To OTC Journal Members:
 

Happy 4th Of July- United States Turns 226

Dear Mr. Pitt

Mr. Harvey Pitt
Chairman, Securities and Exchange Commission
450 Fifth Street, NW
Washington, DC 20549

July 5, 2002

Dear Mr. Pitt:

The editors of the OTC Journal are writing you on behalf of investors everywhere who are interested in obtaining accurate financial reporting from publicly traded companies.

In light of the revelations of widespread accounting fraud which have succeeded in decimating our stock market investments, we realize accounting reform initiatives must be foremost on your mind these days.

The irony of this is not lost on investors. You were appointed by a Republican President, the Party which champions less government regulation and more free enterprise. While the OTC Journal is not necessarily in favor of bigger government, it is ironic the Republicans are faced with the task of applying a significant additional regulatory burden on big business, which has proven it is untrustworthy and perhaps needs to be more aggressively watched.

We are writing with a specific suggestion. The media is reporting you are considering reducing the amount of time companies have to file their financial statements. They have reported you are suggesting reducing the quarterly reporting requirement from six weeks to four weeks, and the annual audited report filing time from twelve weeks down to eight weeks.

If this is your intention, the members of the OTC Journal would very much like to understand exactly what you are thinking? If your intention is to get more accurate financial reporting, why do you feel shortening the amount of time companies have to report the financial results would accomplish this?

Consider your own family's finances at Christmas time. Undoubtedly, there are many purchases on credit cards. There is a lot of banking activity. In fact, you might not learn when certain expenses and banking events occur until three to six weeks after the year ends, especially if you have children living in other places with credit cards on your accounts. 

In order to count all this activity you need statements from many financial institutions, which take quite a bit of time. At least one month. Then imagine you had a week or two to count up all this activity and file into a complicated government reporting form which takes a huge amount of effort to put together. In all likelihood, you would make a mistake or two counting it all up.

Now, imagine that instead of three or four family members and a few thousand dollars in transactions, you had 15,000 employees and $2 billion to count. How daunting would that task be?

In addition, now a government regulatory agency comes in, tells you they want more accurate financial reporting, and then tells you that you have two weeks less to count it up each quarter, and one month less for your audit. Are Kidding Me!!!!!!!!!!!!

Of course there are a few of us out here watching this melodrama unfold who understand the possible underlying motivation. We all realize this accelerated reporting schedule will lead to huge increases in accounting fees with no corresponding increase in value to shareholders, unless you are a partner at a Big 5 (is that how many are left?) accounting firm. The accounting firms will need larger teams of people at public companies to meet this ridiculous schedule. This will of course lead to higher expenses, lower earnings, less accurate reporting, and lower stock prices.

Naturally, since you have decided to make the accounting firms get rid of their consulting arms, you have to give them a way to make more money to replace the lost value. Heaven forbid the accounting firms are not rewarded for their failure to properly monitor their client companies.

On behalf of the members of the OTC Journal and investors everywhere we ask you to consider lengthening the time companies have to report their financial results so they can get it right without incurring any excessive accounting fees. We should be working to get rid of terms like "accrued", which is a fancy way to estimate what you cannot count at that moment in time. Replace accrued with actual if you want accurate reporting.

We have a pretty good idea from pre announcements how companies are performing without accelerating the time they have to file their financial statements. The new era of earnings preannouncement and guidance has been spawned by the Class Action lawyers who are now leaglly allowed to blackmail public companies.

Mr. Pitt- investors everywhere want to know if you are working for the people of the United States or the accounting firms. We can only learn from your actions. Shortening the amount of time companies have to report would do nothing for information flow, cause expenses to go up, and only make things worse.

However, that's just our opinion. We could be wrong.

Respectfully,
 

The Editors of the OTC Journal and Investors Everywhere Who Agree

P.S. Mr. Pitt- If your brain surgeon ever asks you if you want your surgery done better or faster, get a new surgeon.

SwingWire.com also has a lucrative incentive model for experienced investors and traders who consistently outperform the market. Share market ideas with other like-minded investors, establish a proven track record, provide insightful commentary, attract followers and ultimately become one of the Internet's highest paid and most sought after CyberAnalysts! 

Click here to receive your FREE 30-Day Trial Membership with no further obligation. Sign Up Today! 
 

Click Here to view our compensation on every company we have ever covered, or visit the following web address:  http://www.otcjournal.com/disclaimer.html for our full profiles and http://www.otcjournal.com/trading-alerts/disclaimer.html for Trading Alerts.

All statements and expressions are the sole  opinions of the editors and are subject to change without notice. A profile, description, or other mention of a company in the newsletter is neither an offer nor solicitation to buy or sell any securities  mentioned. While we believe all sources of information to be factual and reliable, in no way do we represent or guarantee the accuracy thereof, nor the statements made herein.

The editor, members of the editor's family, and/or entities with which they are affiliated, are forbidden by company policy to own, buy, sell or otherwise trade stock for their own benefit in the companies who appear in the publication unless specifically disclosed in the newsletter.

The profiles, critiques, and other editorial content of the OTCjournal.com may contain forward-looking statements relating to the expected capabilities of the companies mentioned herein.

THE READER SHOULD VERIFY ALL CLAIMS AND DO THEIR OWN DUE DILIGENCE BEFORE INVESTING IN ANY SECURITIES MENTIONED. INVESTING IN  SECURITIES IS SPECULATIVE AND CARRIES A HIGH DEGREE OF RISK. THE INFORMATION FOUND IN THIS PROFILE IS PROTECTED BY THE COPYRIGHT LAWS OF THE UNITED STATES AND MAY NOT BE COPIED, OR REPRODUCED IN ANY WAY WITHOUT THE EXPRESSED, WRITTEN  CONSENT OF THE EDITORS OF OTCjournal.com.

We encourage our readers to invest carefully and read the investor information available at the web sites of  the Securities and Exchange Commission ("SEC") at http://www.sec.govand/or the National Association of Securities Dealers ("NASD") at http://www.nasd.com. We also strongly recommend that you read the SEC advisory to investors concerning Internet Stock Fraud, which can be found at  http://www.sec.gov/consumer/cyberfr.htm. Disclaimer ID:xG1jf4ll Readers can review all public filings by companies at the SEC's EDGAR page. The NASD has published information on how to invest carefully at its web site.