US firms hit by SEC enforcement warning
The Securities & Exchange Commission has issued a stark warning to the accountancy profession saying that entire firms will face lawsuits unless they co-operate more with investigations.
Steven Cutler, director of enforcement at the SEC, said the regulator had only pursued individual auditors in the past, but is now arguing for entire firms to face the music.
‘It is time to adopt a new enforcement model – one that holds an accounting firm responsible for the actions of its partners,’ he said.
The words came in a speech to members of the audit profession and come soon after the nomination of Wall Street veteran, William Donaldson, to take over from chairman Harvey Pitt. It signals a tough new stance for the regulator.
Meanwhile, the White House announced yesterday that Stephen Friedman, former chairman of Goldman Sachs, will become chief economic advisor to President Bush.