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
Failing to Comply With NJ Rent Control Exemption May Prove Costly
What Developers Need to Know About New Jersey’s Rent Control Exemption Law to Ensure Entitlement to Exemption for Newly Constructed Multi-family Housing. A property owner in Jersey City is facing a $400 million federal class action lawsuit alleging that the landlord did not follow the procedural steps required to be eligible for exemption from local […]
Author: Patrick T. Conlon
Crypto Securities Law: When Tokens Become Investment Contracts
The application of traditional federal securities laws to crypto assets continues to evolve. In some cases, the Securities and Exchange Commission (SEC) considers tokens and other digital assets to be securities. This makes them subject to federal securities law, including the Securities Act of 1933 and the Securities Exchange Act of 1934. This classification has […]
Author: Bryce S. Robins
The Due Diligence Process for NY Condominiums and Cooperatives
While the New York City real estate market can be extremely competitive, moving too quickly often backfires. Before purchasing a condominium or cooperative in New York City, it is important to do you homework. Purchasing property in NYC can involve a dizzying number of legal issues. These include condo and co-op rules, rent restrictions, and […]
Author: Jesse M. Dimitro
Smart Contract Legal Issues: Drafting Agreements for Blockchain
Smart contracts feature a unique blend of legal agreement and technical code. This innovation has the potential to reshape how business is conducted. At the same time, smart contract legal issues around enforceability, jurisdiction, identity, and compliance are common. The legal framework for these self-executing agreements is still evolving. What Are Smart Contracts? Smart contracts, […]
Author: Bryce S. Robins
Are Stay Interviews the Key to Retaining Top Talent?
Retaining top talent continues to be one of the greatest challenges facing employers today. Even in an employer’s market, the loss of a key employee can disrupt operations and result in significant costs. While compensation plays a role, long-term retention often depends on workplace culture, communication, and employee engagement. One increasingly popular strategy for improving […]
Author: Angela A. Turiano
Why Secured Transactions Are Important
Secured transactions form the backbone of a wide range of business dealings, including business loans, mortgages, and inventory financing. Because the stakes are often high and relatively minor oversights can have drastic consequences, lenders and borrowers should thoroughly understand how to form an enforceable security agreement that protects their legal rights. What Is a Secured […]
Author: Dan Brecher
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.