SEC Reinstates Rule for Reporting Ignored Corporate Illegalities
Published Date: 3/7/2025
Notice
Summary
The SEC is bringing back Rule 10A-1 without any changes. This rule affects companies with audited financial statements and requires quick reporting if their auditors find serious illegal acts. While reports are rare, the SEC wants to be ready in case more come in, with no new costs or deadlines added.
Analyzed Economic Effects
1 provisions identified: 0 benefits, 1 costs, 0 mixed.
One‑Business‑Day SEC Reporting Duty
If your company files audited financial statements, Rule 10A-1 requires the board to notify the SEC within one business day if an auditor reports an illegal act material to the financial statements and senior management hasn’t taken timely remedial action. If the board fails to notify the SEC, the auditor must provide the Commission a copy of the report within the next business day. The SEC estimates an aggregate additional reporting burden of 5 hours per year and says it currently receives fewer than ten such reports annually.
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