SEC Requests Dismissal of All Active Accountant Misconduct Cases Pending Before ALJs

US SEC abandons in-house malpractice suits after Supreme Court ruling

The U.S. Securities and Exchange Commission last month asked for the dismissal of all active misconduct proceedings against accountants sitting before its in-house judges, which legal experts said was a fresh sign that a recent Supreme Court ruling is curtailing the agency’s enforcement powers.

Between Aug. 2 and Aug. 19, the SEC’s enforcement division filed motions to dismiss eight enforcement actions pending before its administrative law judges, public filings show. In each case, some of which date back as far back as 2021, the agency had been seeking to discipline accountants for alleged malpractice.

The SEC offered no explanation for the decision and a spokesperson declined to comment.

SEC Charges Former Finance Director at CIRCOR International with Accounting Fraud

The Securities and Exchange Commission today announced fraud charges against Nicholas Bowerman, a former finance director of CIRCOR International Inc., a formerly publicly traded technology manufacturer. The SEC alleges that Bowerman’s fraud led to the company making misleading statements to the public about the company’s financial performance from 2019 through 2021. The SEC also announced related settled internal accounting charges against CIRCOR.

Bowerman worked at CIRCOR’s U.K.-based business unit, Pipeline Engineering. According to the SEC’s complaint against Bowerman, between 2019 and 2021, Bowerman manipulated CIRCOR’s internal accounting records by falsifying Pipeline Engineering’s financial results before they were included in CIRCOR’s consolidated financial statements. The complaint further alleges that Bowerman concealed his misconduct by manipulating account reconciliations, falsifying certifications, fabricating bank confirmation documents, and misleading CIRCOR’s management and independent auditors. The SEC’s separate order against CIRCOR finds that the company failed to devise and maintain sufficient internal accounting controls concerning financial statement preparation, reconciliation processes, and access to bank accounts. Because of these deficiencies, CIRCOR was unable to prevent Bowerman’s fraud and, as a result, overstated by millions of dollars its performance for fiscal years 2019 and 2020 and the nine months ending October 3, 2021.

Bank of America Shared Nonpublic Information With Investors in India, Whistleblower Says

Bank of America is investigating allegations that bankers in Asia shared nonpublic information with investors before the bank sold hundreds of millions of dollars’ worth of stock.

The whistleblower complaint alleged that bankers shared transaction details with investors before a stock sale in India was announced this spring, according to a copy of the complaint reviewed by The Wall Street Journal—potentially enabling the investors to engage in what is known on Wall Street as “front running.”

Software Development Platform Hit with AI-Related Securities Suit

SEC officials have for months been signaling their concerns about companies overstating their AI credentials, a phenomenon that the officials and others have called “AI washing.”….

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Another audience is also monitoring public companies’ AI-related disclosures – the class action plaintiffs’ lawyers. The number of securities class action lawsuits based on allegedly misleading statements concerning AI continues to grow. In the latest example, on September 4, 2024, a plaintiff shareholder filed a securities suit against software development platform GitHub alleging that the company misled investors by overstating the company’s ability to develop AI software features that would increase market demand for the company’s software development platform. A copy of the complaint can be found here.

PwC tells UK staff it will monitor office attendance

PwC has told its 26,000 UK employees that it will start monitoring their office attendance in the same way it does their chargeable hours, as the Big Four accounting firm adopts a stricter hybrid working policy.

In a memo sent to staff on Thursday, seen by the Financial Times, managing partner Laura Hinton said that the firm would begin sending staff their working location data every month, adding that employees must now spend “a minimum of three days a week” in the office or at client sites.

The location data will also be sent to employees’ career coaches at PwC, said one person familiar with the details. The new policy will take effect from January.