This review was begun as part of the holding company's analysis of its internal controls and procedures as required by the Sarbanes–Oxley Act of 2002. During this process, the company, which is the parent company of New York Mercantile Exchange, Inc., identified a material weakness in internal controls relating to the procedures governing the acquisition, tracking, and disposition of fixed assets. The company is in the process of remediation, which will include automation of certain manual processes, new asset–tagging procedures, and new controls over the disposition of assets.
The impact of this review on current and prior period financial statements has not yet been determined, and it is unclear whether a restatement of prior financial statements will be required. If a restatement is required, it could have a negative effect on the holding company's reported historical results. The company and its audit committee have notified its independent auditors, KPMG LLP, of this matter and will work closely with them, as appropriate, in completing their review.
The accounting issues under review relate to non–cash items and do not impact the operations of its exchange subsidiaries including their trading and clearing functions. As soon as practicable after completion of the review, the company will make all necessary filings with the Securities and Exchange Commission.
