For the most part, Sarbanes-Oxley has led to better financial statements, especially at the biggest companies.

We've seen far fewer restatements since the law went into effect. That said, there will always be reasons for the SEC to quibble, and all companies could use some procedural improvement. Which brings us to Wells Fargo, which had its hands slapped recently by the SEC for being overly vague, as reported by footnoted.org, a must read about the hidden world of SEC filings. We noted this over on FierceFinance.com.

"When it comes to disclosing the risks that shareholders face, companies seem to believe that vaguer and blander is better. So let's hear it for the brave souls at the Securities and Exchange Commission who decided to call a company out for just such an approach... (Wells Fargo) was reprimanded in a letter from the SEC staff on May 11--but just released last week--for issuing risk-factor disclosures ‘too vague to be meaningful to investors.'" 

Obviously, financial units need to be on the lookout for content-free writing. The bank did submit rewritten statements, though footnoted.org wonders if the re-write amounted to little more than shuffling words around on the page. This issue of vagueness looms large as the PCAOB considers whether there should be a narrative element added to financial statements written by management.

Obviously, investors would like the words to be as meaningful as possible. That said, you can certainly see why companies would not want to put themselves out on a limb. In some ways, content-free writing is a corporate art form. Recall all those dotcom prospectuses from yesteryear. They all listed a ton of risk factors, all of which came across so bland and generic. Maybe I read too many of them. Obviously, most investors glosseed right over them.

We'll have to see if the SEC follows up with other reprimands. There are no doubt many other offenders.  

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