Pro Forma Information in Earnings Releases


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Pro Forma Information in Earnings Releases

SEC Releases Cautionary Advice and Tips for Investors regarding pro forma financial information

By John M. Baker, Esq.

The Securities and Exchange Commission today issued “cautionary advice” to registrants, as well as a “tips for investors,” on the use of pro forma financial information in earnings releases. Release Nos. 33-8039, 34-45124, FR-59 (Dec. 4, 2001) (cautionary advice statement).

The cautionary advice states that pro forma financial information can serve useful purposes but, under certain circumstances, can mislead investors if it obscures financial results prepared under generally accepted accounting principles (“GAAP”).

The cautionary advice makes the following points: –Securities law antifraud provisions apply to a company issuing pro forma financial information. —



The SEC press release, with links to the cautionary advice statement and the tips for investors, is available online at http://www.sec.gov/news/headlines/proforma-fin.htm

The FEI/NIRI earnings press release guidelines endorsed by the SEC are available online at http://www.fei.org/news/FEI-NIRI-EPRGuidelines-4-26-2001.cfm

Copyright 2001, John M. Baker, Esq., Stradley, Ronon, Stevens & Young, LLP, 1220 19th Street, N.W., Suite 700, Washington, DC 20036 – (202) 822-9611- Fax (202) 822-0140 This article was originally posted to the FundLaw List, http://www.egroups.com/group/fundlaw. To subscribe to FundLaw, send a blank e-mail to fundlaw-subscribe@egroups.com

Nothing herein is intended as legal or financial advice. The law is different in different jurisdictions, and the facts of a particular matter can change the application of the law. Please consult an attorney or your financial advisor before acting upon the information contained in this article.  



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