The Securities and Exchange Commission’s recently released annual reporton enforcement activity shows that its efforts to ramp up enforcement of financial reporting fraud are getting results.
The SEC brought 134 financial reporting and audit actions in 2015, according to the Wall Street Journal. That’s a big increase from the 98 brought in 2014 and the 68 brought in 2013. Noteworthy settlements in that area include a $190 million penalty against Computer Sciences Corp. for manipulating financial results and concealing adverse information and a $55 million penalty against Deutsche Bank for misstating the value of derivative instruments.
SEC Director of Enforcement Andrew Ceresney told the Wall Street Journal there is “a lot more focus in this area in the last couple years and a lot more interest.”
Overall, the SEC brought 807 enforcement actions in 2015, winning approximately $4.2 billion in disgorgement and penalties.
The SEC’s focus on policing financial fraud is a marked change from only a few years ago, when the number of accounting cases brought by the agency dipped in the wake of the financial crisis. To turn that trend around, the SEC formed a Financial Reporting and Audit Task Force in 2013 to focus on financial reporting and issuer disclosures.
The Task Force invites help from whistleblowers to aid the SEC in pursuing financial fraud matters, writing that it “is particularly interested in receiving information from corporate insiders who may have witnessed or gained knowledge about improper conduct related to the preparation and audit of financial statements of public companies.”
As SEC attorney David Woodcock told the Journal in 2013, “Frauds in the accounting area are often difficult to detect without somebody from the inside.”
With financial fraud established as a top priority at the SEC, expect to see more significant results in the coming year.