CAPITAL MARKETS ALERT: SEC Staff Takes Formal Position on CEO and CFO Certifications

    27 February 2009

    On February 26, 2009, the SEC Staff 's Compliance and Disclosure Interpretation (CDI) was updated to  set forth in writing the Staff's position regarding whether the CEO and CFO certification of compliance is required to be filed with the SEC by SEC reporting TARP recipients in connection with their upcoming Securities Exchange Act filings. 
    The Staff took the same position that Senator Dodd did in his letter to Chairman Schapiro, which is that the CEO and CFO certification of compliance is not required until Treasury establishes executive compensation and corporate governance standards. As you are aware, Treasury has yet to promulgate any of these executive compensation and corporate governance standards.   Thus, companies that are presently working on their Annual Reports on Form 10-K will not need to include such certifications in their Reports for this year.
    Set forth below are the relevant provisions from the CDI in italics:
    Section 7001 of the Act also amends EESA Section 111(e) to require the CEO and CFO of each TARP recipient to provide a written certification of compliance by the TARP recipient with the requirements of Section 111(e), as amended. In his February 20, 2009 letter, Chairman Dodd stated that, "As this certification requirement relates to compliance with executive compensation and corporate governance standards that have yet to be established by the Secretary of the Treasury, it is my view that this requirement is not yet effective and therefore CEOs and CFOs will not be required to certify as to their company's compliance with such standards until they have been established."

    The Division staff is following the views expressed in Chairman Dodd's letter to Chairman Schapiro.

    We will continue to monitor for further pronouncements.

    Please contact one of our attorneys listed below if you have questions.