Dan Brecher
Counsel
212-286-0747 dbrecher@sh-law.comFirm Insights
New SEC Technology to Focus on Suspicious Corporate Disclosures
Author: Dan Brecher
Date: February 26, 2013
Key Contacts
Back
The Securities and Exchange Commission (SEC) is increasingly turning to technology to help root out fraud. The agency recently announced plans to launch a new computer software program that will detect accounting anomalies in corporate disclosures submitted to the regulator.
The new data driven approach is expected to bolster the SEC’s risk assessment process when it comes to accounting fraud. Under the “Accounting Quality Model” (AQM), the SEC will be able to analyze a company’s financial disclosures and assign a specific risk score, which will be used to identify outliers. “It is a model that allows us to discern whether a registrant’s financial statements stick out from the pack,” Craig M. Lewis, Chief Economist and Director, Division of Risk, Strategy, and Financial Innovation, stated in a recent speech.
In many ways, AQM is similar to the agency’s “Aberrational Performance Inquiry” initiative, which focuses on hedge fund advisers. Performance that is flagged as inconsistent with a fund’s investment strategy or other benchmarks forms a basis for further investigation and scrutiny. The program has resulted in several successful enforcement cases against advisers since it was first launched in 2011.
However, unlike the program targeting advisers, the SEC plans to use AQM across the SEC to assess the degree to which registrants’ financial statements appear anomalous. As Lewis notes, the data it churns out can be useful to a number of groups within the SEC. For instance, the Office of Compliance, Inspections, and Examinations could use these analytics during registrant examinations, and the Enforcement Division could use the analytics to focus their investigative process.
As this new program highlights, the SEC is committed to making good use of the wealth of information it collects. Therefore, it is even more important for regulated entities to devote significant time, money, and effort to compliance activities.
If you have any questions about the SEC’s new analytical tools or would like to discuss how they may impact your compliance activities, please contact me, Dan Brecher, or the Scarinci Hollenbeck attorney with whom you work.
- Practices: Corporate Transactions & Business, Financial Services & Regulatory Practice
- Locations: New York City, Red Bank, NJ, Little Falls, NJ
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Related Posts
See all
Understanding Portability for Estate and Gift Tax
Portability of estate and gift tax enables a surviving spouse to inherit any unused portion of their deceased spouse’s federal estate and gift tax exemption. So, if one spouse doesn’t utilize their full exemption, the surviving spouse can effectively double their exemption amount with regard to estate tax liability. For married couples, portability offers a […]
Author: Marc J. Comer
Pet Trusts in New Jersey and New York: A Practical Estate Planning Tool
For many of us, pets are more than companions—they are members of the family. Yet they are often overlooked or inadequately provided for when it comes to estate planning. A pet trust offers a legally enforceable way to ensure that your animal continues to receive proper care if you become incapacitated or pass away. As […]
Author: Marc J. Comer
How Can Trusts Be Used in Business Succession?
For many New Jersey business owners, a closely held company represents decades of work, financial investment, and personal sacrifice. Trusts in business succession planning are one of the most effective tools for protecting that value, allowing founders to control how and when the business passes to the next generation while reducing the risk of disputes, […]
Author: George McGowan
Read Before You Sign: IT Contract Pitfalls Every NJ Business Should Know
In today’s digital economy, New Jersey businesses of all sizes rely heavily on technology vendors, software providers, cloud platforms, and managed IT services. Whether your company is purchasing software, migrating data to the cloud, engaging a cybersecurity consultant, or entering into a long-term managed services agreement, a careful IT contract review can have significant operational, […]
Author: George McGowan
New York NDA Requirements for Businesses
Non-disclosure agreements (NDAs) remain a critical tool for protecting sensitive business information. However, New York NDA requirements have evolved, and businesses must ensure these agreements are carefully drafted to remain enforceable. In a competitive market like New York City, NDAs are commonly used to protect proprietary information, client relationships, and strategic plans. At the same […]
Author: Dan Brecher
New Jersey Will Contest Grounds Explained
How Courts Evaluate Testamentary Capacity and Undue Influence Will contests in New Jersey are difficult to win, given the strong presumption that a properly executed will reflects the testator’s intent. However, challenges based on lack of testamentary capacity and undue influence remain common, particularly where there are concerns about mental capacity or the involvement of […]
Author: Marc J. Comer
No Aspect of the advertisement has been approved by the Supreme Court. Results may vary depending on your particular facts and legal circumstances.
Sign up to get the latest from our attorneys!
Explore What Matters Most to You.
Consider subscribing to our Firm Insights mailing list by clicking the button below so you can keep up to date with the firm`s latest articles covering various legal topics.
Stay informed and inspired with the latest updates, insights, and events from Scarinci Hollenbeck. Our resource library provides valuable content across a range of categories to keep you connected and ahead of the curve.