SEC Proposes New Disclosure Under Rules Implementing Sections 404, 406 and 407 of Sarbanes-Oxley

Section 404 directs the SEC to prescribe rules requiring that each annual report under the Securities Exchange Act of 1934 include an “internal control report” of management, attested to and reported on by the company’s registered public accounting firm, regarding the effectiveness of the company’s internal control structure and procedures for financial reporting. Section 406 directs the SEC to adopt rules requiring disclosure on the adoption of, and waivers with respect to, a code of ethics for the company's senior financial officers. Section 407 requires the SEC to adopt rules defining the term “financial expert” and requiring each reporting company to disclose whether its audit committee includes at least one member who is a “financial expert.”