Regulatory: Public company financial statements face increased scrutiny from the SEC

The PACCAR settlement is yet another reminder that responses to comment letters sent by Corp Fin should not be treated lightly.

Though routine, review of a public company’s financials by the Securities and Exchange Commission’s (SEC) Division of Corporate Finance (Corp Fin) can, in unique circumstances, lead to an enforcement action and should not be taken lightly. This is especially true given the backdrop of an announcement by the SEC’s enforcement division regarding its creation of a new Financial Reporting and Audit Task Force and statements by the staff reflecting a refocus of efforts on accounting cases. The SEC’s settlement with PACCAR, Inc. (PACCAR) for relatively minor issues that did not involve fraud allegations, or even a financial restatement, demonstrates how the staff is pursuing less significant violations and reinforces that disclosure revisions or accounting errors identified during a Corp Fin review could trigger such charges.

 

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Daniel O'Connor

Ropes & Gray litigation partner Daniel O’Connor focuses his practice on securities enforcement matters, internal investigations, related trial work and compliance consulting. A former SEC...

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Michael Vito

Michael Vito joined Ropes & Gray in 2009 as an associate in the litigation department. Michael has a broad range of experience in securities litigation...

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Michael Jo

Michael Jo joined the litigation department at Ropes & Gray as an associate in 2011. During law school, Michael was an articles editor for the...

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