Increased enforcement by SEC leading to more criminal charges?

Individuals who work in the field of securities should be aware that their actions may be more closely scrutinized than before. This is due to actions on the part of the Securities and Exchange Commission. A new report indicated that in 2013 the SEC worked to better enforce the rules and regulations in several areas. In addition to looking for financial fraud, it is also on the lookout for lapses in financial reporting and accounting.

This higher level of scrutiny may have recently led to more arrests and criminal charges against individuals who work in that field. The Southern District of New York handled many of those cases. Cases were commenced regarding, among other things, the following matters:

  • Alleged misuse of corporate assets.
  • Alleged overstated assets.
  • Misstated business prospects.
  • Revenue recognition.
  • Understatement of assets.

Some of those cases were the result of whistleblowers reporting alleged wrongdoing.

There are multiple ways in which matters related to securities fraud could be resolved. In addition to arbitration, alternative dispute resolution methods such as negotiation or mediation may be available. The best option will depend on the circumstances surrounding the allegations.

There is no reason to think that the approach in 2014 will change from last year. Because there are serious consequences surrounding a criminal conviction, it is usually a good idea for individuals facing these types of allegations to work with a lawyer. Someone familiar with that area of law would likely assist in both a criminal as well as civil matter.

Source: Accounting Today, "SEC Revs Up Accounting and Financial Fraud Enforcement," Michael Cohn, Feb. 3, 2014

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