News & Analysis as of September 20, 2024

Generally Accepted Accounting Procedures › Enforcement Actions

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Generally Accepted Accounting Principles (GAAP) are accounting standards and procedures that are used by companies within a particular jurisdiction to prepare financial records and statements. These principles are intended to create consistency in documentation across companies and industries. Consistent documentation assists investors to better analyze potential investments and assists regulators to detect potential fraud and/or wrongdoing. less -

Get the Numbers Right — SEC Enforcement Activity Highlights Focus on Accounting Violations, Non-GAAP Disclosures and Executive...

Vinson & Elkins LLP on 10/20/2023

Recent enforcement actions brought by the Securities and Exchange Commission (“SEC”) signal that the SEC is paying close attention to public company financial reporting and will continue to punish misleading accounting and...more

Slew of Recent SEC Enforcement Actions: Guidance for Registered Investment Advisers

Lowenstein Sandler LLP on 10/19/2023

On September 5, the U.S. Securities and Exchange Commission (SEC) announced enforcement actions against five investment advisers for violating Rule 206(4)-2 (the Custody Rule) and Rule 204-1(a) (the ADV Reporting Rule) of the...more

SEC charges executives with fraudulent revenue recognition practices

Cooley LLP on 10/10/2023

As part of its fiscal-year-end enforcement surge, the SEC filed charges against three former executives of Pareteum Corporation, a telecommunications and cloud software company, for fraudulent revenue recognition practices—a...more

SEC Sends Second Message to Private-Fund Sponsors on Audit Obligations Under Custody Rule Through Enforcement Actions

Goodwin on 9/26/2023

On September 5, 2023, almost one year since its first flurry of similar Custody Rule actions, the SEC announced settlements with five SEC-registered investment advisers to private funds with respect to alleged violations of...more

Is It Time to Take a Fresh Look at Disclosure Controls and Procedures for CEO/CFO Certifications?

BCLP on 9/6/2023

In New England Carpenters Guaranteed Annuity and Pension Funds v. DeCarlo (Aug. 2023), the Second Circuit held, among other things, that CEO/CFO certifications mandated by SOX Section 302 constitute non-actionable statements...more

Deconstructing The SEC’S Cryptocurrency Suppression Program - Part 6: Why Cryptocurrency Companies Are Unable To Comply With...

SECIL Law on 6/14/2023

INTRODUCTION- This article is the sixth in a series that explains how the SEC has structured a campaign to suppress and eradicate cryptocurrency and digital tokens, why the SEC lacks jurisdiction over creators of...more

Strengthened SEC Enforcement Activity is a Reminder that Investment Advisers Must Ensure their Practices and Procedures are...

Lowenstein Sandler LLP on 10/3/2022

As evidenced by an influx of recent activity over the past month, it’s becoming more and more apparent that the U.S. Securities and Exchange Commission (SEC) is strengthening its regulatory framework and pushing forward with...more

Nutter Securities Enforcement Update: September 1, 2022

Nutter McClennen & Fish LLP on 9/6/2022

The Nutter Securities Enforcement Update is a periodic summary of noteworthy recent securities enforcement activity, settlements, decisions, and charges. ...more

The SEC Closes the Cookie Jar - Recent SEC Enforcement Activity Reaffirms Focus on Improper Earnings Management

Vinson & Elkins LLP on 5/6/2022

On April 18, 2021, the Securities and Exchange Commission (“SEC”) announced the fourth enforcement action arising from its EPS Initiative, charging Rollins Inc. (“Rollins”) and its former chief financial officer (“CFO”) with...more

SEC Enforcement in Financial Reporting and Disclosure: 2020 Year-End Update

Jones Day on 2/8/2021

The second half of 2020 saw U.S. Securities and Exchange Commission ("SEC") enforcement activity continue to rebound from deep uncertainty and change caused by the COVID-19 pandemic. All told, the SEC—despite a full-scale...more

SEC Shows no Goodwill for Issuer

BCLP on 12/17/2020

The SEC sued Sequential Brands on December 11 in Manhattan federal court, alleging that it failed to accurately calculate and disclose impairments to its goodwill in 2016 and early 2017. According to the Complaint, this...more

Recent SEC Enforcement Actions Involving Accounting Misstatements and Non-GAAP Financial Measures

Mayer Brown Free Writings + Perspectives on 10/7/2020

In July 2020, a publicly traded pharmaceutical company entered into a settlement with the Securities and Exchange Commission, without admitting or denying findings, and agreed to pay a financial penalty relating to various...more

SEC Announces Charges Against Fulton Financial Corporation and Interface, Inc., in Bellwether of Increased Earnings Management...

