SEC To Enhance Company Filings Scrutiny with Broader Corporate Review Process

BNA reports that sources say that the Securities and Exchange Commission will likely widen its corporate filing review process to improve how it scrutinizes financial statements that are publicly filed by registered companies, as well as other documents. The program, referred to as “continuous review,” was set up a few years ago to focus on financial institutions that received Troubled Asset Relief Program support from the government. This focus is likely to grow to include large financial service firms.

The SEC started its process of continuous reviews on a number of companies in the Corporation Finance Division’s Assistant Director Office No. 12 (AD 12). Nine banks that had obtained over $120B in taxpayer funds through the Capital Purchase Program, which is a TARP program, were analyzed. Unlike the regular review process, which examines a company’s Form 10K filings every three years, this program looks at all documents and filings on a continuous basis.

Sarbanes-Oxley Act
Per the Sorbanes-Oxley Act, the SEC has to look at all public companies’ financial statements regularly and systematically at least once every three years. The SEC’s Corporation Finance Division is the unit that conducts corporate reviews. Data is examined to make sure that compliance with accounting and disclosure requirements are taking place. The division performs about 5,000 reviews annually.

The Troubled Asset Relief Program was set up by the US Treasury. It consists of a number of programs geared toward helping stabilize the US financial system, jumpstart economic growth, and stop foreclosures that can be avoided. Money was to be channeled into stabilizing bank institutions, revive credit markets, stabilize our nation’s motor vehicle industry, stabilize American International Group (AIG), and assist families so they wouldn’t have to go into foreclosure. A few of these program areas were later cancelled.

While Congress granted $700 billion for TARP in 2008, the Dodd-Frank Wall Street Reform and Consumer Protection Act lowered that amount to $475 million.

TARP lost its authority to make new financial commitments in October 2010. As of the end of last November, the US Treasury has gotten back 90% of the money that it used through its different programs.

Securities Fraud
Throughout the US, our institutional investment fraud law firm represents clients seeking to recover losses caused by securities fraud.

SEC Expanding Corporate Review Process To Increase Scrutiny of Company Filings, Bloomberg/BNA, January 15, 2013

TARP Programs, US Department of the Treasury

The Sarbanes-Oxley Act 2002

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US Lawmakers Want SEC and Treasury Department to Answer Questions About Merrill Lynch Executive Bonuses and TARP Funds, Stockbroker Fraud Blog, April 15, 2009

Stockbroker Fraud Headlines: Securities Claims Against Lehman Underwriters Are Dismissed, NYSE Euronext Works on Kill-Switches Plan, and SEC Calls for Structured Products Ratings Roundtable, Stockbroker Fraud Blog, December 24, 2012

Govt. Not Prepared for Next Inevitable Financial Crisis, Says Ex-SEC Chair, Institutional Investor Securities Blog, July 30, 2012