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It is no secret that the SEC is expected to review disclosures regarding loss contingencies this year.  To see what may be ahead, we looked at some recent SEC comment letters regarding loss contingencies.  If the SEC notes a significant potential loss, they may ask pointed questions about it.  And if you talk about it during your earnings call, but do not mention it in your periodic report, they may still ask about it.

Casella Waste Systems, Inc.


With respect to each of the legal proceedings that you are currently involved in, please revise your disclosure to ensure you identify (i) any and all damages sought, and (ii) the possible loss or range of loss when there is at least a reasonable possibility that a loss or an additional loss in excess of amounts accrued may have been incurred.  If you have determined that it is not possible to estimate the range of loss, please provide an explanation as to why this is not possible.  Refer to FASB ASC 450-20-50-3 and 450-20-50-4.


In future annual and interim filings, as applicable, we will include, where relevant, in our Commitment and Contingencies footnote, a statement of damages sought and indicate a range of loss where there is at least a reasonable possibility that a loss may occur.  In the 3Q 10-Q we included the following disclosure in response to the Staff’s comment: [omitted]

Anadarko Petroleum Corporation

The SEC asked an interesting question regarding Andarko’s interest in the well that was the subject of the BP Deepwater Horizon event.


Please tell us whether you have entered into any settlement discussions regarding amounts that have been incurred on your behalf by the operator of the Macondo well and, if so, please describe the status of these negotiations.


To date, there have been no substantive discussions between the parties with respect to settlement around the Deepwater Horizon events. Any settlement discussions that occur would likely be subject to confidentiality agreements between the parties and would be evaluated under the provisions of FASB ASC 450-20 to ensure appropriate disclosure and, if necessary, liability accrual.

Capital One Financial Corporation


We note your disclosures on pages 112-115 regarding the various litigation claims that you are subject to, and your disclosure in many instances that, given the various uncertainties, you cannot provide a “meaningful” range of reasonably possible losses. We note that “meaningful” is not the defined threshold for disclosure outlined in ASC 450-20 and that this analysis may be subject to significant interpretation. Please provide further clarity in your statements in many of your litigation matters that a “meaningful” range cannot be provided.  Please clarify how you define this term for purposes of your disclosure threshold.  In this regard, the staff notes that simply because a range of losses may be large, does not necessarily mean that the range is not required or “meaningful” to investors. Please see Examples 1 and 3 in ASC Topic 450-20-55.


We regularly review the most current available data to determine if we can estimate the reasonably possible loss or range of loss for disclosed litigation matters.  In using the phrase “we cannot provide a meaningful range of reasonably possible loss,” we did not intend to articulate a disclosure threshold different from the one required by ASC 450.  In future filings, we will use the word “estimate” and we will either provide an estimate of the reasonably possible loss or range of loss or state that such an estimate cannot be made.

General Electric Company


We see on page 2 of your earnings release that you increased reserves by $1.1 billion related to your former Japan consumer finance business that is included within discontinued operations. We additionally note that statements made by Keith Sherin during the October 15, 2010 Earnings Call, which discussed that you had adjusted your reserve estimate from the low end of the range of losses to your “best estimate and the ultimate exposure.”  Please describe for us the facts and circumstances, which occurred during the quarter ended September 30, 2010, which resulted in you increasing the loss reserves from the minimum amount of the range to a better estimate of $1.7 billion under FASB ASC 450-20-30-1. As part of your response, please include a discussion describing the timing and nature of the specific events and circumstances, which caused you to increase the reserve by $1.1 billion during the quarter ended September 30, 2010 and explain why these facts and circumstances were not considered in your reserve estimates for prior quarters in the fiscal year ended 2010.


[Introductory paragraphs omitted.]

Based on the results of this refined analysis, we recorded an adjustment to our reserves of $1,100 million in the third quarter of 2010 to bring the reserve to a better estimate of our probable loss. This adjustment reflects revisions in our assumptions and calculations of the number of estimated probable future incoming claims ($936 million), increases in claims severity assumptions ($119 million), reflecting recent trends in amounts paid per claim, and higher estimates of loss for claims in process of settlement ($45 million). As of September 30, 2010, our reserve for reimbursement of claims in excess of the statutory interest rate was $1,667 million.

Based on what we know today, we believe that our reserve for excess interest refund claims represents a better estimate of our probable loss, consistent with FASB ASC 450-20. We have included disclosure in our third quarter Form 10-Q of the events and circumstances in the third quarter 2010, along with a sensitivity analyses on expected future claims.

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