SEC Enforcement Targets for 2018 Include ‘Exam’ Cheating, Failure to File and ‘Pump and Dump’ Schemes
While the Trump Administration is known for its deregulatory approach (see this previous Ticker report), including a January 25 decision by the Department of Justice to end “use of civil enforcement authority to enforce agency guidance documents,” SEC enforcement action continues apace. A recent action against six high-profile accountants focused on professional ethics. The first of the SEC’s two orders in the matter states that the allegations involve “unauthorized disclosures of confidential information from the Public Company Accounting Oversight Board … relating to its Inspections program, and a concerted effort by the [accountants] to use that information to benefit [the firm] and, consequently, themselves.” In essence, the accountants cheated on their auditing “exam.”
Other recent SEC enforcement actions include proceedings dated January 18 and January 30, each revoking a registration of securities after the respective registrants failed to file several periodic reports. In other enforcement developments, archives for litigation show 15 cases filed by the SEC in January 2018 and 11 more by mid-February. In one recent case, a former corporate officer was accused of hyping a stock and then quickly selling, an action known as “pump and dump.” For more background, see the annual report from the SEC’s enforcement division, described in this previous Ticker report. The annual report showed little change in the level of enforcement between the government’s two most recently-completed fiscal years (October 1 through September 30), with 754 enforcement actions in FY 2017 vs. 784 in FY 2016 (excluding data from a voluntary program involving municipal securities).