Silicon Investor (SI) -- The First Internet Community

STOCKTALK

We've detected that you're using an ad content blocking browser plug-in or feature. Ads provide a critical source of revenue to the continued operation of Silicon Investor. We ask that you disable ad blocking while on Silicon Investor in the best interests of our community. If you are not using an ad blocker but are still receiving this message, make sure your browser's tracking protection is set to the 'standard' level.

Pastimes : Plastics to Oil - Pyrolysis and Secret Catalysts and Alterna -- Ignore unavailable to you. Want to Upgrade?

To: scion who wrote (782)	5/26/2010 11:25:12 AM
From: scion	Read Replies (1) \| Respond to of 53574

II. BACKGROUND ON SEC ENFORCEMENT ACTIONS The Enforcement Division of the SEC oversees the investigation and punishment of violations of the law, including those involving financial misstatements. This process involves several different steps, which I refer to collectively as the enforcement process. Enforcement actions are the formal summaries of events and subsequent injunctions against each respondent (i.e., the firm, its managers, or other relevant individuals). In trying to explain the SEC’s selection criteria for enforcement targets, it is useful to understand the sequence of events that lead to an enforcement action. The enforcement process is often triggered by the voluntary announcement of a financial restatement by the firm. Other trigger events may include auditor switches, firing of top management, delayed filing of SEC reports, or routine reviews by the SEC. For the purposes of this study, only 29 percent of the enforcements in my sample are triggered by something other than the company press release announcing a restatement. After the identification of a potential law violation, SEC staff privately request information from the firm and carry out an informal investigation. Following the informal investigation, the SEC chooses between two possible paths of actions: (1) stop the investigation and take no action, or (2) commence a formal investigation. As the SEC does not publicly announce preliminary investigations, restatements that trigger an informal investigation, but are subsequently dropped, will appear as a “no-enforcement” observation in my sample. At the conclusion of the formal investigation, which can take up to several years, the SEC formally files an enforcement action against each respondent summarizing the complaint and detailing the punishment. This is the first information released by the SEC that is publicly available for review. In general, minor violations are disclosed in Administrative Proceedings and more egregious violations in Litigation Releases. Beginning in 1982, the SEC also began assigning the secondary designation of Accounting and Auditing Enforcement Release (AAER) to certain actions that involved accountants, auditors, or CPAs. Within each enforcement release, the SEC details the respondents’ penalties. Potential non-monetary punishments include cease-and-desist orders, censures, trading suspensions, or suspensions/bars from serving as an officer, director, or financial professional at a public company. The SEC can also order respondents to pay fines or disgorge any gains received from illegal activity. In supplemental analyses (Section VIII), I explore the relationship between corporate transparency and the amount of these fines. Do More Transparent Corporate Actions Following a Restatement Influence the SEC’s Decision to Issue an Enforcement Action? acctwkshop.cox.smu.edu