2023 Developments in SEC Rule 102(e) Enforcement Against Auditors

In 2023, the Securities and Exchange Commission continued its trend of bringing fewer enforcement actions against auditors than in recent years. The brought 17 enforcement actions against auditors in 2023. As a point of comparison, the SEC brought 44 such actions in 2015, but only 11 in 2020, 12 in 2021, and 13 in 2023.

However, 2023 was significant in that we saw the SEC bring what appears to be the first enforcement actions against auditors in connection with SPACs as well as an auditor independence violation claim in a federal district court, rather than in an administrative proceeding, reports.

SEC Rule of Practice 102(e), which was codified in Section 602 of Sarbanes-Oxley, allows the SEC to seek relief against an individual auditor or audit firm that has intentionally, willfully, or negligently violated professional auditing or standards. For these violations, the SEC typically seeks relief such as censures, cease and desist orders, fines, and prophylactic relief to protect the integrity of the SEC's processes, through measures including suspensions from appearing or practicing before the SEC for a specific number of years, after which the auditor or firm may apply for reinstatement from the SEC's Office of Chief Accountant if the suspension imposed is not permanent. Read more.


Source: 2023 Developments in SEC Rule 102(e) Enforcement Against Auditors