SEC rejects UK liability disclaimers

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In a letter seen by Accountancy Age, the Securities and Exchange Commission has bluntly told ICAEW president Peter Wyman that the disclaimer will have no effect in the US.

The feeling that such a disclaimer would further spoil the image of an already damaged profession was so strong that initially the SEC had opposed a disclaimer appearing anywhere in accounts filed with the body by UK companies also listed in the US.

However, after meetings between Wyman and the SEC in New York, the regulator conceded that the disclaimers could be included as long as it was made clear they offered no protection and applied only in the UK.

Though the SEC has rejected the validity of the disclaimers, its concession avoids the timely and expensive process of producing two completely separate sets of accounts for US and UK consumption.

The SEC letter bluntly stated: ‘In no circumstances should an audit opinion containing restrictions such as the UK form of audit opinion, be included in US filings.’

Disclaimers were introduced as a method of protecting firms against action from third-party claims. Despite the SEC rejection, Wyman remained optimistic that his talks had made progress. ‘We are two-thirds of the way to where we wanted to be. Now we have to decide whether we leave things like they are now or have another go in a year’s time,’ said Wyman.

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