SEC Announces Three New Anti-Fraud Enforcement Initiatives


On July 2, the Securities and Exchange Commission announced three new initiatives in the Division of Enforcement (the “Division”) focused on the detection and prevention of fraud. First, the newly-created Financial Reporting and Audit Task Force will focus on the identification of securities-law violations relating to (i) the preparation of financial statements, (ii) issuer reporting and disclosure, and (iii) audit failures, with the goal of increasing both the detection of fraud and the prosecution of violations involving false or misleading financial statements or disclosures. In addition, the Microcap Fraud Task Force will focus on identifying and combating fraud related to the issuance, marketing and trading of microcap securities, including by focusing on attorneys, auditors, broker-dealers, transfer agents and other significant players in the microcap market. Finally, the Center for Risk and Quantitative Analytics will work in close coordination with other SEC offices and divisions to identify risks and threats that could harm investors, assist in conducting risk-based investigations and allocate the Division’s resources in light of identified risks. The Center for Risk and Quantitative Analytics is also intended to serve as the SEC’s central information source regarding characteristics and patterns indicative of fraud or other illegal activity.

To view the SEC’s release regarding these new enforcement initiatives, click here.

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DISCLAIMER: Because of the generality of this update, the information provided herein may not be applicable in all situations and should not be acted upon without specific legal advice based on particular situations.

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