SEC to testify on millennium bug

The Securities and Exchange Commission will testify before the Senate about company disclosure on Year 2000 bug efforts.

Government regulators, economists, and corporate executives will testify this Wednesday before the Senate Banking subcommittee on the need to get more meaningful disclosure from publicly traded companies on their Year 2000 preparedness.

"Investors have a right to know whether the companies in which they will invest will be able to operate on January 1, 2000 and how much it will cost to fix the Year 2000 problem," Sen. Bob Bennett (R-Utah), chairman of the Senate Banking subcommittee on financial services and technology, said in a statement Friday. He also chairs the Senate Committee on the Year 2000 Technology Problem.

At the hearing SEC commissioner Laura S. Unger is expected to present a preliminary report on all the disclosures the committee has looked at this year. The final report is due at the end of June.

The regulatory agency has been under pressure from Congress to make sure companies are keeping investors current on their progress. Bennett is concerned that not all companies are disclosing Year 2000 plans, according to a spokesman, and that only "boilerplate" comments have been filed so far.

"These initial reports make it clear that some companies are not taking the problem, and their clients' interests, seriously," Bennett said. "This hearing will allow for an open discussion with the SEC to see what kind of action is necessary to speed companies' efforts to Y2K compliance."

Companies are not required to make Year 2000 disclosures unless they find the information material to their ongoing operations and future earnings. Last January the SEC issued Year 2000 guidelines aimed at spelling out how public companies, investment firms, and others should make known their efforts and progress in improving their computer systems.

A professor from the securities law department at Georgetown University, a senior credit officer from Moody's Investor Service, and a senior executive from Triaxsys Research will join economist Edward Yardeni from Deutsche Morgan Grenfell in giving private sector perspective and analysis.

Yardeni told CNET NEWS.COM he plans to provide some insight based on a database he has compiled of all the disclosure filings made by S&P 500 companies.

"I'm coming to the conclusion that corporations are not providing adequate information about the Year 2000," he said. "They're focusing on the wrong things...costs in 1998 and 1999, but not what the costs will be if disruption occurs in 2000."

He hopes that this week's hearings will not only draw attention to the lack of full disclosure by publicly held companies, but also spark government to do more. "The SEC should get a lot tougher."

Reuters contributed to this report.

Close
Drag
Autoplay: ON Autoplay: OFF