NEW YORK (CNN/Money) -
Thirteen companies failed meet a new Securities and Exchange Commission ruling that they adequately sign off on their financial results, the regulatory agency said, as a handful of companies delayed swearing to the accuracy of their books.
The 13 companies included Enron, Adelphia Communications and WorldCom, whose accounting scandals helped inspire the new regulation requiring CEOs at more than 900 big companies attest to the accuracy of their sales and profits.
Other red-flagged companies included Alaska Air (ALK: Research, Estimates), which plans to restate its results, and Gemstar-TV Guide (GMST: Research, Estimates), which is also revising its financials to reverse recognition of approximately $20 million of revenue from its TV Guide subsidiary.
Consolidated Freightways Corp. (CFWY: Research, Estimates) has asked for an extension, along with Comdisco Inc., which is emerging from bankruptcy.
But the vast majority of companies signed off, heeding a new rule meant to heal battered investor confidence. Chaotic at times, and not without critics, the highly anticipated event passed with few big surprises.
"The world didn't end," said John Gavin, president of SEC Insight. "Just like Y2K."
Not that the exercise lacked criticism. Gavin notes that about 300 of the 947 companies required to sign off on the documents have changed CEOs and CFOs in the past year, meaning these executives are swearing by reports filed when they were somewhere else.
"That has to beg questions about the credibility of the exercise," said Gavin, who nonetheless supports the new rule ordered June 27 for companies with annual sales of at least $1.2 billion.
In one sign of support for the new rule, the stock market rallied last week before and after the Wednesday deadline passed. Stocks rose again Wednesday.
In signing off, some companies issued qualified statements. AOL Time Warner (AOL: up $0.77 to $13.33, Research, Estimates), under investigation for accounting practices at its AOL unit, called into question $49 million in recently reported advertising and commerce revenue. AOL Time Warner runs CNN/Money.
The SEC Monday approved AOL's results, along with the signed statements from Bristol-Myers Squibb Co. (BMY: Research, Estimates), which faces an SEC inquiry.
But Cendant (CD: Research, Estimates), which provides travel and real estate services, has not yet been cleared. The company said Monday that the SEC staff has told it that upon completion of an amendment to its filing it would be considered in compliance.
And TruServe Corp., a hardware store chain cooperative, said that because of a previously reported lack of proper inventory controls, its executives could not certify past results. TruServe was among the 12 companies red-flagged by the SEC.
Not everyone finds value in the rule born from the accounting scandals at Enron and WorldCom that helped hammer the stock market by causing deep mistrust in corporate financial statements.
Attorney William Lerach, who filed a class-action suit on behalf of shareholders against Enron, said the requirement will not stop a CEO bent on fraud.
"They are going to cross their fingers, sign, and pray for the best," Lerach said.
Among late filers, Hercules Inc. (HPC: Research, Estimates), a chemical company, certified its financials Monday, the company said. It joins Mariner Health Care Inc., which also signed off Monday, according to the SEC Web site.
ACT Manufacturing Inc., Adams Resources & Energy Inc., CMS Energy, Dynegy, Mirant, LTV Corp. and McLeodUSA round out the SEC list of companies that filed to adequately comply with the new order, according to the SEC.
Bill Singer, an attorney who has represented the securities industry, calls the new SEC rule a "great idea and inspired idea" because it raises the level of accountability and personalizes it.
"What always frightens people is personal exposure," Singer said. "Nothing hits home like pricking yourself with a needle and signing with blood."
Companies revealing accounting scandals have taken major market hits. Enron's disclosure, announced last year, and WorldCom's bombshell, dropped in June, reduced once-lofty shares to penny stocks.
But the punitive consequences of not complying with the new SEC rule remain unknown.
John Heine, an SEC spokesman, said that when terms of the agreement have not been met, either because of deadlines or misstatements, "the SEC will consider all options available for fashioning an appropriate remedy."
The regulatory organization can impose fines on companies and can also bring civil charges.
And the process isn't exactly over. It may not end until Dec. 27, when the last of the 947 companies are required to certify their financials.