Released: September 14, 2007

SEC levies first charges against unregistered audit firms

Source: Associated Press [New York Times] (Free Registration)

Federal regulators charged 69 accounting firms and partners on Thursday with violating a landmark 2002 antifraud law by auditing public companies without registering with the board that supervises the accounting industry.

The Securities and Exchange Commission (SEC), which often brings charges and settles them on the same day, also said that 50 of the firms and partners had settled with the agency.

There were no Big Four or major accounting firms among the 37 businesses involved. Yet the action was significant because it represented the SEC’s first cases alleging violation of a provision of the Sarbanes-Oxley law requiring accounting firms that audit public companies to register with the Public Company Accounting Oversight Board. The law was enacted in response to the corporate scandals of 2002.

Without being registered and subject to inspections by the board, the 69 accounting firms and partners around the country together issued audit reports for 53 public companies from November 2003 to October 2005, the SEC. said.

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