It may not be the superhuman robotic police officer who patrolled the lawless streets of Detroit in the 1987 sci-fi thriller, but corporate filers should be every bit as concerned about the Securities and Exchange Commission’s (“SEC”) new Accounting Quality Model (“AQM”), labeled not-so-affectionately by some in the financial industry as “RoboCop.” Broadly speaking, the AQM is an analytical tool which trawls corporate filings to flag high-risk activity for closer inspection by SEC enforcement teams. Use of the AQM, in conjunction with statements by recently-confirmed SEC Chairman Mary Jo White and the introduction of new initiatives announced July 2, 2013, indicates a renewed commitment by the SEC to seek out violations of financial reporting regulations. This pledge of substantial resources means it is more important than ever for corporate filers to understand SEC enforcement strategies, especially the AQM, in order to decrease the likelihood that their firm will be the subject of an expensive SEC audit.
‘Enforcement 40’ for 2020
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