP, and the SEC's Regulation S-K require
> >disclosure of environmental liabilities -
> >whether or not they are contingent on a final
> >agreement with the EPA.
> >"The 1975 Statement of Financial Accounting
> >Standards No.5 stated you record a liability
> >when it's probable and the amount is estimable,
> >but many companies choose not to estimate,"
> >said Fred Gill, Senior Technical Manager of
> >"The new environmental accounting model for
> >environmental remediation liability Statement
> >of Position 96-1 now requires corporations to
> >disclose what they can estimate," said Gill.
> >The laws and regulations are in place - the
> >catch is enforcement.
> >Legal experts do not expect the SEC to rule on
> >the Viacom situation anytime soon because of
> >the unwritten detente that exists between the
> >publicly traded companies and the SEC in filing
> >environmental capital and liability costs.
> >"How can the SEC prove Viacom departed from
> >GAAP when they have allowed mixed practice
> >in environmental 10-K filing to exist for so
> >long?" asked Greg Newington, Chief of
> >Enforcement for the California State Board of
> >"They (the SEC authorities) don't want to end up
> >like Marcia Clarke and lose a high profile court
> >challenge to a powerfully financed company
> >like Viacom," Newington said.
> >The Corporation of Finance at the SEC has
> >refused to cite previous enforcement cases of
> >environmental 10-K filings. The agency admits
> >to a policy of confidentiality for corporate
> >internal environmental audits.
> >"Disclosure of internal environmental audits is
> >neither prohibited nor mandated by the
> >Commission's rules or staff policies, and the
> >staff believes that disclosures meeting the
> >requirements of the securities laws need not
> >include internal environmental audits," said
> >William E. Morley, Senior Associate Director of
> >the Corporation of Finance.
> >"Without enforcement of internal
> >environmental audits to stakeholders, anything
> >goes in 10-K filing of significant
> >environmental material expenses," said
> >The SEC declined to comment on whether their
> >policy of confidentiality for corporate internal
> >environmental audits is a breach of federal
> >disclosure laws and the Security Exchange Acts
> >which require full disclosure of corporate
> >assets and liabilities to stakeholders.
> >The environmental groups are not giving up on
> >their pursuit of the issue of disclosure of
> >corporate environmental liabilities. "We plan to
> >follow up our charges on Viacom with the SEC
> >in September," said Michele Chan-Fishel of
> >Friends of the Earth, "and this is not the only
> >company we will be targeting for failure to
> >report environmental liabilities."
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