Regulators are on high alert. In recent months, the Securities and Exchange Commission has brought a string of cases accusing executives of cooking the books to meet numbers. Today’s tough climate for earnings will likely swell the pipeline of future actions.
“My money is on a few years from now, say 2026, we’ll see a lot more of these earnings management cases,” said Lenin Lopez, an attorney at insurance brokerage Woodruff Sawyer & Co.
The SEC’s enforcement armory includes its so-called EPS Initiative, which uses data-driven analytics to try to root out earnings manipulation. So far, that has resulted in cases against six companies and an unusually high number of individuals, including five current or former chief financial officers.
Source: SEC Is Focusing on Earnings Manipulation by Companies – WSJ
