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Category Archives: PCAOB Enforcement

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Posted in Accounting Standards, Broker-Dealer Regulation, PCAOB Enforcement

The PCAOB adopted two attestation standards relating to auditors’ examinations and reviews of broker-dealer compliance and examination reports and adopted an auditing standard for the audits of supplemental information that broker-dealers file with the SEC. The preparation by broker-dealers of compliance or exception reports are new requirements that were added by the SEC when it… Continue Reading


Posted in Accounting Standards, PCAOB Enforcement

The PCAOB issued a policy statement regarding its enforcement investigations, in that it will consider extraordinary cooperation, including voluntary and timely self-reporting, remedial or corrective action, and providing substantial assistance during the investigative process.  This type of cooperation may result in reduced charges and/or sanctions.  The settlement documents may also indicate the cooperation, or there… Continue Reading


Posted in PCAOB Enforcement, Sarbanes-Oxley

Two Senators introduced a bill that would make disciplinary proceedings of the Public Company Accounting Oversight Board open to the public.  According to the lawmakers, the Sarbanes-Oxley Act of 2002 made the PCAOB proceedings confidential through charging, hearings, initial decision, and appeal.  Unfortunately, the secretive nature of the process enables firms that engage in misconduct… Continue Reading

Auditors And Accountants Need To Be Skeptical in Their Reviews

Posted in Accounting Standards, PCAOB Enforcement

In early December, the PCAOB issued a release indicating that accounting and auditing professionals need to be skeptical regarding their work. The PCAOB is suggesting that professionals in the accounting and auditing profession must be critical of their oversight responsibilities with their clientele.  Regulators expect them to continue to exercise that skepticism in their judgments as… Continue Reading

How Do Accountants Look in Prison Stripes? You Do Not Want to Find Out

Posted in Accounting Standards, Federal and State Criminal Activities, PCAOB Enforcement

Accountants beware – prison lurks. Recently, a certified public accountant and auditor was sentenced to 54 months in prison for his role in a nearly half-billion dollar investment scam that impacted over 3,500 investors.  In the sentencing, the court indicated accountants and auditors are gatekeepers of our financial system, and must protect that system and those who… Continue Reading

Non-US Auditors Are Being Scrutinized by SEC

Posted in Accounting Standards, Capital Formation, PCAOB Enforcement

The SEC is extremely concerned about foreign auditors. In particular, the SEC is worried that those who work in certain European countries and in China are not subject to auditor requirements or the PCAOB.  Essentially, the SEC is concerned over the lack of US oversight over these foreign auditors.  Further, the SEC is concerned about if… Continue Reading

Auditors Are Subject to SEC Action

Posted in Accounting Standards, PCAOB Enforcement, SEC Enforcement

We have repeatedly stated that auditors are significant players in today’s securities industry.  No other than the SEC has made this point on numerous occasions.  Recently, the SEC brought this fact home with the filing of administrative proceedings against two auditors.  See http://www.sec.gov/litigation/admin/2013/34-68605.pdf. The SEC claimed these individuals failed to follow professional standards in reviewing… Continue Reading

Sarbanes-Oxley Redux

Posted in PCAOB Enforcement, Sarbanes-Oxley

We have not talked about the Sarbanes-Oxley Act in sometime, so let’s jump right in!!  Interestingly, over the last 10 years since Sarbanes-Oxley became effective, audit costs for public and private companies have increased significantly.  We recently came across a survey published by Financial Executives International, indicating, that these fees increased somewhat over the last 10 years. … Continue Reading

Jobs Act Emerging Growth Status Disclosure

Posted in Capital Formation, JOBS Act, PCAOB Enforcement

The SEC’s Chief Accountant announced that a number of companies may be unaware they fall under the disclosure requirement for Emerging Growth Company status under the JOBS Act.  As a result of this status, the JOBS Act requires these companies to disclose such a status in their public filings with the SEC.  This disclosure and the resulting status… Continue Reading


Posted in PCAOB Enforcement, SEC Enforcement

The SEC Enforcement Division’s chief accountant has gone on record as saying that, in every SEC accounting case, the SEC Staff reviews auditor conduct.  The chief accountant stated that the SEC Staff looks at improper revenue recognition; understated expenses; financial crisis related accounting issues regarding loans and securities; as well as cross-boarder issues.  These reviews are done in conjunction… Continue Reading

MSRB Rules Changes Allow For Risk-Based Exams

Posted in Broker-Dealer Regulation, Compliance and Supervision, Financial Industry Trends, FINRA Compliance, FINRA Enforcement, PCAOB Enforcement, Registered Representatives, SEC Compliance, SEC Enforcement, State Enforcement

The SEC approved a number of rule changes promulgated by the MSRB to facilitate risk-based examinations for participants in the municipal securities industry.  These municipal securities industry participants are, generally, FINRA members.  In particular, the new rules, G-9 and G-16, relate to record preservation and periodic examinations, respectively.  It is believed that these new rules will… Continue Reading

PSST!!! Want to Save Money on Your Legal Bills? Read on. . .

Posted in CFTC Enforcement, Federal and State Criminal Activities, FINRA Compliance, FINRA Enforcement, Intra-Industry Arbitrations, NFA Enforcement, PCAOB Enforcement, Public Customer Arbitrations, SEC Compliance, SEC Enforcement, Securities Class Actions, State Enforcement

Late last week, one of my colleagues sent me an e-mail where he copied 8 other people, half of them I could not identify if my life depended upon it.  I then heard about the person who had a Twitter account with over 17,000 follwers, and was now being sued by his former employer over ownership of the account–… Continue Reading

Josh Horn’s Ponzi Scheme Response Road Map

Posted in CFTC Compliance, CFTC Enforcement, Federal and State Criminal Activities, FINRA Compliance, FINRA Enforcement, NFA Enforcement, PCAOB Enforcement, SEC Compliance, SEC Enforcement, State Enforcement

My colleague, Josh Horn, has written an amazing article that should be on every compliance officer’s desk.  It details methods for investigating and responding to ponzi schemes.  In this day and age, we are met with another Ponzi scheme occurring or being uncovered almost every day.  Josh’s article is an exceptional primer since it details… Continue Reading

Securities Podcast with Ernest Badway

Posted in Broker-Dealer Regulation, CFTC Compliance, CFTC Enforcement, Compliance and Supervision, Federal and State Criminal Activities, Financial Industry Trends, FINRA Compliance, FINRA Enforcement, Hedge and Private Equity Funds, Intra-Industry Arbitrations, Investment Adviser Regulation, NFA Enforcement, PCAOB Enforcement, Public Customer Arbitrations, Registered Representatives, Sarbanes-Oxley, SEC Enforcement, Securities Class Actions, State Enforcement

Thought you might be interested in a recent podcast I did concerning my securities law practice.  http://web.me.com/cordpar/Client_Development_Tips/Law_Consulting_Coaching_Podcast/Entries/2011/10/28_Developing_a_Securities%2C_White_Collar_and_Complex_Litigation_Practice.html

The SEC’s New Proposed Rule 17a-5 Amendments and Adoption by PCAOB

Posted in Broker-Dealer Regulation, PCAOB Enforcement

Both the SEC and the PCAOB have proposed standards that would amend Exchange Act Rule 17a-5, to require broker-dealers and their auditors to include various schedules and financial reports with their annual audits. The new requirements would require broker-dealers annual reports to include a financial report, a compliance report or an exemption report exam reviewed… Continue Reading