KPMG must pay $50 million after the Securities and Exchange Commission charged the accounting giant with cheating on training exams and using purloined information concerning audit inspections to be conducted by the Public Company Accounting Oversight Board (PCAOB).  KPMG agreed to the $50 million penalty and also accepted a public censure as part of the settlement.

The findings in the SEC’s cease-and-desist order—which KPMG has admitted—are that now-former members of KPMG’s Audit Quality and Professional Practice Group improperly obtained lists of particular audit engagements that the PCAOB planned to inspect.  KPMG obtained the confidential information from multiple individuals who had worked in the PCAOB’s inspections group, some of whom joined KPMG after leaving the PCAOB.  KPMG personnel then used the information to revise audit work papers to minimize the chances that the PCAOB’s inspections would turn up deficiencies.  These misdeeds resulted in a substantial improvement to KPMG’s 2016 inspection results.  The SEC charged six accountants individually, including these former KPMG personnel, in January 2018 for this conduct.
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Celadon Group Inc. announced a settlement with the SEC and the DOJ over allegations of accounting fraud.[1]  The company agreed to pay restitution of over $42 million in connection with a Deferred Prosecution Agreement with the DOJ, and to pay disgorgement of roughly $7.5 million in a parallel SEC settlement.  The disgorgement obligation is

The SEC recently announced insider-trading charges against the former senior lawyer at Apple specifically tasked with ensuring insider-trading compliance at the company.[1]  The Department of Justice also addressed this case of “the fox guarding the hen house” by filing criminal charges against the former Apple attorney.  The defendant, Gene Daniel Levoff, denies all charges and vows to defend himself.

The SEC alleges that Levoff received material non-public information about Apple’s quarterly earnings announcements through his role as a reviewer of draft earnings materials before their public distribution.  Armed with this confidential information, Levoff allegedly traded Apple securities just ahead of three separate quarterly earnings announcements in 2015 and 2016, reaping some $382,000 in profits and losses avoided.  The SEC contends that Levoff conducted his trading during blackout periods, selling Apple securities when he knew Apple was going to miss analysts’ estimates, and buying when he knew Apple stood to beat estimates.
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