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SEC launches initiatives to combat accounting fraud

The US Securities and Exchange Commission (SEC) has launched three initiatives to combat financial reporting, microcap fraud and enhance its risk analysis using improved analytical technology.

One of the new initiatives will look to enhance and improve the role of the Financial Reporting and Audit Task Force in identifying securities-law violations relating to the preparation of financial statements, issuer reporting and disclosure and audit failures.

The SEC is also setting up a Microcap Fraud Task to target abusive trading and fraudulent conduct in securities issued by microcap companies, particularly those that do not regularly publicly report their financial results.

The Microcap Task Force's aim is to develop and implement long-term strategies for detecting and combating fraud in the microcap market.

The SEC said the new task force will particularly target "gatekeepers," such as attorneys, auditors, broker-dealers, and transfer agents, and other significant participants, such as stock promoters and purveyors of shell companies.

The third new initiative requires the Centre for Risk and Quantitative Analytics to use quantitative data and analysis to profile high-risk behaviours and transactions and support initiatives to detect misconduct, increasing the enforcement division's ability to investigate and prevent conduct that harms investors.

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Securities and Exchange Commission

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