BCLP on 10/2/2020

On September 28, the SEC announced charges against two public companies, Interface, Inc. (“Interface”) and Fulton Financial Corporation (“Fulton”), for violations related to the reporting of improperly calculated earnings per...more

Five Principles For Accurate and Reliable Portfolio Company Valuations

Proskauer - The Capital Commitment on 9/1/2020

We have seen the SEC increase its focus on valuation of privately-held portfolio companies recently. The SEC’s increased focus is in line with our prediction made in the Top Ten Regulatory and Litigation Risks for Private...more

Valeant Pharmaceuticals (Now Bausch Health) and Three Former Executives Settle SEC Cases

The Volkov Law Group on 8/7/2020

Bausch Health agreed to pay the SEC $45 million to settle Valeant Pharmaceuticals (former name) accounting fraud schemes. Three former executives, former CEO Michael Pearson, CFO Howard Schiller and Controller Tanya Carro...more

SEC Fines Private Fund Sponsor for Failing to Deliver Audited Financials

Winstead PC on 6/3/2020

On May 22, 2020, the Securities and Exchange Commission (the “SEC”) initiated and settled cease-and-desist proceedings against a private fund sponsor that allegedly failed to timely deliver audited financial statements to the...more

Sec and Reporting Update

Snell & Wilmer on 1/6/2020

Disclosure Simplification (New Rules in Place). In March 2019, the Securities and Exchange Commission (“SEC”) adopted certain amendments as part of its continuing efforts to modernize and simplify provisions of Regulation...more

SEC clamps down on Custody Rule

Proskauer - The Capital Commitment on 12/12/2019

Under rule 206(4)-2 of the Advisers Act, otherwise known as the Custody Rule, it is a fraudulent practice for a registered investment adviser to have custody of client funds or securities, unless the adviser takes certain...more

Highlights from 2019 ALI-CLE Accountants’ Liability Program

Vedder Price on 11/7/2019

Junaid A. Zubairi, Chair of Vedder Price’s Government Enforcement and Special Investigations group, served as co-chair of the 2019 ALI-CLE Accountants’ Liability program on October 17 and 18, 2019 in Washington, DC. The...more

Messages for Public Companies from the SEC’s Spate of September Enforcement Actions

King & Spalding on 10/11/2019

The United States Securities and Exchange Commission wrapped up its fiscal year on September 30, 2019 with a flurry of enforcement actions filed in the final weeks of the month. These cases will provide fodder for analysis...more

SEC: Here Is When Loss Contingencies Must Be Disclosed and Reserved

Faegre Drinker Biddle & Reath LLP on 10/2/2019

When confronted with government inquiries, public companies commonly grapple with the issue of when events have escalated to the point that they are subject to disclosure obligations—or, further yet, require recognition as a...more

SEC Enforcement Activity – A Reminder Regarding the “Equal or Greater Prominence” Presentation Requirement of Item 10(e)

Bass, Berry & Sims PLC on 9/26/2019

At the end of last year, in an enforcement action brought by the Division of Enforcement of the Securities and Exchange Commission (SEC) against ADT Inc. (ADT), reporting companies were reminded that the SEC continues to...more

SEC Fines Fund Manager $5 Million Over Undervaluation of Assets

Proskauer - The Capital Commitment on 6/25/2019

A recent action where the SEC focused on the presumably conservative undervaluation of assets suggests that it is more than willing to use valuation as a hook to deter “smoothing” of returns. As we previously noted, while the...more

Governance & Securities Law Focus: Asia Edition, February 2019

A&O Shearman on 2/14/2019

In this newsletter, we provide a snapshot of the principal Asian, U.S., European and selected international governance and securities law developments of interest to Asian corporates and financial institutions. ...more

SEC Enforcement in Financial Reporting and Disclosure—2018 Year-End Update

Jones Day on 2/5/2019

In 2018, the SEC continued to pursue many of the same initiatives and objectives it articulated in 2017, including emphasizing retail investor protections and keeping pace with technological change. While stand-alone...more

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Generally Accepted Accounting Procedures › Enforcement Actions

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