VideoProviding support for arguments against regulatory breaks for small caps, Richardson Electronics and Hemispherx Biopharma announced restatements stemming from accounting errors and saw their share prices dive.
Securities and Exchange Commission chairman Christopher Cox said earlier this week that small companies shouldn't necessarily expect a pass on complying with Section 404 of the Sarbanes-Oxley Act, which dictates stiff rules for assessing internal controls. Former SEC chairs Arthur Levitt, Richard Breeden, and Lynn Turner have already expressed their opposition to such exemptions.
On Wednesday, Richardson Electronics reported that it would recast its results for the three years ending in May 2005 as well as for the first two quarters of the current fiscal year. The $112 million market-cap electronics distributor made the announcement after it discovered errors in financial accounting at one of its Italian subsidiaries. Investors sliced off about a quarter of the company's market capitalization when shares began trading.
Investors in Hemispherx were a tad kinder: its share price decreased 10 percent for the day it announced its restatement after dropping nearly 14 percent at one time. On Monday, the $166 million market cap biopharmaceutical company admitted that an incorrect accounting principle was applied to certain debentures and warrants issued between March 2003 and August 2005.
The wayward application of the priniciple caused errors in reporting convertible debt, additional paid-in capital, and non-cash financing charges in the company's financial statements between March 2003 and September 2005.
Reader Comments» Post a comment