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From a wrist slap to jail time: how the SEC deals with dodgy accounting

What exactly does it take for a company to move from getting a slap on the wrist from the Securities and Exchange Committee for accounting issues to being slapped with criminal charges that could lead to jail time?

That’s a pertinent question, coming a week after the former head of real-estate investment company American Realty Capital Partners was charged with accounting fraud for using a metric that didn’t comply with Generally Accepted Accounting Principles and that inflated his company’s results.

Don’t miss: SEC is gearing up for next smackdown on bogus earnings numbers

While criminal charges for accounting issues in quarterly earnings reports are relatively rare, companies can face enforcement actions for failing to follow SEC rules on earnings reports.

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