More 2014 securities class action filings involved accounting questions
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Securities class action filings involving allegations of accounting issues increased by 47% in 2014 compared with 2013, despite there being little change in the overall level of securities class action filings, according to a Cornerstone Research report.
Cases are considered accounting cases if they involve allegations related to generally accepted accounting principles violations, audit violations or weaknesses in internal control over financial reporting, according to the report by the Boston-based firm, “Accounting Class Filings and Settlements, 2014 Review and Analysis,” which was issued Tuesday.
The report says there were 69 accounting-related case filings in 2014, compared with 47 in 2013, but these occurred against the backdrop of a year marked by essentially no change in overall securities class action filing activity, and the absence of new types of securities class actions. There were 101 filed non-accounting cases filed in 2014, down from 119 in 2013.
Elaine Harwood, Los Angeles-based vice president of Cornerstone Research and head of the firm’s accounting practice, said in a statement, “The increase appears to be, at least in part, a result of the (Securities and Exchange Commission’s) heightened focus on accounting-related fraud as demonstrated by the substantial growth in accounting case filings that refer to inquiries or actions by the SEC.”
The report said more than one in four accounting case filings referred to an SEC inquiry or action, which was the highest level since Cornerstone began tracking this variable in 2010.
It said also accounting case filings involving restatements increased to their highest level in the last seven years, both in terms of the number of filings, at 29, and as a percentage of total accounting cases, at 42%.
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