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Potential SEC Inquiry: Improper Rounding Up of EPS

By Joon H. Kim, Pamela L. Marcogliese & Matthew C. Solomon on June 25, 2018
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A recent report in the Wall Street Journal, drawing on a source “familiar with the matter”, indicates that the Securities and Exchange Commission’s Division of Enforcement has launched a probe into whether certain issuers may have improperly rounded up their earnings per share to the next higher cent in quarterly reports. While the SEC has neither confirmed the report nor otherwise disclosed the existence of any such investigation, the Journal reports that the SEC has sent inquiries to at least 10 companies requesting information about such accounting adjustments that could have inflated reported earnings. The targeted companies have not yet been identified. Whether the reported inquiries amount to a broad-based sweep of issuer accounting practices remains to be seen. However, such an investigation would be consistent with SEC Chairman Jay Clayton’s announced enforcement priorities, which include a focus on public-company accounting practices and the protection of retail investors.

Please click here to read the full alert memorandum.

Photo of Pamela L. Marcogliese Pamela L. Marcogliese

Pamela L. Marcogliese’s practice focuses on corporate and financial transactions, particularly capital markets matters and corporate governance matters.

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  • Posted in:
    Corporate & Commercial
  • Blog:
    Cleary M&A and Corporate Governance Watch
  • Organization:
    Cleary Gottlieb Steen & Hamilton LLP
  • Article: View Original Source

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