Top Vegas executives must now vouch for numbers

Tuesday, July 16, 2002 | 11:16 a.m.

The Securities and Exchange Commission is requiring top executives at four of the world's largest gaming empires to verify the accuracy and completeness of their companies' latest financial statements.

Park Place Entertainment Corp., MGM MIRAGE, Mandalay Resort Group and Harrah's Entertainment Inc., all of Las Vegas, are among a list of 945 large, publicly traded companies required to submit sworn written statements to federal securities regulators.

All SEC-registered companies with revenues above $1.2 billion in their last fiscal year will be required to submit the statements.

The SEC action stems from a wide-ranging government probe of corporate accounting scandals that have erupted in recent months. Responding to a wave of alleged accounting fraud by companies such as Enron and WorldCom, President Bush last week outlined a plan to earmark more funds for enforcement, create a task force to oversee fraud investigations and toughen criminal sentences for fraud.

Gaming companies already are closely scrutinized by state governments, which apply a gauntlet of financial disclosure rules on casinos to ensure that governments receive taxes due on gaming revenues. As a result, the gaming industry will likely weather the financial scandals that have buffeted other sectors, Wall Street analysts say.

The statements essentially formalize what MGM MIRAGE executives have done all along, company spokesman Alan Feldman said.

"Shareholders should have the confidence in the executives running these companies that the executives are effectively signing off on the numbers," he said.

Added Park Place spokesman Robert Stewart: "Park Place is certainly going to comply with not only the letter but the spirit of the requirements."

Mandalay Resort's Chief Executive Officer Michael Ensign and Chief Financial Officer Glenn Schaeffer could not be reached by press time. Harrah's declined to comment.

The four companies, along with competitors, will be releasing their second-quarter earnings over the next few weeks. So far, companies have given no indication of whether they will be discussing the issue of greater corporate scrutiny.

The written statements are seen as a way to increase potential liability for executives who are now better able to distance themselves from financial irregularities. Executives who sign the statements may be personally liable for financial information that is false or misleading, the SEC said.

The statements apply to the companies' most recent annual reports filed with the SEC, as well as any subsequent quarterly reports, 8-K statements and proxy materials.

The government also proposes that companies file 8-K statements more quickly and include more information than is now required, such as any changes in a company's credit rating and restructuring efforts.

The boilerplate document, which must be signed by each company's chief executive and principal financial officer, requires executives to certify, "to the best of (the officer's) knowledge," that financial statements were not misleading and did not omit material facts.

Executives also must identify whether financial statements have been reviewed by the company's audit committee or independent members of the company's board of directors.