Targeting financial fraud – A look at the SEC’s newest weapon

Description

Abstract: After focusing on financial-crisis-related cases for several years, the SEC is once again turning its attention to accounting fraud and other financial-disclosure issues. The Commission is developing software that sifts through the numbers and language in financial reports for warning signs that earnings have been manipulated or results misstated. This article explains how language — ranging from a higher word count to fewer colons and present tense verbs — could signal potential fraud.