SEC’s New Task Force On Financial Reporting Fraud

The Securities and Exchange Commission announced three new enforcement initiatives, including a task force aimed at rooting out potential fraud involving issuer disclosures and audit failures.  See http://www.sec.gov/news/press/2013/2013-121.htm.

The SEC said its Financial Reporting and Audit Task Force will expand the Enforcement Division's efforts to identify securities law violations relating to the preparation of financial statements; issuer reporting and disclosures; and audit failures.  The SEC also announced a Microcap Fraud Task Force, and a new Center for Risk and Quantitative Analytics.  The SEC claims that financial fraud is frequently detected through issuer restatements.  These restatements have declined in recent years through the quality controls instituted by the Sarbanes-Oxley Act of 2002.