Jina Choi and Andre Fontana authored an article for Bloomberg Law covering the Securities and Exchange Commission’s (SEC) crackdown on companies that manipulate earnings data to meet forecasts.
“The SEC continues to scrutinize and investigate public companies for ‘earnings management practices,’” the authors wrote. “Under its data-driven Earnings Per Share (EPS) Initiative, the SEC has filed charges against three companies and four individuals since September 2020, levying a total of over $12 million in civil penalties. Three executive officers have agreed to be suspended from appearing and practicing before the SEC as accountants because of the charges.”
They added: “Companies should be aware that the SEC will not simply wait for issuers to announce restatements or self-report conduct to initiate investigations. In addition to fielding tips from whistleblowers, the SEC has been monitoring and analyzing data through its EPS Initiative to open investigations into potential accounting and disclosure violations stemming from earnings management practices – violations that are otherwise often difficult to detect.”
Read the full article.