News & Analysis as of

SEC Sanctions 8 Auditors in “Broken Gate” Enforcement Sweep

The SEC this week issued cease-and-desist orders against eight auditors, fining them $140,000 collectively, for violating auditor independence rules by preparing the very broker-dealer financials they were to audit....more

Legal Alert: SEC and PCAOB Address Independence Requirements in Audits Related to Broker-Dealers’ Financial Statements

Confirming that auditor independence continues to be a regulatory priority, the Securities and Exchange Commission (SEC or Commission) and the Public Company Accounting Oversight Board (PCAOB) issued orders on December 8,...more

SEC and PCAOB Collar 15 For Independence Violations in Audits of Broker-Dealers

The SEC and PCAOB collectively charged 15 audit firms for violating independence requirements in connection with audits of broker dealers. Under SEC independence rules, which apply to audits of broker-dealers whether or not...more

SEC Will No Longer Require an Acquired Entity to Use “Pushdown” Accounting upon a Change in Control

On November 18, the SEC’s Division of Corporation Finance and the Office of the Chief Accountant (the Staff) rescinded Topic 5.J. of the Staff Accounting Bulletin Series. Topic 5.J. required an SEC registrant that became...more

SEC Issues Guidance to BDCs Regarding Consolidated Financials

On October 31, 2014, the Securities and Exchange Commission, through the Chief Accountant's Office of its Investment Management Division, issued a Guidance Update regarding whether wholly owned subsidiaries should be...more

Providing Audited Financial Statements Late Leads to Charges of Custody Rule Violations

The SEC announced charges against an investment advisory firm and three of its top officials for violating the “custody rule” that requires firms to follow certain procedures when they control or have access to client money...more

Bridging the Week - October 2014 #4

Senior Fed Officials Encourage Financial Industry Firms to Improve Compliance Culture - Enhancing culture was the theme at a workshop on “Reforming Culture and Behavior in the Financial Services Industry” held at the...more

Commissioner’s Dissent May Signal Harsher Sanctions Against Accountants

Commissioner Luis A. Aguilar provided the most recent illustration of the SEC’s renewed emphasis on enforcement actions involving accounting and financial statement fraud when, on August 28, 2014, he issued a rare written...more

EY Sanctioned For Acting As An Advocate For Audit Clients

Auditor independence is critical. The opinion issued by the audit firm regarding the financial statements of an audit client represents in part that the firm is independent. That judgment is based on an assessment of all the...more

Separate Financial Statements and the SEC’s Disclosure Effectiveness Project

SEC Division of Corporation Finance Director Keith Higgins recently suggested that the SEC will review the rules requiring separate financial statements or separate financial information under certain circumstances for...more

"SEC Judge Issues Initial Decision Regarding Chinese Affiliates of the Big Four Accounting Firms"

On January 22, 2014, U.S. Securities and Exchange Commission Administrative Law Judge Cameron Elliot (the ALJ) issued an initial decision censuring the Chinese accounting firms affiliated with Ernst & Young LLP, KPMG LLP...more

This Week In Securities Litigation (The week ending January 10, 2014)

The insider trading trial of former SAC Capital official Matthew Martoma opened this week in Manhattan with jury selection. The SEC announced the resignation of George Canellos, Co-director of the Division of Enforcement....more

Financial Statement Requirements in US Securities Offerings: What You Need to Know 2013 Edition

The most frequently asked question at all-hands meetings for a securities offering is “What financial statements will be needed?” The question seems simple enough. But the answer is rarely straightforward. This User’s...more

Two More Municipal Fraud Cases From the SEC

July 2013 was a big month for the Securities and Exchange Commission (the "SEC") in its quest to increase enforcement in the municipal market. On July 19, 2013, the SEC charged the City of Miami, Florida ("Miami"), and its...more

SEC Provides Guidance On Custody Of Privately Offered Securities

The SEC’s Division of Investment Management recently offered guidance on the custody of privately offered securities....more

AICPA Addresses Independence On Conflict Minerals Audits

The AICPA has issued non-authoritative guidance which provides that auditing an SEC issuer’s financial statements and performing an independent private sector audit of a conflict minerals report would not be inconsistent with...more

U.S. and Chinese Regulators Sign Historic Memorandum of Understanding Regarding Enforcement Cooperation

On May 24, 2013, the Public Company Accounting Oversight Board (PCAOB) announced a breakthrough in its years' long log-jam with Chinese regulators over access to audit firms' documents located in China....more

The SEC Action Against the City of Harrisburg: Lessons for Other Municipalities

The Securities and Exchange Commission ("SEC") recently announced that it has charged the City of Harrisburg with violations of various anti-fraud provisions of federal securities laws in connection with the resource recovery...more

SEC Official Describes Model To Identify Anomalous Accounting Results By Registrants

Craig M. Lewis, Chief Economist and Director, Division of Risk, Strategy, and Financial Innovation, U.S. Securities & Exchange Commission, described the SEC’s “Accounting Quality Model,” or AQM. This model is being designed...more

"Accounting Cliff” for Public Companies with Operations in China is More Like a Slope

Public companies with PRC-based auditors are facing a worrisome accounting “slope” rather than a “cliff” on December 31, 2012. If the Public Company Accounting Oversight Board (PCAOB) is not able to finish its international...more

"Corporate Finance Alert: 2013 SEC Filing Deadlines and Financial Statement 'Staleness' Dates"

2013 SEC Filing Deadlines and Financial Statement “Staleness” Dates Calendar (when financial statements need to be updated in a securities offering). Please see full chart below for more information. ...more

“Accounting Cliff” Looms for Public Companies with Operations in China

The Public Company Accounting Oversight Board (PCAOB) has been trying to exercise its oversight responsibilities with regard to registered accounting firms in China for years, but so far has been prevented from doing so by...more

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