Deloitte Study Shows Bankrupt Companies Three Times More Likely to be Subject of SEC Enforcement Action

A new study released today from Deloitte Financial Advisory Services shows that bankrupt companies are three times more likely to have been the subject of SEC enforcement actions. The study tracked companies with annual revenues of more than $100 million, and compared 519 bankrupt companies to a group of 2,919 non-bankrupt companies from about 2000 through 2007.  Deloitte found that approximately nine percent of bankrupt companies were the subject of SEC enforcement actions, versus three percent of  nonbankrupt companies.

According to Reuters, Sheila Smith, head of reorganization services at Deloitte, said that it is “not clear whether employees at bankrupt companies are more likely to commit fraud or whether the microscope of bankruptcy makes it easier for regulators to detect it.”

Read the Deloitte report, “Ten Things About Bankruptcy and Fraud”

Read the Reuters article

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