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Bennett: SEC should report on Y2K filings

A senator urges the SEC to report on whether publicly-traded companies are disclosing their Year 2000 readiness adequately.

In the wake of a number of Y2K filings to the Securities and Exchange Commission by some major corporations, one U.S. senator is taking a break from his Congressional recess to urge the commission to report on whether publicly-traded companies are disclosing their Year 2000 readiness adequately.

Senator Robert Bennett (R-Utah) said he calling on the SEC to act now in order to protect the money of citizens who have invested or plan to invest in the market.

"They must be guaranteed access to the most accurate information about public companies to make wise choices about their investments," Bennett wrote in a letter to SEC chairman Arthur Levitt.

The SEC has not yet responded to Bennett's request.

Bennett chairs the Senate Subcommittee on Financial Services and Technology, and the Senate Special Committee on the Year 2000 Technology Problem.

"I would like to know whether publicly-traded companies are adequately disclosing their Year 2000 readiness and what action the SEC is planning against those companies that fail to make the required disclosure," he said.

Bennett's request was in response to recent action by the SEC and the National Association of Securities Dealers Regulations (NASDR), to enforce Year 2000 disclosure among the nation's broker-dealers that failed to report Y2K readiness.

The SEC charged 37 brokerage firms for failing to report the status of their Year 2000 technology problem preparedness as required by the federal government, the commission said. Nineteen of the 37 firms that were charged agreed to settlement offers, which consist of a cease-and-desist order, a censure, and a civil penalty. Fines from the settled cases total $235,000.

Don Meyer, a spokesman for the Special Committee on the Year 2000 Technology Problem, said Bennett is asking the SEC to take similar actions when, or if, it cracks down on publicly-traded companies. "It's just as important to have them adequately disclose their Y2K readiness as broker-dealers."

"The SEC must be prepared to take action against those companies that fail to make proper disclosure in order to promote disclosure among publicly-traded companies," Bennett wrote.

Back to Year 2000 Index Page Bennett's comments come just days after a number of companies filed their Y2K readiness and costs. Just yesterday, General Electric said it will cost $550 million to cleanse its systems of the Y2K glitch. Earlier this week, Sears Roebuck said it has spent $67 million so far to get its computers ready for the Year 2000 changeover, but the cost could reach $143 million.

Edward Yardeni, chief economist at Deutsche Bank Securities, said Bennett's comments were on the mark and had offered ideas on what companies should be required to do. "The SEC has to put out a standard...a questionnaire that all publicly-traded companies need to fill out on a quarterly basis that gets down to specifics."

Yardeni said the companies should provide at least what government agencies are now required to do. "How many systems have been tested? What are your mission critical systems? And they should also disclose their third-party relationships."

In June testimony before the financial services and technology subcommittee, SEC Commissioner Laura Unger said that SEC efforts had "raised the consciousness" of public companies regarding Y2K, but have not fully succeeded in obtaining the quality of disclosure that investors need, according to Bennett.

The problem, often called the millennium bug, is rooted in the way dates are recorded and computed. For the past several decades, systems have typically used two digits to represent the year, in order to conserve memory. With this two-digit format, however, the year 2000 is indistinguishable from 1900, or 2001 from 1901.

SEC spokesman Duncan King said the agency would not respond to Bennett's letter publicly.

Meyer said he expects to have a response from the commission either by phone or letter within a week or two.

Reuters contributed to this report.