Y2K Law Offers Disclosure Protection

January 1999 Issue
Y2K Law Offers Disclosure Protection
By Fong Chan
The Year 2000 Information and Readiness Disclosure Act, signed into law by President Clinton on October 19, limits the liability of any individual or organization that has issued or will issue any public statements or reports that deal with the Year 2000 problem. The AICPA advises that the act may provide CPAs with protection regarding publishing information on how to fix a Year 2000 problem and in situations where a client requests confirmation with Year 2000 process capabilities.
Under the act, no Year 2000 statement clearly marked as a "Year 2000 Readiness Disclosure" can be used as evidence to prove the statement's accuracy or truth in a lawsuit against the individual or business issuing the disclosure. The law also allows organizations to cooperate with each other to seek a common solution to the problem without violation of antitrust laws.
The act defines "Year 2000 statement" as any statement that a person or entity makes to another or to the public that deals with an assessment, projection, plan, timetable, testing, or operational problem or solution addressing the Year 2000 problem. The protection also applies to statements made or placed on a website and to documents containing a republication of another party's Year 2000 disclosure.
The law does not apply to materials filed with the Securities and Exchange Commission and banking regulators, or information that accompanies the solicitation of an offer or sale of securities. In addition, it does not shield a business or individual who had actual knowledge that the statement was false, inaccurate, or misleading, or who acted in bad faith, with intent to deceive, or with reckless disregard as to the statement's accuracy. The protection also does not apply to any action brought by a consumer against a seller, manufacturer, or provider of a product with a Year 2000 statement expressly made in a solicitation (e.g., an advertisement or offer to sell, or a Year 2000 statement concerning a software program or service specifically designed to detect or correct a Year 2000 processing problem).
The protection covers any statement issued from the law's effective date, October 19, 1998, through July 14, 2000. To qualify, individuals and businesses must clearly identify the statement as a "Year 2000 Readiness Disclosure" by inserting a legend labeling it as such. Websites containing Year 2000 statements must prominently display a similar notice. The law also was retroactive to statements made after January 1, 1996, but to claim this protection, the statement's author must have taken certain actions by December 3, 1998.
See the government relations section of the Society's website at www.nysscpa.org/ govrel.htm for a copy of the act. For more information, contact NYSSCPA Director of Governmental Affairs Fong Chan at (212) 719-8418, (800) 633-6320, or fchan@nysscpa.org. *

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