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Advocacy Group Requests SEC to Investigate Irregularities in Pay Ratios

by   |   March 29, 2018

An advocacy group, Public Citizen, has requested the SEC to investigate irregularities and inconsistencies in pay ratios reported by public companies. According to the group’s press release:

The letter documents a number of irregularities and inconsistencies in the reported data, highlighting dramatically different reported figures from similar companies in the same industries – companies that have nearly identical business models, numbers of employees and compensation structures. As this is the first time such data has been collected and made available to the public thanks to the SEC’s new pay ratio disclosure rule, Public Citizen is encouraging the division “to exercise appropriate diligence in oversight of this important new disclosure.”

“President Ronald Reagan famously said ‘trust but verify,’ and that’s all we’re asking the SEC to do,” said Bartlett Naylor, financial policy advocate for Public Citizen’s Congress Watch division and author of the letter. “It’s possible that there are reasonable explanations for the discrepancies we found, but it’s also possible that some of the companies fudged their numbers or reported bogus data to mislead the public. The SEC should check the math so we know for sure.”

The group appears to misunderstand the nature of the calculation and disclosure but hopefully it won’t take a great amount of SEC resources to set the record straight. Unfortunately, without much more than arm chair observations, they state that it’s possible some companies “fudged their numbers or reported bogus data to mislead the public.”