SEC Official Discusses New Financial Reporting and Audit Task Force

The Securities and Exchange Commission (“SEC”) Enforcement Co-Director, Andrew Ceresney, spoke at a conference hosted by the American Law Institute (“ALI”) on September 19, 2013, entitled “Accountants’ Liability: Managing Risks in A Changing Environment.”  As Arian June wrote in an article for Law360, Ceresney described several initiatives planned for the SEC’s new Financial Reporting and Audit Task Force, which will be central to the SEC’s renewed focus on accounting fraud and financial disclosure violations.  SEC Chair Mary Jo White announced the agency’s intentions to shift its focus back to accounting fraud in late May, just weeks after she began serving in the position.

SEC Task Force Chairman David Woodcock told conference attendees that the task force would “actively solicit whistleblowers for information about accounting and financial disclosure violations.”  Woodcock said at the conference that whistleblowers were “hugely important” to the SEC’s ability to identify fraud in the areas of financial reporting and accounting, and noted that “[the SEC has] cases on our docket now that no amount of analytics, no amount of screening or proactive efforts, in my opinion, would have ever discovered.”

The SEC recently demonstrated its emphasis on the importance of whistleblowers when it paid out by far its largest whistleblower award ever, awarding over $14 million to an anonymous whistleblower.  The award came on the heels of multiple pronouncements by SEC officials that “big things were on the way” for SEC whistleblowers, and was particularly encouraging in light of the relatively modest awards that had been handed out to whistleblowers in the two years since the SEC Whistleblower Office came into existence.