PCAOB Enforcement Activity Soared in 2022, With Penalties Up Nearly 10X

PCAOB Enforcement Activity Up Sharply in 2022, with Highest Monetary Penalties Imposed in the Board’s History

The Public Company Accounting Oversight Board (PCAOB) increased its enforcement activity sharply in 2022, disclosing the most enforcement actions in five years, and handing down the highest monetary penalties since its establishment in 2002, according to a new report released today by Cornerstone Research.

The report, PCAOB Enforcement Activity—2022 Year in Review, found that in 2022, the PCAOB disclosed 29 disciplinary actions involving the performance of an audit and/or a firm’s system of quality control, up 61% from 2021 and the most since 2017. Nearly half of those actions were disclosed in the fourth quarter. Monetary penalties in 2022 totaled close to $10.5 million, almost ten times more than in the previous year, with $8.8 million tied to Q4 actions.

Top Republicans double down on efforts to rein in SEC Gensler’s Climate Proposal

In a letter, reviewed by FOX Business, House Financial Services Committee Chairman Patrick McHenry, R-N.C., along with Senate Banking Committee ranking member Tim Scott, R-S.C., and House Subcommittee on Oversight and Investigations Chairman Bill Huizenga, R-Mich., are demanding that Gensler turn over all related communications and records on the rule going back as far as Jan. 20, 2021.

In addition to the document requests, the GOP members want to know if Gensler and his team considered the rule’s impact on energy prices. Also being asked is whether the SEC considered the First Amendment implications involved in demanding that companies disclose information that is not normally considered disclosable for public companies.

As a result, the trio said in the letter the rule as written would “appear to compel speech.” “We are deeply concerned with the SEC’s lack of transparency and disregard for legitimate congressional oversight inquiries, and call on you to be more responsive to congressional informational requests going forward,” the letter stated.

Gensler has in the past ignored GOP congressional inquiries into his agenda that Republicans say often pushes the boundaries of the SEC’s mandate.

The Plaintiffs’ Law Firms’ Securities Litigation Business

To try to derive the kinds of information that would allow lead plaintiffs and courts to fulfill their intended roles, the authors reviewed case records of thousands of cases, as a way to identify important indica of law firm performance as well as to extract detailed information about the fee awards. With the benefit of this information, the authors — Professor Stephen Choi of the New York University Law School, Professor Jessica Erickson of the University of Richmond Law School, and Professor Adam Pritchard of the University of Michigan Law School – suggest a variety of ways that lead plaintiffs and courts can better serve their intended functions under the PSLRA. The authors’ February 2023 paper, entitled “The Business of Securities Class Action Lawyering,” can be found here.

NBA-Branded ‘Top Shot Moments’ NFTs May Be Securities, Judge Rules in Dapper Labs CaseThe offering of Dapper Labs’ NBA-branded “Top Shot” non-fungible tokens might be securities, a federal judge ruled Wednesday.

The ruling on a motion to dismiss comes a year and a half after a class-action lawsuit was filed against Dapper Labs and its CEO, Roham Gharegozlu, in New York. The lawsuit alleges Gharegozlu and Dapper Labs violated federal securities laws by offering a non-fungible token (NFT) collection – the NBA Top Shot Moments – without first registering with the U.S. Securities and Exchange Commission (SEC).

“The Court finds that Plaintiffs’ allegations render each consideration under Howey facially plausible and survive Defendants’ Motion to Dismiss the alleged violation of Sections 5 and 12 of the Securities Act,” ruled District Judge Victor Marrero, of the Southern District of New York. The Howey Test mentioned by the judge was created by the U.S. Supreme Court for determining whether certain transactions qualify as “investment contracts.”

Program: SEC’s Office of Minority and Women Inclusion — OMWI at 10 Years

Join the SEC Historical Society and Howard University School of Law for a special program featuring the Director of the SEC’s Office of Women and Minority Inclusion (OMWI) and three former U.S. Securities and Exchange Commission Chairs who served during the first decade of OMWI’s operations.

In this program, you’ll learn about OMWI’s origin and mandate as part of the Dodd-Frank Act and how the office was stood up by the Commission. The panelists will examine the office’s goals, priorities, challenges, and successes throughout the past decade since its establishment in 2012, and explore what the next 10 years may hold as the office leads the Commission’s diversity and inclusion efforts.