Andrea Romi, a doctoral candidate at the University of Arkansas’ Sam M. Walton College of Business, examined the SEC filings of 309 companies that received notice from the Environmental Protection Agency between 1996 and 2005 that they should expect to pay at least $100,000 in fines – the minimum amount required for disclosure by SEC Regulation S-K, Item 103.
Romi found that 72% omitted this information on their filing forms, a violation of federal law. Companies that did follow the law and publicly announced the EPA sanction saw the value of their stock fall by an average of 1.6%.
Since those that omit the information are unlikely to suffer any consequences, it is clear that more enforcement is needed. (Accounting Study Reveals Firms’ Failure to Disclose Environmental Sanctions, 2/17/09) At minimum, the SEC should fine these identified companies and award a finders fee to Ms. Romi. Unfortunately, the SEC awards no such finders fees.