Status of Non-Accelerated Filer Permanent 404(b) Reprieve

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The omnibus financial reform bill (H.R. 4173) or the "Wall Street Reform and Consumer Protection Act of 2009" was passed by the House of Representatives via a vote of 223-202 on December 11, 2009.  This bill would seek to permanently grant a 404(b) reprieve for non-accelerated filers (those with a market capitalization below $75 million).  The bill must now be passed by the Senate to be put into law and their vote has yet to be scheduled.  As it stands now, non-accelerated filers must comply with 404(b) by June 15, 2010; 404(a) has been in effect since 2007 and is not in debate.

To be clear, there are two parts to SOX that should be understood to properly understand how this bill may impact the public market:

SOX 404(a): Management Attestation

• Effective December 15, 2007:
• Requires the management of a public company to assess the effectiveness of the company's internal controls
• Requires management to include in the company's annual report the conclusion of that assessment

SOX 404(b): Auditor Attestation

• Effective June 15, 2010:
• Management's external auditor's must review management's assessment and complete their own assessment and publish their results